Real Estate Investing Archives

Form 2553: How to Use It & Save on Corp Taxes!

May 24, 2022 By Jeremy

If you are ready to save money on your corporate taxes as a real estate agent, investor or small business, we are here to help. Registering with the IRS to form your corporation is easy, and form 2553 is simple when you know what to fill out and how. The TL:DR version is by marking yourself from a C Corporation (which is the IRS default) to a S Corporation you can lower what you owe in taxes. It is important to note there are differences in C and S corps, and we’ll cover those in a follow up post.

Below you’ll find FAQs about Form 2553 including what it is, who is eligible for it, and how to fill out and file this form.

What is a Form 2553?

The 2553 form is the tax form that tells the IRS that a business wants to be registered as an S Corporation rather than a C corporation.

To be eligible and qualify you must: [Read more…]

What Quiet Titles and Quiet Title Actions Are

May 10, 2022 By Jeremy

A “quiet title” is a name given to a legal proceeding that takes place in civil court when someone makes a claim about the rightful ownership of a property during a real estate transaction. A “quiet title action” is the evidence provided by the person defending their ownership. The questions about ownership can come from the buyer, the seller, or a third party who believes they have a right to ownership or that a previous owner has a debt owed to them.

Claims on a title that result in a quiet title proceeding occur somewhat frequently, and there are numerous reasons. So if you’re on this post because someone is making a claim, we can tell you first hand not to panic. You have options and the claim doesn’t have to stop your transaction from going through. Before we jump into your options, lets look at some of the reasons someone may make a claim or you have to go through the quiet title process.

Reasons a quiet title claim is filed include:

The death of an owner (there can be multiple owners)
When a quitclaim deed is used
Disputes between a mortgage lender and a borrower
If there’s a period of time where no one knows who owned the property
Property boundary disputes
Properties that were unoccupied for a long time
Errors in surveying
When there is a case of adverse possession (squatters rights)
To settle tax issues

Each state has their own specific laws on who is able to file a quiet title action. Some states only allow the lender who holds the mortgage to file. In states like Michigan, anyone who has an interest can file. States like Florida and Texas require the current property owner to file the quiet title action.

The Process of a Quiet Title Action

Research the ownership
Draft a complaint for a quiet title action
File the suit and serve any parties involved
Obtain a court order

Research the ownership of the property

You can research the property’s ownership by: [Read more…]

Townhouse Vs. Condo: Which is a Better Investment and Why?

March 29, 2022 By Jeremy

Whether you’re looking to invest and earn a profit, or you are shopping for your new home, choosing between a townhouse vs. a condo doesn’t have to be a hard decision. Both property types are great options, and if you’re stuck, we’re here to help you make the right decision based on your situation.

Below you’ll find everything from upfront costs to resell values, HOA fees, property taxes and what you’ll need to make a decision whether to go with a townhouse vs. a condo.

For example, condos generally are cheaper to own, although they generally have higher interest rates so if you’re taking a mortgage and living there, a townhouse is probably the better option. Townhouses are normally more affordable to live in, but a townhouse does not always have the same resale value as a condo. This is why future planning is key because if you don’t plan on staying in the townhouse for more than 5 or 10 years, a condo could be the better choice.

So let’s jump in and help you decide from both a homeowner and investor point of view.

The Differences of Townhouses Vs. Condos

The differences with townhouses and condos is in your future planning. Future planning for townhouses vs. condos includes the following situations.

You plan on living in the property until you retire
Sell the property once you’re ready for the next stage in your life
Living in the property until you’re ready to rent it out
Purchase the property and rent it from day one
Do a fix-and-flip to sell for a quicker profit (usually you’d take a hard money loan or borrow cash for this vs. a traditional mortgage)

Taxes and fees change pretty drastically between townhouses and condos. These differences are what will help you make the decision on choosing between townhouses vs. condos based on one of the five situations above. [Read more…]

Rent-To-Own Homes: What They Are And How They Work

March 8, 2022 By Jeremy

A traditional mortgage isn’t always an option for everyone. If you need time to build up your credit score, have more time to save for a down payment, or you know exactly where you want to live, a rent-to-own home may be an option for you. But what are they and how do they work?

What is a Rent-to-Own Home?

A rent-to-own home, also known as a lease-to-own home, is a house that you rent for a specific amount of time that comes with the option to purchase before your lease expires. But depending on the type of agreement you have, you may or may not be required to purchase the home. That is why it is important to know which type of rent-to-own agreement you’re committing to and why we created this post.

Below you’ll learn about rent-to-own homes from how the agreements work, to the advantage of taking this step as an investment or ownership strategy, and some helpful hints so that you can decide if a lease-to-own agreement is right for you.

How do rent-to-own homes work?

A rent-to-own home works by following this process: [Read more…]

What is a Probate Sale in Real Estate?

February 22, 2022 By Jeremy

A probate sale in real estate occurs when a homeowner has died without a will and the property is being sold in order to liquidate the asset. A probate sale can also involve a homeowner dying that owes significant debts. Any properties that the person owned are sold to pay off their creditors if the estate doesn’t have enough in cash assets.

Now that you know what a probate sale in real estate is, lets answer some of the most common questions about probate sales.

