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How a lender turns your income into a loan amount, in plain language, each answer with a short video. Self-employed and 1099 buyers will find most of their questions here.
A 1031 Exchange is a financial transaction that is used to avoid paying or to defer the tax liability on a specific investment property that you are selling.
How the rule works is the gain that you have on the sale of the property you are allowed to reinvest 100% of the proceeds into another property as long as that property has a equal or higher property value. This transaction is not to be done with out a 1031 tax professional that can walk you through the process.
If you would like more information or have more questions about a 1031 exchange please message me below. I am happy to answer your questions ASAP.
There are 2 different valuations you will see on your appraisal once you receive a copy.
The first valuation is called the comparative analysis. This valuation is based on the similar sales that have happened in the same area of your home and are similar in age and size. The appraiser will make adjustments to the other sales to make it compare to your home. For example, if a home sold down the street but is 200 sq/ft less than your home. The appraiser will adjust the sales price of that home down by a calculation. The Sales Comparison approach is what the lender will use for the true value of the home.
The 2nd valuation that you will see on an appraisal is the replacement cost of the home. This is what the appraiser is estimating what it would cost to rebuild the home. The replacement cost of the home is important to note because sometimes this can be more than the value of the property. You will want to make sure your home owners insurance policy has enough coverage to replace the cost to build the home from the ground up.
If you have more questions regarding your appraisal, please message me below. I am happy to answer your questions ASAP.
Owning investment properties might be easier than you think. Purchasing investment properties is a great way to grow your net worth and acquire wealth.
The biggest fear I hear that what if my tenant destroys the home? What if they do NOT take care of the property? What if I have to pay more taxes on the rental income? What if, What if. These are legitimate concerns.
However the what ifs can be overcome. Here are my tips on purchasing rental properties.
First, hire a property manager. Make sure the manager has a good record of finding great tenants. Most of them do. This is how they get paid. They will make sure they collect, follow the laws, have the right legal documents. A property manager will charge 5-10% of the rents. This can be negotiable.
My 2nd tip is to always purchase the investment property based on the potential income. NOT on the potential increased value over time. The value will appreciate however you want to make sure the income will cover the expenses of the rental property. If property values go down, you will be able to withstand the storm because you will be able to keep collecting the rent and paying down the mortgage.
My 3rd tip is to make sure you hire a tax accountant. The tax accountant will make sure you avoid paying too much to the IRS. They will also advise you on how to depreciate the investment property over time to get an additional tax benefit. It's always a great time to purchase a rental as long as its the right deal.
Go to this link to see my top 3 tips on finding a great deal on your next investment property.
I would love to answer your questions. Please ask me a question below, and I will get back to you asap.
You can avoid paying taxes when you sell your home as long as you have lived in the house for at least 2 out of the last 5 years.
This tax-free money is limited to up to $250,000 per spouse for a maximum of $500,000.
If you have NOT lived in the home, 2 out of the last 5 years and want to sell your home, you will be subject to capital gains tax, or you can use the 1031 tax exchange strategy to avoid paying taxes. Currently, the capital gains tax on long-term investments (12 months +) is 15%.
If you have more questions, please message me below. I am happy to answer you questions ASAP.
There are 3 ways you can deduct income to avoid taxes and use this as income on loan. I call these the win-win of the business deductions.
The first deduction you can have is the business use of a home. If you have a home office, you can deduct these expenses from the income of the business. We, as the lender, can also use this income for your home loan.
The 2nd win-win is depreciation. When you purchase new equipment for the business or office supplies etc., there are two ways you can report the deduction. The first is to write the expense off that first year. Or you can depreciate this expense over 27.5 years. If you depreciate the equipment, we can also use this depreciation as income on your loan.
The 3rd win-win is mileage. If you drive a lot of miles, the government gives you .54 cents per mile. The bank will give you half that back as income. We take the total amount of miles you drove for business and multiply this amount by .23 cents. This amount can be added back in as income.
I am happy to answer any of your self-employed questions below.
The Home Ready loan is a great option for first time home buyers.
You can use the home ready loan for both purchases and also refinances. The home ready loan is great because it does allow for what's called boarding income. Boarder income is when you have a roommate that is paying you to rent for a room. The bank will want to make sure you have a history of receiving boarding income in the past. The home ready loan is also great because you get a reduced cost for mortgage insurance.
See here the video tutorial I did on the home ready loan.
Please message me below if you have any questions about this amazing loan. I am happy to get back to you ASAP.
I know, I know!!! Zillow says your home is worth $$$. Well the truth is it may be true.
However, most of the time the Zillow estimate is not an accurate valuation of your property.
If you want to find out the value of your home on a month-to-month basis, the best way is to look at the recent sales in your neighborhood. Zillow allows you to do this.
Here is a link to a tutorial I did on how to look for sales comparables in your neighborhood.
If you have questions, please let me know below.
How to Avoid Paying Mortgage Insurance on a Home Loan.
There're three different ways to pay mortgage insurance. The first way is to pay a one-time fee, and you never have to worry about mortgage insurance again. The second way is to pay a monthly fee, and the third way is to split between the two. You can pay a lower monthly fee and a lower upfront fee.
These three different ways, there're different strategies on each way to pay mortgage insurance, and you definitely want to talk to your lender.
I've done a video for each way to pay mortgage insurance below, and you can see each video and see which one is best for you.
If you guys have any questions, feel free to reach out to me any time.I hope you enjoy this mortgage safety tip, and we'll talk to you very soon. See you.
