Mobile homes as revenue properties...

[Runum]

Thanks Wildflower. I agree I will have my CPA look into it and he is a DK associate. I already have several rental properties and I pay little taxes on them. Just curious about the taxes on selling a property on payments. I've never done that, yet.

DK has been on here but she hasn't been back in over a year. I was around when she left and would like it if she came back. I think she's busy doing other things now.:cheers:

Yeah, 21 days from notice to auction in Texas. Most of those properties are around 10 months behind on their payments so they had plenty of warning before being served.

 

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[MJ DeMarco]

Runum,

I believe the interest on the note is taxed as income. The other "income" is capital return.

So if the payment is $500 a month and $383 is interest and 117 is principal reduction, the 383 is taxed as interest income. Last I knew, interest income is taxed at ordinary rates. So if your marginal rate is 35%, the tax on the interest income is 35%. An amortization schedule would detail the exact amounts.

PS: I am not an accountant -- this is not to be construed as professional advice.

 

[MonTexan]

I'm no expert either, but when you sell on owner-financing, you must be sure it is considered an "installment sale" to avoid realizing all gains in the year of the transaction. Consult your CPA on the specifics....here's a link to the IRS website concerning installment sales: Tax Topics - Topic 705 Installment Sales

 

[Dhappy]

Wildflower,

The mobile home parks make there money off the dirt,so they want your buyer to keep on paying the lot rent. The only time I heard of that happening was when a park was sold and being torn down to build homes. That park bought out each owner for a nice amount.

Runum,

On the taxes, J scott is smoking today. I'm going to start asking him questions. I have a great accountant and I let him have all the fun with my taxes.

 

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[Runum]

DHappy is modest, but for those that might not be aware, he is quite the real estate success story...he's been helping me out tremendously with some real estate questions I've had...

I agree Jason, Dan has always provides intelligent RE responses to questions. I have been impressed by his comments. Thanks Dan.:cheers:

 

[Dhappy]

Way to go,thats great. They are fun and easy. You Almost feel like your stealing.

No fix up,that is cool.

Next time try doing a little fix up and go for a longer term. When I first started I was uneasy about going for any longer then 24 months. I thought they would not go for it. After a few I went for 48-60 months and they never said a thing. Figure your numbers at 60 months on this deal and it gets crazy.

 

[1mancrew]

Thanks for the great info!
I aquired my first MH yesterday for free already setup in a park. It is older but not too bad of condition. I figure repairs in the $1500 range to make it nice enough to rent.
Exit plan is to rent to recover repair cost and then carry the note for profit.

So far I love these deals!

 

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[Runum]

Free is cool.:coolgleamA:

 

[kwerner]

I second all of that what JScott mentioned above. Why take on all of the headaches of landlording when you can make pretty much the same money financing the sale of it (acting as the bank), and have NO landlording headaches?

 

[1mancrew]

JScott,
Thanks for the valuable input.
This is a unique situation as it is only an 8 space park in a real small town. The owner just purchased the park and only has revenue from 3 of the 8 spots before he gave me the trailer. He originally wanted it moved off until I sold him on the idea of leaving it and letting me pay for the space so he has money for the dirt. The owner will be lucky to get others to move onto the location so I am not worried the owner wanting it out.

You bring up great points on renting verses selling and I will take all of the wisdom into consideration when the house goes on the market.

As far as depreciation of the home goes, since it is free, the deprecated value is great which means less tax!

My plan was to hold for a year and then sell, but now you have me thinking…….

Mike

 

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[dbaker89]

I purchased the book by lonnie and am waiting for it to arrive.

Where are you guys finding your used MH's? I found a couple people giving them away,(but they were on farms and you had to come pick them up, all of them were old and unlivable, etc) but besides that I haven't found any for sale in the 3-5k price range.

I have been looking on craigslist and a MH type MLS. Any other ideas? I'm sure the book will elaborate

 

[KarlR]

Hi all,

i have also just purchashed Lonnies book and cant wait to get it!

This is something Ive been looking into for the past while and have a bunch of questions (keep in mind im very new to this kind of thing!)
What Ive been thinking is to maybe set myself up as a LLC first to avoid being sued etc.and take advantage of tax deductions.do you guys think this would be the best option?Or would setting up an LLC just be over complicating everything?
Im not an expert at all on business's and the different types,but from what Ive read,if i bought and rented out MH's under an LLC,not only would my own money and assets be protected were i to be sued/go into debt,but seems I would be able to write alot of stuff off my taxes,such as the depreciation of the value of the MH,travel costs,phone costs, maintenance etc.
Is the above correct?Seems like its too good to be true....Can anyone help me out and point out where im wrong or what im missing?like I said im just starting to learn about the different types of business's and tax deductions etc.
Thanks all!!

-karl

 

[21elnegocio]

I was in this MH revenue but it didnt go so good to me, but idk you could do better

 

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[KarlR]

oh?can you go into more detail of how it didnt go well?what problems did you encounter?
Just curious as Id like to take all possible problems into perspective before risking anything!
Thanks!