All Forum Posts by: Account Closed

Hello, I am a new agent (4 months licensed). I am looking for tips on how to set up a consultation with an investor client. I know that it is much different than a buyer/seller consultation. What questions should I ask? 

Backstory:

Yesterday a customer reached out to me via phone because they want me to work directly with their investor (who is also a Realtor) to close deals on multiple properties in the area. They have already found the properties that they are interested in. I am scheduling an in person consultation to get a better idea of what their needs are and to see what they would expect of me throughout this process. With me being a new agent, I have no idea what to ask or what to even look for with investors/investment properties. I have not yet scheduled a consultation before. This would be a first for me. 

@Nicholas L. We currently don't have exact costs because everything is estimated. I am a new Realtor and I will be listing the property. I currently don't have a Landlord Insurance quote because I was told by my Homeowners Ins Agent that I will have to wait until the property is vacant or rented. 

Everything in the home is just under 4 years old, so there are no major capex items coming up. 

I will list the property at $2700 per month. I plan to self manage. If It becomes too much, I have a PM that charges 10% of rental income (270 per month).

I only put the rental income as $2500-$2700 because I will list at $2700, but will take into account that I may have to price drop.. Just based off of the comps in my area.

Current mortgage: $1287 without taxes (with taxes it’ll be about $2050 per month) this purchase price was $258k.. we have refinanced and have a 2.5 interest rate

Potential Rental income: $2500-$2700 depending on if we have to price drop.

New home mortgage: $2500 without taxes

Purchase price $468 with 4.2 interest rate.

Current combined income $158,000 only 52k is taxable income. Potentially $172,000 per year with husbands raise. Only $52,000 of this is taxable income (W2). 

I am more so worried about not having enough cash saved for this because with all our current home repairs and putting up earnest money, we are down to under 15k in savings. I know that it could get costly and I’m afraid of putting ourselves in a whole. But I also don’t know much about real estate investing because this is our first time and I don’t want to back out of something that could be beneficial for us in the future. I am willing to lose the earnest money if it means we won’t be in a whole in the future. But like I said, I really don’t know what I’m doing and need advice! 😭

Hello,

My husband and I have wanted to invest in real estate for years now and recently made the decision to purchase a new home while converting our primary residence into a rental. Since we are both 100% disabled veterans, we each get the 100% property tax exemption and we currently don't pay properties taxes on our primary residence. Our primary residence is a 5 bedroom, 2.5 bath, 2 story home, built in December 2019... Our original plan was to buy a new home, using the VA Loan and rent out our current home (under the impression that we wouldn't have to pay property taxes on EITHER property).. He would have used his tax exemption for the rental and mine would be used for our new primary residence.

Fast forward... We have found the new home, put down earnest money, and signed initial contract docs. The home is perfect for our family. It has everything we need and I could definitely see us there long term. $468k home. We locked in a 4.2 interest rate. Bigger home, huge yard, plenty parking. But I've recently discovered that we can't use the property tax exemption on a rental property. It has to be used only on our primary residence homestead.. I don't know how we missed this major point, but this makes me want to back out and lose the 7k earnest money that was put down.. I wasn't expecting to have to pay property taxes, as this would increase our out of pocket costs by about 1k a month. I want to back out, but my husband still sees opportunity and is very motivated to keep going. When we have vacancies, we will probably have to pick up side hustles to stay afloat. This is not something that I'm interested in doing because I recently got my real estate license and want to focus on my career. But I am not making money in real estate at the moment and would have to get something quick. We also have 4 young children and I would have to remove my 2 youngest from daycare in order to save money. We would also have to cut back on saving until we find a renter. We currently have under 15k saved.

His thing is... this is an Investment and yes, it'll be hard right now.. But in the end it'll all pay off. He also says we may not get an opportunity like this again soon. Low interest rate, bigger property, 3 car garage, huge yard for kids to play.. basically our dream home. I am just having trouble seeing the light at the end of the tunnel. We have a very comfortable life now and I don't want to complicate things by putting too much on our plate. I don't see how it's a good investment if we have to cut back on saving, find side hustles, or even struggle for a little bit while we have vacancies. Yes, we have always wanted to invest in real estate, but this isn't how I wanted to go about it. He says he has it under control, we won't struggle, and we'll be fine. He is also getting a hefty raise soon, so he is taking that into account. I am still worried. He is very driven and determined to make this work. Backing out is not an option for him. He brought up the fact that we could transfer the rental into our business name or a trust to avoid paying property taxes. Does anyone have an idea on how that works?

Overall, what are your thoughts on this situation? We close in a little over a month. Are there ways that we could get around the property tax like he says? How was your experience with your first investment property? Should I just suck it up because this is just apart of the game? I am new to this and it's all very overwhelming. I am in dire need of some advice. We need someone that could properly guide us so that we can minimize these road blocks in our future. Thanks.

Hello,

My husband and I have wanted to invest in real estate for years now and recently made the decision to purchase a new home while converting our primary residence into a rental. Since we are both 100% disabled veterans, we each get the 100% property tax exemption and we currently don't pay properties taxes on our primary residence. Our primary residence is a 5 bedroom, 2.5 bath, 2 story home, built in December 2019... Our original plan was to buy a new home, using the VA Loan and rent out our current home (under the impression that we wouldn't have to pay property taxes on EITHER property).. He would have used his tax exemption for the rental and mine would be used for our new primary residence.

Fast forward... We have found the new home, put down earnest money, and signed initial contract docs. The home is perfect for our family. It has everything we need and I could definitely see us there long term. $468k home. We locked in a 4.2 interest rate. Bigger home, huge yard, plenty parking. But I've recently discovered that we can't use the property tax exemption on a rental property. It has to be used only on our primary residence homestead.. I don't know how we missed this major point, but this makes me want to back out and lose the 7k earnest money that was put down.. I wasn't expecting to have to pay property taxes, as this would increase our out of pocket costs by about 1k a month. I want to back out, but my husband still sees opportunity and is very motivated to keep going. When we have vacancies, we will probably have to pick up side hustles to stay afloat. This is not something that I'm interested in doing because I recently got my real estate license and want to focus on my career. But I am not making money in real estate at the moment and would have to get something quick. We also have 4 young children and I would have to remove my 2 youngest from daycare in order to save money. We would also have to cut back on saving until we find a renter. We currently have under 15k saved. 

His thing is... this is an Investment and yes, it'll be hard right now.. But in the end it'll all pay off. He also says we may not get an opportunity like this again soon. Low interest rate, bigger property, 3 car garage, huge yard for kids to play.. basically our dream home. I am just having trouble seeing the light at the end of the tunnel. We have a very comfortable life now and I don't want to complicate things by putting too much on our plate. I don't see how it's a good investment if we have to cut back on saving, find side hustles, or even struggle for a little bit while we have vacancies. Yes, we have always wanted to invest in real estate, but this isn't how I wanted to go about it. He says he has it under control, we won't struggle, and we'll be fine. He is also getting a hefty raise soon, so he is taking that into account. I am still worried. He is very driven and determined to make this work. Backing out is not an option for him. He brought up the fact that we could transfer the rental into our business name or a trust to avoid paying property taxes. Does anyone have an idea on how that works?

Overall, what are your thoughts on this situation? We close in a little over a month. Are there ways that we could get around the property tax like he says? How was your experience with your first investment property? Should I just suck it up because this is just apart of the game? I am new to this and it's all very overwhelming. I am in dire need of some advice. We need someone that could properly guide us so that we can minimize these road blocks in our future. Thanks.