03-06-2003 00:29									#31
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'Subject to', got it Japher, good idea.

John, yes it will.

	03-06-2003 00:36									#32
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I think the fact that you got the "subject to" information from a message board speaks loudly of your need for a lawyer in this issue. At the very least, Lancer, I would draw up the sale agreement and have a real estate lawyer review it before you present it to the buyer.

Yes, lawyers are costly. But not having one can be even more costly.

	03-06-2003 00:36									#33
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You have to also cover fire & casualty insurance in the contract, and I'd make them carry a personal liability policy (cheap addon to a homeowner's policy) for the value of the house. Basically, you want to do everything you can to protect the asset, because if **** can happen, it will.

	03-06-2003 00:38									#34
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How much do you guys figure the lawyer will cost?

	03-06-2003 00:39									#35
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quote: For 5 years we'll be working here to save for a place on the ocean over there, but that's really at our whim too.

Would the house's mortgage be your only source of income when you are over seas? How much would a house over there cost?

If you can (not sure if it works for foreign property) I would perform a 1031 exchange on your property for a property over there and save all your capital gains.

Don't want to leave your friends out in the cold?

Did you rent out the apartments? Was this stated as such in your deed?

If so I think you could perform the exchange on the appraised value of the non-rented areas to get your house on the beach avoiding a good portion of the capital gains, and then use the remaining portion of the money (that which it would cost to sell the apartments) to transfer into an investment property down payment for the whole of the house + apartments (pretty much you take a loan agains the apartments to buy back your house, rates should be really low), this would require another mortgage, and may require that you transfer the name of the property into an estate trust (take a shorter than 30 year loan preferably a 3, 5, or 10 year loan to realize your gains quicker). Yet, then you have your friends buy that mortgage from you/trust and walla, you have your house in the Phillipines NOW, your friends have your old house (if you get a lower interest rate for the mortgage you could still sell it to them at 6%, and you can still sell it to them on 30 year loan), and they are paying you a monthly income (although considerably less than before since they must first pay the mortgage).

It's kind of like getting paid for only what you leave in, but you funded their down payment, and only on that are they paying you the 6%. The rest they will pay on whatever you got that loan for. In the end they will save money, and you will gain more by buying your house now instead of in 5 years, as well as avoiding those taxes... Only trick, you have to buy a property of equal or greater value to take advantage of 1031 (if it applies for any property in the world).

	03-06-2003 00:40									#36
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Have you thought about looking online for sample purchase agreements?

	03-06-2003 00:42									#37
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quote: I think the fact that you got the "subject to" information from a message board speaks loudly of your need for a lawyer in this issue.

My father does a lot of Real Estate investing, that is not where I got it. I got it from him who got screwed sometime ago because he didn't have it in his contracts.

I only directed to the message board because it is a good source of information for those who don't know how to use the loopholes (or protect themselves from those loopholes).

Still, I agree with JohnT, I would find a Real Estate Attorny just to be on the safe side.

	03-06-2003 00:43									#38
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Honestly Lancer, it depends upon what you want him to do. If he's going to draw up the document from scratch, that will be more costly than having him advise and revise an already drawn up purchase agreement.

Don't forget that you'll need to be aware of the state and local regulations regarding real estate sales. If you can, find a purchase agreement that is specific for your state and/or municipality.

	03-06-2003 00:46									#39
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For example Lancer, here is an outline of a basic purchase agreement from Legal Forms on Demand.com ( http://www.legal-forms-on-demand.co...real_estate.htm ): If you were thinking about a 1/2 page document, then I would SERIOUSLY think about getting a lawyer.

quote: This offer to purchase applies when the Offeror offers to buy a used residential building from the Seller. Here is the Table of Contents: IDENTIFICATION OF THE PARTIES PREAMBLE OBJECT CONSIDERATION Purchase Price Terms and Conditions of Payment SPECIAL PROVISIONS Inclusions and Exclusions Representations and Guarantees of the Seller Conditional Offer Obligations of the Offeror Obligations of the Seller Legal Guarantees Signing the Sale Agreement Adjustments Taking Possession and Ownership Taking Over the Risks No Intermediary Cancellation or Declination Expenses GENERAL PROVISIONS "Force Majeure" Severability Notices Headings Schedules No Waiver Cumulative Rights Entire Agreement Amendments Number and Gender Calculating Time Periods Currency Governing Law Election of Domicile Counterparts Successors Joint and Several Liability Elapsed Time No Right to Transfer Language EFFECTIVE DATE TERM TERMINATION SIGNATURE OF THE OFFEROR SELLER'S ACCEPTANCE INTERVENTION OF THE SPOUSE OF THE SELLER ACKNOWLEDGMENT OF RECEIPT BY THE OFFEROR

	03-06-2003 00:49									#40
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Ok, I'm convinced. I'll find a real estate lawyer.

	03-06-2003 00:50									#41
	Lose 30 kilos (of popups)

Good man! After all, it's not just you dependant upon this, it's your wife too.

	03-06-2003 00:51									#42
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That's insane!!!

A lawyer should know all the loopholes too, and help both you and your friends get what you want cheaper and quicker.

	03-06-2003 00:56									#43
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Actually, it's typical. Even worse, it's a basic agreement and doesn't cover special contingencies such as the seller still living in the house for 10 years after he sold it.

There's also psychological issues as well... if Lancer has lived in and paid for the house for 15+ years, is he going to have difficulty letting go and allowing the friend to do as he wishes? As a tenant, Lancer won't have a pot to piss in if his new owner decides to blare the music at 3:00am. What if the new owner decides to paint the interior orange and green?

Ugh. Better to sell it and leave.

	03-06-2003 01:00									#44
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quote: Ugh. Better to sell it and leave.

I agree, but he seems to want to keep it. I too would sell it, take the tax break on an exchange, and if I was feeling nice (which Lancer is) take a second (or refi) on my new place (on the beach) and give my friend a loan at 6% for a down payment on a place of their own.

	03-06-2003 01:06									#45
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I don't think any of us has mentioned the fact that tenancy has it's own issues and legal liabilities. Lancer should draw up a rental agreement as well, one that limits his liability as much as possible.

Lancer, how old is the house? It's not 15 years old is it?

	03-06-2003 02:46									#46
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John, they have been here for 8 years already. They rent all 3 of the other appartments. Also, I knew them long before they moved in. They're not going to blast the music.

The house is 80 yrs old.

Japher, everything is dirt cheap in the Phils. I've already built a 5 bedroom house w/ balcony for around $25,000. However, the banking services are limited and the interest rates outa this world. I doubt US banks would even consider such a thing w/ property over there.

	03-06-2003 03:19									#47
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US banks won't consider **** anywhere outside the US unless you can get a US title insurance firm to guarantee title, and you have a few other things going for you.

	03-06-2003 05:37									#48
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I can work up the math on the prepayment penalties tomorrow.

The ability to prepay a mortgage loan without penalty on a standard bank loan accounts for a goodly chunck of the interest rate charged; about 80% of the difference between treasuries and mortgages.

(fun with option math...)

	03-06-2003 08:12									#49
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Huh?