All Forum Posts by: Jeremy Williams

@Jermaine Chad Ingram yup, the lovely state of CA would want their 10% and the fed theirs as well. 

@Kyle Kadish It's not in contract or even listed yet. I'm just looking into options. I can't currently qualify for a standard refi as I changed from a W2 to 1099 employee. No loans for me until the beginning of 2021. I'm looking into alternative financing but cash-out on those type of programs are pretty high on rates and I'd rather not have the negative cash flow in FL.

@Dave Foster The option to 1031 and cash-out on something here in CA is a good idea. I've typically been buying properties with deferred maintenance/cosmetic issues and then cash-out refinancing those once fixed up. I didn't mention the W2 to 1099 job change before but that does make this a bit harder and more expensive in the short term to make all of that happen. My biggest concern is not being able to find a replacement property in the time period required for the exchange. I tend to buy in mid-to-high end areas and the deals are not as frequent. I guess I'd just pay the taxes either at that point.

In a worst case scenario paying all the taxes, my new build in CA would probably hit the following numbers:

• $1400-1,500 minimum cash flow per month (About $1,200 after losing the cash flow in Florida)
• 14-15% CoC return after accounting for 30% being paid in taxes
• Break even on the cash outlay to the home and taxes would be around 4.5 years

Hello Everyone,

I have a property i purchased way back in 2012 that is in Florida. It's had a decent run for me with good cash flows but I'm looking at making some moves here in California where I own the rest of my real estate and live. A recent change here has allowed me to build a 3rd stand alone unit on a lot my duplex is on. I was looking for a way to get the equity from the property in Florida into my new build without a tax consequence but it looks like the 1031 exchange would only be for the purchase or build of a property on a newly purchased parcel, not one I own.

Anyone have any ideas on good ways to reduce the tax burden for the $90-100k I'll be receiving on my Florida sale?

Won't be able to help much without knowing what they're questioning about your work history. Can you go into more detail? Self-employed, W2, 1099? Length? Taxes...?

I agree with a few of the replies above mentioning the car.  I notice all the time that people looking to buy or refinance who have larger auto payment always struggle on debt ratios. There might be a third option to refinance the car loan down to say 15-20k and pay only half of it off to keep extra cash on hand for your next property.

Just remember real estate can take time.  Don't over leverage yourself just to force the next deal through.  Markets haven't been as stable this last year. You may want to make your decision on this one slightly more conservatively. 

If you think you're negative $100 on the rental after this, you'll have to figure out what your next deal will bring you.  If the opportunity cost of losing that $100 per month will net you more than enough to offset it, sounds like a deal.  If not, keep on searching and seeing how you can get creative for the next deal.

I'm curious if anyone asking has tried getting approved with lenders who are familiar with day 1 certainty or by an originator who actually reads their automated underwriting findings...  If you can get a verification of employment and a conventional loan you should be able to avoid having to provide paystubs and W2s unless the lender has overlays. 

 If you're familiar with looking up zoning and allowed uses on your city's/county's website that's a good place to start.  There usually a list of allowed uses posted there along with setback limits, height limits, etc.  

Like mentioned above planning/code department can probably provide you with all of this information as well.  You probably won't fully know until you buy it, get plans drawn up and see if they'll approve everything, what changes they'll need, what code you'll need to abide by...

Good thing about this is that you can probably buy it with residential financing if the current best use is residential.  Just did this myself.  I wanted to actually put a barbershop in but since the city looks to need me to do 80-100k of updated it may just be the back up plan I had for a rental property. Always have that backup plan :) 

 Variable 5.125%, correct?  Haven't seen many fixed rates available anymore and I've never seen a fixed after the 6 month teaser intro rate.

 Yup, take a look at getting pre-approved and go a step further if good properties in your area move fast, get your pre-approval fully underwritten.  If you take this route, you can typically shorten or even eliminate some of your contingencies bringing your offer closer to a cash offer.  We have had clients who rush the appraisal early on and are able to remove all contingencies in as little as 5-7 days.  Speak with a local lender and agent to see if you might be able to do something like this.

 For a standard conventional mortgage, they are mostly the same but there can be minor differences.  For example, we can do 15% down on an investment purchase but a cash out refinance would require 25% equity.  The same goes for your personal residence.  You can do 3-5% down conventional but a cash out refi will require 20% equity in the home.  

If you've acquired other properties since, you may also have higher reserve requirements.

Most of the criteria remain the same but there are a few differences.  Check in with a lender to find out the details.  It's hard to let you know exactly what may be different without all the details.