All Forum Posts by: Mike Arias

Hello, my goal is to convert my primary SFH to a rental. From what I read, depreciation is calculated on the purchase price of the investment property. In my situation, I purchased my primary over 22 years ago and I assume I don't use that "purchase price". I assume I use the current value of the property (I know its the value of the house only; excluding land) when I "convert". So my questions are:

- Do I need to get an appraisal to determine the value of the property so I know what to use to calculate depreciation?

- When exactly does my primary become a rental property?  When I move out? Or when the house is rented?

I know this is common but I never have heard any podcasts, blogs, or videos talk about this.  I have read Amanda Han's tax book (first book) and started on the Advanced Tax Strategies and don't really see this mentioned. 

I assume there maybe some nuances when one turns their primary home into a rental (not house hack but full rental so my wife and I will move out).  Anything else I shoudl be aware of?  Thanks in advance.

OK, I think I understand. So basically calculate the numbers as a cash out refi maybe better than taking out a HEL/HELOC?

To purchase investment properties. It may not be right away. Without getting into a long story, I will have a decent equity (down payment) when buying that primary house. A year or maybe slightly sooner, I would like to pull most of that equity [I know it will be based on LTV] to buy investment properties.

Thank you, all. Reason I ask is that I maybe moving in the near future and start investing in real estate afterwards. I am trying to figure out if I should exclude buying a condo as my primary because it is more restrictive to get HEL/HELOC that I can use for real estate investing. @Sasha Mohammed, I had no clue about what a "townhouse" means. So I should ask whether a townhouse is a true condo or attached SFR? If a "townhouse" has HOA fees, does that automatically make it a condo or PUD? Is PUD and condos basically the same?

I do tend to hear more negatives about a condo so that will probably not be an option anyway. 

From my research, owning a condo as a primary is more restrictive than owning a SFH because lenders view condos are higher risk. Is that true? So if one wants to buy investment properties, is it harder to get approved for home equity loans if you own a condo vs. SFH?

What about townhouse?

I am looking at an area where about the majority of homes (SFH) are owned not rented. Not sure if these numbers are accurate but about 83% owned/17% rented (according to Niche website). There are very few rentals in this area.

Does this make a major difference?  Is it good to look for properties for LTR in this area since competition is low?  Or will this be more difficult to rent? 

Thanks!