All Forum Posts by: Alick Patrick

@Upen Patel How about a 5% conventional loan, is that possible? LA real estate is just too expensive and to put 15% on a $415,000 home is not something I can afford anymore. I prefer investing outside of CA but unfortunately I'm not knowledgeable enough about other states to even tackle investing outside my backyard.

Hello BiggerPockets!

I started investing in real estate early this year. So far I've managed to purchase one SFH for $385,000 15 miles south of downtown LA and a 3-unit Multi-Family property about 2 hours east of LA. I was able to get the SFH on 3.5% FHA owner-occupied under my name and the MFH also at 3.5% FHA owner-occupied for under my GF's name. I am on my third property now which is another SFH just 20 feet away from my first property. The price is $415,000.

Because I've used up all 3.5% FHA loans I could the lender I worked with managed to convince me to use my GF's son for the new loan. He would be the primary borrower and I would be the non-occupying co-borrower. Everything was fine at first until we were told by underwriter that we don't qualify under FHA guidelines since the primary borrower is not really my relative. I tried looking for another lender and was told the same thing.

Any ideas on what other options I have to be get qualified on a loan at 3.5% or 5% down. Unfortunately I don't have enough funds to put any more than 5% on this property.

I don't have any other relatives that I can work with to co-sign for me. I also don't want to marry my GF just for this purpose.

Thank you!

@Bill S.

That's correct, Wyoming and Nevada doesn't have one. Steven's suggestion was it would be OK to hire an accountant outside of California so I asked if accountants are normally knowledgeable of the tax laws on other states. If I was to hire an accountant eq at Colorado, open a company at Nevada, and live and do most of my business at California would that Colorado accountant be able to tell me the pros and cons of that. Even if NV does not have any state tax laws but I do business in CA does it even make sense to go that route? Do I have to live in NV or have an address at that state? How much savings am I looking at? Etc.

@Steven Hamilton II

Would out of state tax accountants still be very familiar with state specific tax laws outside of their home state? I recently read the Rich Dad, Poor Dad book about Real Estate Advantages and one of the strategies mentioned in there was having a company established in either Nevada or Wyoming and registering that to do business in California where I reside. It mentioned that there are tax advantages to that as well as privacy on the information you provide on a corporate level. I sort of threw that suggestion the other day to my accountant who does my personal taxes each year but she said there are no advantages, more fees to pay, and that I have to move to Nevada to do that. Although I didn't question or disagree with her on that I just kept mum and felt that maybe she's just not well versed with Nevada tax laws so she couldn't tell me the pros with that approach.

@Phil Hong

If I operate them as an individual will I still be able to get the same tax benefits I can get by operating them under a company?

Thank you @Shane W. and @Mark Mynhier !

@Phil Hong

The plan is to collect multi-unit rental properties that will generate cash flow. I've been reading through the threads here and it seems like I need to start an S-Corp or LLC to get me started correctly and prepare for the years to come.

I tried doing a search for real estate accountants and corporate attorneys and I've noticed that when I call the popular ones or big dogs I get thrown to their assistant or some person under them. On the other hand, the smaller firms that I found on Yelp and Google felt like I was their only client and they just want to earn my business. Although I understand that I'm no big dog myself for the good ones to spend time on me I still want to feel comfortable with the person I am talking to and feel that he/she is very knowledgeable and has my best interest at heart.

With that said, is there a good and reliable site I can visit to find good and reputable real estate accountant and corporate attorney? I'm looking to acquire my first investment property and would like to get professional help in doing so. Even better, if anyone knows someone trustworthy and skilled around the Los Angeles area please recommend him/her to me. 

Very helpful @Jesse T. ! Thank you very much!

@Chris Winterhalter

Yes, I originally started looking around the Torrance area but the properties are too expensive. Although I found a couple of fourplex properties that generates good cash flow they are on the $700,000 range already and being that this would be my first I think it would be too risky to go that high of a price. Thanks for the advice!

@Elizabeth Colegrove

You are right about the stress. Although I haven't experienced it myself I know that will happen. I too have a full time job (2 full time jobs, actually) so good point on the lower number of units for less stress.

@Jesse T.

Yes, the $500,000 property is a duplex. It's 3BR/3BA for each unit and was just completed (rebuilt) early this month. The back unit just had a tenant move in a week ago for a year lease. The front unit is appealing enough for me to live in and make better use of the $1,700 monthly rent I am paying for my apartment.

The three other properties I'm considering are a triplex ($200,000), triplex(175,000), and duplex($80,000). Unlike the duplex which is less than 10 miles south of downtown Los Angeles, the three other properties are all over 100 miles from downtown Los Angeles.

The only reason I am considering the three remote properties is because they already have existing tenants and I would generate $900 more positive cash flow than the duplex even if I was to rent the other unit for $2,500 and not live on it. But again, I have no prior experience or idea yet about the expenses involved and the three properties would certainly have more repairs and expenses than the newly rebuilt duplex.

Now that I'm actually writing this down it feels like I should go with the duplex instead.