All Forum Posts by: Ty Coutts

Hello Mara Hayes

For your situation, hiring a fee-only financial planner who charges by the hour would be a practical choice. For example, Garrett Planning Network advisors offer financial planning on an hourly basis. You can search their directory to find a planner who meets your needs.

- Search for "fee-only financial planner hourly rate" in Tennessee.
- Review their websites and credentials.
- Schedule a consultation to ensure they can assist with real estate investment decisions.

By taking these steps, you should be able to find a financial advisor who can help you navigate the purchase of your new primary residence in Tennessee without the high minimum fees. Good luck!

When applying for a joint mortgage in California, lenders will typically assess both of your financial qualifications individually and consider the property's use as both a primary and secondary residence. This may slightly affect the types of financing options available, but if both applicants are well-qualified financially, you should still be able to secure competitive financing terms. Be prepared to discuss with lenders how the property will be used and ensure your financial profiles demonstrate strong ability to manage the mortgage jointly.

Hope this helps. Feel free to reach out to me directly if you have any other questions, want to discuss further, or if you would like flexible financing options!

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. 

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!

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!!

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.

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!

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!

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!

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!