Posted by Matthew B on October 01, 2003 at 24:00:06:
John,
Thanks for the information!
What I meant by the technique is this:
Basically Carleton implies that it is possible to take out “Another Mortgage” or a second mortgage on the property and pay off the remainder of the first, and also use it to provide the downpayment. IE:
Seller has 10,000 left on mortgage and wants 5,000 down
** Is it viable to convince the seller to take out a second mortage against his equity and then use this to provide him with the downpayment and pay off the remainder of the first mortage. Then the second mortgage will then become the monthly payment basis that you use to pay off the home and to try to convert into positive income through rent.
Posted by Matthew B. on September 29, 2003 at 22:13:37:
Thanks everyone for taking the time out to begin viewing my thread. I would like to begin by introducing myself:
I am a 22 year old guy from Houston, TX and I own a beautiful home with my wife. We have both worked hard for what we have, and I am very determined to become involved in Real Estate Investing. I am currently viewing Carl Sheet’s program and I enjoy a lot of what he has to say, and also realize I must take some of it with a grain of salt and apply it to my current plan and situation.
I have a few questions that Sheet’s has not seemed to answer clearly in the program yet:
Income Tax. – How would I apply income taxes to any positive cash flow that I receive through Rentals, Lease Options, etc?
Property Taxes – With my home, I pay my property taxes in the mortgage. I understand that it’s a good idea to examine the tax situation of any property, but I was curious as to how one would handle paying the property taxes on a newly aquired home? Would I have to Take it out of the rent check and pay them manually? If it were owned financed would it be their responsibility to include it in the mortgage (I would like to pay it monthly).
Another Mortgage to pay off the owner. – Does this techique work? Taking out a second mortgage to put money in the owner’s pocket and then paying it off yourself? Wouldnt the owner have to take out the second mortgage, and wouldnt the owner consider it a risk?
Thank you for reading my post, and I would be greatful for any responses.
Thanks Again,
Matt.
PS - I look forward to becomming an active member of the CRE Community.
Re: New to REI, Questions. - Posted by John Smith, IV
Posted by John Smith, IV on September 30, 2003 at 23:35:30:
Well, lets take this one by one.
#1 Income Taxes- These are part of your expenses. They are paid only on net profits though. In other words, if you end up making money, you pay income taxes. If you don’t make money then you actually reduce your income tax burden since you will show a loss somewhere.
On the other hand, you only should pay income taxes if you are liable for the specific tax. Is your income taxable? Take a look at www.taxableincome.net
#2 Property Taxes- If you buy the property with a mortgage, it will most likely be added to the mortgage payment just like your home’s mortgage.
If it is seller financed, then it depends on the contract that you make with the seller. If you want to pay it monthly and you stipulate in the contract that you will pay X amount, then the seller has to turn around and make the payment for you.
If you have the discipline for it, you might be better off opening an account (like a money market account) where you deposit the amount and then pay the taxes once a year out of that account. The benefit of this would be that you make a little on the interest paid on the account. Every penny counts.
You said--------------------Another Mortgage to pay off the owner. – Does this techique work? Taking out a second mortgage to put money in the owner’s pocket and then paying it off yourself? Wouldnt the owner have to take out the second mortgage, and wouldnt the owner consider it a risk?>>>>>>>>>>>>
I don’t understand what your question or proposed technique you are talking about here.