All Forum Posts by: Gwen St. Pierre

Hi there,

I am selling a rental property (H1) and would like to avoid paying capital gains. I would like to refinance my current primary residence (H2) using the profit and turn it into my next rental property. Then, I want to pull out equity from H2 to purchase my new home (H3.) 

Can I:

• Move income from sale of H1 to 1031
• Refi H2 using that money to pay down loan amount.
• Take equity out of H2
• Use that money as a downpayment for a new primary residence H3

Now that I type it out it seems like some hoopla the IRS would not allow - but my brain won't rest until I ask the question.

@Ben Raygor - thank you. I love that creative way to do both and will definitely keep it in mind for larger capital gains situations in the future.

Hi - I'm looking ahead to where my husband and I will have multiple properties. Is it better to try and keep loans in one of our names or in both of our names? I know about DTI and that if in one person's name we'll need to qualify on our own. Is the best strategy to try and qualify with just one of us on each loan if possible? What will give the most flexibility as far as getting the most number of loans?

We started out with loan #1 - a USDA in his name. Got loan #2 - FHA in my name and turned #1 into a rental. Sold loan #2 and got loan #3 - a Conventional in both our names. We moved >50 miles from home for work so were able to put him on the new loan even though he was on the USDA which is otherwise a no-go. I'm thinking we should have kept the current primary loan in my name only (my DTI) was fine) to give us more flexibility. Since the current it is an ARM loan we are going to refinance anyway and wondering if it's better to refi in my name only.

Thoughts?

Thanks @Michael Cohen - I was looking at the Fannie Mae site last night and saw that LTV chart. It also says you must have 6 months cash in Reserves for Investor loans for SFH. Does anyone know if 401k money would count towards this? I'm guessing no unsecured money like lines of credit are allowed.

Thanks - you too Richard. You planning on attending the Coastal REIA meeting this Thursday? I am.

Good stuff - thanks for pointing out the difference between tax free and tax deferred @Bill Exeter - that is not a small thing to overlook.

Thanks @Dave Toelkes

I file jointly and we were in the 15% tax group last year but barely....I think we will go up to 25% next year.

We paid $130k for the property in 2012 using a USDA loan with 0% down and an interest rate of 3.5%.

We think we can get $165k for it now and we don't have any additional mortgages or lines of credit on it.

Honestly, I think our COCR is better than our monthly cash flow since we put no money down. If we DON'T account for Cap ex our monthly cash flow is $492. I just now analyzed the property properly (using BP calculator) and if I put in the Cap ex correctly it is a negative cash flow of $-132.67. Now, this is including paying a property management fee to ourselves, but even without that it would be break even.

We put in a new HVAC this past winter and flooring in 2014, but otherwise have done very little and the place will need some big ticket items soon like roof, kitchen and bathroom.

I should say we bought this as a primary we never ran the numbers for using it as a rental - we just wanted to get started in REI so we turned it into a rental when we bought our next property. I feel like I'm talking myself into selling the more I type....get the good cash on cash return out and use it to get a property better suited to renting. Also, we moved in April so the property is now 4 hours from us and we are managing it ourselves from afar.

I am digging this - had no idea that Homestyle was an option! I'd been looking at another product HomeReady but didn't think I could fit into the income requirements. This is even better! Thanks everyone who contributed.

Thanks! Do you know if the 121 exclusion would require the sale have to close before the time limit is up or just be under contract?

Thanks Jon!