All Forum Posts by: James Miller

We have a 4 bedroom single family rental in Plano, TX that have been vacant now for 90 days (!). We haven’t had any issues renting it out in the past, therefore we do not understand why we struggling this time.

It has gone through make ready repairs and looks great, the only feedback we got from relatos who showed it is that people are saying that the street is narrow. The actions we took already to try and getting it rented include price reductions (twice), new photos and lower application fee. Any advice on other things we could do? And what could be a “hidden” reason for such a long vacancy period?

Thank you…

Elad and Keren

You can try increasing the renter's agent commission to get some more traffic. I.e. offer a whole month's rent to the tenant's agent. That should get a bunch more traffic.

0 Votes

Dallas, Texas

Originally posted by @Nur Al Sharif:

Hi guys,

I've been trying to understand the tax implications of different entity types. I've developed a really short, brief model of how an S-Corp would be taxed, provided that it is 100% comprised of rental properties. My results came out quite counterintuitive; the higher the income, the lower the effective tax rate is (I assume this is because Social Security Tax becomes more and more insignificant, as it is capped at $128,000 of salary).

Anyway, I attached the quick model. Not sure how accurate it is, if at all. Could you please take a look and vet it?

Thanks everyone!

Remember, S-Corps' main disadvantage in a buy and hold rental context is the extra difficulty in exits. If, for example, you decide you'd rather transfer the property out of your LLC, live in it as primary residence for 2 years, and then avoid some capital gains tax, nope. You can't do that in an S-Corp without a taxable event. There are some other disadvantages when it comes to exits with an S-Corp. Partnerships and disregarded entities typically avoid these issues. As general rules of thumb, S-Corps for flips when flip income is over $40ish K per year, and disregarded/partnership entities for buy and hold.

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Originally posted by @Juan Carlos Gutierrez:

I’m in the process of buying a house. My closing date is Nov. 15th BUT my divorce date is Nov. 14th Should I push back my closing date? Do I need proof of divorce? What else do I need to know, I have very little knowledge on all this Please help

Eeek! I used to do a bit of divorce law in TX and I would NEVER advise my clients to do a deal until the divorce was final and the time for appeal was over. Have you talked to a lawyer in your state about whether that's doable or not?

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Originally posted by @Ryne V.:

Hello fellow BP'ers,

Both my partner and I are self employed in the horse racing business. We can't provide any W2's or a proof of monthly income due to the fact that our earnings are based of off race outcomes which vary every week. Between the both of us our 1099's over the past two years are show earnings of close to $570 combined (him $375K, me $195K) My credit is bad though due to a foreclosure in 2012 (I was young and dumb) his is in the 700's. We also have a third partner who shows a monthly income of $6500 with a credit score in the 700's as well. We have $50K set aside to invest. We want to invest in the DFW area using the brrrr strategy. My question is, what options do we have to apply for a loan, and which loan would you recommend? I imagine I'll have to be a silent partner. So should we go FHA, conventional, or look for a hard money lender?

You may want to speak with an accountant about whether an entity taxed as an S-Corp would work in your situation. In my experience, if lenders see a W-2, *even if you're the sole owner of the 'employer'* they count that as higher quality income than SE income.

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Originally posted by @Brian Cardwell:

@Brandon Hausauer you are correct. There is no magic. It is simple math. So when one shows the math, you still say scam. The math works. The plan works. If you don't like Kool aid, then dont drink it. But don't keep saying Kool aid isn't sugar water when it is. The method works just as whatever method you used to pay off your mortgage worked. Does one need all the other things people are trying to sell with the method? No but that doesn't mean the method doesn't work. If you don't understand it, you don't understand it. Don't call it scam because you don't agree with or understand the method.

Please show me the math then. If the HELOC's interest rate is higher than the primary, you're spending more in interest on the HELOC than you're saving on the primary... If the HELOC's rate is lower than the primary, maybe, this makes sense.

Here, show me how a HELOC saves me money here.

$100k primary mortgage, 20 years am, 4.7% fixed, no early prepayment penalty.

I can borrow $15,000 in a HELOC at 5.9% that floats quarterly.

Show me with math how borrowing at a higher interest rate, then putting those proceeds against my mortgage, then paying back the HELOC, saves me money over paying the equivalent additional principal on my mortgage instead of the HELOC.

