All Forum Posts by: Mark Carbonaro

I've got a great tenant and would like their security deposit to earn them as much interest as possible. The problem I'm encountering is most of the high yield (> 4.00%) savings accounts I've looked into don't seem to offer the appropriate structure:

- I could open an individual savings account, but the interest accrued (> $10) would be reported to the IRS as taxable income under my name.

- I could open a joint savings account, but as the primary owner, the interest would still be reported to the IRS as taxable income under my name. What's more is my tenant would then have access to the funds.

Does anyone know of a high yielding account where I would have sole access to the funds but my tenant would have the sole tax liability? 

Alternatively, since NJ requires landlords return the interest accrued on their tenant's security deposit back to the tenant every year, could I open an individual account, return the $X in interest which gets reported as my income, then report either $X less in rent OR the full amount of rent plus a separate $X operating expense?

@Stephen Kappre Are you aware of any districts in Audubon/neighboring townships that are definitely zoned for duplexes/triplexes? My research so far suggests there aren't very many (if any) viable districts (geographically between let's say Cinnaminson, Mount Laurel, Blackwood, and Collingswood)

@Shawn Mcenteer Thanks for the reply. I've been able to find several townships' zoning maps and local codes via Google. The issue isn't necessarily finding the information, rather it's finding viable duplex districts. From Trenton to Vineland, there's hardly anything zoned between "Single-family (detached/attached) dwelling" and "Mid-rise/High-rise apartment building".

I'm mostly curious to know if anyone has had success with being a live-in landlord in a southern NJ duplex and if so, where?

Hi I'm looking to buy a duplex in souther New Jersey but it seems most towns aren't zoned to allow for them. Does anyone have experience with this area and could you point me in the right direction? I've been on the MLS/Zillow/Trulia/etc. for several months and all I come across are twin homes and illegitimately listed duplexes.

Thanks,

Mark

Ah yes I misunderstood. I thought you were referring to the lender's opinion, not the seller's. It would make sense that the lender would be eager to approve an FHA loan as Uncle Sam would be my cosigner. I can also see how the buyer not having as much skin in the game as one ordinarily would could be a turnoff to some sellers.

I absolutely agree that I'd rather put 3.5% down than 20% and invest/ retain that extra 16.5%. I primarily wanted to make sure the rationale I have for leaning toward the FHA-backed (or similar high LTV) loan is well founded. I'm looking in the $200,000-$300,000 range to start and haven't looked at the different rates for SFRs vs. multi-family in my market, so I will definitely start investigating that. Thanks for taking the time to reply!

Thanks for your advice & input. I'll keep it in mind as I continue to network within my local market. While I'm not overly concerned with getting approved as I've got excellent credit, I was not aware FHA insurance came with a stigma when applying for a mortgage.

Hi there,

I'm looking to house hack a small multi-family property and am thinking of different financing options. I plan to occupy one unit of the residence for at least a year and rent out the other(s).

In looking to get a loan with an LTV > 80%, the two options I'm considering are:

-Get an FHA mortgage, put 3.5%-5% down, and refinance 12 months after closing to get rid of the monthly PMI expense.

-Get a non-FHA mortgage, pay the recurring PMI at first- knowing it will (hopefully) go away after I've built up 20-22%+ equity in the property.

Assuming consistent PMI costs and interest rates between options (before &/ after refi), the only scenario in which I can see the second option being more beneficial is if I had put enough money down to hit that 20-22% equity level within the first 12 months.

This seems implausible due to mortgage payments barely paying off any principle in the first year, not to mention I'd think the only way I could attain that level of equity so quickly is if I had put down 15%-18% initially, which virtually eliminates the benefits of a "low" down payment.

I don't have any specific properties, institutions, or rates in mind, and while I'm sure these questions would be more easily answered on a case-by-case basis, what are some considerations I may be overlooking? Any constructive input on this topic is greatly appreciated.

Thanks!

~Mark Carbonaro

In reading "Rich Dad, Poor Dad", I'm trying to understand how Mr. Kiyosaki's numbers work out the way they do in Chapter 5. Specifically, he gives the example of his first flip where he profited $40,000 from 5 hours of work. His math and the corresponding chart do not make sense to me.

He says the transaction went as follows:

"For $2,000, which was loaned to me from a friend for 90 days for $200, I gave an attorney a cashier's check as a down payment....I asked for a $2,500 processing fee, which [the buyer] gladly handed over...I returned the $2,000 to my friend with an additional $200...I had sold a house for $60,000 that cost me $20,000. The $40,000 was created...in the form of a promissory note from the buyer."

Robert's corresponding chart shows the following:

My confusion lies in that if he sold the house for $60,000, shouldn't the promissory note be worth the price of the sale (i.e. $60,000), not $40,000? Or perhaps if he forgot to mention that the buyer paid $20,000 down and then gave him a $40,000 promissory note, shouldn't the $20,000 mortgage have been paid off/ removed from the liabilities list?

The balance sheet shows a net profit of ($40,000 - $20,000) $20,000, but I infer from the passage that the $40,000 promissory note was profit since "the house sold for $60,000" and "[the house] cost...$20,000." If the buyer only gave him a $40,000 promissory note and he still had a $20,000 mortgage (as made evident by the balance sheet), he would have made $20,000 after paying off the mortgage- not $40,000. Basically, $40,000 + (-$20,000) = $20,000, not "the created" $40,000.

If anyone could explain what I'm missing, I would greatly appreciate it. Thanks!