All Forum Posts by: Dan Schwartz

@Deep Patel DTI is a precious thing. Even if you have no plans to hold 10+10 conventional mortgages at any one time, there is no reason to encumber any more income with debt that doesn't have to be attached to it. Good luck!

Money's expensive right now. If you really need, you need to pay up. Could you cash out refi one property to pay off another (or even more than one other) property? Then put a first position LOC on the free and clear property/use. Many commercial lending departments will take first position for a LOC, but not second.

This is an instance where step two needs to be lined up before step one.  

If you go the non-bank route, make sure you are with an actual broker who has access to multiple funders. Many independent brokers get swallowed up by financial companies that only sell their own paper. It’s not competitive, but since it doesn’t say “Bank of America” on the door, one might assume it’s a broker.  

A purchase last year was at 2.875 with a broker; the financial company that used to be a broker could do no better than 3.625.   

@Johnny McKeon glad to help.  i Think you file an amended return on paper.  Or that may have been after a certain time had passed since the original filing.  

At $80 a month - or really, any amount - they should be doing it accurately.  Point out their error and have them refile everything.  It will be a lot easier on you.    They have the original filings, but make sure you have copies of everything prior to firing them.  They probably filed online.  

Consider saving the $80 a month and taking this on yourself.  If your annual liability is less than $2,000, you can file once per year by Jan 31.  It takes longer to remember how to login once per year than it does to fill out the form….

https://azdor.gov/transaction-...

Reach out if you need help.  This trips a lot of people up, but it’s not actually that complicated. 

On a separate issue, I had to call AZ DOR business line yesterday.  Hold time was less than 15 minutes, they were super helpful as usual, and the issue was resolved right away.  Don’t be afraid to talk directly to them as well.  

Can you please share some of the tax benefits you've reaped from holding real estate in an LLC? Thanks.

Not sure that sex in dorms is a “new college lifestyle.”

She can…

Drop a class she can easily take at another time if the course load is too much. Music classes are usually on a rigid semester-by-semester schedule (prerequisites), but is there a general education class she can defer to later?

If the room is too small for all of her stuff, send some back home.  

Sit down with the hall advisor and the roommate and work out the privacy issues.  Her roommate will surely realize that guys aren’t too picky on where exactly they get to take care of business.  That campus is far larger than that one dorm room.  

Talk to her voice teacher and TAs about the difficulty finding practice rooms.  This problem is also hardly unique to her.  They can’t make more rooms magically appear, but they can offer her whatever guidance they’ve given scores of students before her, all of whom faced the same limited facilities and managed to successfully navigate their studies.

It’s a very nice music program.  I hope she finds her path and does well.  

@Jean Pierre your lenders and mileage may vary, but….

-buy the first house with <45% global DTI.

-if you will live it in for a year, you can get owner-occupied rates and down payments (as low as 3%). I one year is kind of the standard for “that’s long enough,” but I haven’t asked a lender that in over 10 years.  

-2nd house is a little tricky since you need a signed lease and deposit payment.  After you have more experience and show some Schedule Es, this gets a little easier.

-75% of the rent amount less your PITIA and MI is added or subtracted to your DTI. If you have 97% LTV mortgage it might be hard to have this be additive to your DTI. Again, the second home is hard.

-recalculate your DTI excluding rental income/loss, then add/subject the amount of your rental income loss. This is your new DTI. E.g. you make $10,000 a month. 45% is $4500. You have a housing payment of $2,000/mo and $300 in monthly payments on your credit report. You have $2,200 left to fund a new PITIA. You calculate 75% of your lease rent less the PITIA and MI as -$600. Now you only have $1,600 for your new PITIA.

I may not have all of this 100% accurate, as I’m not an underwriter, but this what I do to pre-qualify myself.  By the time I’m talking to my loan officer, it’s just to see exactly what paperwork/statements they need to see to underwrite.  

It gets easier as time goes on.  That’s the beauty of long term real estate acquisition.  

Good luck!

@Masashi Borges-Silva you’re reading up on a lot of IRS publications, which is great.  But you’re also chasing a Holy Grail that many others come here seeking.  

The best, and sometime only, way to reduce the tax burden of your W-2 job is to reduce your W-2 earnings.  

Since we all generally like having more money rather than less money, the best way to reduce your W-2 earnings is to use your (presumably) high earnings to generate replacement, tax-advantaged income.  

This could be buying stocks that throw off big qualified dividends. 

This could be forming a business in your profession to enable deduction of ordinary and necessary business expenses. But you’ll also get an immediate 7.65% tax increase due to self-employment taxes, and the size of the deductions aren’t always what people purport them to be (the ability to get a solo 401k is pretty awesome, though). 

This could be buying income-producing real estate, which often provides a cash profit while at the same time creating a tax loss that defers the payment of tax well into the future.  

I suggest focusing your energy on converting the income, while you have it, into tax-advantaged income streams rather than try to contort yourself into a situation (often by taking large, actual cash losses) where you can offset some of your W-2 income to avoid taxes.  

@Jowan Chism. soo.......what happened?

@Sadhana Patel, @Jerry W. is right, on top of being an all-around good guy.  Formation is not the hard part, operating agreements are.  LLCs are so simple to set up in AZ that my attorney won't even let me pay her to do it.  It would take more time to write and send her the info than it would for me to simply create it.  But the operating agreement is the part you can get some help on, both to make sure you understand it and that it's tailored to any special needs you may have (and you may not have any yet....you can always amend it later).  

This took 30 seconds to find: https://wyobiz.wyo.gov/Busines... Read through what you need to do to file, and then focus on finding someone for your operating agreement.  If you're thoroughly confused by what the online promoters are setting up (you haven't indicated you are, so I'm just saying), then they may be crafting confusing arrangements for a reason.

Just my two cents. All we know of your situation is what you wrote here.