Insurance for a Home Purchased ‘Subject To’

Remember, buying a home ‘subject to’ the seller’s financing, means WE own the home, the SELLER owns the loan. Our goal after buying, is to lease out the home to a tenant buyer. We will need an insurance policy that’s called a ‘non-owner occupant’ policy.

The seller had an ‘owner occupant’ policy, so if we continued to use that policy and made any insurance claims, they could be denied!

So it’s important to get a new ‘non-owner occupant’ policy. To facilitate that, we get a Limited Power of Attorney, signed by the seller, authorizing us to take care of the property and to deal with the insurance company and the mortgage company.

Even though the seller’s policy may be paid up for several months, usually we immediately get a new policy naming the seller, the lender and our trustee as the beneficiaries. We then attempt to get a refund from the seller’s original insurer. If the seller’s original insurer wants to write that new policy, fine. But most of the time, the original insurer will simply stonewall our efforts and avoid giving us a refund.

Naming the three beneficiaries isn’t a problem should we need to collect on a claim, since we have the seller’s POA.

All these forms are available in our home study materials and in Bob Talks Forms.
Visit http://www.GetTheDeed.com/BTF for a special offer

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Is there an alternative to an IRA?

For years it’s been preached that we should have a self-directed IRA to invest in real estate. Many investors have followed this advice. Having a Roth IRA is especially productive, since the tax on the gains in the IRA has already been paid.
Certainly, with the potential of large-scale inflation (government printing and spending more money that it takes in with taxes), we want to have our investments grow tax-free.
But IRAs can have some significant limitations and pitfalls.

For example, you really can’t put that much cash into an IRA each year.
Then, there’s the custodial fees,
Then, the custodial restrictions on what you can invest in.
Then, the potential for making a PROHIBITED TRANSACTION, or dealing with a DISQUALIFIED PERSON.
Heck, the entire IRA can be polluted and there’s no ‘statute of limitations’, so the IRA can be penalized as an astounding rate.

But wait.
Can’t we still find an investment method that minimizes or eliminates nearly all these issues?

Several years ago, we set up an Individual 401(K) Roth Pension Plan.

Sounds complicated, but it was pretty simple.
It’s our company’s program…just me and my wife.
I’m the trustee.

We can invest pretty much as we see fit.
We don’t need a custodian.
We have virtually no tax filing requirements.
We can put away about $45,000 per year into this account…oops, I mean Qualified Benefit program.

You don’t need to know what I did, you need to look at these programs.

Just Google, Solo 401(K) and examine for yourself.

To your continued success,
The Get The Deed folks

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New to RE Investing? Quick way to get up to speed

TeleSeminar300Yes, we’re making available a teleseminar that covers both the buying and filling homes techniques we use. No, it’s not our full home study course, it’s 8 CDs and the manual that we used when we presented an extensive teleseminar. We never offered the product for sale, but we’ve got a limited number of these packages, shrink wrapped and ready to go. Take a look at http://www.getthedeed.com/teleseminar for the details

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Hard Money or is it Private Money

Recently we conducted a webinar discussing how to get and how to loan hard money.

Since most folks would be borrowing from someone that’s not officially in the lending business, it should be called Private Lending.

Anyhow, we got scads of questions after the webinar.
Then we presented at the local investors group.

Scads of questions there too.

We’ve got a home study course coming out in about 10 days.
It’s set up for both borrowers of private funds and lenders of private funds.

You see, the ‘baby boomers’ are entering retirement age…so they have money to lend…but they don’t know how to package a deal.

And investors are being deluged with bank owned properties that can be purchased for 20 to 50% Loan to Value…great deals…but the investors don’t know how to package themselves of the deal.

Our materials cover both…and they cover some exciting new ways to finance these deals…like no payments for 36 months!

Stay tuned.  We’ll keep you posted.

Bob

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Repeal of the Excessive 1099s

In case you haven’t already heard, last week a repeal of the
health care reform law’s 1099 tax reporting requirements was
finalized.

This has been an underhanded  issue ever since it was originally enacted.

 The cost and time-consuming new reporting requirements would have been a
significant burden on real estate investors.

If not for the repeal, real estate owners would have to file a 1099 form with the IRS for every vendor to whom they paid more than $600 in a year.

After the repeal, only non-corporate vendors will need to be sent a 1099…same as old
law requires.

Note that LLCs are NOT considered corporations. 

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1099s Ugh!

I’ve heard that there’s some new reporting that’s being required…something about 1099s.
What’s up?

A 1099 is a form that’s supposed to be sent to the feds and to anyone that you paid over $600 to during the previous calendar year.  There are some exclusions:
For example, you don’t have to send them to Corporations…like Lowes, Home Depot, Sears, etc.
Also, you don’t have to send them where you purchased less than $600 worth of labor or services, like buying $1000 worth of salt but the delivery charge was only $100.
(It’s all snow and ice when I’m writing this!!).

The reason this issue was coming up was that under the ‘Obamacare’ law, everyone was going to have to comply with this reporting.  It was thought that the amount of revenue that wasn’t being reported was quite high and that this 1099 reporting would bring in substantial revenues to help pay for the increased health care costs.  So the increased 1099 reporting was included in the law.
Somehow, small businesses were able to squeal loud enough that the old 1099 reporting rules remained in effect and the newer, expanded rules were squashed.
We heard of a gold dealer that made over 10,000 transactions per week!  It would have been a reporting nightmare.

So in summary, you will issue a 1099 to anyone who provided you with a service $600 and over (and is not an S or C Corporation) at the end of each year.
To get the correct info for the 1099, have the service provider fill out a W-9.
They are available on-line at:
http://www.irs.gov/pub/irs-pdf/fw9.pdf

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Insurance for Land Trust properties

The insurance company has the trust listed as the owner and policy holder.  I do not have the actual trustee listed anywhere. Is this correct and should the trustee be listed as additional insured. 

If a claim is filed, it would be wise to have the trustee listed as the additional insured.  However, the trustee could endorse a check made out to the ABC Trust, by signing ‘Susie Smith, Trustee for the ABC Trust.

I wouldn’t make a big deal out of it, but I would try to have the additional insured listed as the trustee on future policies.

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