All Forum Posts by: Leewood Chan

My Sister and I bought rental property on April 2020, and it listed and rented start on July 2020. On June 2022, we established LLC and transferred title from our personal name into LLC.

1. Do we need to split the depreciation between our personal tax and LLC tax? Because we started LLC mid-2022. 5 months for personal tax, and 7 months for LLC tax.

2. For the gross income from rent in 2022, Do we need to split them as well between personal tax and LLC tax?

3. Do we need to do finish our LLC tax first, then split income from LLC between my sister and I? And use the income from LLC to do our personal income tax.

Thank you.

0 Votes

Quote from @Bill F.:

I like @Justin R. quick rule of thumb. But I'm a finance nerd and couldn't leave well enough alone.

@Jared Rine's intuition is 100% spot on. You break even Year 1 buying the loan down 1%. Buying it down 2% breaks even somewhere in year 2-3.

If you plan on holding it longer than three years, buy the note down 2%.

Here is the math for any excel nerds out there:

Yes, I plan on holding it long er than three years.

Thank you for explain and number in the excel.

0 Votes

Quote from @Jared Rine:

@Leewood Chan..I'm assuming that's dscr lender, as the terms sound pretty in line with what's typical in the market right now. As to answer your question generally - if you're going to hold the property for longer than a few years, then take the max buy-down. Your recoup on the cost vs. payment savings breaks even at the 2 year mark if it's only costing you 2 pts. It's a no brainer, especially if you're taking interest-only. Make sure your lender is telling you the right numbers though as your buy down's sound off. Most lenders are a 2 to 1 buydown, with a max of 1% to the rate, depending. So a 1% decrease in rate = 2 pt cost. Some lenders are worse than that meaning that your time to recoup will be a little longer. Just my $0.02

I am going to hold this property for a long time. I also it is good idea for buydown interest for long term.
thank you for your help.

0 Votes

Quote from @Jonathan R McLaughlin:

@Leewood Chan

Depends on your credit score but your buysown basically gets you to the going rate, just sayin.

If u don’t have an ongoing relationship with That bank and your credit score is comfortably in the 700s I would shop around.

My credit is 700+. I already have two properties from that lender. I think might need shop round this time to see what the different.

Thank you for your advice.

0 Votes

Quote from @James Loffredo:

Is there a reason your rate is that high to begin with?

Good question, I will try to ask my lender.

Thank you

0 Votes

Quote from @Justin R.:

There is a simple trick for comparing rate buy downs.

1. Figure out your annual principle and interest payments over the first year with Par (no rate buy down)

2. Figure out your annual principle and interest payments over the first year at the buy down rate

3. Whats the difference?

4. Divide the cost to buy down the points by the difference and you will find out how many years it takes to break even. If you hold the home longer than this and don't plan on another refinance than it may be worth while. I typically buy it down only if it pays for itself under 30 months time.

Thank you for your information. I will try and follow your suggestions.

0 Votes

I just got a deal for 3 beds 2 bath rental property for $247,500. The estimate rental is about $1,550-1,700.

My interest rate is 6.375%. My lender want me to buy down 1% with $1,800 Which make my interest 5.375%.

I asked my lender if I want to buy more down how much it will be. He said for 2% down is $4,990.

My question is which one should I choose 1% or 2%?

And it is wrong idea to buy down interest rate?

thank you

0 Votes

I have a single-family rental which I bought last year. It is paid $1300/month, and mortgage with escrow is $633.42 which is a good cash flow for me. I check my real estate agent. He said my house could sell for $210-220K for current market. I only own 85K to mortgage loan.

I would like to buy the quadraplex with asking price 675K; but I am going to offer for 600K, and I need to put 150K (25%) as down payment to get 3.5% interest.
I currently have only 60K cash, so I need 90K to make it for down payment. Here are my two idea that i can think of.

1. Selling my single-family, which should give me 100K or more after paid all the fee.

2. Refinance my single-family, then take out the house appreciation which should give me 66-70K. I got this idea after watch video about BRRRR. so I am not sure if it work or not, please me correct. I will also sell my stock to make 150K for down payment.

I am not sure which one is the better option, I would like to keep my single-family because it is my first rental property.

Please let me if you have any different idea because this is kind of new to me.

Thank you.

0 Votes

All Forum Posts by: Leewood Chan

Leewood Chan has started 3 posts and replied 9 times.

Post: Tax questions for the Rental property after transfers title from personal to LLC

Post: Tax questions for the Rental property after transfers title from personal to LLC

Post: Should I buy down interest rate?

Post: Should I buy down interest rate?

Post: Should I buy down interest rate?

Post: Should I buy down interest rate?

Post: Should I buy down interest rate?

Post: Should I buy down interest rate?

Post: Should I selling my single-family rental or refinance it?