All Forum Posts by: Tucker Long

@Andrew Postell, once again you come in with an unexpected answer. Much thanks! I'd rather not way two years to have this income working for me...So based on the context, your response, and my goal, would you recommend going the S corp rate and start W-2ing myself starting January?  That should be lendable income once I have 2019 tax returns, correct?

Or is there another strategy you reccommend? 

Hey all, trying to setup business structure for 2019 to improve lend-ability/DTI in future years. This post is about improving lend-ability, not tax savings (which seems to be the topic on most LLC vs S corp threads I've found). Currently I have years of 1099 income I'm getting loans for rentals from, but I want to add to my income/improve DTI from flip/wholesale/creative real estate deal profits. SO a few questions for anyone willing to take the time to answer:

1. If I'm flipping/wholesaling and making $100k profit annually to my personal name/LLC, there's no way to use this capital gain/profit to improve my DTI. Fannie banks won't consider it reliable income. Do I have that right?

2. Does the above scenario change if I 1099 myself (not even sure that's possible)? So, LLC makes $100k, transfers to my accounts, 1099's me for the $100k at the end of the year, and I could then use that 1099 showing that income to get conventional loans? OR would bank see I own that entity and tell me that doesn't work?

3. Is the best way to turn flip profits into lendable income in Fannie's eyes is to have LLC that elects to be taxed as S corp pay me w2? There's no way to do something similar with normal LLC (via 1099)? Yes, I understand S corp could have tax advantages at a certain income threshold.

Summary: I want to ramp up flip and wholesale profits this year, but want to ensure that it turns into improved ability to get fannie loans/improved DTI in 2020. I've talked to accountant, he says go S corp for tax reasons if I can make $80k + flipping but talk to lenders about lending guidelines. I've asked lenders, they say S corp paying me w2 would be safe bet but haven't found clear answer on turning flips in LLC name into lendable income. To be clear, I don't know that I'll clear $100k flipping in 2019. I would like to give this a shot through LLC if I can 1099 myself, but only if banks would count that as income.

Thanks for any thoughts,

Thanks Austin, received your PM I'll give him a call tomorrow.

Hey Columbus people!

I'm searching for an Ohio lender who can help pull 100% of $ back out of a cash purchase, via delayed financing (of course contingent upon appraisal being high enough).

For those unfamiliar, check out this great post on the topic (specifically part 2) 

https://www.biggerpockets.com/forums/48/topics/460294-how-to-cash-out-1-4-unit-property

https://www.fanniemae.com/content/guide/selling/b2/1.2/03.html

I've talked to several loan officers who are typically investor friendly, they all either want the investor to leave some of their own cash in the deal for first 6-12 months due to their own banks overlay, or they don't understand this process/don't want to mess with this.

Has anyone successfully pulled 100% of their cash out of an all cash purchase in Ohio with this technique? If so will you please share which bank it was with? :p

Thanks in advance,

Hey Chris, I live Columbus and work full time in real estate sales/investing. Feel free to PM me, I'll do what I can to help.

I was told the following, could someone confirm or deny this is accurate?

If I pay cash for a home, rehab, rent, and go to refinance Fannie/Freddy guidelines will require me to keep 20% equity/my own cash in the deal regardless of new appraised value.

If I buy a home with hard money/private money with a note in place, rehab, rent, and go to refinance I can put 80% LTV in place based on the new appraisal. So potentially could have none of my own capital in the deal if I buy right/add enough value.

SO basically, they were claiming there's an advantage having a first mortgage in place when completing a BRRR because it allows me to leave no skin in the game, where as if I buy and renovate with cash I'll be forced to leave 20% or so in the deal.

Thanks for any thoughts,

Thanks for the opinions. 

@Nathan Holsather great points, thanks for pointing this out.

Hope everyone is staying warm! Hoping to get some advice...

I own my primary residence free and clear, preparing to pull out equity to invest. I feel inclined to just cash out with 30 year fixed since rates are trending up, but do want to be sure HELOC isn't a better option before committing. I realize if I'm not constantly deploying the capital, there's a chance I'll pay more in interest with the 30% even at a lower rate. Property will appraise around $240k, planning to go 80% ltv if I go cash out option.

My objective is to continue building a buy and hold portfolio using BRRR (real creative, I know). I do have income from day job, so there may be situations where I buy something closer to turn key that flows, but I would need to leave some equity in the deal. In general, I'm conservative financially and don't want to leverage my investments over 80% ltv.

So, what I'm wondering is those who have purchased cash flowing properties without a ton of upside with HELOC cash, were you stuck with that 20% equity you have in the deal (or whatever % you put in) in the HELOC balance? Do banks that require you keep X% in the deal even allow you to use equity that came out your home, via a HELOC?

Thanks for any wisdom,

Hey all,

Just an update for those lost and confused on a mattress hunt. Went with a firm, SPRING Ikea mattress for $250. Extremely impressed, have had a friend sleeping on it for a week, he loves it. Will put a foam/pillow top on so guests feel it's soft enough. 

Thank you both for the feedback, much appreciated. Looked at both options, something in between your price points might be ideal :p

@Jon Crosby Thanks for the expertise, can you recommend a traditional mattress under $700 in queen? Is that just trying to be too cheap?