All Forum Posts by: Jeshua Patrick

@Logan Vierstra I think that OF would definitely be one way to do it. Are you looking at them for rentals or flips? Try to get them under contract and if it’s truly a great deal the money will come.

@Anthony Sinigaglio he may be able to add you to the deed at which point at least the property would pass to you upon his death without having to go through probate; however, I’m not sure you would be able to do a cash out refinance without his consent.

@Jeffrey Lo I’m pretty sure the tax-free loophole requires 2 years of occupancy within a 5 year window not 7 which would only give him 3 years to sell tax free not 5. The $250k single/$500k couple numbers are correct.

@Rebecca McDonald those saying you should take another job in a similar field are correct though, if you want access to traditional financing methods. By leaving your job and becoming self-employed you have started a 2 year clock before most lenders will consider you for a loan and the only way to put it back is to go back to another job similar to what you left before any significant time passes. Also, as a self-employed person, banks will typically only consider your net or AGI and not your true gross income as most savvy self-employed people tend to take a lot of deductions and operate at little to no taxable income. This is why you see a lot of self-employed individuals partner with people who have sufficient W-2 income and low DTI ratios.

@Mark ONeill seller's agents will present your offer in a more favorable light as well if you go conventional as FHA inspection requirements are more stringent and complex. I think others may have mentioned this already.

@Mark Welp I figured you would go to the depreciation as I have heard that argument before and I would counter that the only advantage that depreciation has over a traditional qualified benefit plan is that taxes can be avoided completely by holding the asset(s) until death and passing the asset(s) to heirs; however, holding assets outside a QBP for depreciation is IMHO an inferior strategy to holding assets inside a ROTH QBP if one’s focus is wealth building for retirement.

Also, I personally believe cash flow is just as important inside a QBP as it is outside one. Inside a QBP cash flow builds liquid assets that can only be eroded by inflation and allows the portfolio to grow faster while building a foundation for a great retirement later. Outside a QBP cash flow allows one to buy financial freedom much earlier than allowed by traditional methods so I would argue that holding assets inside AND outside QBP’s is equally important but that the balance between the two should be based on your personal financial goals.

@Mark ONeill keep in mind that the upfront PMI fee charged by FHA combined with a permanent, higher rate monthly PMI fee makes this a significantly more expensive option than a 5% down conventional loan. If you can swing it take a 5% conventional and then talk to your lender about a flat-fee PMI option. It may be a little more out of pocket up front but it will save you thousands between the direct savings vs a monthly PMI option plus the thousands more it would cost you to refi out of that FHA loan.

@Rebecca McDonald does your REIA have a time where investors get to pitch deals? If you have a deal under contract and talk about it the money will find you, or so I'm told. My point is that nobody will give you money unless they know you have a deal... and trust you. As a manager you have likely learned relationship building skills so now you have to learn how to market yourself.

@Mark Welp I am in the process of converting an old 401k into a SoloK. I have talked to people who hold RE inside of a qualified plan and those who don’t. What tax advantages do you see to keeping actual properties outside of a retirement account vs holding them inside of one?

@Jamie Burns I would recommend looking into a SoloK instead. It will take a little more work on the front end; however, it is much more advantageous if you are a believer in using leverage to build wealth. It also carries much less risk if you want to take advantage of features like checkbook control.