All Forum Posts by: Ty Coutts

Hi, Igor Balakhnin, I think I can help with your question. It depends on specific conditions.

The IRS allows for a capital gains tax exclusion on the sale of your primary residence under certain conditions:
- Single taxpayers can exclude up to $250,000 of capital gains.
- Married couples filing jointly can exclude up to $500,000 of capital gains.

Conditions for Exclusion:
- Ownership and Use Test: You must have owned the property and lived in it as your primary residence for at least two out of the last five years before the sale.
- Frequency: You cannot have excluded the gain from the sale of another home in the two years before the sale of this property.

For a duplex where you occupy one unit and rent out the other, the rules are slightly different:
- Owner-Occupied Unit: The portion of the property you lived in qualifies for the exclusion, provided you meet the ownership and use test.
- Rental Unit: The portion of the property that was rented out does not qualify for the full exclusion but can benefit from partial exclusion based on the proportion of time you lived in the property.

I personally have set my rentals up as LLC's and gotten an EIN number in order to set up bank accounts in which all the rents get deposited and all the expenses get taken out of. This will not only protect your personal assets from any potential renter who is looking to sue, but it also will vastly help the underwriters track income when looking to get approved for future loans. This will also help you be organized when completing taxes and writing off any potential expenses like furniture, utilities, repairs etc. that come with the rental business. Please note that I am not a CPA or an attorney, so please seek professional advice for any legal or tax questions as I know just enough to be dangerous! If you want any good contacts for those realms as well, let me know!

@Rick Albert mentions a great point. You can absolutely keep going from FHA to FHA (as long as you move into the properties), but you will need to refinance to first home into conventional before using FHA again. Also a weird caveat is that in order to count rental income on any FHA property to offset the mortgage for your DTI calculations on the next approval, the properties have to be more than 100 miles away.

Also, in regards to communication with your lender, I always tell my clients to consider me as their lawyer and tell me everything (good, bad and ugly) and then I can best help them navigate how to communicate to the Underwiters. Let me know if you ever want to chat more directly about house hacking as my wife and I personally do this as well as most of my clients that I help!

Hey Ryan,

Dayton, TN, is experiencing growth and increasing demand for rental properties, which could make it a good investment for a multifamily property with 2 bed, 1 bath units. While specific rental data might be scarce on platforms like Rentometer, local real estate agents, property managers, and online rental listings can provide more accurate rent rates and market trends. It's advisable to conduct thorough due diligence by visiting the area, speaking with local experts, and evaluating economic indicators to confirm the high demand and growth potential.

I can provide you with more information on rates if you message me directly, or connect you with any one of these information sources.

Hi Ashish,

Zip code 38125 in Memphis is generally considered a good area, often described as an A+ neighborhood with newer developments and amenities. However, as you stated, Memphis can vary significantly by street, so I recommend visiting the area personally and observe the specific streets and surroundings, or doing a zoom call with a trusted realtor who has physically been there. Additionally, talking to local residents and checking crime statistics for precise locations within the zip code can provide more detailed insights.

If you have any other questions or just want to discuss further please feel free to message me. I could also possibly help connect you with a realtor!

Hey Carter,

Renting to a Section 8 tenant on disability can provide stable and reliable income since the government pays a significant portion of the rent directly to you. However, it's unlikely the government will cover 100% of the rent. Tenants typically pay around 30% of their adjusted income towards rent, with the government covering the rest based on local payment standards. While renting to Section 8 tenants can reduce the risk of non-payment, your property must meet specific standards and pass inspections by the Public Housing Authority.

Please feel free to DM me if you have anymore questions or if you just want to discuss further!

Hello Mina Spice. Renting properties to sober living homes in Colorado involves a combination of understanding local laws, finding the right tenants, and ensuring your property meets the specific needs of a sober living environment. Here are some tips that may provide a little guidance:

Understand legal requirements and zoning laws, some municipalities have specific rules about where these homes can be located and how many residents are allowed. Familiarize yourself with the Fair Housing Act, which prohibits discrimination against people with disabilities, including those recovering from substance abuse. Sober living homes often fall under this protection. Ensure your property complies with all local health and safety codes. This might include smoke detectors, carbon monoxide detectors, proper egress windows, and handicap accessibility. Sober living homes typically require certain amenities, such as furnished living spaces, common areas, and kitchen facilities. Consider adding features that support a communal and supportive living environment.

This is a good start, as renting properties to sober living homes in Colorado involves thorough preparation, understanding legal requirements, and establishing connections with reputable operators.

Hello Brandon Sisco, finding the best lender for a 90% loan-to-value (LTV) mortgage based on bank statements can be challenging, as these loans are often geared towards self-employed borrowers who might not have traditional income documentation.

Here are three good options:

1. Quontic Bank offers bank statement loans with up to 90% LTV. Accepts 12 or 24 months of personal or business bank statements. They also have flexible underwriting guidelines for self-employed borrowers.

2. Angel Oak Home Loans specializes in non-QM (non-qualified mortgage) loans, including bank statement loans. It offers up to 90% LTV on bank statement loans. Although, it requires 12 or 24 months of bank statements.

3.Northstar Funding provides bank statement loans with up to 90% LTV. Accepts personal or business bank statements. They offer various loan terms and competitive interest rates.

Hey Jon,

If the seller (note holder) wants to receive cash for the note upfront. This can be achieved through a process called "note selling" or "note assignment" to a note buyer (investor).
The terms of the note (interest rate, monthly payments, duration) are crucial as they determine the value of the note to the buyer. The note buyer (investor) looks for a reasonable return on investment based on the terms of the note. They will evaluate the risk and return profile of the note, considering factors like interest rate, duration, and the creditworthiness of the payer (you as the property buyer). You, as the property buyer and payer of the note, need to ensure that the monthly payments are affordable based on the rental income generated from the property.
The terms of the note (interest rate, monthly payments) should be structured in a way that aligns with your rental income and financial capabilities.

We can go over how to do this if you would like. Feel free to DM me if you need further help.

Hello Jared Schott, regarding your situation, here are some considerations and options for managing the $280,000 gap: 

Second Mortgage: You can seek a second mortgage or home equity loan to cover the $280,000. This will be subordinate to the existing FHA loan, but you'll need to qualify based on your credit score, income, and debt-to-income ratio.

Home Equity Line of Credit (HELOC): A HELOC could also be an option, offering flexibility in how you draw and repay funds, though it might come with variable interest rates.

Balloon Payment Loan: This type of loan can offer lower initial payments with a large lump sum due at the end of the term. Given your expected income increase, you could refinance or pay off the balloon payment when it comes due. However, this carries significant risk if your financial situation doesn’t improve as anticipated.

I hope this helps, and this is just the tip of the iceberg when it comes to mortgage loans. Feel free to message me for more information if needed, I am happy to help!