All Forum Posts by: Aaron Zimmerman

I'd speak with a great lender in your local market that can educate you. They will know various loan programs. 

The two main ones you hear about are 3.5% down FHA and 5% conventional. Both have private mortgage insurance (PMI) but generally the 5% down is preferred as the PMI is usually less and you don't have to contend with self sufficiency fha tests on 3-4 unit buildings.

Congrats on committing to buying a house hack! It is The most accessible way to get into an expensive market such as Seattle is via house hacking. If you're trying to boost the cash flow, I'd say you can look into rent by the bedroom. 

As a house hacker from a tax perspective, it's crucial to identify rental vs personal use and to make sure you have the appropriate basis (which impacts amount of depreciation). 

On the tax side of things, you're effectively moving money from one pocket to another. However, the pocket you're moving it to has potential self employment tax consequences.

what id consider is: 

1. can you make the management LLC have just one member? This way, you avoid an annual filing of form 1065 and instead goes on schedule c. This will save some money.

2. Do you have any kids that can help with the management of the properties that you're managing within the LLC?

@Darius Harper - very difficult to answer without knowing more information.

What is your family situation? Is it possible/are you willing to house hack? 
Do you need the money for your next downpayment?

how much equity is in the current property?

how long have you lived at your current property?

Good question of asking HOW to do it . I'm not a lender but you'd likely need a guarantor on the loan. If your friends have not gotten a place yet, you could rent by the room to your friends in your unit and that'd be a great way to get into house hacking. 

House hack. Easy decision. The goal would be to reduce your housing payment and then to repeat the cycle. It requires the lowest amount of cash down of any of the strategies mentioned with far less risk. Worst case scenario you're paying as much as you're paying for rent. Best case - you're saving money on rent and building equity 

things to look out for/obtain:

Estoppel agreements for residents and possibly looking at the docs they applied in the apartment for. 

Checking all major mechanicals

Cons of house hacking: it's only a con if you don't collect $$ from the other side and need to evict. Other than that, you're learning the ropes of real estate and ideally reducing your housing expense. 

DSCR. Hard money loans are typically for short durations - not loans youd want to maintain for the long term.

House hack via VA loan.

you can buy a multifamily with 0% down and minimal closing costs. Let's say you buy a property at $500k and you're able to reduce housing expenses by $1k per year, you can roll that savings into your next down payment and possibly have some $$ left on your va loan. The VA loan is one of the most coveted loans so I would recommend using it!

On the return, I would enter the k-1 as one worksheet not multiple. There's no value add there. 

As Sean said, keeping track of the 199a is important because there could be cwrryforward losses that affect 199a going forward. The form that shows this is 8995 and sometimes there are worksheets behind this number that support the amounts included on the return