All Forum Posts by: Ian McDonald

Hey spokanians,

How is the market over there?  I am in Ellensburg currently but looking at expanding over there for maybe a home or two.

Take care

@Daniel Chang

I can understand that and thanks for the explanation. What I am dealing with is deciding what is the lesser of two options. I can purchase a new primary residence and rent my current one out for around $600 cash flow/month which would also allow me to use a FHA loan with 3.5% down to keep more capital in the game for further investment properties.

If I decide not to do that I would be purchasing an investment property straight out which would require 20% (at least) of my capital as money down.  This may put the brakes on ability to expand (maybe not). 

Is it better to rent out my current residence to leave more capital in the game for purchasing additional investment properties while paying the possible capital gains/depreciation recapture later down the road?  Or is it better to stay where I am at and only invest in smart investment properties at 20%+ down but have less free money to invest in new properties that could possibly net me the difference anyways?

Thanks

@Jeff Trevarthen Makes sense. It gets confusing when you listen to investors say that you can have "up to 8 loans" or "up to 4". Is that true or is it all based on debt to income?  Technically if there is a maximum number of loans you can have, then jointly signing on a loan would absorb one total loan for each of you. Maybe that isn't how it works. 

@Wayne Brooks @Doug McLeodThanks.  So your saying that I would have to sell it within that 5 year period to avoid the gains tax?

So I have a primary residence that I am converting to a rental so that we can purchase another primary.  What kinds of tax ramifications will I see if I sell the property?  Is there a timeframe where its better or worse to make that decision? 

I understand that I am taxed on my cash flow as income and that I can use depreciation and certain expenses to my benefit but I am by no means a tax expert.  Suggest speaking to a real estate attorney?

Thanks,

I mostly want to know the benefits of pre-approval jointly or separately with my spouse. 

Bigger Pockets family,

I recently spoke with my mortgage broker to get approved for a loan on a new primary residence. I have an FHA with 30% paid down on my current primary under 3%, 15 year terms but plan to refi to a conventional and pull out the equity to both purchase a new primary and get an investment property. I have a couple questions:

1.  Have any of you done this and is it a decent path to take?

2.  My spouse and I are both together on this but I am unsure whether it would be better to get approved separately or together.  I would assume getiing approved together would limit our future options.. am I wrong?

I plan to rent out my current primary residence as it would cash flow around $450/month at the same time we move into a new primary.  Any advice or input would be greatly appreciated.

Thanks,

Ian

@Joe Villeneuve 

Joe,

The numbers your speaking of don't even exist in my corner of the country... but I would love them.  Your posts make a ton of sense and match what I have been thinking in theory.  What is the best way for to invest there from afar? 

@David Truong 

Good Question.  I would say that the majority of the properties are just too low of rent.  The issue always seems to stem from running the 50% rule on the property to achieve a conservative expense estimate.  An example would be a property I have been eyeing that is $126000 that would be $630 in mortgage and $1200 rent per month.  Once you add in the $600 for 50% rule you have already negative cash flowed on it.  That is the story on most all them. 

I am beginning to wonder if I could really spend $600/month in expenses if the property is A.) in good condition with little repairs needed and B.) self managed due to the close proximity to my primary residence and small portfolio to deal with. 

I would hate to buy that property and have a cap ex come out in 4 years that wasn't accounted for. 

@Account Closed 

Much Appreciated.  Multi-family is definitely a way I want to go.  Only 2 available in Ellensburg right now that are far over priced.  Time to get out and look around!