All Forum Posts by: Dan Schwartz

Taking a 5/1 ARM in a rising rate environment suggests that you don't want to hold it longer (or much longer) than the initial 5 year period.

If that's true, have you asked about avoiding the points with a higher interest rate?  Would you goals still be attainable with the higher interest rate (and $8K more in your pocket)?
 

@Dan W. you have to file a 2021 tax return. The house you bought and the direct costs incurred in rehabbing it prior to sale increase your “inventory.”  Inventory held needs to be reported to the IRS. When you sell that particular house you will be selling that “inventory.”

If you work with a tax pro on this make sure you are asking what, if anything, can be deducted as start up costs and if any of your business expenses that aren’t directly related to the property/inventory can be deducted in 2021.  

But for sure the costs directly related to the rehab will be suspended as inventory until you sell it.  

Without any 2021 income from this venture, you shouldn’t incur any taxes.  You might want to file an extension, make sure you’ve paid sufficient taxes on the rest of your situation by the April deadline, and then sort this out with someone after April.  It’s getting late in the tax season to drop this on someone and get the best outcome.  

If you have elected to be taxed as a partnership or corporation your filing is due next week. 

I’m curious to know what the two different answers you received were.  

@Brent Fisher congratulations!!  I don’t know the area or the home, but think about why it was built/configured the way it was and what would make it more valuable.  I’m working on a home in a retirement community now that had barely been touched in 40 years. There’s a lot I *could* do to it, but I ultimately decided that the main value to be unlocked was in making it not look like and feel grandma’s house anymore.  Good luck to you!

Every bank is different.  Write down a list of questions you want answers to.  The first person you speak to May or may not have access to the underwriting guidelines.  I’ve seen anything from needing to be able to pay the interest-only payment on a full draw to the fully amortized payment on a full draw to the fully amortized payment on a full draw with a higher-than-current interest rate.  

What DTI do they allow?

What calculations does underwriting use to add this line to DTI?

What income is allowed?  (I’ve come across a credit union that wouldn’t allow any rental income in qualifying….it had to be 100% on W-2 income, even though the line was for a rental)

Is the income discounted, like Fannie Mae does, or is it calculated from tax returns?

The more you talk to people, the better feel you’ll get on what to ask.  Just start calling loan departments.  Their staff is literally there to sell debt, and you are a potential customer.  

Sure thing,@Brent Fisher. Great that she's been designing, and Hale Center is great.  I'm going to PM you because I don't want to post a third person's name online without her permission.

@Brent Fisher so much to unpack here.  I've got NYU stories, USU stories, Oregon State stories......  Financially, I haven't thought of any reasonable way to crack your dilemma, though I've tried.  Professionally, your daughter has a long, tough road ahead of her.  I hope she understands that.  If she makes the move to NYC, her peers are going to matter more than her teachers.  She needs to be with the people who are going to "make it," and be one of those people who are going to "make it."  Opportunity won't show up with the diploma.  Has she been designing sets at high school?  Community youth theater?  Has she scoured LinkedIn for students or graduates of the program and messaged them to ask them questions?  Has she cross-checked what she can find at ibdb to see if they have professional credits?  Lots of hard research there beyond who NYU might put her in touch with.  Has she mapped the paths of current set designers on Broadway or in the West End?  Their bios are all in the Playbills.  Her path won't be the same as theirs, but it can be illustrative.  Has she researched what set/scenic design jobs are available across the country and what skills they are asking for?  Has she participated in summer programs and, whether she has or hasn't, will she in the future?  Is she prepared to be a nomad through the early parts of her career, at a minimum?  I could go on and on.  I won't.  Bottom line advice is that she can start this journey at a disadvantage (like $200K in loans), but she can't start it with any sort of passivity.  She's not going to college to learn how to be a set designer; she's going to advance her career as a set designer.  There's a big difference.  Good luck to her!

@Joe S. what happens when you click through from Google to bluepillow. Google is helpful but not entirely accurate in every case. I've never searched for STR on Google, but they rates for hotels and flights seem to be accurate maybe 75% of the time - higher for flights and lower for hotels. Just my experience.

@Abhishek Maloo did you prepare and sign the disclosures (a SPDS or similar, I'm guessing) prior to listing the house.  Or at least prior to the prelim title report being generated?  I'm not in CA, but the SPDS is always part of the purchase contract, meaning that it was prepared and signed by the seller prior to my making an offer.  

Bear with me, because this might be a stretch, but maybe the bank through which you process the income on the $40MM income-producing real estate portfolio might be a potential solution to your problem?

@Michelle Garcia you’re under no obligation to commit until the initial disclosures are provided.  Don’t like them?  Don’t sign them.  I’ve left some unsigned in the past and moved on to a different lender. 

I’m guessing that the 3.5% rate has a point attached to it.  But there’s so many other costs that are in the disclosures that can vary widely between companies, like origination fees, underwriting fees, and more.