All Forum Posts by: Account Closed

You can't discriminate against an applicant based on "familial status." However, this protection only applies to applicants with children under 18. You can absolutely discriminate against these applicants who have adult children living with them.

Even if all of these applicants' children were under 18, you could reject their application simply based on their history of destroying properties. Why would it matter that you learned this from a real estate agent and not a landlord?

Just because someone is in a protected class does not mean you have to approve their application. Or that you can only deny their application because of lack of income. It simply means you can't deny their application on the basis of them being in that protected class.

I'm not a FICO expert, but I thought any student loans through Sallie Mae would be considered installment loans and not revolving loans. So they hurt your debt-to-income ratio, but they have minimal impact on your credit score (as long as you make your payments).

Nobody knows how the Jobs Act is going to affect raising private capital. The SEC still has not written the rules that were supposed to be written by July 4, 2012.

Your friend lending you money is probably not going to cause an issue under securities laws, but you will need to make sure you comply with the SAFE Act and any state lending laws.

If you and your friend are partners (members) in an LLC, and you are both involved in the management of the business, then you probably don't have any securities issues because his membership interest would not be a security (even if he puts in most or all of the capital).

You should talk to a lawyer in your state before proceeding with any of these ideas. State securities laws may be stricter than the federal laws, and an LLC operating agreement for a multi-member LLC has to deal with some complex issues.

I would sell this property. Tax, insurance, vacancy, repairs, capital expenditures and other costs are going to cost you somewhere around $1,000 a month. That leaves you maybe $11k or $12k a year cashflow on your nearly $200k investment. You don't expect much appreciation, and you aren't paying down any principal. You can do better than a 6% return on your cash.

If you want to invest in rentals, you should be able to collect far more rent by buying 2 or 3 cheaper homes. Also, in my market it is much easier to find tenants for $1k/month rentals than for $2k/month rentals. I suspect this is true of most markets, but I don't know about yours.

I don't like the strategy of renting for 2 more years and then selling, because you are likely to have to do another rehab to get it into selling condition.

Form 8582 is the form to determine Passive Activity Loss Limitations. I think the form was formerly called 8252.

I invest in single family rentals in Oklahoma City. I buy foreclosures and rehab them. I think it's a pretty good market for rentals, but I frequently see posts on Bigger Pockets about investors in other cities finding better deals than I find here.

I can't find houses here that meet the 2% rule - at least not anywhere that I would want to own a house. I'm happy if I can find houses that rent for around 1.5% of their acquistion and fixup cost. We have relatively low property taxes (at least compared to Texas) so that helps with cashflow.

I'm sure there are far fewer investors here than in Phoenix, but any decent deal in a desirable part of town that goes up on MLS gets put under contract immediately.

Most of my properties are located in or near the OKC suburb of Midwest City, home of Tinker Air Force Base. There is a very large tenant pool and home prices are reasonable. I have read that Midwest City has more NOO houses than owner-occupied houses. Some parts of Midwest City are well-kept and others are pretty rough.

I'm happy to email or talk with anybody who is interested in the OKC market. Feel free to send me a message.

Does your contract with the property manager specify the duration of the term for which he will manage the property?

At the federal level, your rental income will be taxed at the same rate as earned income, except that you don't have to pay FICA on it. The other big advantage is that you can take depreciation to reduce your rental income.

Here is how the tax will work on your LLC. Your LLC needs to file its own tax return, on Form 1065. It will taxed as a partnership. You and your girlfriend will each receive a Schedule K-1 from the LLC, which is how the income passes to your individual return. The TurboTax program for individual tax returns will not help you with this process.

To complete the partnership return, you first need to calculate your basis in the property. This is your purchase price, plus all of your other expenses (closing costs, interest, utilities and renovation expenses, including labor) incurred up to the day you put it into service as a rental. The "phantom" expense you referred to is called depreciation, and it is calculated from your basis. You depreciate the value of residential rental property (minus the value of the land, which doesn't get depreciated) over 27.5 years, but your depreciation will be a bit complicated to calculate, because you put your rental into service in the middle of a year. The IRS puts out a publication (I think it's Publication 527) that explains how to calculate your depreciation. Your depreciation will be deducted from your rental income. You can also deduct your property tax, insurance, maintenance, interest and other expenses incurred after you put the property into service. After you determine the LLC's income, you will assign half of it to each member and send them a K-1. This is passive income from a rental, so you will not have to pay FICA on it.

Hopefully Steven Hamilton will drop by and correct anything I've gotten wrong here.

Try some other lenders. I have been able to get a conventional cash-out re-fi based on a new appraisal value after six months with Bank of Oklahoma.