All Forum Posts by: Brandon Hall

The reason they tout opening several lines of credit is because in doing so, you reduce your utilization. Your utilization = (Your credit balance)/(Credit available). Therefore if you have more credit available, you reduce your utilization. 

Each company will report your credit activity with them once per month. It is advantageous for you to pay off all but 10-20% of the card a few days prior to your balance being reported. This means that your utilization will be under 30% which will positively impact your score because you can "manage your finances."

Utilization is the second most important factor in determining your score so it's important to know how it works. It makes up 30% of your overall score.

I've had a card for a year and five months. It is my first and only card. I charge everything to it but pay the majority of it off a few days prior to my credit report being submitted to the agencies. I have a 730-755 score and the major reason it isn't higher is due to my short payment history (which constitutes 35% of your score).

**One more thing: Having too many cards does not hurt your score, but apply for several cards in a short period of time WILL hurt your score. To the credit agencies, it will look as if you are struggling financially and need credit to survive. 

http://www.bankrate.com/finance/credit-cards/when-...

http://www.myfico.com/crediteducation/whatsinyours...

I don't believe this is possible either. Per the IRS website:

Compensation limit for contributions

Remember that annual contributions to all of your accounts - this includes elective deferrals, employee contributions, employer matching and discretionary contributions and allocations of forfeitures to your accounts - may not exceed the lesser of 100% of your compensation or $51,000 for 2013 and $52,000 for 2014. In addition, the amount of your compensation that can be taken into account when determining employer and employee contributions is limited. The compensation limitation is $255,000 for 2013 and $260,000 for 2014. 

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics--401k-and-Profit-Sharing-Plan-Contribution-Limits

Thank you for the replies. I will talk to a smaller lender and let you know what they say. @Bill Gulley , I appreciate your in depth reply!

It may depend on the county, but for mine it is the responsibility of the purchaser. You can always call and ask.

@Albert Bui Thanks for your posts - so to clarify, I cannot use a cash gift to purchase a home unless it has been sitting in my bank account for 2-3 months which would be outside or the "two banking cycles" correct?

Does that change with smaller/local banks as mentioned by other posters?

I were to create a LLC where I either grant my parents equity or I, as the owner of the LLC, take on a loan from my parents, would that change the situation at all? From my understanding, banks typically shun lending to LLCs.

@Hattie Dizmond I'll definitely look into smaller banks in the area. Thank you for your comment. 

@Account Closed Thanks for your comment! 

Hey @Victor Menasce thanks for your reply! I figured most of the items in your reply were the cause of it. I also figured that by targeting (and specifying that I was targeting) tri and quadplex properties that it may help a bit, but it didn't.

Are there any creative ways to utilize a mortgage and couple it with another type of loan? I thought I was already being semi-creative with the financing but I guess I was too naive. Rather than a mortgage, I assume the next most popular option would be to finance it with private money from friends and family. 

How did you, or other investors secure mortgages when starting out?

Hey Folks,

I'm in the market for my first property (investment and otherwise) and was on the phone with a loan officer earlier today. The original plan was that my parents would match my cash contribution and classify it as a gift for tax purposes. The loan officer informed me that if my parents gifted me money, I would not be allowed to use that money for the purchase of an investment home. A personal residence yes, but not an investment home.

I am trying to understand why (and if) this is true. In my mind, if I get qualified based on my personal assets for a certain loan amount, why couldn't my parents come in on top of that and gift me money to use toward the purchase? Why would that have any effect on the loan qualification?

Additionally, he said even if my parents loaned me the money and there was supporting documentation, I would not be allowed to use it for the home purchase. 

I'm pretty confused and I am hoping for creative solutions to the problem. I have a call again later this week and I want to have smart questions to ask him. 

One thing I thought about was forming an LLC and having my parents contribute to that LLC. Would that be an option?

I'd like to understand how other people are able to obtain private money and legally purchase properties with it. Thanks!!

You will likely be able to deduct these expenses as an educational expense. Be sure to include the miles driven to and from theses trainings. 

Another thing to consider is classifying these expenses as "start-up" expenses. With start-up expenses, you can deduct up to $5,000 of qualifying expenses in the first year, and amortize the remaining amount over 15 years. This of course depends on when you officially became a landlord. If you had already been landlording, then you may not meet the requirements. 

Not legal advice.

Generally, costs related to creating, acquiring, or protecting a capital asset, such as real estate and intellectual property are capitalized and not deducted. The legal fees would then be added to your property's basis and decrease (or eliminate) capital gains. 

You should consult with your CPA to ensure you are acting appropriately.