Burning Tax and Legal Questions~~

[Philip Hy]

I've asked a lot of people but not getting any clear answers. These questions are keeping me up at night! 1.) My wife and I want to maximize number of conventional loans. We heard if lenders see that we file taxes together, lenders will only give us a maximum of 8 or 9 loans. However, if we file separately we can get 18-19 loans. Has anyone else heard this? How do you file? 2.) Another question broadly about debt to income ratio and LLC protection. We have an LLC and a business savings account for that LLC. Ideally we'd have that business savings account handle all the rental income and mortgage payments (I read that if an LLC bank account doesn't handle all expenses and income, we could lose the protection of an LLC). But if we do, next time we want to get a loan under one of our personal names, won't it look like our debt to income is too high to get a loan? Lenders will ask to see our banks statements and but won't see the rent and mortgage transactions coming in and out. Can anyone suggest an alternative setup? Sorry for the lengthy post, but dying for some clarity on these issues.

[Jim Kennedy]

@Philip Hy 

You are going in the wrong direction! Don't spend all your cash first and then go to LOC's. Get LOC's first and save your cash. Here's the problem: Once you spend your cash, you have no more cash. Using the banks money protects my own money, while I get my funding and the tenant pays the bank back for me in their rent).

Our rental income and expense are nowhere near the business accounts I use for my CPA firm. At one time we had a dozen individual checking accounts - one for each property. Even though I am a CPA and my wife is a tax accountant and we know bank reconciliations like the back of our hands, , after 10-12 years of over 100 bank recs a year, we got tired of all the fun and grouped them and closed down some of the accounts. Now we have three accounts and clump several rental units into one. We grouped them geographically so we could remember. And the snag there is that if two tenants have the same rent amount and are depositing into the same account you don't know who deposited what, so we have no 2 rent amounts the same, ever. That way we know who paid what.

We've never had a lender ask to see our rental activity bank statements. We make them focus on the tax return because its a signed document by me, and that document  (the 1040) has an affidavit where you sign that says everything is true and accurate as far as I know, under penalty of perjury. And if I perjure myself against the IRS, they're a government entity, so the crime is on a felony level. 

Jim Kennedy, CPA