What I learned at ‘What Box’

Calhoun Times - - FRONT PAGE -

be­tween deed own­er­ship and tax own­er­ship on a prop­erty. Some­one can be on ti­tle as the owner of a house but rent said house to an­other party. If that party agrees to be re­spon­si­ble for all the re­pairs, taxes and main­te­nance, like in cer­tain lease op­tion sit­u­a­tions, af­ter two years they are el­i­gi­ble for Sec­tion 121 treat­ment.

Sec­tion 121 of the IRS tax code says that for a mar­ried cou­ple who has lived in a house two of the last five years, their profit from the sale of that house is tax free up to $500,000. The limit is $250,000 for some­one who isn’t mar­ried.

I’d al­ways as­sumed you had to own the house for this to ap­ply. That’s not al­ways the case, how­ever, and this struc­ture could al­low you to live in a much big­ger house than you could oth­er­wise af­ford by leas­ing rather than buy­ing with the po­ten­tial for a large tax free profit.

We also talked about a deed-for-note deal. This is an in­stall­ment sale in which the seller agrees to sign ti­tle to the prop­erty over to the buyer in ex­change for a prom­is­sory note that pays for the pur­chase price. Bill talked about how he’d suc­cess­fully ne­go­ti­ated these deals with lo­cal banks and how it ben­e­fited both par­ties.

In Bill’s ex­am­ple, he was able to get bank fi­nanc­ing on a mo­bile home park with very lit­tle money out of pocket. It was great for the bank be­cause they couldn’t make a loan on the prop­erty. By uti­liz­ing the in­stall­ment sale strat­egy, they were able to turn a non-per­form­ing as­set into a per­form­ing note with­out hav­ing to trans­fer any money.

Ed­u­ca­tion is only part of the rea­son we went to the sem­i­nar. We went there to re­cruit busi­ness al­lies, as Pete likes to say. Prime time for net­work­ing, and even putting deals to­gether, is dur­ing the breaks and af­ter class. Pete says he of­ten pays for his travel by putting deals to­gether at the sem­i­nar.

Take lunch for in­stance: Ashley and I sat down with three strangers. At the ta­ble we had two dif­fer­ent pri­vate money lenders look­ing to make loans, one of whom is very in­ter­ested in loan­ing on mo­bile homes. The third per­son at the ta­ble was a very ex­pe­ri­enced land­lord from At­lanta. Bounc­ing ideas off of some­one that was lo­cal was an im­por­tant ben­e­fit to us be­cause state land­lord laws vary widely.

Find­ing lo­cal peo­ple was not the norm, how­ever. There were 100 at­ten­dees in the class, and fewer than 20 of them were from North Ge­or­gia. Peo­ple had flown in from Cal­i­for­nia, Wash­ing­ton State, Min­nesota, Wis­con­sin, Texas, Ar­kan­sas, Flor­ida and the list goes on.

The rea­son 80 of these peo­ple came here is be­cause we have some­thing special hap­pen­ing in At­lanta. We’re blessed to have some of the best real es­tate in­vest­ing teach­ers in the world fre­quent our area. I high­lighted Bill and Pete in this col­umn, but we also have Dy­ches Bod­di­ford, Gary John­ston and David Til­ney come here reg­u­larly. The other 80 at­ten­dees can’t get this cal­iber of ed­u­ca­tion where they live, so they fly from the other side of the U.S. to our back­yard to par­tic­i­pate.

It took Ashley and me only an hour and 15 min­utes to drive to the sem­i­nar, and while there, we made a deal that’ll add to our monthly cash flow. Need­less to say I won’t be tak­ing hav­ing these classes be­ing so close to me for granted. And, that’s what I learned at “What Box”.

Joe and Ashley English buy houses and mo­bile homes in North­west Ge­or­gia. For more in­for­ma­tion or to ask a ques­tion, go to www. cash­flowwith­joe.com or call Joe at 678-986-6813.

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