How does a probate sale work?

A probate sale works like this (it can vary slightly from state to state but there are specific procedures that are followed): [Read more…]

The FHA 90 Day Flip Rule – Here’s What to Know

February 1, 2022 By Jeremy

The FHA 90 day flip rule is a policy that requires you as a property buyer to wait at least 90 days from the last approved deed before you can get an FHA loan. The policy is reviewed by an FHA approved appraiser and only applies to FHA loans. So if you are not using an FHA loan, the FHA 90 day flip rule likely will not apply to you. There are also numerous exemptions to the FHA 90 day flip rule.

Exemption to the FHA 90 Day Flip Rule Include:

HUD resales
If the property was inherited and the seller just wants to get rid of it quickly
When an employer or relocator has purchased the property and no longer needs it
- This could also apply to movie studios or TV production companies
Houses being sold by not-for-profits and the government

The good news is that if you do not fall into the 90 day time frame, the normal restrictions will not apply to you. But that doesn’t mean you’re 100% in the clear.

If you’re using an FHA loan and the time frame on the last deed is between 91 and 180 days, you have a few more restrictions, although they are nowhere near as tricky as the ones in the 90 day flip rule. [Read more…]

What is Ownership Interest in a Property?

November 23, 2021 By Jeremy

Ownership interest in a property defines your rights as an owner of a property or that you have a claim to the property. Ownership is the highest form of interest and typically gives you the full rights as an owner to do what you please with the property, within the limits of the law.

You don’t have to live in a home to have an ownership interest in a property. Likewise, you can have an ownership interest if you inherit a property, split the property in a joint tenancy with your spouse, or invest a little amount in exchange for a percentage-based interest of the property.

While owning a property may seem fairly straightforward, understanding what ownership level is becomes important when applying for specific loans.

For example, HUD defines a first time homebuyer as someone who has not had an ownership interest in a home for the last three years. Even if you did not live in the home or had a 1% financial interest, you still would not qualify for an FHA loan or other first time homebuyer programs.

Now that we know what ownership interest in a property is defined as, we need to discuss what qualifies as ownership interest in a property. [Read more…]

What Does Pre-Foreclosure Mean? And How to Avoid It.

November 9, 2021 By Jeremy

Pre-foreclosure means that your lender has issued a notice of default (a public notice filed with a court) and that they are beginning the process of foreclosure. Fortunately, pre-foreclosure does not mean that your house will be foreclosed upon and there are many ways to get out of pre-foreclosure.

While pre-foreclosure may seem like a scary process, it is also an opportunity for you to get your finances back in order and to keep your house or walk away with cash-in-hand. Foreclosure is very expensive for your lender and oftentimes they will be ready to work with you on a solution that saves you your home and saves them their money.

Fortunately, there are solutions to get you out of debt and help you escape foreclosure without losing your house, and that is what you will learn in this post.

Below you’ll discover the process of pre-foreclosure and the options you have to avoid the bank completely foreclosing on you. But first, let’s learn the difference between pre-foreclosure and foreclosure.

What’s the Difference Between Foreclosure and Pre-Foreclosure?

The difference between foreclosure and pre-foreclosure is that foreclosure enables lenders to reclaim the remaining balance on your loan, typically by auctioning off your home. Pre-foreclosure is the preliminary process that gives homeowners a heads up that their lender has begun the process of foreclosure. [Read more…]

What is Unimproved Land & Is It Worth Buying?

September 28, 2021 By Jeremy

Unimproved land (sometimes known as vacant lots or more commonly raw land) is land that does not have any active services or public utilities running through it like water lines, electricity or even street access from the public roadways. Improved land is different from unimproved land in that it will have at least a few of these services making it easier to buy and develop. But this doesn’t mean you should avoid investing in unimproved land.

You can use unimproved land for:

Holding and reselling once property values begin to increase
Building a dream house
Creating an investment property to rent or sell
Developing a community or private grouping of homes
Designing a park and area to give back to your community

So if you’re wondering whether or not to invest money to build on unimproved land, that will depend on your situation. So if you’re thinking about purchasing unimproved land, below you’ll learned when it is a good and when it is a bad idea to make this investment.

When Is It Smart to Buy Unimproved Land?

[Read more…]

What is Bird Dog Real Estate?

June 22, 2021 By Jeremy

As you journey into the world of real estate, you’re likely to come across bird dogs. Of course, there’s a wide variety of different practices attached to some creative names to describe them, but bird dog may be the most peculiar of them all.

What might come as a surprise is the fact that it’s one of the most hands-off practices in the real estate industry. In other words, being a bird dog in real estate is one of the simplest ways for real estate investors to make money by doing very little work.

What is bird dog real estate?

A bird dog in real estate terms is someone that identifies distressed properties, recommends them to other real estate investors, and collects a finder’s fee when that investor closes the deal. That’s all there is to it.

The process of finding distressed properties can vary. It can be as simple as stumbling across a home that is ready for a new owner, or it can take research via networking and so forth. Either way, the bird dog doesn’t get involved with the procurement and sale of the home. They simply recommend it to another agent who will handle that end of things. [Read more…]