All Forum Posts by: Kathy Patterson

Hi Garrett,  I live in Sebastopol and have been looking at the SRJC area for a year.  I haven't seen anything under 600K that is not a fixer requiring more cash.  I recently took a class at the JC about changes in local ordinances allowing renting out extra bedrooms and converting garages into rental units.  So rather than taking on more debt to buy another single family home, that is what I decided to do.

If I were your age (I am semi-retired so different goals)  and just starting out I would try to get a partner, even two.  It is impossible to purchase in Sonoma County without help.  Then I would rent out the other bedrooms while you live there and plan your next move.  This site has great info on "house hacking" and I think it could be your answer.  Good luck and let me know what you decide.

Kathy

Thank you very much Ken.

I would like to know how others might structure a deal in this situation:

My friend has a high paying job, an 800 credit score and cash for a down payment.  She wants equity, write-offs and eventual appreciation.  She does not want current income.

I do not have a high paying job, a 737 credit score and no cash for a down payment.  I too want equity, write-offs and eventual appreciation.  I don't need current income either.

We would need to take out a mortgage for the remainder of the purchase price.  I will identify the property, find tenants and manage the property.  Assuming we can cover expenses (using the BP calculators)  and break even (or at least not have a negative cash flow), what are some ways to structure a deal?

We want to be 50/50 partners, but how do we balance the fact that she is putting up more cash and I am doing the work?  

How do you divide the equity when one person is an active manager and the other is a passive investor?  We are looking at move-in ready single family homes, not fixer uppers and have a 10 year minimum holding period.  In 10 years we will decide if we want to sell or one buy the other out.

I would appreciate knowing how others have done similar deals successfully.  

Thank you.

Thank you all, but my question was already answered.

Thank you Dmitriy!   That is what I wanted to know.  Many thanks. Kathy

I am interested to know how using a tax-deferred retirement account to purchase a rental would affect my ability to use depreciation. On the surface, it seems that you would not be able to depreciate an asset in a tax sheltered account any more than you would be able to write off stocks that went down in value inside an IRA. Is this correct?

Also, when I eventually sell the property and am required to begin withdrawals at age 70 1/2, wouldn't my withdrawals be taxed as ordinary income vs being taxed as a more favorable long term gain outside my IRA?

Thank you,

Kathy

I am new to BP.  Does anyone attend the meet up at the Washoe House in Petaluma, and if so do you find it valuable?  Thank you, Kathy