Posted by Kevin (TulsaOK) on May 01, 2006 at 13:16:47:
OK, the home warranty doesn’t sound as good as I originally thought, so we probably will not be going that route. Which means repairs are back in the equation.
I am getting this house on terms so I do not expect huge cashflow or boat loads of equity. These are very nice folks who are elderly and do not want to manage properties at their age. They are willing to be flexible (they told me this at one of our meetings), and they do not want to see me get hurt on this deal either. They said “If we can’t get the numbers to work, then we shouldn’t do the deal. They will just rent the houses out.” The way I figure it, the owners will be getting around 8% ROI ($1,130 Payment - $226.67 T&I = $903.33 Net = 7.9%) or ($903.33 / $137,000 Purchase Price X 12 months), so not outragious for an investment loan to an investor.
Can we avoid triggering taxes by transferring majority interest in the trust to me, and giving the owners a mortgage for $140,000 @ 6%, 30yr amortized / 5 year balloon? The trust hides the transfer, but the mortgage may trigger something.
Also, I didn’t buy this house from my neighbors because they were not offering any terms.
Any ideas? Thanks!