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All Forum Posts by: Adam K.

Adam K. has started 2 posts and replied 70 times.

Post: How can I get my second rental property?

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40
Originally posted by @Andy Collins:

Each rental should have its own schedule (or they have them in columns anyway), the depreciation is the one thing the IRS allows you to deduct, but they add that back in when figuring if the house made money or lost.

You can show a loss to the IRS, and still have your rentals count positively in your DTI.

Yes, depreciation is deductiable but it is the lender giving you the loan that chooses how they interrupt the numbers and what formula to calculate your DTI.

Either way, in response to the original posters question I would just check with your lender as you add more properties. Whoever is going to give you a loan will follow the underwriting criteria that they choose to use.

I had 3 different lenders working the loan before choosing one and it was the same issue. There was new change to FNMA underwriting guidelines to how they calculate DTI (at least that's what all 3 told me). If your lender follows FNMA for purchase or refinance its something to be aware of.

Post: Buying a home that has current rentors.

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40

Contact a lawyer experienced and specializing in real estate and pay the fee for them to review the contract and represent you. Different states can be on both ends of the spectrum when it comes to tenant and landlord rights. 

Post: How can I get my second rental property?

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40
Originally posted by @Andy Collins:

depreciation expense is not held against you when calculating DTI, since it is not a 'cash' item

andy

 The tax return was 65 pages and I stopped trying to figure out what counted for what. I went to purchase a new primary residence and the lender used the tax returns to calculate the profit and loss from the properties. The properties showed a loss on paper which the lender had to calculate as monthly liability.  Maybe it was just for the primary purchase underwriting but I went back and forth and didn't win.

I don't know if it is the IRS, FNMA or both but it seemed as if you want to own to rental property and buy a new primary you either pay cash and don't finance rentals or don't claim losses. The properties where less than 75% LTV and cash flowed. $1000 rent - $600 PITIA wasn't good enough for one of them.

I have not bought a rental since purchasing a primary so the criteria may be different but this scenario was my most recent personal transaction.

Post: New Western Acquisitions (Reviews)

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40

I have purchased 2 deals from NW. If your expecting a zero out of pocket deal it's probably not going to happen. I will say the second deal I bought came in as a slow under hand pitch and the bases were loaded. I hit it out of the park and it still hasn't landed. Thanks. NW! Because I was able to rehab the property at a higher level for far less my only OOP was the $5k down payment. Going to into 3rd yr as rental with almost $500 mcf.

With that said, You yourself absolutely must do your own research, verify all the info, history, know the comps (real MLS comps), DOM, etcetera. Have exits a,b,c,d. For the property.

Most of the wholesale brokerages in Houston have in house financing and brother in law general contractors available. I don't use in house financing for automobiles and the same goes for real estate. Don't give someone all the shells to move around. When you bring your own financing and have your own rehab team it at least gets other sets of eyes to look at the deal.  Knowing first hand how appraisers values can vary greatly I project low end ARVs to stay safe. If that still works then I'm in.

I will use them again when.

Post: Need Advice From Experienced Wholesalers

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40
This thread has got off topic and people are misunderstanding what I was saying and to who. I think I have lost my point as well. I am a investor first, purchased, leased, managed and sold my own properties without agents before I became one, I know the game.

Post: Need Advice From Experienced Wholesalers

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40
I am fully aware that wholesaling is legal when doen correctly. I have purchased from wholesalers. When the contract is done correctly it's all good. And other than the state comission having a specific reason to go after someone or a lawsuit there is no real estate police that is coming to get you. But for new wholesalers trying to jump in they need know the details of how things are worded, how the contracts read, who gets paid by who and how it all fits together. I have had discussions with several new wholesalers from this website and outside and it's amazing how little someone knows when the jump in.

Post: Need Advice From Experienced Wholesalers

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40
It's probably a fine line for a Realtor to wholesale a property if it can even be done. I will go back over a purchase where I represented myself and look at if from a wholesale perspective and see if it is possible based on the standard wording. I understand and believe there is no need for agents if there is a seller and a buyer who both agree and know what they are doing. Some brokers don't let agents rep themselves or list their own properties so the broker can be an obstacle. If you have a license why not just get the listing? If the seller is worried about commisions reduce your commision. If they are selling at such a discount then they could probably sell a little higher and afford the buyer commission. If the seller is adamant then you yourself could actually close the deal with short term transactional funding if you have your buyer. That would make things much easier but you need to qualify for the transactional funding and make sure buyer is going to close. It seems that most people starting out wholesaling because they don't have the cash and can't qualify so TF is out for them.

Post: Need Advice From Experienced Wholesalers

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40
It's probably a fine line for a Realtor to wholesale a property if it can even be done. I will go back over a purchase where I represented myself and look at if from a wholesale perspective and see if it is possible based on the standard wording. I understand and believe there is no need for agents if there is a seller and a buyer who both agree and know what they are doing. Some brokers don't let agents rep themselves or list their own properties so the broker can be an obstacle. If you have a license why not just get the listing? If the seller is worried about commisions reduce your commision. If they are selling at such a discount then they could probably sell a little higher and afford the buyer commission. If the seller is adamant then you yourself could actually close the deal with short term transactional funding if you have your buyer. That would make things much easier but you need to qualify for the transactional funding and make sure buyer is going to close. It seems that most people starting out wholesaling because they don't have the cash and can't qualify so TF is out for them.

Post: Need Advice From Experienced Wholesalers

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40
Originally posted by @Kirk Gore:

To my understanding the main difference between wholesaling a property and representing a client as a licensee is that in the wholesale transaction you enter into a contract with the seller to "buy" the property (which really means to assign to another buyer)

-The buyer portion would read something like "Kirk Gore and/or assigns" or "Kirk Gore and/or Mr Cash Buyer"

 and in a licensee transaction you enter into a contract to either "represent" a seller, buyer, or both in the selling of a property.

-Correct. This is a buyer or seller representation agreement.

 Even though as a wholesaler you still technically represent the seller and buyer,

-No. You don't represent them, you are a party to the transaction. You are the buyer. The assignment part is tacked on at the end in the buyer section. Unofficially with a verbal agreement you are representing their interest in buying the property but technically, legally and on paper you cant represent them.

 the contract assignment loophole seems to exempt you from the necessity of the license.

- There is clauses that can be written to protect parties to the transaction and specific ways to word a contract but there is no loophole that makes you exempt from practicing a licensed trade for profit be it real estate, law, dentistry, plumbing or hairdresser.

I'm still learning myself but I hope this helps!

The minor details, specific wording, disclosure and roles of each party are crucial for the success of the transaction. RE State forms and contracts have been written and revised for years by lawyers who know how to play the game far better than me and most others on this forum. I should add to my signature that I am not trying to discourage anyone but you have got to know what you are doing to be successful and stay out of trouble. Laws and contracts are always changing and you have to know the rules of the game.

Post: Need Advice From Experienced Wholesalers

Adam K.Posted
  • Rental Property Investor
  • Houston, TX
  • Posts 74
  • Votes 40
Originally posted by @Ryan Harris:

 And when you contact these owners just present yourself as the buyer they don't need to know you're representing a cash buyer.

It is illegal to represent someone else in a real estate transaction if you are not licensed to do so. When you get to the contract stage there is going to be fees, options, deposits, proof of funds and bank approvals. The wholesaler will need bank statements or  a good actor with a google voice number if they plan on using a generic bank approval. You risk wasting every ones time by not being upfront. Failure to disclose and omission of the truth takes your credibility to zero.

Before I accept contracts I call the loan officer listed on the approval to verify.

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