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Subject: persfin-digest V4 #135
Date: Mon, 16 Mar 1998 21:15:52 -0500 (EST)
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persfin-digest Monday, March 16 1998 Volume 04 : Number 135
IN THIS ISSUE:
ADVERTISEMENT: LAN ACCESS TO MCI MAIL
SUGGESTIONS FOR USE OF OUR CHAT ROOM
Re: Purchasing Foreclosure Property
real estate advice sought:revisted
option quotes?
In-Kind Gift Valuation
Bond Prices Web Site?
Is Inflation beginning to roar and are interest rates to follow?
contractor /regular employee?
RE: New Construction
Re: foreclosure property
RE: mortgage using one income
Re: Forced 401(k) transfer due to company take-over?
Re: Forced 401(k) transfer due to company take-over?
House buying versus renting
Re: spousal Roth IRA - why the phase-out?
RESULTS OF FIRST 8:00 PM CHAT
Re: mortgage...only one income...
RE:Purchasing Foreclosure Property
Math Compounding Question
Stock Basis in Living Trust
Comprehensive Roth IRA Internet site
Re: NY State Income Taxes On Income Earned In Florida
Re: Purchasing Forclosure Property I've played the foreclosure game somewhat in my area and most foreclosures have large outstanding mortgages (obviously - hence the foreclosure). People generally don't foreclose with a large amount of equity. Usually not even enough to be bailed out otherwise the smarter of them would just sell and relieve the debt. >I'd purchase at $2,000 over the mortgage balance due (they'd pay the >balance and deliver a warranty deed to me after I had a title search >run). I'd rent the house back to them for a monthly rent to cover my >actual costs plus a small percentage. My "profit" would be the >depreciation on my taxes. First thing that comes to mind is that this rent figure would be too high for them to afford. If they could pay you this, why can't they just pay their mortgage? Secondly, "depreciation" is a gift the govt gives and then takes away on the sale - remember that. Of course, I don't know how much this could save you aga!
inst your regular income ... >As long as they are renting the house from me, they could buy the >house back from me for my actual investment + 10%. If they leave the >house, they forfeit their right to buy the house back. They would >rent on a lease with a first months rent and security deposit paid in >advance (thus the $2,000). So it's a lease-option, which is good. But, again where are they getting all this cash? Also, what if (since they're probably emotionally attached to the home because they feel it's still "theirs") they stay on the rent-back and then stop making payments to you. It could take you 6 months to get them out, meanwhile they live free and trash the place. Could happen. Most foreclosure guys I know simply rehab and flip - no sticky situations. >Can anyone identify problems with this approach? It looks like a >win-win for both parties. I don't see anything technically wrong with your idea - It is logical and could work. However, I'm not su!
re about the feasibility of it. It's going to depend heavily on your local housing market which I am not familiar with. Here I feel (NJ-NY) it would be a tough sell. Once they consult their attorneys, there is no deal to be made. The whole process can be stalled for well over a year - I've seen that many times. All the while, the fees add up and whatever equity was left is gone. Good luck and let us know how it works out. G. Panayoti Member Meadowlands Board of Realtors, New Jersey.
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Date: Mon, 16 Mar 1998 19:23:21 -0500 (EST)
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------------------------------
Date: Mon, 16 Mar 1998 19:31:20 -0500 (EST)
From: The Editor <ikrakow@shore.net>
Subject: SUGGESTIONS FOR USE OF OUR CHAT ROOM
Our chat room at:
http://pfinance.miningco.com/mpchat.htm
is available 24 hours a day, 7 days a week. I have designated 8:00 p.m.
Eastern Standard Time, each day, as our official meeting time. However,
you can use the chat room any time.
Two ideas:
1) If you are answering someone's question, and believe that a fuller
explanation might be in order (to get additional details), why not agree
on a time to meet in the room? To meet, both of you simply go to:
http://pfinance.miningco.com/mpchat.htm
and click on LOGIN TO CHAT. All you have to do is pick a nickname
(anything that's not being used will do). You can chat either in public
or in private. To make a message private, you just check the "Private"
check box and highlight the user name to whom you wish to talk privately.
