Double My Salary Through 1099 or Keep W2 for Easy RE Financing

[Rebecca B.]

Hi everyone,

I'm posting here because I always get such amazing feedback, so here goes... 

I work in tech, earn low six figures and we're slowing paying down debt and planning purchase a small MF next year. The plan is to purchase it and move into it, add value, and refinance and move on to the next one the year after that. 

However, I've just been approached by a talent agency to work as a 1099 employee earning almost double my hourly rate. The appeal of earning that much even with having to pay my own taxes and health insurance makes a lot of financial sense. But will it make it more difficult to qualify for a loan? I'd be able to save a lot more and more quickly, but I think banks have a long way to go when it comes to recognizing 1099 earnings. 

Anyone here switched from W2 to 1099? If so, were you able to qualify for conventional financing? Were you able continue investing in RE? Did you have to find alternative types of financing? Were you able to keep building your RE portfolio?

[Glenna Wood]

I did this as a tech worker. Setting up a self directed retirement plan for my single member LLC taxed as an S Corp allowed me to put enough into retirement that my tax bracket stayed the same while my income almost doubled. I used a payroll service to pay my salary, taxes, etc. If this talent agency is taking a cut and issuing the 1099s then be very cautious. You would be working for them w/o benefits. Check your health insurance situation carefully. I had no trouble getting a land loan from a credit union with proof of my 1099s, prior W2s, financial statements and 800+ credit. Since you are buying an owner occupied MF an FHA loan may be a good option. If you are going to be a tech hired gun make sure that you can deliver the goods. Your work situations with high pressure deadlines will change often. Companies often bring in outside help when a project is already floundering. Best wishes.