All Forum Posts by: Sam Marcos

No one mentioned the TAX advantages to leasing!!

I own a small business (unrelated to real estate) and have leased a car throughout my time in business (17 years).  The tax benefit is that you can expense your entire lease payment off your top line taxes, whereas with a loan you can only expense the miles/depreciation.  The lease begins to make more and more sense the more your yearly income is, and the more expensive the lease is.  Thats why high income folks like doctors and lawyers etc are always driving brand new cars.  They aren't idiots right? So how does the math work?

Lets say you make $60k a year and you lease a car for $500 a month ($6k a year).  That $6k is expensed from your $60k income reducing your income to $54k.  To figure out how much you saved you would calculated your taxes owed at $60k and then calculate your tax owed on $54k and subtract it from the first number.  So what would the EFFECTIVE cost of your lease actually be?  Its actually $6k (yearly lease) minus your tax savings.  The result is what you ACTUALLY pay to drive that new car.  You can ballpark this math by simply calculating the net amount through your tax bracket pecentage.  So if you are in the 22% tax bracket, you subtract 22% of the lease payment.  So you are only really paying 78% of that lease payment and the rest is savings from the tax benefit.  

It makes even more sense if you make lots of money and you are in the highest tax bracket. Imagine 37% tax benefit taken off your lease payment.  a $1,000 a month lease on a fancy BMW X5 would cost you only $630 a month once you factor in the tax advantages.  If you pulled up at a traffic light next to someone with an X5 that they bought on a loan, their payment is most likely more like $1,500 a month or more.  Your NET expense is $630 a month and you drive the same car!

The last point on taxes sometimes makes a HUGE difference for people.  for the tax year 2018 If your taxable income after all expensing is $77,401 because you don't have a lease payment to expense, your tax bracket is 22%.  If you have $10,000 a year in lease payments your taxable income is $67,401 and now you are in the 12% tax bracket.

Disclaimer, I am not an accountant and there could be things wrong with this math. But this is how I have always understood it.  

Are there lenders that will finance a purchase as well as the rehab costs at 100%? Is this even an option for people starting out? Let’s say the homes you are looking at go for $100k The rehab runs about $30k The ARV is $180k How much cash would you expect a hard money lender to need you to put in?

I see a lot of people saying hire him.  That is fine but I'd do it knowing it was a charity/humanitarian thing.  The red flag for me was the pain meds because I've been involved in a business deal with someone who started on legit prescribed pain meds and then slipped into black market pain meds, and then into the street alternative (heroine).  Its a VERY slippery slope.  People's tolerance increases and the the pain starts to come back and doctors are afraid to keep raising the dosage so then people start to buy them from whoever they can.  Then it becomes a habit that gets very very expensive and heroine because the only way to feel "normal" without having thousands of dollars to spend. 

Proceed with caution.  He shouldn't have keys to the house.  He shouldn't have materials for the kitchen in his position.  None of your money, credit cards etc.  You buy the materials, you do the work, he helps you and does his part, he gets paid for the day/week/month whatever.  Payment AFTER work.  If he proves to be reliable down the road you can re evaluate the trust factor.

Trust no one who takes pain pills and lives on a boat and "needs the money". (nothing to do with one leg whatsoever, plenty disabled people are very skilled and awesome people).  

You could reparcel the lot and break it into smaller ones if you wanted to sell just the land the house sits on.  That's if there is road access without driving through the rest of your land. 

Your parents can sign a POA (Power of Attorney) that covers their real estate, or just that one building and then you would have legal right to represent them even in court. I've done this with my parents for a property here in Florida even though they live out of state. I actually purchased the property, made it into a rental, and recently sold it, all without them ever being here in Florida.

I’m sure that’s swinging golf clubs not women? 😊

What about if part of your ‘cash in hand” involves large credit card lines that are unused? Would you look for a ratio between actually cash and available credit? Like let’s say 50/50?

Can anyone shed some light on how hard money lenders determine your eligibility of your loan?  Any ideas on the minimum monthly or yearly income you need to have?  I can't seem to find any info on this online even at hard money lender sites.  They want you to apply and then find out..

Thanks Mike!!

A buyer with FHA lending submits an offer. The offer is approved and the house is now under contract. In the mean time the seller pays for estoppel and title search, inspection, etc.. Then in the 48 hours before closing, the loan falls through for the buyer and the deal is cancelled.

Does the buyer get their deposit back?

Will the seller need to pay for a title search on the next contract?

Will the seller need a new HOA estoppel on the next contract?

What costs does a seller incur every single time the same house goes under contract?

What about loan to value?  70%?  80%?  90%?