Using the chat room in this way not only saves a phone call, but also is a
great way to help each other get answers more precisely tailored to your
exact situation.
2) As a general meeting area. There's nothing restricting chatting to
just personal finance topics. This is an excellent way to find out more
about each other, "networking" (in the personal sense). My goal is to
build a community of interests. You might find you have a common interest
with another person that goes beyond personal finance.
Looking forward to chatting with all of you.
Ira
------------------------------
Date: Mon, 16 Mar 1998 19:32:28 -0500 (EST)
From: "L. Chen" <am302@freenet.buffalo.edu>
Subject: Re: Purchasing Foreclosure Property
> I'm looking for ways to purchase single-family homes for rental purposes and
> the following idea came to mind. Can you help me find flaws in this approach?
>
> Find property being foreclosed. Look for property in a good neighborhood where
> the amount due on the mortgage is in a "reasonable" range. If the house looks
> good from the outside, send the owner a letter with the following terms:
What is your definition of "reasonable" range?
> I'd purchase at $2,000 over the mortgage balance due (they'd pay the balance
> and deliver a warranty deed to me after I had a title search run).
Lets assume the mortgage balance due to lender is $95K. I assume that you
mean you will offer to buy at $97K. Is that correct? In case of foreclosure,
there are usually legal fees to the lender, penalty for late payments, etc.
Will the $2K be enough for the seller to cover those extra charges?
> I'd rent the house back to them for a monthly rent to cover my actual costs
> plus a small percentage. My "profit" would be the depreciation on my taxes.
That depends on how much lower the rent is in respect to the mortgage
payments. If not much lower, then what makes you think they can keep up with
the rent? That comes back to my earlier question on the reasonable range.
> As long as they are renting the house from me, they could buy the house
> back from me for my actual investment + 10%. If they leave the house, they
> forefit their right to buy the house back. They would rent on a lease
> with a first months rent and security deposit paid in advance (thus the
> $2,000).
If they can't come up with the mortgage payments, you think they can come up
with the $2K deposit?
Also, the way it sounds, I somehow get the impression that you expect to do
this with no cash out of your own pocket. If you get a mortgage to finance
your purchase, there are financing costs. I could be wrong, of course.
I am sure there are situations that can work out; but it is not going to be
easy.
Chen
------------------------------
Date: Mon, 16 Mar 1998 19:34:04 -0500 (EST)
From: "Mark Jay Kaplan" <mkaplan@execpc.com>
Subject: real estate advice sought:revisted
Thanks to the many of you who responded with great insight, reference
material and well-thought out opinions.
My wife and I spent a great effort educating and considering our
options. Then her father makes us an offer we could not refuse.
We will purchase his beautiful home in an ideal suburban neighborhood
for slightly over the market place price under a land contract , and he
will allow us an opportunity to build equity to 20% and then refinance.
His land contract is for $20,000 less than the purchase price (nice gift
dad!) and about $10,000 less than we both feel is fair market value. He
figures the higher sales price might allow us to get a higher appraisal
when we look to find a mortgage, and thus show better equity to avoid
PMI.
We will pay him on a 8% monthly 30 year mortgage payoff until we can
build enough equity, save more, and find a lender to beat the rate and
avoid PMI.
My question is: Since our tax bracket is low, is there any way to let
him benefit from the property tax and/or interest payment deductions,
rather than us? This " real economic tax savings" can then be mutually
beneficial and negotiated. Family trust and loyalty are very strong and
I do not worry about who actually holds the deed, his will/documents can
protect us.
Is a land contract the best way to accomplish our task of equity-building
to avoid PMI payments? Would an option to purchase contract ,"paying fees
to him" or some rent to own plan work better?
Should we consider joint ownership, him co-signing on a mortgage, or
would it be better for him to "loan" us the remainder of what would be
20% equity, get a mortgage in our name and pay him off along with our
mortgage payment.
