All Forum Posts by: Josiah Collins

@David Hooper @Chris Mason

It seems like the main issue is that the commercial loan and property are in personal names rather than in an LLC. I decided against using an LLC since we do not really have the assets that we would really need to protect with an LLC.

As far as separate expenses, I do pay a lot of our expenses from our personal accounts/credit card. I have records of everything and what each expense was for, but since there is no LLC that requires funds to be separate it didn't seem like it would matter at that point. There was no "veil" to protect. One other issue was that our rental property showed a paper loss because of depreciation etc, so apparently that can scare the underwriters as well..

I guess we'll see what happens!  After speaking with the lender more today and explaining more about our financial situation he seemed to be more positive.  Definitely a learning experience with regards to how being a buy and hold investor can cause other issues!

Thanks!

Hey everyone!

So my wife and I are currently under contract in a home that’s going to be our primary residence. We got preapproved to buy are new home without making it contingent upon selling our current home. We are planning to sell it as soon as we move out, but we wanted to make our offer stronger and not have to worry about the timing of selling one then moving into the other.

Now that we are actually under contract, the lender is saying there are concerns because of a commercial rental property that we own. The gross rents on the rental are currently about $5200/month and the mortgage is $2390/month. It is a commercial loan. From everyone’s experience, should this really be a factor? He had already preapproved us knowing about this property and our current income etc.

Our current DTI is pretty low and even if we added the new mortgage along with our current home's mortgage, but not factoring in income or mortgage from the rental, our debt would be about 37% of gross.

Any thoughts? We are only 4 days in our 30 days, so I could potentially switch lenders still. Just wanted to get some opinions from everyone here. Thanks!

@Jesse Murillo yes once you have identified your three properties, if you do not actually close on one or more of those properties it would be a failed exchange. I’m in the middle of an exchange too so I’ve been learning all about them. 

If you did get into a situation where it was a failed exchange maybe look at Opportunity Zones as another option? I’m currently looking at those too to see if that’s a viable option. Hope that helps!

-Josiah

Generally speaking, I think those down payment requirements for 1-4 units will be the same through any traditional/formal lender.  Just from seeing other posts like this and the information that's out there, I think most people will tell you the only way to get a lower down payment than that is to use a private lender or seller financing.  Probably wasn't what you wanted to hear, but that's been my experience. 

Hello everyone! I’m going to be listing a rental property within the next several days, and I came across a 1031 exchange question I hadn’t considered. There are some up front costs such as inspections and HOA document fees that we are going to have to pay. Once the rental property sells, are we allowed to reimburse ourselves those up front costs from the sale proceeds without it being taxable? Also, on our taxes last year we had some losses that we couldn’t use that are going to carry over. I was wondering if we could technically take some of the proceeds out to have more reserves on hand and use those future losses as a way to offset the gains from keeping some of the sale proceeds. Hope that makes sense! Look forward to everyone’s insight! Thanks!

@Jim T.  I tried to find more information about this.  Do you have a source/link you could share?  Thanks!

Most of the ones that I've seen at those types of price points are in really bad areas.

I'm pretty sure the requirement is that you would have to live in it for a year. Usually this is specific in the actual loan documents and that's what mine was. Not sure if it's state specific.

Hello BP!

I tried searching old posts on this topic and couldn't find a question similar enough to mine. I currently own one rental unit that I manage myself and I'm wondering if I should be able to do a home office deduction. In my house, my wife and I have one room which is the office. She has a little desk for doing her work/school work and I have my desk. Anything I'm doing related to our rental and looking for the next deal is done there. 

However, I use this computer for recreation too, such as video games. I just bought this desktop PC July 2017 as well, and I have a laptop that I use too. Even if I can't claim this deduction in 2017, going forward I'm wondering what we need to do in order to get this deduction. Would love some BP input! I'm working with a CPA and getting his advice as well, but I wanted to get advice here too because I've had a great experience here and have received a lot of useful advice. I understand that the chances of getting audited are minimal, but I wanted to make sure I can defend/substantiate any deductions just in case! Thank you!

Rachel, if your parents are willing to be on the loan then I wouldn't think you would have to worry about the seasoning for the down payment since, presumably, they can show that money in their own account? At that point you should be able to do a standard conforming loan with both of you on the loan?