All Forum Posts by: Nate Maier

Thanks for all your input. Her income is below the 100K thresh hold so that is an area we don't have to worry about.  And to @Dave Toelkes point in the past my accountant has just deducted renovation expenses to prep a property for rental in the year they occurred.  Wouldn't that be more advantageous in a time value of money perspective?  My guess is it is probably dependent on a few moving pieces.  We will leave it to a CPA to figure out. 

We were ultimately trying to figure out if it made sense to go with her parents high price CPA firm so that they could see the whole picture or if that was necessary/possible as far optimizing deductions between her and her parents.

Thank you again!

Nate

I've heard before that you can't always carry over losses unless you're considered a real estate professionals. Is that where the 25k limit comes in?  Along that line is that what you meant Steven with the depreciation?

Thanks for all your help so far!

Good Afternoon,

My girlfriend bought her first single family house this year in the middle of October.  She renovated it over the winter months and has a lease signed starting March 1st.  There were relatively significant cash outlays during the renovation (7-10K) that all happened in 2015.  She hasn't had any income from the property during that time as it has been vacant.

She is a full-time student with a part time job that pays around 20K a year.  Her parents pay her tuition and claim her as a dependent.  My question has to do with the losses associated with the acquisition.

Should she be claiming the loss or should she pass it to her parents?  Same goes for the depreciation of the property.  

Next year she expects to have a similar income level as well.

Any help is greatly appreciated.  Feel free to pm for my phone number to talk specifics

Thank you!

Nate

I've had the same experience, even with a seller willing to carryback 15% with my 5% for an LTV of 80% banks and brokers would not touch it. The general recommendation I recieved was to get owner financing for the first year or two, season it and then refi it into a conventional 80-85% LTV down loan.

Good Luck!

You might want to look more into a land contract with a three year term.  With a lease you won't be building any equity, your payment will be higher, and you'll just be making the difference between the rents and your payments to the owner.  You will presumably be doing all the repairs and maintenance so the numbers there are kind of thin.

For a land contract I would suggest plugging the purchase price and amortization period into a mortgage calculator online and then comparing that to your rents and expenses to see if the property makes sense to you.  Then you could adjust the payment up or down depending on what you want your cash flow and balloon payment to be.  Obviously it is most beneficial to you to make the lowest payment to the seller and vice versa on their side.  So I think it will ultimately come down to who wants the deal done more.

I will be there.