Thanks for all your good thoughts
Mark
------------------------------
Date: Mon, 16 Mar 1998 19:34:58 -0500 (EST)
From: "sran_jc@access.k12.org" <sran_jc@access-k12.org>
Subject: option quotes?
Can anyone tell me where I can receive option quotes? I am looking for
a site which shows the security, various strike prices and dates all on
one table. Any good ideas how to remember that cryptic syntax which
must be entered to get a quote?
------------------------------
Date: Mon, 16 Mar 1998 19:35:49 -0500 (EST)
From: elaine steward <esslady@ix.netcom.com>
Subject: In-Kind Gift Valuation
I accidentally deleted the information on the book (and source of the
book) which gives suggested values for in-kind donations to charitable
organizations. Could someone please either post it again or email me?
Thanks, Elaine <esslady@ix.netcom.com>
------------------------------
Date: Mon, 16 Mar 1998 19:36:41 -0500 (EST)
From: "Mr..Zahid Shafique" <shafiq@paknet1.ptc.pk>
Subject: Bond Prices Web Site?
Dear Persfiners
I am trying to find a website (more than one, if possible) which would
list the latest prices of bonds, both US and international bonds,
commercial paper, just like there are many sites which list the latest
prices of thousands upon thousands of mutual funds.
Would apreciate anyone's help.
With best wishes and regards
Zahid Shafiq
Lahore - Pakistan
E-Mail Address for Reply: zshafiq@mba1982.hbs.edu
zahid.shafiq.bk.80@aya.yale.edu
------------------------------
Date: Mon, 16 Mar 1998 19:37:32 -0500 (EST)
From: RCastro897 <RCastro897@aol.com>
Subject: Is Inflation beginning to roar and are interest rates to follow?
I live in san diego where rents are going up 10-15%, home prices up to 20%,
people are speculating on real estate and stocks. To me this means,
inflation is heating up and soon (3 to 6 months?) the Fed will need to
increase interest rates and the market will get hit big time...what does
this group think?
------------------------------
Date: Mon, 16 Mar 1998 19:38:59 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: contractor /regular employee?
>From: "Mike O'Connor" <mikeo@dibaind.com>
>Subject: contractor vs. regular employee
>Hello persfiners,
>I will be graduating from college in May with a degree in computer
>science. I am 27 years old and I have accumulated about $25,000 in
>student loans, with an interest rate of about 7.8%. My goals are ot get
>the loans paid off . I have gotten job offers in the $48,000 range that
>I am considering, but I also have come across contracting opportunities
>that pay in the $35-$40 an hour range. What I am wondering is which
>would be the better choice financially? I am not too concerned about
>benefits becasue I do not have a family nor do I intend to anytime soon.
>Also, if I do work as a contractor, will I be able to deduct expenses
>(such as a car payment) from my taxes?
>Thanks in advance,
>Mike O'Connor
MIKE
Contractors can make a lot more money than an employee IF they work all
of the time. That is a big if. If you have a skill that is in demand
now, you could probably work every week. However a recent college graduate
probably does not have a skill that is in high demand. Relational data
base skills are in demand now as well as mainframe COBOL skills (year 2000
problems).
You must have health insurance. As a contractor, you will provide your
own. This is not a problem when you are young. It get expensive as you
get older.
Also contractors usually have long commutes to work as they change jobs
frequently.
GOOD LUCK
BOB FORD
BOB_FORD@COMPUSERVE.COM
------------------------------
Date: Mon, 16 Mar 1998 19:40:28 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: RE: New Construction
>From: Jerry Derfler <niffer@cjnetworks.com>
>
>I have purchased and sold several "used" homes and understand the
>mechanics of list price, offer and counter offer.
>
>How much wiggle room does a residential builder have to accept my offer
>of less than full price for his cost to began construction on a new home
>for me? Price quoted by builder is near $120,000.
>
>Thanks in advance.
JERRY
There is no way to know if a builder's price to build a home on your land
is flexible unless you ask. A general rule is that the general contractor
gets bids from the sub contractors and adds 10 percent. However, this is
not a hard and fast rule.
