All Forum Posts by: Andrew S.

If you buy the property for 40k then the lender will assume that is what it's really worth, so yes, the bank will use their normal terms based on that purchase price (assuming you can find a bank that will make loans that small in the first place).  Banks will lend based on the lower of purchase price and appraisal. 

That said, once it's seasoned you may be able to refi for cash-out if the value has increased.

Hmm - I wish I could access that post where @Nancy Neville (don't know why the @ function doesn't work for her, so I can't even tag her right now....)  listed some IRS rules on the topic....

well, I'd love to hear more opinions form PMs and CPAs. 

Personally, as an owner, I would prefer @Dawn Brenengen 's approach, but it can work either way.  I'd just like to know what the approach is that most likely keeps the IRS at bay...

@Jeremy Ferguson 

It seems to me that this should be reflected in the the ARV. If you have an outdated but fully functional property, it will have a lower ARV than a modernized (and fully functional one). So, you either have a higher renovation budget, or a lower ARV

There was a thread on the board by @Nancy Neville on the general topic of 1099misc.  Apparently it got zapped somehow by the moderators as I can't now find it anymore.  I do have a side-question related to that topic and that is: should the PM report gross rent or "net" rent on the 1099misc?  My PM reports "net" rent because that's what he says his Quick Book program spits out.  To me, it seems he should report gross rents, so that I then can take that as starting point for my tax return and deduct management fees, maintenance, etc.

I'm very clear how I will file my return, but I'm concerned that if the IRS expects to get gross rents on the 1099misc, then our numbers won't match and this could be an audit flag.

Any thoughts?  @Dawn Brenengen @Steven Hamilton II 

@Mike Holland 

  Yes, you can certainly bill them.  Whether you will ever collect is another matter - it may well cost more to pursue them than what they owe

rats, rats, rats!  

Well, congrats, Pats fans!

 Yes, an umbrella policy will cover rentals.  Details depend on the insurance carrier though.  And probably even on where you live.  For example, in my area, StateFarm will let you add the first 4 (or maybe 5 - I can't recall) rental properties to your "personal umbrella" policy.  Beyond that, they write "commercial umbrella" policies - a little more expensive but still reasonable.

So very true!

So, all the bank will care about is what's "on paper" - that's why they will want to see your tax returns.  If that's not enough to secure a loan, then you will likely need to go with 

1. Hard money loans (based mostly on the asset, less on your credit/income though requires "skin in the game")

2. Private money (people you know, friends, relatives,etc.)

3. Seller-financing

Search for the bolded terms here at BP - tons of info

Also:

@Brandon Turner has a new book out on this topic (I haven't read it myself, but I'm given to understand it's quite good)

 That seems to depend on the local market - I have been told (to my amazement actually), that in my market, blinds are expected for pretty much all rentals and not having them makes it significantly harder to rent.