Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
×
Try Pro Features for Free
Start your 7 day free trial. Pick markets, find deals, analyze and manage properties.
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Ty Coutts

Ty Coutts has started 10 posts and replied 413 times.

Post: 200k in Equity

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Hey Devonne,

200k in equity is AWESOME! There are so many options for RE investing. Here are a few:

Invest in Rental Properties:

Buy Rental Property Outright: Use a portion or all of your equity as a down payment to purchase one or more rental properties. This allows you to generate passive income through rental payments.

Financing Additional Properties: Use your equity to secure financing (like a home equity loan or line of credit) to purchase additional rental properties. This strategy leverages your equity to expand your real estate portfolio while potentially benefiting from appreciation and rental income.

House Hacking:

Use your equity to purchase a multi-unit property (like a duplex or triplex) where you can live in one unit and rent out the others. This allows you to generate rental income that can help offset your mortgage payments and other expenses.

Real Estate Investment Trusts (REITs):

Consider investing a portion of your equity in REITs, which are companies that own, operate, or finance income-producing real estate. REITs offer a way to diversify your real estate investments without directly owning physical properties.

Real Estate Crowdfunding:

Invest in real estate crowdfunding platforms that pool funds from multiple investors to finance real estate projects. This allows you to diversify across different properties or projects with lower capital requirements compared to direct ownership.

Flipping Properties:

Use your equity as capital to purchase properties that need renovation or improvement. After renovating, you can sell them for a profit. This strategy requires knowledge of local markets, renovation costs, and the ability to manage or oversee renovations.

I am a loan officer and I could advise you on how to tap into that equity and put that money to work. Feel free to reach out directly if you like or if you have any other questions. 

Post: Airbnb downtown Columbus

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Going the Airbnb rout can be riskier as you have to secure bookings to secure that cash flow. In lower vacation/rental cycles of the year your margins could get compressed. Consider going the route of long term rentals in a different market if this worries you. However, if you believe there will be significant demand, by all means it is a good investment. Just make sure you do thorough research and financial planning. I am NOT a financial advisor so make sure you do your due diligence! However, I may be able to answer any other questions you have so feel free to reach out any time. Also, I am a loan officer if you need to talk financing. Hope this helped!

Post: located in Missouri entering House hacking

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Hey Ryan,

Its awesome that you are entering into RE investing. It is truly the best way to build generational wealth. Here are some tips from my experience:

Educate Yourself: Since you're new to real estate, continue leveraging resources like Bigger Pockets to learn as much as you can. Explore articles, forums, podcasts, and connect with experienced investors who have gone through similar journeys.

Understand Local Market: Research the real estate market in Missouri, especially in areas where duplexes are prevalent. Look for neighborhoods with potential for rental income and growth.

Financial Preparation: Given your reliance on loans and good credit score, continue maintaining and improving your credit score. Understand the financing options available for first-time investors and explore FHA loans or other programs tailored for owner-occupied properties.

Networking and Mentorship: While you're already connected to Bigger Pockets, actively seek out mentors or local real estate investor groups in Missouri. Networking with experienced investors can provide invaluable insights and guidance specific to your market.

Property Search and Due Diligence: Once you're familiar with the market and financing options, start actively searching for suitable duplex properties. Conduct thorough due diligence, including property inspections and financial analysis, to ensure it aligns with your investment goals.

Property Management: Since you'll be living in one unit and renting out the other, familiarize yourself with basic property management practices. Understand landlord-tenant laws in Missouri to protect your investment and maintain good tenant relationships.

These tips should help you kickstart your journey into house hacking. I am a loan officer so feel free to reach out if you are interested in financing, or if you just want to discuss further/have questions. Good Luck!!

Post: Long Term Strategy for Real Estate Professional

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Regarding the long-term implications of using rental properties to offset your W2 income with depreciation:

Depreciation Recapture and Tax Planning

Depreciation Recapture: When you sell a rental property, you'll face depreciation recapture taxes on the portion of the gain attributable to depreciation deductions taken. This is currently taxed at a higher rate (25%).

1031 Exchange: You can use a 1031 exchange to defer paying capital gains taxes by reinvesting proceeds into another like-kind property. This strategy allows you to continue building your portfolio without immediate tax consequences.

Long-Term Strategy Considerations
Financial Goals: Determine your 20-30 year financial goals. Consider whether you aim to build a substantial real estate portfolio for ongoing income or diversify investments over time.

Risk Management: Assess risks associated with property ownership, including vacancies, maintenance costs, and market fluctuations.

Risk Management: Assess risks such as vacancies, maintenance costs, and market fluctuations associated with owning multiple properties.

Tax Planning: Work closely with a tax professional to develop a balanced strategy that maximizes current income offset with depreciation, while planning for depreciation recapture and optimizing use of 1031 exchanges.

Post: Getting started on the road to financial freedom for my family

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Hey Brandon,

Awesome to meet a new investor! Real Estate is truly the best way to build generational wealth (in my opinion). Feel free to reach out to me if you have any questions or want to talk financing!