I suggest you give your home plans to 3 or 4 contractors and see what
price they come up with. If they are all about the same, there probably
is not much wiggle room.
GOOD LUCK
BOB FORD
BOB_FORD@COMPUSERVE.COM
------------------------------
Date: Mon, 16 Mar 1998 19:42:47 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: Re: foreclosure property
>From: "Anderson, Alfred I." <anderson@mayo.edu>
>Subject: Purchasing Foreclosure Property
>I'm looking for ways to purchase single-family homes for rental purposes and
>the following idea came to mind. Can you help me find flaws in this
approach?
>Find property being foreclosed. Look for property in a good neighborhood
where
>the amount due on the mortgage is in a "reasonable" range. If the house
looks
>good from the outside, send the owner a letter with the following terms:
>I'd purchase at $2,000 over the mortgage balance due (they'd pay the
balance
>and deliver a warranty deed to me after I had a title search run).
>I'd rent the house back to them for a monthly rent to cover my actual
costs
>plus a small percentage. My "profit" would be the depreciation on my
taxes.
> As long as they are renting the house from me, they could buy the house
> back from me for my actual investment + 10%. If they leave the house,
they
> forefit their right to buy the house back. They would rent on a lease
> with a first months rent and security deposit paid in advance (thus the
> $2,000).
>Can anyone identify problems with this approach? It looks like a win-win
for
>both parties.
ALFRED
I hope you have a lot of CASH.
Let's assume you find a home in a "reasonable" range and you buy it for
$2000 over the mortgage balance. You then rent it back to the former
owners for your actual cost plus a small percentage. The reason the
people are in foreclosure in the first place is they could not make the
mortgage payments. Your actual cost (the mortgage payments) and a profit
are MORE than the payments they were not paying. They probably will not
pay you either.
Do you have any experience in evicting a tenant? It can get nasty and
costly.
The only way to stop the foreclosure sale is to make up the back payments
and foreclosure costs in cash. That is part of the cash you will need.
You must also determine what the house is worth. How do you plan to do
this? There are a lot of houses worth less than their mortgage. During
the first 10 years of of a 30 year mortgage, the loan goes down very
slowly.
There is a good chance the the property taxes are not paid on the home.
This will take more of your cash.
Is it a 1st or 2nd mortgage that is foreclosing. You must find out. You
can not count on the people selling the house to tell you. You also must
find out if there are any liens on the property.
You are going to be in for a MAJOR shock when the mortgage company sends
you a letter telling you that you must pay the FULL AMOUNT OF THE
MORTGAGE immediately or they will foreclose on you. They can do this
because almost all loans today have a "Due on Sale Clause". This means
that if the home is sold, the mortgage is due immediately. This is where
you will need serious cash.
Let me know if you need more information.
BOB FORD
BOB_FORD@COMPUSERVE.COM
------------------------------
Date: Mon, 16 Mar 1998 19:44:02 -0500 (EST)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: RE: mortgage using one income
>From: Constance Bailey <ccbailey@tima.com>
>My husband and I are considering buying a new home soon. Since I have
>student loans (and low income) that will count against our qualifying
>ratios, we've decided to apply for the mortgage using just his income.
>How will our joint debts (2 credit cards, 1 car loan) be counted? Will
the
>mortgage company count 1/2 of the payment as part of my husband's debt
>load? Will they figure out what percentage of total income we each earn,
>and allocate the debt load in that way?
>Thanks a lot.
>Constance Bailey
>ccbailey@tima.com
CONSTANCE
Not all mortgage companies are alike so a definite statement can be made
about what income and debts will be considered on a mortgage.
As a general rule, when a husband and wife are applying for a mortgage, ALL
income and debt of both are show on the mortgage application. The lender
will decide if you meet their ratios for making a loan. DO NOT make any
false statements or leave out informaion on a mortgage application.
You should first look to the best lender available when you buy a home 'THE
SELLER'. The seller usually does not care where the income comes from as
long as you can make the payments. The seller does not charge points or
fees.
Only use a mortgage company for a loan when you can not find a home where
the seller will "carry back" a mortgage.
