Newbie to Real Estate Investing - Help

8 Replies

Hello everyone, 

I am a "get to the point" type of guy so here it goes. In 2016 I bought house in Scottsdale, AZ. My first home at $300k. Credit / Income - everything was on POINT! Now it's 2020 and this 268k purchase is now worth $550k AND I have my real estate license.

I got my license right before the COVID because I love RE. I own a few business so credit and income are a rollercoaster HOWEVER. I now have 250k+ in equity in my home. I am ready for my next move and having my license I am ready to find my next Airbnb or Rental, or primary but I don't want to sell.

I have a lot of lenders who are friends and they can't really get me approved for a Refi or Cash Out or a second mortgage until I sell more houses obviously.

So finally my questions is - I want to be aggressive in the market and ready for my next move. What are my next options to where I don't have to sell my primary? 


Hey @Zach Neff do you have any family or friends who would be willing to be your bank while you invest in Real Estate? You could either go in as partners or they can be a private lender. Also, you could look for deals where the owner is willing to hold financing. If you have some cash, you could invest with a syndicator into larger apartment complex and have a small piece to a much bigger pie!

@Zach Neff

There is a tax rule that you can take up to 250k in profits from the sale of your private residence or 500k if you’re married if you’ve lived in it for 2 of the last 7 years. Do that first.

Buy a new house to live in and with the remainder then find some new real estate to invest in. On your new house, you’ll probably be able to get a heloc up to 90% and can use those funds as well.

If you’re looking for something passive, syndications are a great resource. But as a RE professional, finding some flips or rentals and building your book of investors will help make those opportunities come quicker. We’ve always found that the more ownership that you have in something the more money you will make. At some point that takes too much time and you have to choose what you want to spend your time on.

@AJ Shepard so what I am understanding from you is that I need to sell my primary to really make any moves at this moment? 

My only concern is I am emotionally attached to the property. I know..I know..there is a rule of thumb to never get attached. 

If I want to keep this property I will need to move out and rent / Airbnb it but that is a really slow play as I build up my RE career. 

Am I understanding all of this correctly? Thanks so much guys for your inout by the way!

Look into IRS sectoin 121 (https://www.journalofaccountan...)    If you have 250k in gains, this means that you would not pay 50k in tax.  Are you 50k emotionally attached to your place?  If you stay in the place and just make more money, than you will have to pay taxes on it....



Originally posted by @Zach Neff :

@AJ Shepard so what I am understanding from you is that I need to sell my primary to really make any moves at this moment? 

My only concern is I am emotionally attached to the property. I know..I know..there is a rule of thumb to never get attached. 

If I want to keep this property I will need to move out and rent / Airbnb it but that is a really slow play as I build up my RE career. 

Am I understanding all of this correctly? Thanks so much guys for your inout by the way!

 

The gains on it, if you sold it, would be tax free.  I think they changed the guidelines recently as well and you will have to have 2 years experience as a landlord to count a second property as income property.  Finding a solution to your inconsistent income sounds like your problem.  You may qualify for a Heloc (Home Equity Line of Credit) on your current home and could use those funds to purchase an additional property, but you still will run into financing problems.  Finding a partner that wants to purchase property with you that has  strong W-2 or strong income is a solution that we used early on.  

Originally posted by @Zach Neff :

@AJ Shepard I have owned it for 3 years so it is tax free. I want to buy another house but the debt of this house $248k is messing up my DTI along with the inconsistent income. I am looking for a way to buy another house and keep this one.

 

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