All Forum Posts by: Costin I.

@scott radetich I'm in a similar situation (wondering about best ways for asset protection and trying to understand all the structures and actions required for an effective protection) and I think this post is great. If you start looking into this subject you'll find plenty of lawyers promoting their services with all kinds of scary scenarios - found one claiming statistics that show 1 out of 4 persons will be sued in the next year.

So, me too I'm looking for some real world examples of when you, or someone you personally know, has been sued and lost, and i don't mean lost 15k I'm talking real money, six/seven figures, the property itself, etc.

1. Do not confuse HELOC (home equity line of credit) with HEL (home equity loan) - one is a "reusable" product, the other is a one time deal. One you get charged interest on the balance when used, the other you get charged interest on the whole balance from the moment you get it. One you can pay it down and reuse, the other you pay it down and gets closed.

2. There is no HELOC for an investment property. But you can get a line of credit (LOC) or portofolio LOC or asset based LOC - you just need to find the right bank and the right person in the bank who knows about this type of product (usually a commercial banker). Don't bother to ask a residential loan officer about HELOC on a rental, they will tell you "impossible" and not even know of alternatives.

3. Shop around - the differences in LTV/LTC, fees, renewal fees, periods, terms, rates, closing, documentation required, etc. are substantial from bank to bank. Message me if you want a comparative sheet I used to bring them to an apple-to-apple comparison.

Get the latest edition of Nolo Landlords Tax Guide book and read it (http://store.nolo.com/products/every-landlords-tax-deduction-guide-dell.html) - regardless which route you chose (plus you'll know more than many CPAs about the subject). Or find one that knows real estate investing. Unless you get into fancy stuff and many rentals (3+) you should be able to handle it with TTax Premier edition.

Even with a CPA you still need to know to ask the right questions, provide the correct information, and "guide" them into helping you with the taxes (and counting all possible deductions in the right way). Think of the CPA as just a tool - properly used is going to return you the investment you make when paying them, but they are not going to do the "work" for you, just the tax return (and there is more to taxes than the April mad dash to file it). Just my 2¢.

Get this book and read it (http://store.nolo.com/products/every-landlords-tax-deduction-guide-dell.html), and you'll know more than many CPAs about the subject. Or find one that knows real estate investing. Unless you get into fancy stuff and many rentals (3+) you should be able to handle it with TTax Premier edition. Just my 2¢.

You can start renovations as soon you desire and they let you. But any deal can fail for various reasons, up to the end signature at closing, so I would advise to wait for that. Otherwise, you might be doing work for someone else benefit. If you still feel inclined to do so, I also have a long list of tasks for my home :>) But for sure, you can do planing, line up contractors and materials list, etc.

You can have a tenant occupying the property and do repairs and renovations as long they are allowing that to you - you can't impede on their use and enjoyment of the habitat. But that is the preferable scenario, as any work done before putting the property in service (making it available for renting, and you'll need the proof for that, the ads, etc., or the tenant in place lease agreement) is considered capital improvement and goes to the base of the property (consult a CPA for details, or at a minimum read Nolo's Every-Landlords-Tax-Deduction-Guide - https://www.amazon.com/Every-Landlords-Tax-Deducti..., money well spent for a book). With a tenant in place, much of the work can be considered repairs as long it returns to the original house conditions (careful how you formulate your work plan and invoices from contractors, read the book for details). Otherwise, it can be considered capital improvements deductible over 27.5 years.

Cash out refinance might have more to do with the appraised value of the house and the loan to value ratio, than the tenant presence. You need to talk with a lender, preferably one that specializes in refinancing of investment property and who knows to take in consideration the rental income.