GOOD LUCK
BOB FORD
BOB_FORD@COMPUSERVE.COM
------------------------------
Date: Mon, 16 Mar 1998 19:45:19 -0500 (EST)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: Forced 401(k) transfer due to company take-over?
>
>Hello, everyone!
>
>The piece of Digital that I work for (Digital Semiconductor)
>is soon to be taken over by Intel. Lately the Intel HR people
>have been coming through telling us all about compensation, benefits,
>vacation, and all that other HR stuff.
>
>We have been told that our balances now with Digital's 401(k) plan
>MUST be rolled over into Intel's 401(k). The Intel HR folks cite
>some rule about "same job, same desk" employment changes; that is,
>if you change employer only because of a corporate take-over or
>corporate spin-off, and your job stays the same, you have no choice
>but to roll your 401(k) balance into the new employer's plan
>(if he has one).
>
>Has anyone heard of such a rule? Am I indeed required to roll
>my 401(k) balance (with my old employer) into the new employer's
>401(k)? If so, what's the reasoning for such a rule?
>
>Frankly, I am not impressed by the choice of mutual funds in the
>Intel 401(k) plan. And besides, I'd rather roll my 401(k) balance
>out into an IRA and enjoy the greater flexibility.
> -Jerry (now a Digit, soon to be an Idjit
>
When General Dynamics sold its missile business to Hughes we were
offered 3 choices with respect to our 401k plan.
a) leave our 401K funds with GD
b) take distribution (same rules as a terminating employee)
c) roll the GD 401k plan into the Hughes plan.
I chose option (b) because I was close to retirement and wanted to
excercise more control. If you chose option (c) the roll-over was trustee
to trustee in cash
Since I had retired from Hughes before they sold the business to
Raytheon in 1998 I did not follow the 401k transfer options (I took
distribution from the Hughes plan at retirement)
The GD to Hughes sale was a "same desk, same job" sale however
unlike the Digital/Intel takeover there was a surviving GD to maintain the
401k plan and to be terminated from and that may be the difference. If
there are any Hughes/ RayCo guys out there may be they can contribute. For
what ever it is worth my retirement moved to Hughes and later to RayCo
using the same GD formula for calculating pensions
As best as I can see the GD plan (1991 prospectus) normally did not
allow withdrawals of before tax dollars except in hardship case but the
predecessor plan (which used employees' after tax dollars) allowed
withdrawals in the mid-70's while still employed.
With 20/20 hindsight I note that the GD 401K plan's diversified
equity portfolio (privately run) option was a real performer - too bad I
didn't know what I know now about investments.
Unsolicited advice - "now a Digit, soon to be an Idjit" is not the
way to career advancement under the new owner - Incidentally the GD people
have really done well career wise under the Hughes ownership but they have
trouble with the HAC bureauracy and they are doing well - so far - under
RayCo
Avrum Lapin
Upland., CA
------------------------------
Date: Mon, 16 Mar 1998 19:46:28 -0500 (EST)
From: "Pete Hazen" <hazen@delanet.com>
Subject: Re: Forced 401(k) transfer due to company take-over?
Jerry -- I recently was "outsourced" from a very large company's IS
department to a large systems integration firm and the same thing occurred.
As I understood it, this is a real IRS rule and is intended to prevent the
outsourcing firm from "reducing" your benefits by "terminating" you, when in
fact you are doing work for the same "firm", even though it has changed
ownership.
I think you have another option, however (at least I did), and that is to
leave your 401(k) with the original company. In my case, because my new
firm's 401(k) was less appealing, that's what I chose to do. That being
said, there were some folks in my same situation that had outstanding
loans against their 401(k) that they couldn't pay off and so couldn't
leave the money behind.
Digital's impending acquisition by Compaq probably muddies the water a bit,
but if you think you might want to leave your 401(k) with Digital (or with
Compaq when they finish the acquisition), you should ask about this
option.
Good luck!
