All Forum Posts by: Randy Rodenhouse

My first order of priority is cash flow since appreciation is some thing that is icing on the cake but you cannot expect it. If I was buying the property at a significant discount and considered selling it within a short period of time I might allow a negative cash flow for a short period of time. I think it's wishful thinking that the interest rates are going to come down significantly in the next year or two so don't bank on that as an exit. 

I would suggest if you are buying your personal home (owner occupied) that it would be a good idea to get title insurance. However, many of my investment properties I get a title search done (I know how to read Title) and I may not get title insurance depending on the history (prior transfers, mortgages types, etc. on the property. I have never used an attorney opinion letter, in fact it's the first time I heard of it. Fannie and Freddie can probably take the risk since they have a large volume and the number of issues are low but I don't see the banks not requiring title insurance any time soon. Thanks for the info.

Helen, click on your picture (right hand corner) and then drop down menu will appear.  Click on "My Profile" and then a new page opens.  Look to the right side and you will see recent posts.  

Not being on the mortgage is actually a good thing since you are not personally responsible but not being on the deed is a bad thing because you don't have ownership. Every state is different and how they handle these things but typically you could assume the mortgage as long as you can qualify. Many FHA and VA loans are assumable with qualification. You have to ask the lender. Another idea, if she agrees you can have her deed the property to you and you continue to make the payments.

As a rental property owner, it’s not uncommon for your properties to produce a net loss for tax purposes thanks to depreciation and other operating expenses.

Losses from rental property are considered passive losses and can generally offset passive income only (that is, income from other rental properties or another small business in which you do not materially participate, not including investments).

If these passive losses exceed your passive income, they are suspended and carried forward indefinitely until future years, when you either have passive income or sell a property at a gain.

Generally, the only time passive losses will offset your ordinary income from a W-2 job or another trade or business from passive activity rule which says you can deduct up to $25,000 in passive losses against your ordinary income (W-2 wages) if your modified adjusted gross income (MAGI) is $100,000 or less.  This deduction phases out $1 for every $2 of MAGI above $100,000 until $150,000 when it is completely phased out. These limits apply to both those filing single or married filing joint. The only other way is to become a RE professional -  you must spend at least 750 hours in a real estate trade or business and more than half your total working hours must be in a real estate trade or business.

On your tax return and on schedule E in particular, it will show a negative amount which you can offset your income up to $25,000.  If you are Re professional then you can write off all from your active income.  

Most lenders (which you are calling cash investors) will require a down payment of some amount typically 20% or more. I don't think it's wise to buy a rental property if you have no capital since even after you buy the rental property any hiccup can throw you off and you need reserves in case this happens. Maybe instead do some wholesaling to save up some money and then look for a rental, or buy a house Sub2 existing loan with little to no money into the deal, or possibly buy a house on lease option.

First Western Federal and NASB (North America Savings Bank) will do non recourse loans for IRA. Usually have to have 30-40% of the purchase price in the IRA as downpayment. Check out the book "IRA 401K Income Builder" on self directed IRA investing.

You may want to call landlords and ask them 2 questions.  First, would you consider a long term lease (of course they will say yes).  Second, ask if they would consider selling their house at some point in the future.  If they say yes to both them possible lease option deal.  You can usually get a lower rent payment since long term and they like no turn over and try to negotiate price to around 90% or below.

The only way to get a loan on the property to get the title in your name. You would have to exercise your option and get a loan on the house and pay off the underlying 1.5 million and then pocket the remainder.

I would probably do either biweekly payments or just an additional payment per month which goes towards principal.  You can do the math to see how many years it will reduce the mortgage.  However, if you can take that money and put it to work making another stream of income then that might be a better idea than just saving some interest. It depends on your current interest rate.