All Forum Posts by: Paul Jump

The part of my spouse not currently working is that she can be classified as a real estate professional and we can use write off taxes, interest, and depreciation to offset my W-2 income up to $500k/year. 

I recently bought a home and some life changes make it a less than ideal residence. I absolutely love the home and the location is iconic. Even if it doesn’t appreciate in value, I would have a hard time letting it go and would rather rent it. My realtor tells me, that I can cover my mortgage and then some (probably break even after maintenance).

My spouse is a non working attorney and I have a high income W2 job which is as steady as it can be. 

I did a mock tax return on turbo tax, classifying my wife as a real estate professional and incredibly it knocked my marginal tax rate to 9% (from 28%). Is this really possible? Am I crazy to not rent out my home and buy another in a better suited location for my primary residence?

My biggest concern is if you calculate cash on cash return in this scenario, it’s only 0-1%/year. What am I missing in how I think about my tax benefits? Am I better off with my down payment money in an index fund for example?

@David A. Margin call? I’m long term invested in the market with my portfolio anyways up or down, adding more every month. Why not just use this as collateral?

I’m failing to find a downside. Essentially you pledge 30% of the home purchase price in eligible securities. It makes it so that you don’t need to liquidate for a 20% cash down payment. The only downside I can think of is that if the securities value decreased below the 30% threshold, you’d need to re-up. Am I ready this right? Anyone have experience with a program like this?

Here is an example program by BOA: https://fafpf.files.wordpress.com/2011/10/mortgage100andparentpower0911.pdf

Here is a WSJ article explaining: http://www.wsj.com/articles/selling-stocks-to-buy-a-home-how-to-do-it-right-1445441711

TBH feels like a loophole for the wealthy.

@Alexander Szikla wow great analogy

@Jason Lee that's a great point about max number of units, and unnatural combinations. I've been told there are a couple well designed combinations in the building already, so my thinking is the building might have originally been a 12 unit buidling (and split up unnaturally). My assumption is the combined units match might match to comps--though would be planning to stay a long time, so would not be super concerned to be honest. 

@Alexander Szikla condo conversion is an interesting concept. This would probably make the combined units pop in value what probably not so much benefiting the small units. I'd love to research Condo Conversion more. I'll post back here if I find some good comment on it in other forums. 

Thanks for the thoughtful response. Here's the scenario I worked out in my head with the following assumptions which still need to be validated:

• It is possible to combine these two units
• It will be eventually possible to buy and combine another 2 adjacent apartments
• It is possible to sublet one combined apartment at a time with restrictions (only two years with primary occupancy requirements in between)

I would therefore rotate my primary residency between the two, and sublet the unoccupied one. The upside is that comps for 2-bedroom coop units conservatively run 30+% higher than separated 1-bedrooms. So I'd be essentially covering all my cash investment with renovated appreciation. In addition think there are some tax benefits to rotating my primary residence in both being able to write-off depreciation and qualify to exclude the gain on the sale since I'd have occupied it for 2-years prior.

In short, if I am unable to acquire the whole building, I could eventually flip every unit tax free--while probably also not paying much tax on my primary taxable income. Is that sound logic?

I have the opportunity to purchase 2 adjacent one-bedroom apartments in an iconic New York City building. The building is a 6-stories, consisting of 24-units one-bedroom units and is organized as a coop—so essentially the deal is to purchase 1/12th shares in the coop.

I would be purchasing these two units to combine and occupy as my primary residence; however the individual apartments in the building change hands fairly often as pied-a-terre residences.

I fundamentally believe there NYC is changing and that there is opportunity in developing a building to consist of larger units.

I am trying to wrap my head around a long-term investment in a building in which I personally occupy. Is there a world where it could make sense for me to first buy and combine these two units to personally occupy as my primary residence, while picking off every other unit that goes up for sale? How would I begin to think about a business plan here. Remember I’d be in this for the long haul... like forever. Any advice, past stories, or general cautionary tales greatly appreciated.

@Aaron K. Zillow employs over 50 Data Scientists: https://www.linkedin.com/search/results/people/?facetCurrentCompany=%5B%2213990%22%5D&keywords=data%20scientist&origin=FACETED_SEARCH

Crazy how much better they could be doing.

I wrote a pretty cool script that allows me to surface real estate buying opportunities based on pretty much any characteristic.

For example: I wanted to know what homes in a given zip code could cover the cost of a mortgage with a rent roll (based on Zillow’s rent estimate).

I’ve been experimenting with many different parameters.

I’m no real estate expert but I am a software engineer by trade and I was wondering if the experts here:

What would be in your custom real estate report? 

How would you filter your results to find the perfect opportunity? 

With enough replies, I could build and share a really cool tool.