All Forum Posts by: Lucas Martinez

I’ve asked around and tried researching this and I don’t see a clear answer. Even asked a cpa and it seemed murky.

Has anyone ever been asked to move for work and needed to sell their home before the 2 year mark? Is there any sort of capital gains exclusion for that?

I live In the OC and have a condo I was planning on selling next March (that’s when the 2 year mark is for me) but my work (a non profit) is asking me if I can move to Santa Barbara to be closer to our office there. Does anyone know if there is any type of exclusion or way to not get hit hard with taxes? Sounds like I may just have to wait and that’s totally fine! Just trying to figure this out :)

Lucas, thanks for the response. I have 2 years of rental history on both properties although most of it is STR, which seems to be an issue for a lot of lenders. I'd love the connection to your broker although I'm at least a few months out from really trying to move on anything.

Howdy all! Here is the quick and dirty. Looking to purchase a home in Santa Barbara in the next year. We've been spending half the year there for 8 years and have decided that's where we'd like to "settle". For all intents, this will be our primary residence 9-10 months a year, with 2-3 summer months available as a medium term rental, netting $10-15k monthly. Home will likely be $1.5 million. I have $300k cash to put down if need be, sourced from the sale of a property last year. Here are our other assets and details:

- Property 1- Primary worth ~ $1.8 - 2 million. Owe $650k. Financed at 2.875% 30yr fixed. PITIA plus utilities $3500 a month. Property grosses $60-80k annually as an STR, so we're cash flowing $20-40k annually. We will continue to live here in the summer, but this does not affect STR earnings.

- Property 2 - Rental property worth $625k. Owe $250k with 4 years left on a 7 year ARM at 4.25%. Has operated as an STR, medium term rental, and is currently occupied as a long term rental until next June. PITIA ~ $1800 a month, rents at $3500 a month, netting about $20k annually.

Both of these properties are in our name and as such affect our DTI. We're "real estate investors" in that we have been lucky enough to buy primary residences in desirable locations with high rental demand and then keep them as rentals when we need to upgrade. My strategy hasn't been any more sophisticated than "rent out what I don't live in, and rent out what I do live in when I'm not there".

Even at 20% down, I feel like I'm going to be hard pressed to qualify for a mortgage in Santa Barbara given my DTI. I'd love to not sell the rental property, and am not willing to sell our current primary to get this done. I am very aware that I want my cake and to eat it too. All that said, I'm not sure how to approach the new purchase. Should I be shopping as if it will indeed be my primary? We work remotely and the two current assets are located in a state with much better tax implications, so I'm happy to keep Property 1 as our "primary" if that makes more sense. I also think it'll benefit me to get Property 2 off our personal books, probably best achieved with a refi/title transfer to an LLC? We have a fair bit of equity in Property 1, but I'm unsure how to best utilize a HELOC for something like this. Given the rate and term we have on Property 1, I'm loathe to consider a cash out refi on that property.

Open to all thoughts, strategies and questions other than "don't move to California". Thanks very much ahead of time, this is such a great community and the brain trust is impressive. 

@Brenden M. - I've not done this personally, but have clients who have and I've ran this by some of my lender friends who have also agreed that it is plausible so something you can consider: You need to create a long term lease from you or your business as the "owner" to your STR management business. Essentially, you can create a long term lease for the average STR rent to your STR business who sublets as a vacation rental and then that long term lease income can be counted same as it would be if you had an actual LT tenant. Key is to be upfront with your lender and honest, but I have seen underwriters allow this to get around the DTI issue.

Any Investors, Agents, Contractors located on the Central Coast of California (San Miguel - Oxnard) interested in meeting up?