All Forum Posts by: Ginger Mermer

@Ginger Mermer

You can do it every two years if it’s your primary residence and avoid paying capital gains tax on at least part of the profits. (Not a tax specialist, consult yours and get a new one if they tell you you have to live there for 5 years).

Maybe do a couple more as a primary and build up your cash on hand. Then you could start doing another property on the side. A purely investment flip will cost you more on the tax side but it can obviously still be worth it if you’re doing it well

@Ginger Mermer

New floors, bigger deck and an updated kitchen for $15k; I think that is a little low. I would get some estimates. Also, there are going to be more repairs required than what you think.

Make sure to factor in all of your holding costs; lender fees, interest, insurance, taxes, utilities etc. How are you going to sell it? Through an agent? I would put aside 6% for that as well.

12k net?  I hope your numbers account for  everything.  12K can get swallowed up quickly in a flip

@Ginger Mermer

Some different points:

You have to start somewhere. I started learning about real estate as a hobby not to lose my mind in the early pandemic, and it is so complex and multi-faceted I will be learning until the day I die. I still ask dumb questions. There are so many to ask! 

Banks and lenders do not typically count real estate investment income or new self employment income of any kind, towards qualifying for a conventional loan, until it has come in for two years. I asked a couple of lenders if this was true even if I bought a multi-family with established tenants and provided the lender with leases and copies of the seller's/landlord's rental deposits and they said yes! This creates a dilemma for the real estate newbie, who like me is renting or living in some other housing situation they do not want to stay in. Do we buy a personal home first, and delay investing? Or do we buy an investment property first and postpone having a place we own to live in, for two years, an especially critical question now with interest rates going up fast? And then there is house hacking...living in a unit of a multi family or living in a single family house for two years to avoid capital gains taxes and then putting it under an LLC and renting it out. Most banks do not allow an individual's mortgage to be transferred to an LLC.

As far as the economy going down..maybe. The real estate market is certainly going to stop going up like a rocket. soon. It simply is not sustainable, especially as buyers are priced out of the low end of the market by rising interest rates. Whether properties appreciate slowly, go flat or lose a little value (I do not think is will be much) is anyone's guess and will have regional variations. The strength of the economy depends on what aspect of the economy you are looking at, what industry you are in and what part of the country you live in. In the Northeast, downturns have a terrible effect on working poor and the lower and middle of the middle class, but don't hurt the upper middle class and wealthy people much, if at all. There are just tons and tons of wealthy people here. And unemployment is at an historic low in most states. 

My credit rating went to hell when I had to abruptly close my business to help a sick family member. It's a bad time to buy a car, both new and used cars are at a premium, but I found a great hack for rapidly improving a credit score. I bought a car with $9000 down, which made them not consider my income or horrible credit rating, and lessened the high interest rate they charged people with credit problems. I got a six year loan and paid off the car off in two years. My credit score went up 150 points and I now qualify for all but the pickiest credit cards and quality for a mortgage. If you can't afford a new car, you could buy a used car and do this. Given the circumstances that wrecked your credit, I would also call each creditor, apologize, explain, and ask them to remove the negative comments from your credit report. Good luck! 

Second homes require you to take on the full hit for that PITIA or monthly principal/int/tax/insurance/assessments without rental income offset and given that investment properties are the same pricing as second homes now its typically better to buy as an investment.

The downside to investment property occupancy is that you will need a larger down payment versus second homes. 

This is the strategy your lender should be discussing with you (pros & cons).

@Ginger Mermer  so you are building an investment property to sell to build your own home and in the meantime you want to buy another property?  You might be better off waiting until you can afford it unless you partner with someone.   You have to have something to offer for that though.

@Ginger Mermer - You can always go with a DSCR or Non-QM loan if your debt to income ratio won't support a second property. Those come with worse terms but allow you to purchase the property based on the income of the property and if you have the down payment. I believe David Greene's team offer these types of loans, but there are a bunch of brokers out there.