8 Unit College Rental?
Question: How can I structure this deal? The seller of this 8 unit building rented to college students wants to sell without getting hit by the capital gains tax. He says that he will seller finance the whole deal of 80k. The seller is very flexible and any terms i suggest im pretty sure he will agree. I want to set up an LLC in VA. to purchase the property for assest protection. Any suggestions how i can set this up so i see maximum profits and satisfy the sellers needs?
Thanks in Advance
Ken
Seller willing to finance 100% what else do you need. I would check to see what the rents are. You should be able to get at least 1600 per month total rent. Make sure taxes are current and get insurance for the place. Have title company or attorney do the title search and agree to pay all the sellers closing costs too. Should be very little cc just deed and other documents and title policy. PM me if you need further assistance
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
Make sure you check the insurance first, as it is difficult to obtain (expensive, comparatively).
When renting to college kids, it is sometimes a good idea to have their parents co-sign for them. Also, make sure you get a nice sized deposit. Damage might be extensive.
The current students already have there parents as co-signers and they pay upfront rent by semester. So that eliminates the month to month collection problem. What should i expect for insurance cost being a multi-unit? Any ideas on the terms for the sellers financing? He's retiring and does want a long term note.
In addition to the preceding outstanding advice, if you plan on holding on to this property for any great length of time you might want to place it in a trust to be willed to your LLC. This would help offset that inheritance tax!
I would definatly recommend getting the deed and using seller finance in the form of a mortgage. Contract for deeds are a mess. It leaves the seller in the picture and doen't give them closure (which is what most sellers want). Pretty soon you have sellers bothering you all the time, etc. Get the deed.
Quote:In addition to the preceding outstanding advice, if you plan on holding on to this property for any great length of time you might want to place it in a trust to be willed to your LLC. This would help offset that inheritance tax! StanWatkins,
You will have to explain this comment. I can see how a trust might help you avoid probate, but it is my understanding that the assets in a living trust are always included in the taxpayers estate for federal estate tax purposes.
Perhaps you could clarify for us.
If the seller does not want to pay capital gain taxes try a 1031 exchange. I am not an account but I believe this will give him the ability to differ the tax. A 1031 is a way of differing the tax by buying a like more expensive property. If he holds on to the new property and leaves it to his estate he will never have to pay the capital gain. Check with a good real estate account.
GOOD LUCK!
Getting the Deed should be a first priority. A contract for deed does leave the seller in the picture for a long time and any hickup could cost you you investment. You would have a vested interest, however, this could really get messy.
Good Luck....
The seller sounds like one I would love to find...
Cooperative.