All Forum Posts by: Jonathan Schwartz

Hi @Emily De Leon,

It's not the classic definition to house hacking (that usually involves multifamily), but you still have a "tenant" paying for a portion of your primary residence mortgage while allowing you to keep the property and at zero cost to you so, sure - why not. :) 

As for tax benefits, it gets a little tricky as to how you are claiming the condo on your returns. Assuming that (since it's been your primary residence) you have both been claiming it as a primary residence with everything being split down the middle (mtg interest, property taxes, etc), then on your tax return you could switch from claiming it as a primary residence to claiming it as an income property. This would allow you to take the rent you receive, and apply it to half of the expenses plus allow you to start taking half of the depreciation. This would most likely generate a paper loss that is tax beneficial. 

If you want your sister to also realize the benefits, then you'd have to figure out what part of the house is rented and what part is lived in. So, since it's a 2/2 let's say 50%. Your sister would take half of everything and claim it as 'owner occupied'. The remaining 50% could then be split between the two of you by converting 'half' the house into a rental. It's essentially the same thing as before, just that you are both splitting the business side, and she's also getting the owner occupied deduction. You'd lose your owner deduction though (at least if you did this by the books).

There could be some other benefits if you put in an LLC, but since your sister still lives there - I wouldn't advise that.

I'd go with where she claims half of it as owner occupied on her return, you claim half of it as investment, and then maybe you put your tax savings from the loss into that cosmetic repair fund. You keep monthly profit, but you both reap in the tax savings without making this difficult. 

Another advantage of this is when there is a repair or upgrade you could realistically claim it was for the tenant, and take the full deduction. This would give you a bigger tax break since repairs are not deductible for the owner portion.

Hope this helps! 

Jonathan

Hi @Denis L'Huillier.

This is a complicated question but a couple of quick thoughts:

1. If you pay for everything (scenario) there is no incentive for them to move faster other than the payout. I wouldn't do this. I would have them invest something so that they have skin in the game. 

2. Every partnership is different, it really comes down to what your partners and you agree to. 

3. As for distribution of profits, once again - whatever you can negotiate, but personally I would feel that if you're the money guy, and because you want to be protected against overages . . .I think a fair deal structure could be:

- You pay for all materials and the home, you get your money back first plus some ROI on your money for putting it up. Ideally this should be the profit margin you'd like to see after all of your expenses from the perspective of you were just the 'lender', and while I think 8-10% is fair, that might be a hard pill for them to swallow. So maybe you just make it expenses + 5% which is essentially what you could make right now in some sort of high interest fund or account.

                - They get their labor cost

                 - Profits are split in some way - once again, depending on what you negotiate. 

Hope this helps! 

Jonathan

Hi @Dell Har,

You can qualify for a mortgage (FHA or otherwise), but you'll have to find a lender that will serve foreign nationals as they take on extra risk as you are not a permanent resident. If you had a visa based on employment, it would be easier. Unfortunately, I have no idea where to send you for more information.

Jonathan

Hi @James Lynch,

As long as you did the 1031 properly and followed all of the rules, if I read this right - essentially you received $400K of profit from your sale, and then bought two additional properties for $400K. If so, then you have no tax liability. 

Jonathan

:) @Chris Davidson answered all of your follow-up questions exactly as I would have @Sequoia Pedersen, good luck! 

@Matt Devincenzo These are in Florida. 

@Wendy S. Ha! You would think the FM would come around, but clearly not. :) However, if you have plenty of rental income you should be fine. 

Hi Kate,

Yes you could, but most likely the co-signer would want some sort of ownership stake in exchange for lending their credit to help you get a mortgage. Unless, maybe if it's family! :) 

Hope this helps,

Jonathan

Does anybody know any banks or lenders that would issue a line of credit against the equity on a portfolio of properties in a commercial loan? We have 15 residential fourplexes that have a substantial amount of equity in them, but because they are in a commercial loan - we've been having a hard time finding a lender/bank that would be willing to go into 2nd position. We need a custom solution here as we're aware this is not a typical off-the-shelf product, and we want to do this without a refinance as our commercial loan is locked at 4.25%.

Or - pay for it through Bigger Pockets! For $99/state they offer lease agreement packages.