All Forum Posts by: Sean Gallagher

Can anyone share info on classifying the property as an investment vs a primary home. Primary home lower interest rate etc but who is to say I cannot go with a loan classifying my home as a primary address and then decide to rent it out a couple months later.  Say my loan is already finalized, possibly there are penalties for this?  That's another thing to look into because I will have to classify future properties as investments 

My end game is cash flow over a hold and type investment, my approach was to aquire multiple properties overtime, fix up as needed then rent, and use the equity over time in my portfolio to expand on more property.  I never really thought about larger units.  I did think about the 1031 but it seemed like a lot of coordination had to take place and deals had to work out perfect, I'd almost feel rushed into a purchase.  The 1031 I wonder how much time I have from the time I sold the home.  Does the equity get held by the bank for the next purchase or?  Hmm 

 Did some searching :)

"Gross income shall not include gain from the sale or exchange of property if, during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as the taxpayer’s principal residence for periods aggregating 2 years or more."

Has to be owned

Here is another thought, I've been using this property in question as my primary residence for more than 10 years.  I've traveled around since but the address never changed on my license, I've just had a lot of other temporary addresses and assigned that one as my primary.  I wonder even if I was to purchase it after the fact if I would fall under it being my primary residence for 2 years within the last 5yr.

You guys make some really good points and after doing some research and understanding some of the loop holes / how we have to work the system, a quick flip is not going to happen.  The short term capital gains tax would be beyond brutal.  And the more I read, there is a tax for everything.  I know I need to at least hold the property for 1 year to avoid a short term capital gains tax, even though after 1 year the capital gains tax selling would still be brutal at 15%. I would have to claim the property as my primary residence for 2 of the last 5 years in order to be exempt from it.  I'm still thinking

I haven't run any statistical data on appreciation but I do know what it appraised at before we had our crash in 07, it was roughly 250k.  The market is slowly coming around and I'm sure everyone can see it, I wonder how I can see a graph of property values in the last 10 yrs?.  I'll have to run different scenarios, ideally I'd like to move in, complete small needed repairs to retain its value without making any significant upgrades, rent the property out and make sure it flowed before going that route.  Purchase price as is like I said I'm probably at 700/mo not including lawn care, that 700/mo includes taxes, insurance, prop tax only around 540yr, its almost 3/4 of an acre.  There's also a nice size garage on the property that I would be using for my vehicles I store, if I cleared it out at some point, that could be rented as well, possibly could look into a separate meter, garage has its own driveway its separate from the home.  I see lots of potential.  If I did grab equity from it though in some type of refinance option, say I cashed out 25k, payments go up to around 900, I rent for 1100-1200 its not much flow.  Figure total price would be 141k range, to be ideal 1400 rent.  Lots to think about.  Haven't crunched real numbers yet across all scenarios.. pretty much just thinking out-loud at the moment.  I think a good statistical graph of appreciation over the area in last 10 yrs may help if making a hold decision.

You guys are providing great info I appreciate it.  Will be sitting down to look over everything and crunch numbers.  So many options!

Easy now.. you don't know our situations.  I told them no they persisted, I'm going to talk to them about it this weekend.  And if I flip it who is to say I wouldn't help them out, they have even more equity.  That's beside the point let's not make this discussion personal. 

Yeah its true.  Figure mortgage with 10% down, taxes, insur, about 650/mo, id approximate rent for 1100-1300.  There's some room there for a refi but not a lot. I don't like eating into cash flow as a rental but if I have long term appreciation value I think it's worth it to hold. Say 40k is extracted from the refi, approx mortgage goes up to 965 ish.  It's against most rules as for flow but I think it might be a good option.