All Forum Posts by: Scott Jensen

@Mario Balistreri This seems like a ton of work for very minimal benefit. What is the purpose of the HELOC?

In this super low interest rate environment why wouldn't you just get the longest term lowest fixed interest rate you can find?

For HELOCS, I would go to a local real estate meetup and find a good mortgage broker that understands real estate investing. They usually have good contacts for HELOCs even if they cannot write them.

@Jonathan Doescher Great!  Make sure to keep a spreadsheet of your Roth contributions and conversions. That way, if you need to take the money from the Roth you know how much you have available without any taxes or penalties. Remember you have to wait 5 years for the conversions.

Also, IRS form 5498 gets sent out each year from the custodian that shows the amount contributed and converted. That is another good way to keep track of your basis.

@Joanne Hanson 

I'd also recommend @John Woodrich. He's an amazing CPA.

@Petur Karlsson I like using vinyl plank for my properties. It is durable, easy to install, and easy to clean. I would go that route.

@X Sun The discount rate is the opportunity cost of using the funds. So, it depends on what your other investment options are. If you're a CD investor, use that rate. I typically use 7-8% since that is a pretty conservative rate to expect in the stock market over a long term time period. It is different for everyone, though.

@Jeff Sheraton Typically it is a good idea to include a prepayment penalty for this kind of situation. If you don't have any prepayment penalty written into the loan, try to see if he will pay you over this year and next year or couple years. Figure out the amount of taxes that would be due if he paid you this year versus spread out over a few years and maybe negotiate a discount for paying over a couple years if the difference in taxes is meaningful.  Otherwise, do whatever you can this year to reduce your taxes. Retirement accounts (Solo (k) if you're self employed), HSAs, rack up some business expenses, charitable giving, or a donor advised fund. Talk to your CPA if you have a good one and they should have a few ideas for you.

@Ibrahim Hughes I am no attorney and law is very state specific so run it by a local attorney.

If you owned a property Jointly where the previous sole owner is now the Life Tenant and you are the Remainderman the I believe the Life Tenant would be responsible for property taxes, mortgage, and maintenance. Really, not a lot changes until the death of the Life Tenant. At that point the Remainderman has the legal control and responsibility over property.  Again, ask a local attorney though.

@Brian Price Talk to a good mortgage broker that works with a lot of investors in your area.  A lot of lending requirements are state specific and I am really not an expert.

Have the tenant sign a lease without the discount for paying cash. Bring the new lease to the lender and they can use the rent as income to qualify for an investment property loan.

@Rodrigo Mora Sandoval  If you're getting paid under the table you're not really bankable which does make real estate investing a lot more complicated.

- Option 1 - Claim the money on your tax return so you can get a regular loan from a regular bank. Pros: easier to get a loan, you could qualify for some tax credits, and you're no longer committing tax fraud. Cons: you would have to pay taxes.

- Option 2 - Save up enough to pay cash for properties and/or find partners willing to invest alongside you. Pros: you still aren't paying taxes, you don't have to change your current work agreement. Cons: it will be more difficult to find partners and funding, saving up more cash yourself will take longer, and you're still committing tax fraud.

Good Luck!

@Elizabeth Martin Typically when things seem too good to be true...they're are.  Go ahead and pursue the deal, but do a lot of due diligence on the property and the neighborhood.

Is the property in a war zone? What is crime like in the area? Go to the property at night and see what is going on. What are the taxes and are there any past due? Is there an HOA fee? Are there liens on the property? Are there structural issues with the property? Keep us updated with what you find out!