All Forum Posts by: Marc Rice

Hello all, just looking for input on how to address the following situations with a rental application:

a. Applicant has indicated previously owned a home with spouse but is currently going through divorce and living with relative along with two minor children and is unable to provide previous landlord references.

b. Applicant's wage income is below 3x rent and does not qualify on this basis, but has indicated government assistance for two minor children. Including assistance for children income exceeds 3x rent. Can applicant be asked to provide proof of assistance and treat this as qualifying income for purpose of renting?

 I wondered whether the above should be treated as red flags for screening or not?

Thank you.

Hi all,

I'm considering a purchase of a property that needs a fairly significant renovation. The property is currently occupied - the current tenants would like to remain on the property and sign a lease. I have concerns that having the place occupied will significantly complicate the renovation. I'm new to this and I'm investing out of state - just wanted to get others perspectives and thoughts on this situation.

Thanks!
Brandon

Hello,

I've been studying content on MFH investing for about a year and I'm done waiting and ready to take the dive.  I have friends/family who have some considerable cash and I won't have problems finding equity. The question remains is do I start above 4 units or not. Also, I still have a lot to learn on how to structure the equity partners into the deal, doing preferred returns, splitting returns above it, structuring how profits are disbursed on the exit, etc.

Here's my main concern - I have credit below 600 still from destroying my credit score with reckless consumer debt spending in my 20's.  I've been enrolled in a debt settlement program and have been settling debt for 2 years now, but I still have a ways to go.  I have a couple collections on there, lots of missed payments, etc, in 2019 before they all went to collections (about 13 different consumer credit lines with different banks). 

I've had w2's for the past year and half and will make about $100K-$150k from my job this year, so my income isn't really impressive either. 

With both DSCR loans and conventional financing, it just doesn't appear I can cirumvent the low credit score.

What are my workarounds? Do lenders pull the credit scores of ALL the equity partners (investors) in the deal? Do they just look at mine? Do I leave mine off entirely, and if so, how would I do that and still have any equity in the deal? 

How do I solve this so I stop WAITING to buy real estate but buy and then WAIT, pay off all my debt, increase my net worth for real.  

New to investing looking to connect with like minded individuals looking to further their education in real estate. I learned from academia that group studies are quite effective. Let's concentrate on rental properties and possibly do a deal together soon.

@Christopher Shutrump

When an IRA invests in a syndication, leverage is generally used.

As a result, the IRA is subject to tax on Unrelated Debt-Financed Income (UDFI). Basically, the portion of the income that the IRA is receiving from the non-IRA (borrowed) money in the deal is taxed.

When filing the 990-T return for UDFI, the IRA can take advantage of straight line depreciation, but not accelerated depreciation.

When the deal closes out and the IRA receives a capital gain on sale, prior depreciation taken is recaptured, just like with any other investor.

Taxes and deductions that may apply inside of the IRA do not carry over to your personal taxes when you ultimately take a distribution from the IRA. All distributions are treated equally as regular income to you in the year of distribution, regardless of how the earnings were generated within the IRA.

The bottom line is that leverage boosts return. This is true even when an IRA may be subject to tax on UDFI. The tax should be considerably less than the increase in rate of return that leverage produces.