Pete Hazen
hazen@delanet.com
------------------------------
Date: Mon, 16 Mar 1998 19:47:07 -0500 (EST)
From: "Siedlecki, Mary T." <mts@rti.org>
Subject: House buying versus renting
I have some additional questions with respect to house buying versus
renting. I do understand that buying makes very good financial sense
for the majority of individuals in this world, but frequently a house
buyer purchases a larger abode than that which would be rented.
Furthermore, that house buyer then incurs all sorts of house-related
expenses (furnishings, lawn mowers) that are not necessary for the
renter. So I guess what I am asking is, am I making a financial mistake
by continuing to rent (comfortable one-bedroom apartment) and investing
the difference between what I consider a house payment and my rent
payment in stocks??? Any advice would be welcome. Thank you.
------------------------------
Date: Mon, 16 Mar 1998 19:47:39 -0500 (EST)
From: HLO2-1/H12 225-4218 <horton@pasta.enet.dec.com>
Subject: Re: spousal Roth IRA - why the phase-out?
>From: Rich Carreiro <rlcarr@animato.pn.com>
>Subject: Re: spousal Roth IRA?
>Finally, assuming you are filing jointly, your allowable *Roth IRA*
>contributions gets phased out starting at an AGI of $150,000 (if you
>file separately, it gets phased out at an AGI of $0 (no typo)).
Rich,
I'm curious why married folks filing separately suffer a phase out
starting at an AGI of $0. Do you know what the legislative reasoning
was?
- -Jerry
------------------------------
Date: Mon, 16 Mar 1998 21:06:31 -0500 (EST)
From: The Editor <ikrakow@shore.net>
Subject: RESULTS OF FIRST 8:00 PM CHAT
I just signed off from our first 8:00 pm chat. We had 4 brave
participants (myself, Darrell, Tunia, and Christy) and had a great
conversation about investing for college, the Roth IRA, and asset
allocation.
The next chat is at 8:00p.m. tomorrow. To join, just go to:
http://pfinance.miningco.com/mpchat.htm
and click on LOGIN TO CHAT. Select a nickname and you're in!
See you there. Believe it or not, chatting is probably the easiest thing
to do on the Internet.
Ira
------------------------------
Date: Mon, 16 Mar 1998 21:07:20 -0500 (EST)
From: stockr1@juno.com (Russ Stock)
Subject: Re: mortgage...only one income...
Constance:
unfortunately, you get bad news...if you don't use your income (which it
sounds like you should not), your husband will still have to use his
income AND all debts associated with him (even if they are joint debts
with you). I am assuming this will adversly impact your qualification.
Russ Stock
------------------------------
Date: Mon, 16 Mar 1998 21:08:28 -0500 (EST)
From: "Jackson, Anthony D." <JacksAD1@central.ssd.jhuapl.edu>
Subject: RE:Purchasing Foreclosure Property
Al,
That all sound great in a perfect world however, reality tends
to look a little different. In most cases the reason the house is in
forclosure is that the current occupants can't pay. And you can bet by
this time they have been through all the sharks with debt consolidation,
second mortgages, etc. So renting back to them is probably not a
reality.
Your idea of buying foreclosure is still OK as long as you
research rents vs. mortgages in the area that you buy. Also you want to
be able to carry the mortgage yourself in the likely event (reality)
that the property is unoccupied several months. Good Luck.
------------------------------
Date: Mon, 16 Mar 1998 21:09:45 -0500 (EST)
From: dmak@tma-net.org
Subject: Math Compounding Question
Can someone remind me how to correctly compound interest?
I am trying to determine the present value of a series of 20
bimonthly cash flows. In the compounding formula, do I divide the
interest rate by 20 or 26?
Same question for a series of 10 monthly payments: do I divide the
interest rate by 10 or 12?
Thanks!
------------------------------
Date: Mon, 16 Mar 1998 21:10:19 -0500 (EST)
From: Mirin Lew <mirin@scmkt.sr.hp.com>
Subject: Stock Basis in Living Trust
I have a question about how inheritance of stock would be handled with
a living trust. If the stock is held in the trust at the time of death
of the person who set up the trust, what is the cost basis for the
successor trustees who receive the stock? I know that if someone
inherits stock that's not held in a trust, they get to adjust the basis
to the value when they inherit it and no longer have to worry about the
original cost basis when the stock was bought. Does the same thing hold
true with stock in the trust, or do they have to retain the original
value because the trust still owns the stock?
