All Forum Posts by: Tiana O.

Does this make sense? Say someone has a house worth $250k thats complete paid off, free and clear. They want to sell it and avoid some capitol gains. So they do a cash-out Refi to put a $200k mortgage on the property (80% LTV) with no prepayment penalty. Then they sell it for $250k. So now the original $200k from the cash out was technically loan aka no taxes. But using the proceeds from the sale the $200k loan is paid back, and only $50k is actually profit.

(Not including a 1031) Is this a good strategy for reducing capital gains??

Are there other ways that you know of?

@Kirk Perecich talk to a lender to see if you would even qualify for the FHA loan. My lender told me that because I already lived in a sfh home, the underwriters wouldnnot approve me moving into a 4plex, duplex, or triplex because it would seem like I was downgrading in home size and underwriters didn’t like that. So essentially because I bought the sfh (even with a conventional loan) I would not be approved for a FHA loan for a small multi-family (unless it was in another state and I could prove that my job was moving me there, or some other important circumstance). So ask a lender if you think underwriters would even approve you first.

@Jeremy England I’m actually really glad you posted about this issue. People forget to include 3 additional costs when they are doing the BRRR method or estimating profits for flipping a house: Buying costs: round 1 of closing costs, appraisals, Home Inspection fees Carrying costs: monthly payments on PITI while carrying the properties, utilities until place gets rented, In addition to any rehab costs Refinance/Selling costs: round 2 of closing costs, higher interest rate since the Fed has been hiking the interest rates every quarter for the past 3 years (or so it seems). I try to estimate 6% for closing costs. But on cheaper properties, that won’t hold because there are stable closing costs that may be higher than 6% of the ARV, especially when you are buying less expensive properties. (Im in the DC area so we are lookIng at higher home values. Which means that the 6% typically covers all the fees. 6% of 100k is different then 6% of $350k). That being said. Your returns are great. For your next deal see if you can run your numbers so that when you refi you take $5,000 more in addition to what you are already estimating to get back from your next property. Then you’ll even out and after 2 deals, you’ll have none of your own money in the deal.

Originally posted by @Nicole A.:

@Tiana O. You can likely become a member of several credit unions as they don't all have much of a restriction on membership.

While we can not give you recommendations here in this thread (against forum rules to give recommendations outside the marketplace), we can give you advice. You're correct in talking to smaller local banks.

The other big thing is that rather than the term "HELOC", for your rentals, you'll want to ask for a "line of credit" secured by your rental. Essentially the same thing, but if you call it a HELOC, they might just say "oh no we don't do that".

Go out and visit a few banks! Best of luck!

 Such a good idea. I've heard of people getting bank lines of credits. So essentially instead of getting an unsecured line of credit, I can ask for a general line of credit and just use my rental as collateral. Way to think outside the box!! I'm going to look into this.

Hey BP Fam, 

I'm having a hard time finding a bank that will do HELOCs on rental properties in the DC (DMV area). People have mentioned that I might want to try a local lender or credit union. I'm not a part of any credit unions. 

Does anyone know of any local lenders that provide HELOCs for investment properties?

Tax Question fun!

If I self manage my properties but want to take advantage of the LLC S Corp designation for single-tier taxation, can I pay my small business to manage my property so that I only pay business income tax and not FICA tax on the rent that I'm using to manage the property?

- For example, say I get $600 of cash flow from rent (CF = rent - PITI). $150 of that goes toward property management fees (which I currently do myself), $200 goes toward future CapEx savings, and $250 is true cash flow. Can the $150 that I save for property management costs be paid to my LLC/S Corp so that I only pay business income tax and not the FICA taxes on that amount?

How to you eat the 25% down to get the first 90 unit? Did you 1031 your single families intro the 90 unit?

I’ve been debating whether or not to get my real estate license. (Mainly because many of my friends are settling down and looking to buy houses in the next 2-3 years). My main reservation is that I’ve been told it’s harder to get deals, because you have to disclose to the seller that you are a realtor looking to buy the property as an investment property. Since I’m not lying all cash, I’ve heard that it’s easier for the seller to discriminate against you and sell to a family instead. Is any of this true?

Just bought my first Rental property in the DC Area (PG County to be exact). Currently, I'm getting some contracting work done: plumbing, electrical, flooring, etc. I'm looking to get it ready to be rented out by February 1st, which is when my 1st mortgage payment is due. 

I definitely think I'm paying too much for some of the repairs, and I'm not good at negotiating better prices. So this process is both nerve-wracking but exciting to me. I'll have a ton of questions in the up coming week. Here's a little about the property. 

Bought: $157k (29% down - long story)

Originally: 3 bedroom, 2 bathroom, with an office space (I'm going to frame in a closet in the office, to make it an official 4th bedroom)

Rehab: Estimated Costs $10k - $15k

Current rehab Costs: $11k - $12k

Hoping to rent in between $1750 - $2400

The Housing Choice Voucher Payment standards for the area are $2353 for 3 -bedroom to $2,902 for a 4-bedroom. But I don't know if those rents will hold after a rent reasonability study. 

Rentometer says that the median and average rents for 4 bedrooms in this area range around $1980 - $2000.

Hopefully, this ends up being a great deal and a great step toward Financial Freedom. 

Hey everyone. Does anyone have experience with rents from Section 8 / Housing Choice Voucher tenants. The payment standards for my area that are posted seem to be high.

People I know, say that a 3 bedroom house in our area goes for around $1500 a month. But the payment standard (below) says a 3 bedroom would be around $2,353. I know that Section 8 does a area rent reasonability study. However, I'm wondering what you all's experience has been with the difference between actual rent approved by Section 8 vs. their posted Payment Standards.
  Bedroom Size - Payment Standard (Taken from the PG County Housing site) Efficiency $1,504 1bedroom $1,561 2 bedroom $1,793 3 bedroom $2,353 4 bedroom $2,902 5 bedroom $3,337 6 bedroom $3,773 7 bedroom $4,208
Follow-up question: Can you ask for a potential tenants actual voucher to see what rents they have been approved for?