Hard Loans

 

Local Money. Local Projects.

Hello ! Have a deal that doesn't quite qualify yet For Conv, Govie or Non-QM? Let us close your loan in the meantime. Bridge, hard money, temporary fix, rehab Short-term, hard money with No Pre-Pay!  Refi's. Cash Out. Bridge Purchase. We can help! 1sts and 2nds Loans $30k to $5MM+ See our details below.   Just closed this $2.45M bridge in Malibu!          Hard Money Loan Products:   It's our fund so we can customize any loan, but generally here's what we do. (and we do awesome deals nationwide in major metros like CA, UT, CO, AZ, HI and Coastal FL, or like a ski resort SFR, or to a high profile borrower (like a sports star or high profile person)).   General Loan info (every deal customizable): ·     $30k to $5MM+ loan size ·     12 - 18 month short term notes (10.875% to 11.875%+ rates) ·     No Min FICO. No income. ·     1sts AND STAND ALONE 2nds! ·     Cash outs up to 65% LTV & CLTV (1st and 2nds). ·     Purchases up to 75% LTV. ·     Property Types ·     1 - 4 unit residential, multifamily bridge ·     $1M to $5M commercial: Multi-Family, mid-sized retail centers and office buildings. ·     No Specialty Properties: We do not like anything auto, cannabis, assisted living, no hospitality like hotels, no special purpose properties like restaurants, churches, schools, or strip clubs.  ·     Land: we don't do much land, but when we do, it needs to be a very clear exit (like they have a contract already with the buyer who will buy within a year, or they have a bulletproof loan commitment from a take out lender that would pay us off, or they have other completed properties they can cross that we like, or it's the last lot in a higher end residential neighborhood.  ·     Bailout Loans: Non-Owner Occ & Primary/Owner-Occ Consumer Bailouts (OO in CA only): Forbearance & Foreclosure Fix (& Other Cash Out Fixes) Loans ·     Fix/flip - rehab deals up to 70% Loan To Cost (30% of purchase and 30% of budget out of pocket), no greater than 70% of the ARV     MORE DETAILS   Bridge Loans (purchase and refi) ·     $30k to $5MM loans ·     10.875%+ Rates. 1.5+ points. 12 month note. I/O payments. No Prepays. ·     65% max cash out. 70% LTV usual max purchase. ·     Owner Occupied (OO in CA only)  ·     OO Consumer Bridge - cross existing home and home they are purchasing to get a 100% Cash Offer Purchase Loan (Buy before you sell). ·     OO Foreclosure & Forbearance Bailout/Fix (& Other Fixes) Loan   2nds  ·     $30k to $1MM+ loans ·     12%+ Rates . 2+ points (prob min origination of $3.5k on small deals). 12 month note. I/O payments. No Prepays. ·     65% max CLTV. ·     NOO and Owner Occupied (OO in CA only)    Commercial Loans  ·     5+ unit multi-family is the main commercial product. We'd do value add construction loans, cash out and purchase on those.  ·     $1MM to $5MM ·     10.875%+ Rates. 1.5+ points. 12 month note. I/O payments. No Prepays. ·     Purchase/Rehab/Construction/Cash-Out OK ·     65% LTV max rate/term - purchase ·     55% LTV max cash out·    On Retail Centers, Office Buildings, Light Industrial we'll do cash out and purchase but no major construction or rehab. ·     We don't do specialty properties: no churches, no schools, nothing related to auto, so self-storage, no strip clubs, no cannabis.     Our 3 Owner Occupied Loans ·     HELOC for consumer loans:  needs income to qualify. no min fico. and needs Section 32 high cost class ·     Used when more than 25% of the funds are for consumer purpose (personal debt payoff including mortgages used for primary residence like in a foreclosure or forbearance bailout loan), ·     Need income to qualify for ability to pay (45% DTI) JUST subject ITI payment (we do not count any payments on credit at all, just the i/o and taxes and insurance for subject). VERY flexible on income documentation.  ·     10 year line with 12 month teaser, then i/o adjusts to note plus prime years 2-5, then 6-10 year is PI and note rate + prime. ·     BUSINESS PURPOSE LOAN on primary residence: no income, no min fico. 75% funds used for business purpose. 12 month note.  ·     I just need to document with a certified letter from the borrower that all moneys (including debt being paid off) is for business purpose. A business purpose loan on a primary does not have to qualify, but 75% of the funds have to be for business purposes. so doesn't usually work as a new first cause that existing first is usually a consumer loan, so that would make it more than 25% consumer purpose. so usually do business purpose 2nd so 75% of more of the funds for business purpose, confirmed with signed LOE, no steering. No income qualify. NEEDS SECT 32 (High Cost Class). 12 month note. ·     CONSUMER BRIDGE: no income needed, no min fico.11 month note, and 3 day rescissions and Section 32 high cost class. ·     They own their current residence and buy the next home before they sell the current one, one loan crossed by both properties, up to 100% of purchase plus all costs. 11 month note, no income, no min fico.  ·     have TRID rescission periods.    Fast-Close, Make Sense Financing, without Rigid Guidelines   Short term real estate loans To solve problems and capture opportunity Save our info!

How to Hold Title

 

Vesting or Common Ways to Hold Title 

for residential home loans

A person can hold title to real property by receiving a deed. The deed describes the new owners and how they are holding title, which is called title vesting. The type of deed signed depends on how the person wants to hold title. 

