All Forum Posts by: David Lao

At a low interest rate of 2.375%, I think it'd make more sense to hang onto the loan than to refi it. It's mostly just math so you can model the scenarios in which you hang onto that loan and its low rate and compare it to the scenario in which you refi it into another loan with a higher interest rate. I personally did the comparison myself and for my situation (I got 2.25% on my FHA loan with ~82% LTV), my MIP won't need to be paid after the 11th year and I would come out ahead financially in all scenarios (in the beginning because I put less than 25% down, and in the end because my monthly payments would be lower for 19 out of 30 years due to the eliminated MIP after the 11th year). I suggest you double check your loan agreement to see how long it says your MIP needs to be paid. If you put at least 10% down, then chances are your MIP won't need to be paid after the 11th year and by that point your monthly payment would be much lower. Personally, I wouldn't refi the loan at the rate that you have.

Originally posted by @Shivam Patel:

@Lynne Smith

Yes so I'm house hacking with an fha.

Just you guys have an idea: I get 1800$ in rent and my mortgage is 2100 and some change. I bought the property at 315k and it's appraised now to around 345kish with the hot market. However I put more than 3.5% down when I bought the property, maybe close to 10. My loan on it righr now is about 286k. And I have about 25k cash. I save about 4000 a month. After I rent the whole house out, my property manager estimates about $2400 in rent (conservative).

Now for the investment property. I'm guessing I can't use HELOC because I don't have 20% equity yet. Based on the conversation above it doesn't sound like I can refinance either unless it's an investment property refinance. But then I can't live there until I find my next property. My only option seems to be holding the FHA loan with the good interest rate for now, and buy a fourplex with 20% down after I hit my 1 year in September. But even then I feel like a fourplex at 20% in my area would be close to 40k in just the down payment. I know I can't sell because I'll take a loss either.

My main purpose is to get another investment property but not live with my tenants. I didn't think it through the first time and I need to keep a buissness professional relationship with them so getting into a small multifamily makes more sense to me where my walls are seperate. Also with the work job change I wanna be closer to south jersey.

My options that I'm thinking rn:

1. Refinance into an investment loan, and move out and live with my parents for a few months while I apply for an fha and find a new property. Even though my interest rate would be a lot higher it will give me another tenant in, and cashflow and reset my fha.

2. OR refinance into an investment loan and then use a 1031 exchange into an investment loan for a fourplex. And then work on using the primary loan.

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I agree that listing agents value offers made with conventional loans over offers made with FHA loans. With an FHA loan, you might need to put down more than 3.5% down. If it's an income property, then it'd need to meet a self-sustainability test, which you can just look up on Google.

There are some incorrect info here. FHA MIPs can stop under certain conditions. Reference: https://www.hud.gov/sites/docu..I also have an FHA loan on a 4-plex that has a 11-year MIP requirement.

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Originally posted by @Bonnie Griffin Kaake:

@David Lao When discussing depreciation, residential rentals are considered commercial property. If you have a W2 job, you will not likely qualify as a RE Professional to be able to take advantage of making your commercial investments "active". Therefore, you cannot use the depreciation to offset the W2 income. On the other hand, if you have a spouse who does not have a W2 income, this may be an asset.

Bonnie, thanks for the insights. So what value of real estate holdings would Billy need to have enough depreciation to offset $100,000 of gross income assuming that he or his wife meets the IRS's definition of a RE professional? We can assume that 70% of the asset value are improvements for this hypothetical situation.

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This is a hypothetical situation. Billy has a day job earning $100,000 per year in California. He wants to build a real estate empire in his local market as the king of residential real estate (1-4 units). What value of real estate holdings would he need to have enough depreciation to offset $100,000 of gross income (assuming he does not buy commercial real estate)?

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Hi, I'm based in Oakland, CA. Could someone please advise on the tax consequences of transferring a detached single family home between siblings via a gift transfer? Would the property tax basis get reassessed? Would there be transfer tax? Would there be gift tax if the amount exceeds $15,000? Thanks in advance~

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I've a 4-plex in Oakland, CA and am planning to rent a vacant unit to a prospective Section 8 tenant. Are Section 8 follow-up inspections (that is, after the initial or first inspection) limited to the findings from the initial inspection?

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Originally posted by @Carl Mathis:

AFAIK section 8 inspections are owner certification only at this time due to covid.

also: Be super duper careful with section 8 - many people have good experiences but the concern is that if anything goes sideways you are stuck in a horrible situation with a bureaucracy run by incompetent low intelligence bumbling fools making everything hard / impossible. Read Kafka. Tenants under section 8 are more likely to turn out this way despite screening well.

also: Imagine administering your rental through the DMV and having your tenant get in a crash while driving your car without insurance - yeah, its like that.

Thanks for your reply~ What do you mean by "owner certification"?

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Originally posted by @Michele Fischer:

Some people hate Section 8, some love it. Probably depends on what you expect from it.

Agree that it is unlikely they will do an actual physical inspection with COVID, our area does some zoom style inspections under rare circumstances.

Regardless, it should just be the one unit plus any common areas.

Thanks for your reply~ I just had the inspection, and the inspector looked at only that one unit.

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HUD's Housing Quality Standards guidance on ungrounded 3-prong electrical outlets states that they're acceptable if protected by a GFCI outlet. What would you do it if you've a unit in Oakland, CA and the inspector still says they need to be grounded or reverted to a 2-prong outlet?

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What's the approximate cost of a Section 8 inspection? I assume the landlord pays it. Is there an additional charge if an additional follow-up inspection is needed?

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All Forum Posts by: David Lao

David Lao has started 15 posts and replied 59 times.

Post: Lender Says he can call note due at any point!

Post: Lender Says he can call note due at any point!

Post: Depreciation to offset W2 income

Post: Depreciation to offset W2 income

Post: Tax consequences of transferring real property between siblings

Post: Scope of Section 8 Reinspections

Post: Section 8 Requirements

Post: Section 8 Requirements

Post: Oakland Section 8 Inspection result on ungrounded 3-prong outlets

Post: Cost of an Section 8 inspection