Using roommate income to qualify for future rent in a multifamily

6 Replies

I understand that you can use future rent as income when qualifying for small multifamily as long as you have established history as a landlord. 

Does the rental income from renting out one room in a house that you live in count toward this?

Or does it have to be a separate property?

@Kurt Brumbaugh

Established history means having rental income on your schedule E (rents and royaltys), preferably two years of tax returns. Unless you actually had roommates and put on tax return, then no. 

The norm is separate property like a duplex, triplex, or 4plex.

Terry

Thanks Terry.

This is for a room that I'm planning on renting in the near future. So I would do whatever I would need to do for taxes. I'm wondering whether this will benefit me 2 years down the road.

I realize that renting a room in your home, in order to gain this status, is not the most common circumstance. I assume that's why I couldn't find any references to it when I did a search in the bp forums. 

I don't have a lot of income to show. I'm looking for any edge I can get. 

@kurt brumbaugh 

talk to the lender you think you will be using in the future. On a multi-family where you are obviously not going to inhabit every unit I believe you will get a percentage of the expected rent. (It will actually be part of the slightly more expensive appraisal. “Estimated rent”)  I don’t remember if you get 70% with experience or without. Without it might only be 50% but your lender will have actual written rules fo what they will do.

Originally posted by @Kurt Brumbaugh :

Thanks Terry.

This is for a room that I'm planning on renting in the near future. So I would do whatever I would need to do for taxes. I'm wondering whether this will benefit me 2 years down the road.

I realize that renting a room in your home, in order to gain this status, is not the most common circumstance. I assume that's why I couldn't find any references to it when I did a search in the bp forums. 

I don't have a lot of income to show. I'm looking for any edge I can get. 

Even if it doesn't help you as far as your "established landlord" status is seen by Lenders in 2 years time, it'll help your 2yr income tax return history, right? Welcome to BP. Good luck...

Lenders generally like to see the tax returns to back it up and sometimes require 1-2 years of schedule E.

Thanks @Bill Brandt

Talking to a lender makes a lot of sense!

Thanks everybody!

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