Legal Question?

[jdw99]

Any input on this topic would be greatly appreciated.  My main concern is whether or or not this process would be within the boundries of the law.

My partner and I are looking at buying one distressed property each in the $15,000-$25,000 range.  Then putting appx $5,000-$10,000 into the property for rehab.  Upon completion of the rehab we would sell each other the houses for the appraised value and market the properties to Section 8 for rental purposes.  

Is there legal issues that I need to be concerned with this process?

[tedjr]

I do not know what part you may think is illegal. If it were illegal to buy property below market we would all be in jail. If you committ some type of fraud like forgery that would be illegal. The question is not specific enough to answer. Maybe call or write and I will try to help or find someone who can.

Thank you,

Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas  78737

512-301-9171 home
512-587-6177 mobile

[jdw99]

Ted, my concern is in the flip and whether or not that is considered an arms length transaction. Typically after the rehab when we would sell the houses to each other on a mortgage there is a $15,000-$20,000 profit. At this time we are able to market the property to Sec 8 for year leases of appx $900/month

I don't see where there would be legal issues either, however I have had several people suggest that I do a little more homework

[tedjr]

I do not think Sec 8 will care how you do the deals. Last deal I did with them all they needed was a copy of deed showing ownership. The only place you may have problems is getting a new loan after the rehab where the lender may see as a brother in law type deal where they would use the cost to purchase and rehab as your loan amount and maybe only 70 to 80 % of that amount. There are mortgage companies that will loan on just the appraised value and do not ask a whole lot of questions about previous owners and what you paid and from whom. Check the links here and call around to find a good mortgage company or broker. Do not even try an FHA or other govt backed loan program here. The best one I have used so far is IndyMac Bank at 1-800-781-7399. .I did eleven loans with them with my bad credit and 30 to 40 owned rentals. Wish you all the luck on this, it can be confusing.  :thumbsup

Thank you,

Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas  78737

512-301-9171 home
512-587-6177 mobile

[jdw99]

Thanks for your input I have already made contact with hard money lenders and mortgage lenders.  So I am set up and ready to make a move.  I just wanted to be careful that I was not crossing any lines.  Thanks again for your time