The Famous Need Money Now So I Can't Hold Situation And Must Flip
I'm not sure if this is the right place to post this, but here goes. I'm currently in need of cash to pay off debt that is crushing me. I'm going to flip a house I just bought and will walk away with 40-50k. The problem is the tax issue. If I could hold the house I would, but the payments are way to high. I could refi in 4 months and lower the payments, but I don't think I will last that long if I don't sell in 30 days and pay off this consumer debt.
The good news is that this is really a hot house in hot market and will move fast, the bad news is if I was to hold for just one more year I could make 100k. Any idea's? Maybe I should just take my tax lumps, and move on? Investors have told me there will be other deals, and if I found this one I'll find others.
Thanks
Where is the house, and why can't you rent it out...have you talked to a private or hard money investor..
Don't be greedy. Take the 40-50k and run. There are more chances out there to make money. Don't try to kill the beast with one shot.
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Bird dog
Yeah, thats what most tell me. Just pay the tax man and be rid of your debt, then you can start fresh. I guess if I came this far with little or no money down then I can do it again.
VinceH;
I CAN rent it out, that is what is sad. It's in a high end community in Las Vegas, but I need cash to pay off debt.
Do you mean hard money to pay off the consumer debt? My debt to income ratio is pretty high.[ Edited by scr2001 on Date 12/04/2003 ]
hard money lenders don't care how much debt you have as long as there is enough equity in the house.
Yeah, if it were me I'd sell it and get out of debt. There is nothing that I can think of that feels worse than being in debt. Yeah, you'll have to pay taxes but you'll make the money too! That's the reality of life....the government gets their peice of the pie.
Here is another thought. You say you just bought it. If it wasn't bought subject to, then why not pull a HELOC at 4% (current rate just about everywhere) and pay your debt down letting the renter or lessee make the payments? If you are realistic in thinking that you could make 100K in a year on the property then I would explore ways to keep the property and pay off debt.
How much is your debt? doing a "lease option with a large option payment might be considered. Set the option price somewhere under the real projected value in a year or two. take the non refundable option consideration to pay off your debt, and the increased payment to give you monthly cash flow?
YOur mind is a computer, ask yourself "how can I pay off my debt and hold onto this property making money with it?" and your computer will eventually spit out the answer.
Best of luck to you!
Randall
Do you have other rentals? If so, doesn't your depreciation deduction virtually wipe out your tax liability? I only own 8 units and I get every dollar of withholding back every year because of the depreciation deduction.
Close sale in 2004 then you have the tax money till next April If you have to pay penality it would be better to use the $$ and do more deals and make another $40 grand.
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
I personally like the response that stockpro99 gave. I was thinking along the same lines. One thing I did learn as a novice trader was that I do have more problems than making ONLY 40-50k. It could go the other way. So, don't be so negative about making "so little". Yes, there will be other deals. Good luck!
yes, i have three other rentals. Can my depreciation offset my tax liability on this particular sale?
Whoa cowboy.
Have you spoken to an accountant about a 1031 exchange?
There are many solutions to tax problems, especially in RE and the 1031 could be your ticket.
Good luck.
PS:
If you have back-tax problems, you can settle with the state of feds and do it over time. (And for less than what youn owe!)
Most tax attorneys will give you a free consult and give you many options with which you tackle your problem.
If he just closed on the home a HELOC may not be possible. If you got in with no money down then technically you have no way of freeing up the equity of the home. There is one bank I know of that will go to 106% but that is based on the purchase price. So there may be a problem with seasoning.
Dont one of the gurus live in Las Vegas? Give them a call if it is that good a deal they might make you money.
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