How Can A Self-Employed Wholesaler Best Present Tax Returns to Qualify For a Personal Residence Loan?
After wholesaling rental properties and being tired of being a tenant again myself - I would like to be able to qualify for a conventional loan. In speaking with a local tax attorney, I was told that 2013 was the last year I could use the Schedule D for form 1040 for short-term capital gains and that I would do better to file as an S corporation as I will now be considered a dealer for 2014. Filing as an S corp also helps with self-employment taxes.
I also spoke with a lender today that told me my taxable income would be averaged for the two years and that my total monthly payments including housing costs can be up to 43% of average monthly income. He also said I should take the down payment out of the business account a couple of months before applying to allow that sum to season and show that it isn't an essential amount to have in the business. I have also heard that stated income loans (liar loans as they were called) are making a comeback of sorts, but I suspect the downpayments required would be quite large.
I know that lenders categorically don't like investors due to the uneven cashflows, etc. I am a little reluctant to list my occupation as an investor. When I file as an S corp I could say I am the president of the corporaton - but either way the short term capital gains on real estate sales are evident on the Schedule D and form 8949 so I don't know if that really matters. I have been to enough seminars that say when you are trying to get a business loan, to say you are anything other than an investor though.
How can I best present my tax returns to qualify for a conventional loan myself? Of course I would like to get some owner-carry deals but our market is so strong they rarely come along for me.