Real Estate Invest

Trulia is useful, but it's just one tool, and you need to be careful to be too dependent on it. I recommend also checking out Yahoo Real Estate and Zillow, as web resources to look at comparable real estate listings, if your state land records are online then they're a great resource for looking at sales history, acreage, square footage, etc, and of course there's no substitute for the advice of a living, breathing, experienced real estate agent (although spend the time to find one that's actually good). Best of luck!

I thought it might be beneficial to start a thread where people list any real estate-related audit flags that the IRS likes investigating. I'll start by adding one or two: 1. Deducting expenses for prior years' business activities. I was sued (what fun) over an old business activity I no longer did any work in, and settled the suit, but my accountant said the deduction was sitting all alone on that page of the return, with no current income or activity in that area, which means I'll probably get a friendly call from my local IRS agent to demand at least an explanation. 2. Business Mileage. While there is some safety in numbers here, as many filers list substantial business auto mileage, the IRS knows even before an audit whether you have any proof that you drove those miles for business, because you have to check a box and tell them! Talk about easy prey. Proof is hard to furnish on this one, but at least have an explanation for those miles prepared and ready in case Uncle Sam comes a-knocking. What are some other audit flags real estate investors need to be aware of? ____________________ Brian

Honestly everything they need to know about credit repair can be found in a single article, and it's free: The Real Estate Professional's Guide to Credit Scoring & Improvement That's an industry filled with rotten apples, and basically paid to babysit people to make sure they stay on the financial straight-and-narrow. Of course, some people need babysitting, or need to pay for something just to feel obligated into following the guidelines. It's like gym memberships: sure, someone could run and exercise on their own, but if they're paying someone else to oversee them, they actually do it. All right I'll get off the soap box, good luck helping people with their bad credit. Cheers, -------------------- Brian Rental Lease

I'm going to disagree with the consensus here, and tell you firsthand that: 1. Many states have enacted laws severely restricting pre-foreclosure purchases. Maryland is one, which I know because I felt the fury of a lawsuit there over one. 2. These cases, when they go to court, are not about "the Law," they're about sympathy and public sentiment. Judges and juries go with public sentiment, and right now there's a lot of anger against people who are perceived as "equity thieves" and "taking advantage of hardworking but down-on-their luck home owners." Age, gender, race, ethnicity, and language factors all come into play as aggravating factors as well. 3. Having been sued, I can assure that serious lawsuits are so expensive to defend against that you lose even if you end up winning in court. The cost in time, money, and lost sleep isn't worth the aggravation, no matter how "right" you are. I would urge you to stay away from pre-foreclosures. Do deals with people before their mortgage lender finishes filing for foreclosure, because once it starts you become this big, mean, tricksome, sophisticated white collar predator, "taking advantage" of a poor little old lady or some nonsense. It's just not worth the fight, and sooner or later I assure you the fight will come to you. May not be the first deal, or the second, but it will come. Best of luck, _________________________ Brian www.ezlandlordforms.com

I'm personally a landlord, and own my rental properties under LLC names, but I would offer the following caution: Single-member LLCs offer no protection whatsoever from collection. Period. If you're serious about protecting your real estate assets, speak to an asset protection attorney, and create some deep protection (such as owning property in a partnership LLC, where your controlling interest is owned by a blind trust, etc). Otherwise, there's absolutely no reason to waste your money on an LLC; you might as well just own the properties in your personal name and save yourself the taxes, legal fees, and extra accounting fees. Best of luck with your real estate investing, ____________________________ McMenaemie

Well, you have a couple options. First of all, is there any way to keep the properties as rental units? The rent may pay the mortgage and then some, in which case you might be able to ride out the terrible market. Is your name on the deed? Is it on the mortgage note? If the answer is no to both, you're not on the hook anyway, she is. If you're determined to get rid of the things, you could always go to the bank and offer a deed in lieu of foreclosure. Best of luck,

I was an account exec for a hard money lender for about 5 years, so I can tell you firsthand that foreclosing is extremely expensive. As for how expensive, it depends on the amount of the loan, and the state/province/country, as each has different time periods and legal requirements. In my home state of MD, the miserable governor (same @#$% who raised sales tax by 1%) forcibly extended the amount of time it takes to foreclose from roughly 2-3 months to 6-8 months, in a misguided attempt to keep homeowners in their homes. What he failed to realize, of course, is that he made the local credit crisis more severe, because banks and mortgage lenders put a freeze on their lending, but never mind. Anyway the lender has to carry the loan from the date of default until the date of foreclosure, which is another several months on top of the amount of time it takes to foreclose. So assuming 9 months of carrying costs (principal, interest, taxes & insurance), plus legal fees (typically in the $5K range), plus advertising expenses for the auction (another $1-3K), and in some areas part of the closing costs. If it doesn't sell, then they have to pay to have title transferred, and then carry it even longer, and then pay a realtor to sell it. Hopefully that answered your question, good luck bidding, and by the way here's a good article with tips on Buying Real Estate at Foreclosure Auction. Cheers, Junior

I'm a landlord and I've been told that the best way to protect your assets are either: 1. Start an LLC with your spouse, so that it's not a sole owner LLC, own rental properties under it, 2. Set up an irrevocable trust, with your spouse as the beneficiary, and own the rental properties under this, 3. A combination of the two where the trust owns the LLC, and the LLC owns the rental. Problem: I'm not married! So if I don't want to be sued personally, and I don't want any personal judgments related to rental properties, how do I hold these assets safely? Thanks,