All Forum Posts by: Derrick Dill

For rental property, those expenses count against the that 20,000$ 

^DTI is debt to income ratio. Depreciation is not a debt, and it is not an income. It is a tax deduction.

Ex. If I have 1000$ in monthly debts/loans/credit cards and 4000$ in income my DTI is 25%. At the end of the year, when I input depreciation into my taxes, is that 1000$ monthly debt/loan/CC higher/lower? is my 4000$ in income higher/lower? Since they are unaffected, DTI is unaffected.

If you want to change your DTI, lower your debt (by paying off your loans/CC) or increase your income.

Tax deductions don't affect DTI

Why not get a property manager? Accept the 10% loss and keep the place. I'm a busy guy, so I ain't got time to self-manage. Have come to terms that I won't get the full return from managing myself, but worth it. Tenant should have to pay to opt-out of contract as well

There's a wealth of resources here on this site. Start here. There's an education tab at the top, 1000s of podcasts. Not sure what kind of RE you're interested in because there are many strategies.. Buy and hold? short term rental? vacation rental? College rental? Wholesale? Notes? goes on and on

I'm currently house hunting in 850k range. Got outbid by 50k, cash with 4 offers on the table excluding mine. It's VERY competitive still. Ridiculously rich people are still ridiculously rich

I'm a Registered nurse. Bought my first duplex in Southern California, house hacked for 3.5 years, moved out and it cash flows ~600$/month (appreciated 150k). Took out a HELOC on it and bought investment properties as well as saved some for out of state investments. I now have 6 investment properties and currently putting in offers in Bay area where I moved for work.

Short answer to your question, yes. All cash flow income will be added to your total income and be taxed at your income tax rate.

However, you deduct several things from your taxes from rental properties: Mortgage interest, property taxes, management fees, repairs, basically any expense that goes into your rental is tax deductible.

I'm putting in offers now with intention of adding an ADU:

1. Working on it, but many of the counties/cities haven't updated their ADU laws and you might get some resistance on ADUs. California has mandated the new ADU-friendly laws and might need to educate some local municipalities.

2. Depends what kind of ADU do you want? 2 car garage conversion and/or separate unit in the back seem to be the most common. I would look for a 2 car garage or big lot where you can place an ADU in the back. 1200sqft seems to be the largest ADU you can put in my area

3. This is widely debated and answers seem to vary

4. Renovation loans. Can use your HELOC, credit, whatever other kind of financing

5.Depends on your lender, loan type

6. Yes, check with your city/county first

You put down the 5%. The lender 95%. This is not the norm, but I've heard it done in BP. The norm for investment properties for me has been 20-25% down. For primary residence have different lending terms 

Simple answer is go see a lender, get pre-approved. There are many variables. How much down payment do you have? what's your credit score? Will it be owner occupied? The less you put down, the more your monthly payment will be in general.

owner occupied can put down 3.5% down FHA, while rentals I've always put down 20%, but i've read on BP some lenders will give 5% down option.