All Forum Posts by: Nathan H.

Right back at you @Paul Moore! It sounds like you know a thing or two about creative tax planning. I’ll have to go back and listen to #285, this is the kind of stuff I love about real estate. Tax benefits are so often overlooked, even though they often are the single biggest expense.

@Brandon Turner I’m sure your team is all over this, but might be a good conversation piece when talking shop. 
Thanks for getting me started in this asset class!

@Elise Marquette

Thank you for your response and honesty.

To answer your question, I would absolutely trust a part time MLO IF they were a financial professional. For example, a CFP that is licensed in mortgage origination, CPA or attorney. The barrier to entry for these credentials is high, so I would trust that they’re competent individuals. 

I appreciate your bluntness with the tax background question. That’s a bummer to hear. I was thinking it could be a value add having the ability to see the story behind a tax return for self employed folks. I was also hoping it could bring value by determining the best rate options based in part on the relationship to marginal tax rates. 

Thanks again for you answers

@Steve Morris It’s a Mortgage Loan Originator or Officer.. not even sure on that one haha

Hi BP Community,

I want to get your take on a possible career change and see if you’ve found some of the assumptions I’m making to hold true. 

Currently I’m a tax accountant. I specialize in exchanges and partnerships (typically real estate), but I’m pretty well versed in tax overall. I’ll be a licensed CPA before the end of the year (1 test to go!). 

I’ve put so much time and effort into becoming a CPA, all while investing very actively in real estate. It would be a shame not to put it to use. In being honest with myself, after being in public accounting not that long... I hate it!! My real passion is real estate. It’s so hard working for a salary that I can, and at least once a year, do make on just 1 real estate deal. I really do it for the lend-ability of a W-2 job (I usually buy with HM and refinance) and the educational aspect. 

Now that I’ve given some context, here are my questions, but please add anything that you feel could be helpful...

- Do you feel that being a CPA that knows tax would be a material advantage when it comes to a career as a MLO? 

- What are a couple of major drivers of a successful MLO career? 

- Is this something I could realistically build up part time, while working full time at my CPA firm, winding things down. 

Thank you in advance for the guidance! 

That's correct. When it comes to holding title in a single member LLC vs. personally, the deductibility of expenses is not effected what so ever. Even the reporting on your tax return is the exact same (Sch. E). The tax rates are the same and the nature of the income is the same (Passive Activity). Tax advantages/disadvantages would not be a valid consideration when making the decision to take title personally or in an LLC.

@Kyle Stroup

We're in very different markets, so I might be off here. For HVAC and windows alone, on a 1,300sqft house, I'd be paying about $10,000. $13,000 goes extremely fast. Again, I'm in an expensive market, so I could be wrong for your situation, but the rehab costs seem low even assuming $0 labor cost. 

@Luis Sanchez Rodriguez

If you want to send me the deal, I'd be happy to take a look. Let me know any info that might not be obvious as well as assumptions you're making. 

@Lynn Anthony

There is a ton of nuance when it comes to the ARV of a BRRR project, so this is somewhat of a hard question to answer directly. I'll try to provide some information that can give you better basis for making your own determination though:

Anything that adds value would help with the refinance process, be it market forces or improved finishes. Theoretically, you could simply buy under market and/or experience significant appreciation, then 6 months later (the required amount of time for conventional lenders to revalue a property that hasn't had work put into it), refinance it. Putting money into the house would help your case when presenting this loan to a lender though. 

It simply comes down to the value of the house. I just don't see how you would be required to add square footage to get the value up, unless you're buying a house that is in good enough condition and up to date enough to where there isn't much of a value add opportunity.

To help illustrate this... If you segregate the components of a house, you can contribute a portion of the value to each component. If, for example, you're buying a house with $10,000 worth of carpet, but you remove it and replace it with carpet that costs you $10,000, but adds $15,000 to the value, you removed $10,000 of value, then spent $10,000 to replace it and increased the value by a net $5,000, but you spent $10,000 getting there, you would have been better off keeping it as is....

This is just my confusing way of explaining that you want something that has a lot of room for improvement to maximize the BRRR strategy. Find something that is easy to add value to for a successful BRRR

@Robert Swiss

I would focus on cash flow if you’re trying to consistently build a portfolio the traditional way. Of course the only constriction on real estate strategies is an investors creativity, but here’s my reasoning assuming that entry level pay for your job isn’t 100k+ and you’re doing this the traditional way. 

If you’re not cash flowing a decent amount, you’ll be creating liabilities that could disqualify you with conventional lender.

As an example, Fannie and Freddie will typically count 75% of your rent income towards the offset of your PITI payment. If your PITI payment is more than 75% of your rent income, they will count the net amount against your DTI ratio. This could create a problem when trying to refinance or buy the next property.

Just something to keep in mind... Cash flow/income will allow you to leverage, leverage is how you build a portfolio.