All Forum Posts by: Xavier A. Malave

It depends on your return. Bankability vs. taxability is an interesting issue. Tax planning is key and if you have zero tax in the future you might want to consider accelerating income (i.e. Roth conversion, etc.). Lenders will add back certain deductions when looking at lending.

@Xavier A. Malave Did you purchase as conventional or with Hard money ? If conventional then you already had the income to qualify , when you will refinance if your current income suffices then no worries with the $0 net income. Also if you plan to rent then they would anyways consider 75% of the rental income to offset the debt.

If you are looking to refi with a conventional product it will likely be an issue. There are other products available though like Bank Statement Loans and DSCR where tax write offs won't be an issue.

It's not that simple. It's a much deeper discussion than that and without the understanding of how all of that applies, how you wrote it off, how it's calculated, etc.

It's not about refinancing, or purchasing, either. A mortgage transaction is the same regardless - you have credit, income, etc, that goes into the approval. Most SFR's when rented out show negative income on Schedule E due to the write off's, and without getting into a long explanation about how we calculate income in the mortgage industry, and other permutations about how you structured this from a business standpoint, you're asking the wrong question and trying to simplify a very complex question without understanding why it's an impossible question to answer without all the paperwork to review, and understanding what we're dealing with. I have been in mortgage lending for 25 years,

Not trying to be snarky, but that's reality.

If you filed a schedule C for it, it's treated one way, etc. There are way too many questions that we do not have the answers to right now, and you're asking the wrong question, which is why I mentioned to find a qualified mortgage broker to discuss this with. Since you're in Texas you may want to reach out to http://swiftmortgagelending.co... who can help you with the calculation of your income and determine what the best options are for you based on what your specific situation offers.

Eliot's answer is incomplete, and wrong. Conventional loans are not priced based on DTI, as there are no LLPA's for this from Fannie/Freddie. In the end, handle your taxes the best way you and your tax planner/advisor see fit. Manipulating them to get mortgages may lead to complications down the road. Further, you may be talking about your P&L, which from a tax perspective and loan perspective is meaningless, as what and how you file is what matters. Not all deductions are subtractions to income from a mortgage standpoint on your returns.

Again, speak with a qualified mortgage broker, or loan officer, so they can walk you through it. They may not even need the income from the rental to make the loan work for you, so this entire thread could be moot.

If you use conventional financing yes, your goal should be to show strong income so you can get favorable terms at the bank. 

You can't make sure, because we don't have all the information, your full loan application, income documents, etc.

From the sounds of it, what your bank LO is telling you sounds correct; however, I wouldn't use a bank LO. Banks typically have extensive overlays over base mortgage guidelines, so I would recommend using a mortgage broker over a LO at a bank.

What part of Jacksonville will you be investing at?