To transfer property title in California, the process is: 

Choose a deed

1. Prepare the deed, easy way is to copy the legal description provided by the title company prior insured transfer deed. Be careful to make certain the address, lot, track, APN number are perfect
2. Fill out the deed with accurate information about the property and the new owner
3. Sign the deed in front of a notary public
4. File the deed with the county recorder's office and pay the recording fee
5. Update the property records

Some common ways to hold title include: 

• Joint tenancy
• Tenancy in common
• Tenants by entirety
• Sole ownership
• Co-ownership
• LLC
• Living Trust

Community property is the most common way to hold title between a married couple or domestic partnership in California. 

n real estate, vesting is the point at which someone acquires the rights and interests of a property's legal ownership. 

Joint tenants and tenants in common have different rights and interests in a property: 

Joint tenants

• • Interest:
    • Time
    • Title
    • Possession
  • Shares:
    • Equal
    • From the same source
    • Simultaneously
  • Ownership:
    • Passes to the other owner
    • No probate
• Tenants in common

  • Interest:
    • Time
    • Title
    • Possession
  • Shares:
    • Unequal
    • Different times
    • Different sources
  • Ownership:
    • Passes to the tenant's heirs

Joint tenancy is often used as community property between married couples and domestic partners. Tenancy in common is often used when co-owners are unrelated. 

Stepped Up Tax Rules For Real Estate

Stepped Up Basis for Real Estate

(also applies to timber, personal property, and some types of liquid accounts)

Stepped-up basis refers to a tax policy that looks at the market value of assets at the time a person inherits them instead of the value when the prior owner purchased the assets.

The rules for stepped-up basis:

A stepped-up basis is a tax law that applies to estate transfers. When someone inherits investment assets, the IRS resets the asset's original cost basis to its value at the date of the inheritance. The heir then pays capital gains taxes on that basis.

The tax code of the United States holds that when a person (the beneficiary) receives an asset from a giver (the benefactor) after the benefactor dies, the asset receives a stepped-up basis, which is its market value at the time the benefactor dies (Internal Revenue Code § 1014(a)).

The Internal Revenue Code (IRC) § 1014(a) states that when a beneficiary receives an asset from a benefactor after the benefactor dies, the asset receives a stepped-up basis. The stepped-up basis is the market value of the asset at the time the benefactor dies. The purpose of section 1014 is to provide a basis for property acquired from a decedent that is equal to the value placed upon such property for purposes of the federal estate tax. 

A step-up in basis can significantly reduce your capital gains tax. For example, if a $100,000 property increases in value to $200,000, a step-up applies to 50% of the appreciation, resetting its cost basis to $150,000. Not all inherited assets are eligible for a step-up basis. Assets such as retirement accounts, including IRAs and 401(k)s, do not receive this step-up

President Joe Biden proposed raising taxes for long-term gains over $1 million. This means that high-income investors over that amount would be taxed as ordinary income and pay a top rate of 39.6% or whatever you tax rate actually is...

PROCEEDS - minus ORIGINAL COST BASIS =

PROFIT

Long-Term Capital Gains Rate x Profit = Capital Gains Tax Owed

15% capital gains rate x $ in profit = $ in capital gains taxes

This is significantly more preferable than if your capital gains are short-term in nature.

Step-Up Basis in Community Property States Is Even Better

Residents of nine different community property states have the ability to take advantage of a double step-up basis tax rule. This allows a step-up basis on all community property for the surviving spouse. Community property means any asset that was accumulated during the marriage with the exception of any gift or inheritance.  

Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are the nine states. In community property states, all assets and debts acquired during the marriage are considered joint property and are divided equally between spouses in the event of a divorce.

In many other states, neither assets that are only owned by the surviving spouse or jointly owned assets do not get the same treatment. The assets of a surviving spouse don’t get any step-up basis and jointly owned assets only get half of the basis. However, a surviving spouse can obtain the step-up basis on anything that is inherited from the deceased in any state.

A stepped-up basis is a tax law that applies to estate transfers. When someone inherits investment assets, the IRS resets the asset’s original cost basis to its value at the date o the inheritance. The heir then pays capital gains taxes on that basis. The result is a loophole in tax law that reduces or even eliminates capital gains tax on the sale of inherited assets.

Let's assume you are wealthy and you own a ten million dollar house in Emerald Bay, Laguna Beach. You never want to sell the house, you want to give it to your children when you die because no taxes are due on the gain because you inherited the house that Dad bought for $450,000.00 The basis was $450000.  when you inherited it was worth three million and now your children also pass on the gain and rent that house forever. Unrealized capital gains (air money because you never sell the real estate) are not taxed as income because the owners never cashed in and sold.

A basic rule for income tax purposes is:

the basis of an asset received from a decedent is the lesser of the asset's fair market value on the decedent's date of death 

or the decedent's basis in the asset on the date of death.

In most circumstances the basis will be the lesser of the two. The executor can allocate a maximum of $1.3 million in stepped-up basis to estate assets transferred to any beneficiary.

Under the current fair market value basis rules (also known as the “step-up and step-down” rules), an heir receives a basis in inherited property equal to its date-of-death value.

There is a principal that it is always best to recover basis as fast as possible from an event (death). Heirs can decide to allocate sufficient basis to cover the gains, sell some things and keep others.

GIFTS VS Waiting for the step up at death

If your grandmother decides to make a gift of stock during her lifetime (rather than passing it on when she dies), the “step-up” in basis (from $500. original purchase cost to $1 million) would be lost. Property that has gone up in value acquired by gift is subject to the “carryover” basis rules. That means the person receiving the gift takes the same basis the donor had in it ($500 in this example), plus a portion of any gift tax the donor pays on the gift. If grandmother gives it while she is alive two different taxes might be owed. If she waits for her death no tax is due.

Tell granny to leave it in her will if it is real estate. 

This is not legal advice. And yes the Emerald Bay example is real.