All Forum Posts by: Melissa Hartvigsen

If you find a qualified co-signer, and get approved for the loan, then yes this will build up your credit history. Part of having good credit is having a mix of installment loans (like home loans) and revolving credit like a credit card.

The co-signer is not required to live at the property. Whether or not you qualify for a conventional loan or FHA loan would be up to the bank you get your loan from. The co-signer would not disqualify you from getting a FHA loan. Usually it is easier to qualify for a FHA loan.

Without knowing where the water is coming from it would be hard for anyone to tell you if this is a major issue.

Mold is a health and safety concern. Your realtor should help you get professional estimates on how much this will cost to address. It is important to find someone that will correct the water source in addition to remediating the mold.

This comes up frequently on real estate transactions, and I usually help my buyer clients negotiate to have the seller pay for this type of repair prior to closing. I also recommend that they required the seller use a contractor that is approved by my client to make sure the job is done by someone reputable.

I hope this helps!

Melissa

Jared,

What a great plan!  You would not be able to obtain a loan on your own until you meet the following:

1. Are at least 18 years old.

2. Have a steady income for at least 24 months.  

3. Have a credit score of at least 640. (The higher your score, the better your interest rate will be). 

Or you need to have a qualified co-signer. Generally speaking, the bank providing the loan will require the co-signer to also be on the title to the property with you.

Here is some basic advice:

1. Becoming a realtor. Most realtors are self-employed, and write off a lot of their expenses. Writing off everything you can might be tax smart, but does not help you qualify for a loan. I would suggest getting an entry level W2 job at a local real estate brokerage. You can learn a lot and possibly have your license paid for. This can be a reception job, marketing job, transaction coordinator, realtor assistant etc. 
2. Build your credit. One way to instantly get credit is to have a responsible adult with good credit and responsible credit card usage add you as an "authorized user" to their account. If this option is not available to you, you can get a secured card through your bank or credit union. They basically have you set up a savings account that will pay the bank if you default on the credit card. After 6 months to a year, you may be eligible for a regular credit card, and then they would close the account and send you the savings deposit back.
3. I recommend reading Dan Sheeks "First to A Million: A Teenager's Guide to Achieving Early Financial Independence. It will give you a more in-depth plan on all of the above.

Good luck! I think it is brilliant to start so early! :)
Melissa

Hi Cory,

I am relaying my experience.  Keep in mind, I am a realtor in Oregon, and on my most recent 1031 exchange I had about $12,000 in boot. I ended up paying capital gains on both federal and state. For the $12,000 I paid about $3,000 in taxes.  Each state has a different rate (some states don't tax capital gains) so I am not sure how that would impact you. It was not taxed ay my income tax rate.

I would confirm with a CPA just to be safe. Pennsylvania might have different rules than Oregon.

Best regards,

Melissa

@Kyler J Sloan

If you purchase the property as an investment with 20% down, you won’t be able to pull out 15% later.  Most lenders have a maximum loan to value of 65%, though I have seen a few go up to 75% for a cash out refinance.

To have the lender consider the home a primary residence for a refinance once it has been established as an investment property, you would have to live in it as your primary residence for a significant period of time (likely a year, possibly two). You should confirm this with the lender in advance so you know how long you have to wait.

Maybe you should consider purchasing the property as a primary residence with 5% down? The interest rate on the mortgage will likely be a full percent lower than the investment loan. You could use the remaining 15% to fund your ADU build.

Best wishes,

Melissa 

Hello,

If I were in your shoes, I would send this directly to my QI, and let them give me the breakdown. Mine did this for me multiple times when I wanted to run numbers on possible replacement properties and options.  They answered my questions. I ended up with a little boot, and gave me a reasonable estimate of what I might owe come tax time.  I live in Oregon and paid the state 9.9% in taxes on top of the federal rates.

Quoting a handout that my QI gave me: "The amount of Gain you pay depends on the State and the type of tax you are exposed to. Each State has its own State tax that is applied on top of the federal tax. Depending on the State of disposition and the type of Gain, combined rates can climb to more than 50% if Alternative Minimum Tax is applied (26-28%).

What does it cost?

Federal
Appreciation 20%* 
Depreciation 25%*

* The federal rates quoted are for properties held for more than a year and held for investment. Properties held for investment for less than a year or properties held for resale are taxed at normal income tax rates."

The gain is added to an investor’s income for a year and the appropriate tax rate applicable. In some cases, the Alternative Minimum Tax may apply to gains."

Best wishes,

Melissa

Good morning @Kristyan Santos Figueroa:

Most prospective tenants apply online. I don’t use a physical application. Instead, I use the digital applications available through apartments.com. The $29 fee is paid by the applicant, and includes the credit report, background check, and eviction history check. You should contact the previous landlords of your own to confirm rental history, payment history, and if they violated the lease or caused damages. 

The site also has several other helpful features free to landlords: advertising for your rental, online payments, expenses tracking and easy to download reports, etc.

As for leases, every state (and sometimes every city) has different rental laws and you should not use a free generic lease from anyone, or one you find online.  You can Google “landlord associations” for your area. They can provide you a lease relevant to your location for a relatively low fee.

Good luck!

Melissa 

@Delicia M.:

You are welcome! Best wishes for the re-listing! 😊

 A new wax ring and bolts for toilet is also normal maintenance that needs to occur.

Do not charge the tenant for either of those items by withholding money from the deposit.  Both of these are normal maintenance items that are solely the landlords responsibility.

The real distinction, as to what is considered damage: obvious items that were caused by somebody’s misuse, or neglect.  Common things I have seen over the years: severely stained carpet, doors broken off hinges, holes in the walls, missing refrigerator shelves, broken blinds, etc.

Sincerely,

Melissa

Hi @Delicia M.,

I’ve never heard of a seller, being entitled to the entirety of a buyer’s down payment.

In Oregon, where I am licensed, the earnest money deposit that the buyer provides in the contract is intended to be liquidated damages owed to the seller if the buyer cancels without cause.  The escrow company who is holding the funds would release the money to the seller.  In rare cases where there is a dispute between buyer and seller in regard to who is owed the earnest money, it can go through mediation, or escalate to court if it’s above $10,000.

I know it’s frustrating to have to re-list your house, but I’m confident you will have another buyer that will get you to closing within a month or two.

Fighting in court for an extended period of time for a hope, and no guarantee of more money, does not seem worth it to me.   If I were in your shoes, I would follow your attorneys advice and take the $10,000 and move on.