All Forum Posts by: William Ford

Hello BiggerPockets Network!

My wife and I are in the process of buying our first rental property, which we are financing as a second home since we plan to stay there when it is not rented. We have a primary residence as well that is also mortgaged with the same lender. We are planning to AirBnB the cabin, and the current owners also had this cabin as a second home that they rent on weekends some of the time.

Can someone advise us on the tax implications? I understand from the current owners that you can only rent it a certain amount of the time, and that there are some other tax implications. I was told by our lender that as long as we are there one time a month it can be a second-home mortgage and that we dont hvae to finance it as a commercial investment property because of that so curious how it really works for taxes.

Speaking of taxes, where should we store the rental property income from this property? I am considering a second checking account for this purpose to keep funds seperate from our other income. I also have an LLC, and was considering if I should open a second LLC with another business checking/savings for this property.

Any advice is so appreciated it - we feel good about keeping it rented and we close April 26th.

Best,

Nick Ford

Hey Robert! I’m located in Cumming, GA and looking to buy somewhere within 30 minutes or so preferably so I manage the property.

My wife Sarah and I have been talking about doing a real estate rental property for years, and we already own a 3,100 sq ft house that we now have around 140k in equity. We also have cash for a down payment of 20% on a 250-300k house.

We are ideally looking for a cash-flowing property, that maybe we can remodel and hold for at least 2 years to avoid capital gains. 

To note, in the next 2-3 years we also want to build a "dream home" on a larger piece of land (2 acres preferably)

Any advice on how to get over the analysis paralysis of buying a rental? We are pre-approved for a 2.625% conventional 30 year loan.

@Nick Barlow I have a question - what is the real difference between a cash out refinance and a HELOC? With a cash out refinance, your basically taking the cash (let's say 30 grand) and then they 30 grand gets added to your mortgage. Or, a HELOC is a 2nd mortgage basically but a line of credit where you can take money and pay interest but can pay it back right?

I guess my question is what's the pros/cons of HELOC or cash out refi.

@William Ford bhueller

This home is a 3/2 ranch on a slab that is on a hill. The neighborhood is established and the house was built in 1984. There is no HOA, thank goodness, and we are currently past our due diligence period and are in financing. However, my lender I went into financing has thrown us through a loop.

Because I just started a new job and am in sales, they are requiring that I have a lease SIGNED with a tenant and the first months rent check be deposited into my bank account. This is a fannie mae 30 year conventional loan at 4.5% with no points on the loan. I would have been at 3.5% had this not been an investment property. They will not use my commission earning from my new job until I have had the job for two years.

Is there a way around this? I have thought about getting creative and renting it to a friend and guaranteeing the rent myself, but is it even legal to sign a lease for a home i don't own yet?

Any advice is greatly appreciated!

@Justin Reyes

I am sure I will get corrected here, but I'm pretty sure you can roll over your 401k into an IRA with no penalties or paying tax fee. Then, you can invest the money from the IRA in real estate as an investment, but this would be better for a buy and hold.

Then maybe in a few years you can take out a HELOC on the equity in your home to do flips.

My two cents.

@Scott Kaczmarek

Hey Scott! I am not buying through a group or a property management group. There are a ton up there, so if I wanted someone to take it over and pay 8% or whatever it is I’m sure I could.

I am just buying my first rental that I will use as a vacation weekend spot so I don’t want to rope a management group in since I want to have control, and don’t need a property manager for just one rental.

That’s where my thoughts are now, I haven’t closed on a house yet but have looked at several. The 2 acre property went under contract with a cash offer last week so probably out. Was very nice though!

@Michael Baum

Thank you Michael - lots of helpful information there I appreciate it! I also appreciate everyone else’s feedback - definitely some valuable thoughts I wouldn’t have considered. We are looking at a 3/2 in blue ridge and another 2/2 in cherry log this evening. Pretty exciting, they are at 219 and 180 and the 219 is on 2 acres on a pond and looks beautiful.

Haven’t asked on the fully furnished, but hoping one of these would consider that. They look beautiful as they are and would save me some cash and hassle. Will keep y’all posted - appreciate everyone’s time and feedback thus far already!

Nick

My wife and I are wanting to purchase our first rental (we are in the Forsyth County area) and thought that a cabin in North Georgia would be a good place to start. We love going up there, so were hoping to purchase a lower price cabin (180k or lower, 3 bed/2 bath minimum) and rent it on AirBnb for 2-3 weekends a month and us use it maybe once a month. 

Thoughts on this? One we have our eye on is a 3 bed/ 2 bath at 165k in Cherry Log near some rivers, hiking trails and ponds. Any tips/advice on how difficult keeping it rented will be would be helpful!