Newbie here, I’ve read all of Lonnie’s books and am still a little confused on the proceedures. A lot of inspirational stories but a little lax on proceedures. I was hoping to get a little help here.
- When I go to sell it is my understanding that I have the buyer sign a “Mobile Home Sales Agreement” and a “Promisary Note”. I then go file the title and then sign the title over to the new buyer.
Q1 Do I then have the buyer put the title in his name and then file a lien?
Q2 If the above proceedure is correct, do I need to put something into a corporation to protect myself? It would seem that I’m no longer liable if the title is not in my name and I mearly have a lien.
Q3 What kind of income taxes are due? Do I need to pay FICA?
You need to ask your titling agency about procedure. You may also have, depending on your state/county/municipality (WHICH, by the way, you neglected to tell us so we could possible provide better guidance), taxes of some sort due on the transaction. Ask your local treasurer/assessor, describing the scenario.
Entity structuring for asset protection is a consideration, but not necessarily before your first deal. do a couple, then if it looks like your bag, consult a course or an attorney. Even the library has tons of information on this.
Generally, federal income taxes are due, when you file, on the entire amount of the sale, even though it has not yet been collected. There are ways to spread out this tax burden, such as using Lease/Options, and the KISS method of tax bookkeeping based on FMV of the paper you create. There’s a LOT involved in that one, but again, only worth it if you actually launch.
For a general description, go here:
http://www.creonline.com/mobilehomes/wwwboard4/messages/4427.html
If Lonnie’s books are not specific enough, it’s because there are 50 states and at least 50 different laws regarding MH titles, evictions, notes, etc.
How you structure your deals is very dependent upon your personal financial situation. I did a few Lonnie deals and then paid both my attorney and my CPA to get together to work out acceptable paperwork and entities for me to do more business like this in my state. It cost me a lot of money, but now I have contracts that work for my particular situation. I suggest you do the same.
Anne
If the paperwork is structured the way I interpret it, I am not the owner but mearly the lien holder. I assume that absolves me from all liability. If that is correct, the only advantage to an entity would be for tax puposes. Is that correct? I do not yet have a dealer’s licence.
In some locations being the lienholder will make the most sense, in others (like Florida) you will be better served by being the owner and doing a L/O.
Being lienholder as an individual has greater risks than being lienholder as an entity. For one thing, you cannot assume the judge is going to find for you, if the payor decides to sue you because their prize showdog got electricuted because the stove was note wired properly in their 1966 MH that you got for $500 and sold for $10,000.
You really need to ask these questions of someone local to you who has a license.
Anne