All Forum Posts by: John Brito

Hello,

I purchased my first 3 unit in Dec 19 and I am in the process of looking for my next unit since my first was not with an FHA loan but home possible and I am going to use FHA in a better location for the next one.

I am doing my taxes this year and my CPA included all my rental income on 2 of the 3 units and included depreciation but after discussions with my loan officer and others, it seems like not taking major expenses is beneficial in the beginning of the real estate journey to show positive income on your rental properties. My current DTI is roughly 27% as my only debt is my mortgage. For DTI I can not use my current unit in the calculations but I can use 75% of purchased units rents. so if I do this I think my DTI would jump up to roughly 36% with the new FHA purchase.

So my question is do you think it is better to not take major expenses at the beginning of your real estate journey and just pay taxes on the gains in order to make your DTI look attractive as this seems to be an issue with some investors as they gain more real estate. Currently with no expenses added I would have to pay roughly 2,500 in taxes this due to rental income year but my accountant said that if you take expenses you get roughly 27% of the total expenses taken out so for every $1,000 you spend you can deduct 270 from your tax bill. Just trying to see what others' experience has been on this and is it worth it to pay the taxes in the beginning and then take more deductions after you build up your portfolio and have been showing that your units do increase your overall income.

Thank you for any input! I understand you will not be giving me tax advice but just from your experience I want to make sure I approach this correctly and I don't regret saving a little money now and then end up messing up future purchases such as in this blog post below 

 https://www.biggerpockets.com/...

Civil / Enviromental Engineer here. I think folks pointed out we are analytical and want a challenge and many have learned that corporate may not have been the challenge we were looking for / climbing the corporate ladder doesn't seem like the ideal life. The nice income doesn't hurt either. 

Thanks for the input  @Anthony Thompson and I was on the same page regarding Hard money was just trying to see if it was an option since you never know sometimes. I have lost deals to "cash buyers" in the Philly area who I later learned was just using low interest hard money loans in the areas so I like to know my options. 

I have also felt like buying the "fixer-uppers" are almost the same price as buying a home that was rehabbed in the last 5-10 years with brand newer mechicals and kitchen bathrooms. I am trying to see the value in buying a house that needs a lot of work when they seem to be going for the same price as similar homes that have been way more updated so I just want to make sure I am not missing something. Folks are not really looking at numbers these days when buying homes which I think creates a tough situation if you know that the multi is not your forever home while others may view it as a longer-term home which is makes thier decision less cash flow dependent. 

@David Cherry haha man I moved back around the time you saw me out at Troop. So just bought my first one in Dec after trying to buy something for a while in Philly. We are going to have to talk at some point then. Always good to have more folks to bounce ideas off etc. and I may try to jump into that virtual meeting seems like a good learning experience. 

Hello,

    I have been on biggerpockets / listening to the podcast for about 4 years now which is crazy. I originally tried to purchase a 3 unit in Philly when I was living there but the properties on the mls did not cash flow and I had a couple offers accepted but too many major structural issues. So long story short I moved back home to Rhode Island since i felt like if I am going to buy a property in this expensive market let me do it where my family lives since I will always have to be around / come back. 

So I purchased a property in Pawtucket, RI with a Fannie Mae (and home ready) conventional loan at 5% of the purchase price + closing costs and no sellers assist so I got in for like 20K (the property was turn-key new mechanicals/ roof etc. and I wont have to do any major rehab on the property in the next 5 years hopefully.) I had been searching for a house for so long in Philly that I had saved up a large sum of money and now I have enough to buy a another house and do some substantial rehab on the property. 

My question is what would be the best strategy moving forward for me to get 3-4 unit multi in the Pawtucket/Providence, RI area? Since I used a conventional loan for my first purchase according to my mortgage lender who was my landlord for 3 years in Philly he said I can use an FHA 3.5% product to by buy my next home if it is my primary residence which it will. I also know that you make the most money in real estate using the BRRRR method so I want to know should do the following based on the info I provided:

* Buy another turnkey style home using FHA 3.5%

* Buy another using a 203K / other conventional rehab loan type product (feel free to point any out as I haven't researched enough of this option) that needs work. Knowing that 203K is slow to pay out sums I would use my own money and just get reimbursed by the bank so it moves faster

* Buy a fix upper using a hard money loan and then do the BRRRR method knowing I have never done any substantial rehab but I do understand how to manage contractors since I am a Civil Engineer and work with them on a daily basis.

Feel free to rip up my idea I just want to make sure i am making a good long term move. Knowing that that real estate is a marathon not a race and I would like to create a strong portfolio of multi-family holds before I finally buy a single-family in maybe 5 years or so and have to take things slower.  
 

This is an old thread but thank you the information regarding the Zoning Archive 

@Gabriel Saffioti