All Forum Posts by: Ash Hegde

Welcome Jake! An ADU rental sounds like a great start!

Natalie is correct, the proration is to prevent the loophole of having a rental first then moving in for 2 years to avoid the capital gains tax. In your situation you should get the full exclusion. 

The down payment is on you. This could be raising money from friends and family to invest, pulling equity out of a primary residence, or just saving up cash. If fix and flips are of interest, you can get a hard money loan with 15% down of the purchase price and use your profits after selling as capital for the next flip or rental. You will need some type of money to start with though. 

Great job! How large are you trying to scale? 

Welcome to the forums! What type of investing are you interested in (flip, long term rental, short term rental)? Also, on the network tab at the top there is a section for meetups that may be helpful to you locally. 

Agree with the others. Schedule C is for an active business/self employment, if it is a passive rental property it would go on Schedule E. Putting your rental in an S-Corp is NOT a good answer. 

Homeowners associations make condos and townhomes a little more risky.

Be very careful about rental restrictions. Many HOAs down here don't allow rentals at all and those that do often have time restrictions (such as only one lease per year) that could affect medium term renting. 

Find out about the financial health of the HOA as well so you don't get hit with unexpected special assessments for community repairs.

You should not do any rehab before you close on the unit and actually own it. 

If this will be a primary residence/house hack you'll want to look into a rehab loan such as FHA 203k.

If this is an investment only property it's a two loan process, hard money to fund the purchase and rehab, then DSCR or conventional refinance to take cash out and pay back the hard money loan.

Another option if you are up for doing a rehab is to start a BRRRR with a hard money loan on a distressed property. If it's your first rehab you will need 15% down of the purchase price and it can provide funds for the purchase and rehab.

The DSCR is the long term loan after the sweat equity is already added. If you have a new distressed property that you want to work on, the best place to start is with a hard money loan for the purchase and rehab.