What you missed July 2009 Meeting
by Robert Davis

Robin Butler

Robin Butler has been doing creative real estate deals for over 30 years. He talked about the various aspects of using the new $8,000 credit for new home buyers. New buyers can use the tax credit to help with the down payment on a house they are going to occupy. He said a new buyer currently is anyone who has not owned a home for at least 3 years. Also, the credit may be raised to $15,000 next year, but currently is 10% of the sale price up to $8,000 credit.

What he has done is offer to sell a rental to his tenants and get the down payment money through the tax credit. He explained some of the advantages of buying a home instead of renting to the tenants. He gave some of the advantages we might use. For example, the interest the buyer pays is deductible on their tax return. The house will eventually appreciate in value, giving them extra equity to use later. They would also be paying down the mortgage with time - thus creating equity. And of course, they would be able to homestead the property which would give them a lower property tax and also some homeowner rights. The buyer will also have a certain pride of ownership. They can use their existing deposit towards the down payment.

Some things to consider, he said, are that the program currently will go away after November of this year. The buyer must be tax refund worthy. There is a time delay involved before the refund is issued. The person must be in the USA legally. Robin also likes to offer that he will buy back the property for the balance then due should the buyer have to give up the property. He also puts in the clause to give him the right of first refusal should they want to sell the property.

Lastly, he talked about how to do a wrap-around mortgage, the best way to buy the doc stamps, and a brief note about land trusts, reverse amortizing mortgages and ads. Robin talked briefly about his first property purchase. He said his first house had no roof and had trees growing inside of it. They wanted $14,500 for it but he ended up buying it for $11,000. He said he borrowed most of the $1,000 down payment and paid $100 per month on the seller financed mortgage.

Basically, he said there are all kinds of ways to make real estate deals. Using the tax credit approach is just one way of cashing out of properties.