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Updated about 6 years ago,

User Stats

19
Posts
5
Votes
Tucker Long
  • Columbus, OH
5
Votes |
19
Posts

Setting myself up to be lendable from flip/wholesale profits?

Tucker Long
  • Columbus, OH
Posted

Hey all, trying to setup business structure for 2019 to improve lend-ability/DTI in future years. This post is about improving lend-ability, not tax savings (which seems to be the topic on most LLC vs S corp threads I've found). Currently I have years of 1099 income I'm getting loans for rentals from, but I want to add to my income/improve DTI from flip/wholesale/creative real estate deal profits. SO a few questions for anyone willing to take the time to answer:

1. If I'm flipping/wholesaling and making $100k profit annually to my personal name/LLC, there's no way to use this capital gain/profit to improve my DTI. Fannie banks won't consider it reliable income. Do I have that right?

2. Does the above scenario change if I 1099 myself (not even sure that's possible)? So, LLC makes $100k, transfers to my accounts, 1099's me for the $100k at the end of the year, and I could then use that 1099 showing that income to get conventional loans? OR would bank see I own that entity and tell me that doesn't work?

3. Is the best way to turn flip profits into lendable income in Fannie's eyes is to have LLC that elects to be taxed as S corp pay me w2? There's no way to do something similar with normal LLC (via 1099)? Yes, I understand S corp could have tax advantages at a certain income threshold.

Summary: I want to ramp up flip and wholesale profits this year, but want to ensure that it turns into improved ability to get fannie loans/improved DTI in 2020. I've talked to accountant, he says go S corp for tax reasons if I can make $80k + flipping but talk to lenders about lending guidelines. I've asked lenders, they say S corp paying me w2 would be safe bet but haven't found clear answer on turning flips in LLC name into lendable income. To be clear, I don't know that I'll clear $100k flipping in 2019. I would like to give this a shot through LLC if I can 1099 myself, but only if banks would count that as income.

Thanks for any thoughts,

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