Buying My Dads House
My dad is a Disabled Veteran and has had his house for a number of years. Since he lives on his disability, he does not have much. His plans are that when he dies to just let the creditors and the government have everything and go to a VA Cemetary. I am interested in buying his house from him now and having him pay me a reduced rent to help him and for tax reasons. Then when he does die, he is just a renter and not a homeowner and nothing happens to the house. Are there any problems with that?
Thank you for your help.
Robert :-?
Is there a VA or some other type of mortgage/loan on the property?
Yes there is a VA loan. We are looking into rates and such but we do already have a better interest rate lined up so that is not a problem. We could pay cash for the remainder of the loan, but I want to keep cash to work other deals since this would be my first.
Robert
If you want to keep the VA loan, put the property into a living trust. I would probably make yourself the beneficiary (thus avoiding probate down the road) and the trustee (so you can do what you need to with the property if he survives for a while).
A lot of people like making the grantor(your dad) and beneficiary the same person, but in your case, since its family Id make you the beneficiary. It should not trigger a due on sale, but if it does you can always refi out of the VA loan and just put the property into your name.
hope it helpz and GL
Razzio--Why would I want to have my dad put the house into a trust and getting it after he passes instead of me buying it now. If I do that, I wont be able to use it to its full potential as leverage and tax benefits.
Thanks for your replies.
Rob,
1. If you rent to a relative and do not collect fair market rents you pretty much lose the tax advantages of an investment property. It will be considered a personal residence. In this case you can look at any tax advantage the same way a second home would be treated. The income from your dad still is income to you.
2. If you want to take over the title with the existing VA loan in place and you do not expect to get a formal approval to assume the loan then the trust suggestions are heading in the right direction. This has nothing to do with probate and death. This is about the DOS issues.
3. If you buy the house then it will not be part of probate later when your father dies. Just make sure the transaction is clean and the title is moved so that no one can argue later that he was hiding assets or the deal was not completed.
4. Consider the rules for the state he lives in. Some have rules concerning long term care and the responsibility of the individual re: costs. Things along the lines of assets being transferred so state is left picking up the costs of the care. As he is in the VA system I suspect this is not even an issue.
John
[addsig]
IT will save you closing costs to just put it into the trust and not buy it.
Thanks guys. I will look into the trust, but with rates so low, his monthly would go down a good bit. He is at 8.0 on his first and 10.0 on his second. I can refinance and get a much lower rate, therefore charging him less rent which means more time he can afford at the RV park lol....
I also just like the idea of having my first rental (on paper) under my belt.
Robert
Robert,
Another issue to think about - if he has had that loan in place for a long time, most of your payment is going toward principle. That's great if you want to pay it off. If you want to write off the interest and reduce your dad's payment each month, a refi may be better.
Good luck,
Di
Try going to to local REA meeting and have flyers printed with the house info ready to hand out. Contact the REA first to make sure that's ok. Or you can go and just collect business cards from local investors and contact them after the meeting. Of you can drive around and call all teh bandit sign numbers and try to partner with another wholesaler for your first deal to see how it's done. Good luck!
[addsig]
Look in your local paper under the section "real estate wanted " and call all the ads that say " we buy houses for cash, quick close, we buy houses in any condition....." you should be able to find many investors there.
[addsig]
Thankx everyone for giving their advice!
Wwhen i first set up the contracts I went into it with the goal of flipping it to another investor(I thought it would be soooo easy). The only thing is I have no prior experience with making deals. The main thing I know is how get get a deal under contract & that I need to find some investor's. It took me a week to get 4 houses under contract, they are worth approx. $500k with about $160k in equity. So I definitly need to find some investor's that will purchase assignment deals. I did call 2 "We buy houses" ads in the paper but haven't gotten a response yet. I just hope I'm going in the right direction. Thank you for all of your help again. If anyone has anything else to offer please post, I'm open to all ideas!
Hey , What type of price is expected on each unit? What are the comps for each structure? Give us the details. What is your expected net on each deal??
[addsig]
Great job on the 4 contracts! Excellent work!
Now I really hate passing on a good deal to another investor. There are so many options here. Do you think you can handle it? A hard money lender will loan you the money for the house based on the equity you have in it. Do these houses need repairs? Post some more information.
Can you really secure a contract with only $20?
myfrogger
will a HML lend for the purchase of the house and repairs needed? if so, how much higher of an intrest rate?
Quote:
On 2004-09-29 09:10, jhayden wrote:
Can you really secure a contract with only $20?
you can secure a contract with $10 . I do it all the time , You just tell them it just makes it legal.
Is the $10 or $20 given as a "sign of good faith" towards the contact? What if the seller request more $$?
How can I determine what is a good seller's price - to - profit ratio when searching for a good and / or profitable deal?
How can I find out how much a piece of property is worth via the internet? Is there a site which show the comparison of the asking price vs. true value?