REO Questions

You can use their bank or use the bank whatever has the best deals for you guys. I have purchased a few peoperties with different banks in the past. Hope this helps you. Best of luck !

Warm regards,

Paul T. La Moy

Hi Kris,
It's best to get ball rolling with a mortgage. I would get a pre-qualification to know exactley where you stand as far as an offer amount. You might make an offer but can't get the financing so it's best to at least know this. Your dealing with a bank foreclosure, it's a process and can take time. My opinion, I would use a different mortgage company. I would use a broker instead of a agent, because a broker works in your best interest not the company as an agent would be. Plus the bank might not give you the best interest. A broker will find the best! Continued success to you.......Lubertha

First, what is your exit strategy? Knowing this will make a difference about how you present your financing. For example, if you are planning to do an assignment of contract / double closing you may not need money at all.

Remember, cash is king. When dealing with REO properties banks do not like to hold property for long periods of time. The faster you are able to move or show you can move the more they like you. Pre-qualification is a speculative letter. There are many times pre-qualified buyers have not been able to purchase a property for one reason or another. Proof of funds is a letter showing you have cash. Cash usually does not have problems closing and banks love this. Hard money lenders and private lenders can offer cash and proof of funds.

If you want to own and rent properties you could look to purchase with cash giving you the strength and speed of cash then refinance (no-seasoned refinance) which gives you an acceptable interest rate.

This is a questions best given to a tax professional.

Here is the definition from Wikipedia:

This article is about Capital gains tax in the United States. For other countries, see Capital gains tax.
Taxation in the United States

In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income. Capital gains are generally taxed at a preferential rate in comparison to ordinary income. This is intended to provide incentives for investors to make capital investments and to fund entrepreneurial activity. The amount an investor is taxed depends on both his or her tax bracket, and the amount of time the investment was held before being sold. Short-term capital gains are taxed at the investor's ordinary income tax rate, and are defined as investments held for a year or less before being sold. Long-term capital gains, which apply to assets held for more than one year, are taxed at a lower rate than short-term gains. In 2003, this rate was reduced to 15%, and to 5% for individuals in the lowest two income tax brackets. These reduced tax rates were passed with a sunset provision and are effective through 2010; if they are not extended before that time, they will expire and revert to the rates in effect before 2003, which were generally 20%.

The reduced 15% tax rate on eligible dividends and capital gains, previously scheduled to expire in 2008, was extended through 2010 as a result of the Tax Reconciliation Act signed into law by President George W. Bush on May 17, 2006. As a result:

In 2008, 2009, and 2010, the tax rate on eligible dividends and long term capital gains is 0% for those in the 10% and 15% income tax brackets.
After 2010, dividends will be taxed at the taxpayer's ordinary income tax rate, regardless of his or her tax bracket.
After 2010, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).
After 2010, the qualified five-year 18% capital gains rate (8% for taxpayers in the 15% tax bracket) will be reinstated.
Technically, a "cost basis" is used, rather than the simple purchase price, to determine the taxable amount of the gain. The cost basis is the original purchase price, adjusted for various things including additional improvements or investments, taxes paid on dividends, certain fees, and depreciation.

The United States is unlike other countries in that its citizens are subject to U.S. tax on their worldwide income no matter where in the world they reside. U.S. citizens therefore find it difficult to take advantage of personal tax havens. Although there are some offshore bank accounts that advertise as tax havens, U.S. law requires reporting of income from those accounts and failure to do so constitutes tax evasion.

Using a proof of funds to offer the banks can be one of the strongest ways to getting acceptance from banks. To make it easy for everyone I have posted another forum elsewhere that covers finding hard money in great detail. The information in this post is exactly what I use and have used to find hard money lenders in my area that can offer me a proof of funds.

http://www.deangraziosi.com/node/4080