All Forum Posts by: Eric Veronica

Wondering if anyone has been as negatively impacted by the new tax laws as I have and looking for a solution.  This question is directed towards other CPAs, loan officers or any other commission employees who are paid by a W-2. 

My understanding is that starting in 2018 a W-2 employee can no longer deduct  unreimbursed business expenses from their income.  Even though my income is 100% commission and 100% derived from the business that I generate I cannot write off anything.  I am not talking about grey area stuff like mileage or internet or cell phone.  I am talking about expenses like google adwords, website development, buying leads, and even paying for my biggerpockets membership.  

Last year this cost me thousands of dollars in extra taxes.  Anyone else has been as negatively impacted by the new tax laws as I have?  Any solutions?  CPA recommendations?

@Ali Sardar The rate you are looking for is the 3.65% you already  have.  Best move is not making one.  That's a pretty slick rate!

@Pete Frederick 30 year = cash flow.  CASH FLOW!!! CASH FLOW!!! CASH FLOW!!!

@Delmas Gibson conventional investment financing usually requires a 15% minimum down payment

@Delmas Gibson I have to disagree with some of the other comments here.  If you are buying a rental property then the lender should be able to use proposed rental income when calculating your debt ratios. This is accomplished by the lender ordering a comparable rent schedule (form 1007). The 1007 gives the lender a market rent for the area. An investor friendly lender should be open to using this proposed rent

Scenario-let’s say you currently make $10,000/month w-2 income. You have a owner occupied mortgage payment of $3000. Car payments of $800/month and student loans of $900/month. This totals monthly debt of $4700. With a monthly income at $10,000 you are at a 47% ratio. No way you will qualify for an investment property mortgage. right?

Not so fast.

Let’s say this property you are purchasing will result in a $1000 monthly payment. Let’s also say that 1007 rest schedule form comes in with expected monthly rent of $2000/ month. Our approach is to hit the rent with a 75% vacany ratio which gives you expected monthly rent of $1500/month. We then deduct the $1000 mortgage payment from the rent and you end up with $500 in additional monthly income.

The awesome part is that the $1000 monthly payment is not counted against you at all because it is completely negated by the rent. The awesome-er part is that the $500 expected income can actually be used as qualifying income!

Debt ratio before rental purchase $4700/$10000 =47%

Debt ratio after rental purchase = $4700/$10,500=44.7%

Taking out a new $1000/month mortgage actually lowered your debt to income ratio!

@Ashish G. To get an accurate answer we would need to know the loan type... FHA? Conventional?

Here is the link for Fannie Mae PMI termination

https://www.fanniemae.com/content/guide/servicing/b/8.1/04.html

@Ernesto Hernandez Talk with Steven Burr. He has a contact at Reliant Bank who wrote a HELOC for him. Ill text you the contact information that he provided me.

@Steven Bays Hello from a fellow Buckeye! You have the option of getting conventional mortgages in your personal name and transferring the title to an LLC or you have the option of having the LLC be both the borrower and the title holder. Generally you will find more desirable interest rates and terms going the conventional route where you are the borrower.

It seems that more investors tend to start with conventional financing.  Then in the future as investors move into larger projects they tend to lean more towards commercial financing. 

As far as the "due on sale" is concerned, Fannie has some verbiage in the guidelines which allow for LLC transfers in certain situation. Here is a link to another post which discusses this topic in a lot of detail.

https://www.biggerpockets.com/forums/49/topics/610...

@Tyler Coyle possibly.  There are no set rules for private lenders. All depends on the individual lender's risk tolerance.

@Tyler Coyle Most likely two years.  May be able to find a lender who will consider 100% commission income with slightly less than 24 months.  Possibly 18 monhts.  Anything less than that is possible but not likely.