0 Votes

Originally posted by @Brian Cardwell:

Originally posted by @Jeremy Z.:

@Brian Cardwell

What rubs me the wrong way about how you and others pitch this method is the lack of transparency. You say you used this method to pay down your mortgage in 7 years, but you omit the fact that it was the thousands of extra dollars you put toward principle that really did it.

You're selling a jalopy and telling people it's the fastest car around, just because you drove it faster than most other drivers. You're neglecting to tell your customers that the other cars can be driven just as fast. At least that's my hunch!

Actually @Jeremy Z. I have been nothing but transparent. I outlined exactly how I did it either in this thread or another one. I absolutely have said that one has to have more money coming in then they have going out. So there is nothing I am hiding. Like I have said before I have nothing to gain by sharing except for the satisfaction of me giving someone a tool to pay off their mortgage early. On page 2,3, and 4 you will find that I clearly explain the extra money goes to pay down the HELOC. And that the money from the HELOC goes to pay down the principle of the mortgage. So please if you have a problem with how I explain it, would please be accurate with the criticism.

I fail to see how I wasn't clear about where the extra money was going and what was paying down the mortgage? Please let me know so I could be clearer the next time I explain it.

So why the HELOC in the first place? Just take the extra money that you would be paying at the HELOC and pay it towards the primary mortgage? I would understand that if the HELOC interest rate is less than the primary mortgage. But at least the last time I looked at them, they're not...

1 Vote

Originally posted by @Jason Primrose:

James Miller

Here is a calc with 1k per month.

It works, here is a calc, Yes you might pay more interest, yes you could just pay more on your home. But and this is a big but, who ever really invest every last dollar they have. You are using any extra dollar you have and putting it at your principal that would otherwise sit? This forces someone to consider a budget and force invest into paying off the debt. I know I personally wait till I have 5k extra in a savings account and then move it over to other accounts like Roth, investments, school loans etc.

Paying off a home in 4.67 years VS 11.67.

I don't see the big deal in paying 12,151 more interest to kill a loan like that.

Play with the calc yourself.

https://www.nreigrp.com/vb-calc-2347482457.htm

What if we invest 12k for 15 years rather than extra payment?

What if we pay off in 4 then invest?

What if we say screw the house and borrow from the heloc every few months to invest?

What's the math behind it? It looks pretty; but, anyone could photoshop fancy numbers to make it look like it saves money. I'm just not understanding the point of borrowing on the HELOC unless the HELOC's interest rate is less than the primary mortgage.

1 Vote

Originally posted by @Connor Heim:

Yes, he is willing to sell to the LLC. I will personally guarantee the loan. My income is sufficient :)

While I don't approve of him calling you a little lady etc., I understand why he wants your husband to sign too. Just because it's only your name on the single-member LLC doesn't mean you own it 100%. Your husband likely owns 50% of your LLC as community property, unless it was formed before marriage, or you have a pre- or post-marital agreement partitioning it to separate property.

1 Vote

Originally posted by @Lincoln Tudor:

I'm doing a lease option deal in Mckinney TX and I need a local Mortgage Broker that works with tenant/buyers. I'm looking to do a rent-to-own deal with tenant/buyers and will also want to partner with local credit repair specialists.

I have a signed agreement from the seller!

Help!

Texas de facto outlawed lease options years ago. I've never seen a compliant LO transaction come across my desk and if it's not compliant, it's a virtually risk-free transaction for the tenant / purchaser.

0 Votes

Just because a plumber wasn't licensed doesn't necessarily mean the install was bad. Plenty of people without a license that know the plumbing trade better than plenty of licensed plumbers. The license is more of a problem when it comes to inspections and insurance.

1 Vote

All Forum Posts by: James Miller

James Miller has started 2 posts and replied 357 times.

Post: over 90 days of rental being vacant - any advice?

Post: S-Corporation Tax Scenarios

Post: Buying while getting a DIVORCE

Post: Self employed loans?

Post: Has anyone ever used the Velocity Banking Strategy?

Post: Has anyone ever used the Velocity Banking Strategy?

Post: Has anyone ever used the Velocity Banking Strategy?

Post: We need your husband, little lady...

Post: Need Mortgage Broker that does lease options in TX

Post: To Pex or Not To Pex