Post: The Idea of Renting out Current Home to Buy a New Home

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Given your situation and concerns, here's a breakdown of considerations and advice:

Pros of Renting Out Current Home and Buying a New Primary Home:

Living Condition Upgrade: Moving to a larger, newer home with boutique features can improve your living space.

Rental Market: West Town in Chicago generally has a strong rental market, which could provide good rental income from your current home.

Portfolio Diversification: Adding another property to your real estate portfolio can enhance diversification and potentially increase long-term wealth through property appreciation and rental income.

Cons and Concerns:

Interest Rate: The current interest rate of 7% on a new mortgage is high, and there's uncertainty about future rate decreases. This could limit your ability to refinance in the future to lower your payments.

Rental Viability: Renting out a very new home (built in 2019) may not be ideal due to potential wear and tear concerns and the fact that it's less likely to need significant repairs or updates that tenants often expect.

Local Market Considerations: Chicago's property market is known for high property taxes and historically slower appreciation compared to other markets.

Financial Necessity: If you don't have a strong financial or personal reason to move, such as proximity to work, family, or lifestyle changes, it may not justify the hassle and costs of buying a new primary home.

I am a loan officer so feel free to reach out to me directly if you have any other questions or would just like to discuss!

Post: Who Wholesales In The Twin Cities?

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Hey Eddie,

I am a loan officer in CO, licensed in Colorado, Arizona, Arkansas, California, Florida, Kansas, North Carolina, Tennessee, Texas and Wyoming. However, we have numerous officers here at Aslan Home Lending licensed in Minnesota. We work with over 80 investors, a majority of which are wholesalers. Please feel free to reach out to me directly if you would like to discuss!

Post: Regarding TI Allowance

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Hey Manas,

The Tenant Improvement (TI) allowance is typically negotiated between the landlord and tenant and is used to cover the costs of customizing or renovating the space to fit the tenant's needs. Here’s how TI allowance is commonly calculated:

Determine Total TI Cost:

Estimate the total cost of improvements needed for the space. This includes construction, materials, labor, permits, and any other associated costs.
Negotiate TI Allowance:

Landlord and tenant negotiate the TI allowance amount based on the estimated total cost of improvements. The allowance is often expressed per square foot of the leased space.
Per Square Foot Basis:

TI allowance is typically calculated per square foot of the leased area. For example, if the negotiated TI allowance is $20 per square foot, and the leased space is 1,000 square feet, the total TI allowance would be:
TI Allowance = $20/sq ft \times 1,000 sq ft = $20,000
Lease Term Consideration:

Longer lease terms (such as 5 years or more) can sometimes result in a higher TI allowance because it provides the landlord with stability and longer-term rental income.
Special Considerations:

In some cases, TI allowances may be structured differently, such as a lump sum payment upfront or spread out over the lease term. The specifics should be clearly outlined in the lease agreement.
Documentation and Approval:

Document the TI allowance in the lease agreement, specifying any conditions or restrictions. Ensure both parties agree on the scope of improvements covered by the allowance.

Feel free to reach out to me directly if you need!

Post: How much should my tenant make if Rent is $1,680, in the DFW area?

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Hey Tiia,

In the DFW area, landlords often use a rule of thumb that a tenant's monthly income should be around 3 times the monthly rent to qualify. Here’s how you can calculate the income requirement:

Monthly Rent: $1,680

Income Requirement Calculation:

Multiply the monthly rent by 3 to find the minimum monthly income required:

1,680×3=5,040

Therefore, a tenant should ideally have a monthly income of at least $5,040 to comfortably afford a rent of $1,680 per month in the DFW area. Keep in mind that individual landlords and property management companies may have slightly different criteria or additional requirements, such as credit score, rental history, and debt-to-income ratio. These factors also play a role in determining a tenant's eligibility. Please feel free to reach out to me directly if you need!

Post: Long Term Strategy for Real Estate Professional

Ty Coutts
Posted
  • Lender
  • Colorado
  • Posts 450
  • Votes 224

Hey Joey,

Cost Segregation and REPS: Yes, you can perform a cost segregation study once your wife qualifies for Real Estate Professional Status (REPS) and use accelerated depreciation to offset your W2 income in subsequent years of renting the property.

Purchasing Another Property: It can be beneficial to purchase another rental property within the first 5 years to continue maximizing depreciation deductions. This strategy helps offset W2 income effectively. The decision to acquire additional properties depends on your financial goals and management capacity.

Continuation of Strategy: Continuing to acquire properties and utilize cost segregation makes sense if you want to offset W2 income. There's no set point to stop; it depends on your investment goals and tax strategy.

Considerations: Consult with a tax professional to tailor this strategy to your specific financial situation, investment goals, and long-term plans. They can provide personalized advice based on current tax laws and your individual circumstances.

Please feel free to reach out to me directly if you need!