Thanks for any help!
Mirin Lew
------------------------------
Date: Mon, 16 Mar 1998 21:11:42 -0500 (EST)
From: elsie@desertlinc.com
Subject: Comprehensive Roth IRA Internet site
I have found a very comprehensive Internet site for information about Roth
IRAs. It is managed by Benchmark Software which develops financial
planning software for attorneys and financial planners. It includes links
to many Roth resources, including calculators from mutual fund companies.
The address is: wwww.rothira.com
Elsie
(Editor's Comment: If you go to:
http://pfinance.miningco.com
and take the Taxes link, you'll see links to that site, as well as many
other tax related links. -IK)
------------------------------
Date: Mon, 16 Mar 1998 21:12:43 -0500 (EST)
From: greg.panayotti@swissbank.com
Subject: Re: NY State Income Taxes On Income Earned In Florida
>From: Bob Hartwig <rph1@mindspring.com>
>
>I moved from Florida to New York State in late 1997. Most of my 1997
>income was earned in FL. NY apparently requires that the "state
>wages" match the federal wages. Does this mean that all the income I
>earned in another state during 1997 is subject to NY state taxes?
>This seems to be absolutley outrageous to me.
>
>Any other Persfinners ever have this experience.
>
>Thanks,
>
>Bob
Bob,
I can't understand how it's legal but unfortunately it's true. It's
New Yorks way of getting a piece of everybodys pie. I work in NY and
live in NJ along with my fiance. When we marry, NY will also get a
piece of her income EVEN THOUGH SHE WORKS IN NJ because again, they
look at the federal number.
FYI, other states (Connecticut for one) do the same.
GP
------------------------------
Date: Mon, 16 Mar 1998 21:13:42 -0500 (EST)
From: greg.panayotti@swissbank.com
Subject: Re: Purchasing Forclosure Property I've played the foreclosure game somewhat in my area and most foreclosures have large outstanding mortgages (obviously - hence the foreclosure). People generally don't foreclose with a large amount of equity. Usually not even enough to be bailed out otherwise the smarter of them would just sell and relieve the debt. >I'd purchase at $2,000 over the mortgage balance due (they'd pay the >balance and deliver a warranty deed to me after I had a title search >run). I'd rent the house back to them for a monthly rent to cover my >actual costs plus a small percentage. My "profit" would be the >depreciation on my taxes. First thing that comes to mind is that this rent figure would be too high for them to afford. If they could pay you this, why can't they just pay their mortgage? Secondly, "depreciation" is a gift the govt gives and then takes away on the sale - remember that. Of course, I don't know how much this could sav!
e you against your regular income ... >As long as they are renting the house from me, they could buy the >house back from me for my actual investment + 10%. If they leave the >house, they forfeit their right to buy the house back. They would >rent on a lease with a first months rent and security deposit paid in >advance (thus the $2,000). So it's a lease-option, which is good. But, again where are they getting all this cash? Also, what if (since they're probably emotionally attached to the home because they feel it's still "theirs") they stay on the rent-back and then stop making payments to you. It could take you 6 months to get them out, meanwhile they live free and trash the place. Could happen. Most foreclosure guys I know simply rehab and flip - no sticky situations. >Can anyone identify problems with this approach? It looks like a >win-win for both parties. I don't see anything technically wrong with your idea - It is logical and could work. However, I!
'm not sure about the feasibility of it. It's going to depend heavily on your local housing market which I am not familiar with. Here I feel (NJ-NY) it would be a tough sell. Once they consult their attorneys, there is no deal to be made. The whole process can be stalled for well over a year - I've seen that many times. All the while, the fees add up and whatever equity was left is gone. Good luck and let us know how it works out. G. Panayoti Member Meadowlands Board of Realtors, New Jersey.
------------------------------
End of persfin-digest V4 #135
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