All Forum Posts by: Andy Collins

My tenants all know I own the properties, they all know where I live (put rent under my front mat).

I tell every tenant that the property has a mortgage on it, and I have to live by certain rules set by the bank,,many times its easier to say the bank or insurance company won't allow "x" that they want to do (put an above ground pool in the backyard say"  I've never had anyone question that

Investing is long term, but let's be reasonable, we need to be worried about what will happen in the next 3 or 4 years, anything beyond that is purely speculation.

The amount of money spent on water is such a small percentage of the cost of ownership, it isn't something to spend too much time worrying about.

Now, if the economy is a certain area is based on a certain industry, and that industry requires a lot of water, and they might consider moving closer to the water source that might be something to consider, but those situations would be if your looking at a particular  small area, not on more global view.

We can't be too worried about what will happen in 20 years,,,who knows what will happen to an area/economy/industry in that amount of time

andy

I would do whatever your CPA and attorney recommend,,,if you don't have either or both, you probable don't need any type of LLC

If you are doing it for asset protection, what exactly are you protecting?

If your worth $10 million +, not going to manage the properties or have any handling of the day to day operations and don't mind the extra expense of financing for an LLC, then a LLC might be good for you.

If your not worth Millions, are going to manage yourself and want the low rates, longer term of conforming mortgages, for get the LLC, get the umbrella policy as mentioned by others

I think a lot of people get hung up on wanting to get into a business structure to sound important, for the average investor is makes absolutely no sense,,obviously there are exceptions

the FNMA guidelines allow it to be added back in,,obviously any lender can have an overlay with whatever guidelines they want, however that is one I have never heard of, and I have 6 conforming mortgages,,,if you qualify without depreciation being added back in, it doesn't matter, but if you need it, finding a lender that would allow shouldn't be a problem.

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.

andy

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

andy

saying "go out and buy a house" without qualifying all that goes into that selection, would be like saying go out and buy a stock, and someone picks a name they like out of the stock tables.  

In any investment you must do your due diligence, what could  happen could include your letting your insurance laps, you get sued and end up in personal bankruptcy, or you have minimal coverage and the same thing happens.

I'm for real estate investing,which is why I do it,,but you can't just say buying any house in any situation with any skill set is good,, you must be prepared, do your due diligence and do a good job of screening tenants and managing the property

If you want an inspector to be liable for structural issues, things that break, etc, then the cost of inspections will go up 20x.

An inspection can give you a good idea what is going on with a house, but you can't depend on it for everything.  I have my foundation guy inspect every house I buy, he is the expert on foundations (and he does it for free because I will use him to fix any small problems he finds).

Focus on getting the problem fixed at a decent price,,I'm with the person that said the attorney should have told you at the first meeting what you were trying to accomplish with the inspector wouldn't work,,his liability, at most, would be to refund your inspection fee

As long as your can count your income from your first rental property,and if you don't carry much other debt, you should be fine.

The question is how long have you claimed rental income, as @JD Castillo 

 stated, I believe you have to have rental income on your return for 2 years to count it (not from that particular house or that tenant, just rental income),,however I can't promise you that's right,,talk to a mortgage broker.

Your first rental, if you can count the rental income, will allow you to use 75% of that income toward the payments on the property (if you've held it for 2 years of tax returns it gthen goes to your actual expenses/income on that property)

If at 75% it covers PITI, then it won't hurt you at all (in fact anything over that will be counted as additional income. Your rental properties are counted separately, then how they perform is used as income or an expense when calculating your DTI