Of course. Of course. Everyone wants a great deal for their home. I know. So do I. There is a strategy you can use to find great deals.
This is the exact strategy I have always used when purchasing the homes I buy.
The first step is NOT to go where the crowd is. You want to find the homes that immediately come on the market. Zillow, Trulia, etc., all have delays on when they update their sites with new homes. The MLS is the first place you want to look. You want to ask your realtor to get on their HOT sheet. I look at the hot sheet all the time. Every investor, real estate agent (that is good) looks at this every day multiple times. Homes come on the market multiple times a day. The faster you see the home the, quicker you can act - Thats my first tip.
2nd. Start looking at homes in your price range immediately. You will not know if it's a great deal until you know or see what is out there. I recommend going and looking at at least 10 homes. Once you see these 10 homes for sure, you will know when the house hits the market if it's a great deal or not.
3rd. Once you find that great deal, I recommend you make the offer immediately site unseen. You can always go look at the home after you make the offer. Just because someone accepted the offer does NOT mean that you just purchase the home. You will be able to cancel the contract within 17 - 30 days if you decide NOT to purchase the home.
This is how you want to purchase your next home.
Please let me know your questions below.
Here are the top 3 areas of your home you can improve that will directly help the value of your home.
The first is your kitchen. Updating your kitchen is the number 1 home improvement that will help increase the value of your home. The 2nd, is your bathroom, and in my opinion, the 3rd best is your backyard.
If you want to update your home, I would focus on the kitchen, bathrooms, & your backyard.
If you have questions regarding the value of your home, please feel free to reach out.
Most of the negotiation on a purchase transaction will happen after the seller accepts your offer.
The reason is because the home inspection and pest inspections can create opportunities to renegotiate the deal. Negotiating to get the seller to accept your offer over someone else's offer can sometimes be tricky.
My recommendation is 1st write a handwritten note that explains why you want their home. Most people will make a decision based on their emotions and NOT on the logic of the deal. The letter will bring the seller to understand the emotion behind accepting your offer over someone else.
2nd I recommend making sure your finances are in order. Make sure the lender has fully reviewed your income documentation. This means they have received your verification of employment, they have reviewed your pay stubs etc. This gives the seller assurance that your loan will NOT fall through because of you NOT qualifying for the mortgage.
If you have more questions, please message me below. I am happy to answer your questions ASAP.
Did you know when you purchase an investment property, you can use the future rental income of that property to help you qualify for the mortgage?
If you do purchase the investment property, the minimum down payment is at least 20% down. You will get the best deal if you put at least 25% down. This will give you a better interest rate on the investment home.
Another way to acquire investment properties is to purchase a primary residence and live in it for a year. After 1 year then you can rent out the home and purchase another primary residence home. This is a great strategy to avoid having to put a lot of money down on each investment purchase. A primary residence home allows you to purchase with a minimum of 3.5 - 5% down.
There are NOT too many options for loans for just bare land. The reason is because if the land is not improved, there is not as much demand. So the lender does not want to get stuck with land they are not able to sell if they had to foreclose.
Bare land is best purchased by having the owner loan the money with a land contract. In a land contract, the seller can deal the land to you and then add a deed of trust for a mortgage for the amount you are purchasing the land for.
This strategy is great because its all up for negotiation with the land owner. If you purchase the land, the equity of the land can go towards your construction loan down payment.
Please write below any questions you may have regarding land, I am happy to respond ASAP.
If you are self-employed and want to apply for a mortgage, the lender will use the net income or the income that you pay taxes on.
When you file your tax returns, you're going to wanna make sure you pay the least amount of taxes as possible.
You don't want to pay taxes; however, you want to show income to help you qualify to purchase a home.
In this video, I'm going to talk about depreciation.
So when you file your tax returns, you may have the equipment or maybe some supplies that you depreciate over a long period of time.
Well, if you depreciate these assets, you can deduct that from your income also, when you give your tax returns to the lender, the lender will be able to use that as income as well. It's a win-win.
If you guys are self-employed and have more questions, please give me a call any time. Thank you so much.
If you are self-employed you want to make sure you know the win-wins when it comes to writing off your expenses.
If you do NOT have a business location and use your home as your office for your business you are allowed to deduct this expense as part of your expenses. This deduction can also be added back in as income. So this business use of home expense can be used for both income and also as an expense on your tax returns.
If you have more questions, please write below, I am happy to respond ASAP.
There are 3 ways your can deduct income to avoid taxes and also use this as income on a loan. I call these the win win of the business deductions.
The first deduction you can have is business use of home. If you have a home office you can deduct these expenses from the income of the business. We as the lender can also use this a income for your home loan.
The 2nd win win is depreciation. When you purchase new equipment for the business or office supplies etc. there are two ways you can report the deduction. The first is to write the expense off that first year. Or you can depreciate this expense over 27.5 years. If you depreciate the equipment we can can also use this depreciation as income on your loan.
The 3rd win win is mileage. If you drive a lot of miles the governennt gives you .54 cents per mile. The bank will give you half that back as income. We take the total amount of miles you drove for business and multiply this amounnt by .23 cents. This amount can be added back in as income.
I am happy to answer any of your self employed questions below.
Are you thinking about putting solar in your home? Solar is gettingn less and less expensive however you still will need to know the positives and negatives before you make such a big purchase.
If you spend $20,000 - $40,000 on your solar and then decide to sell your home in the next 2-3 years you will more than likely NOT get the dollar for dollar appreciation you might have been hoping for. Solar DOES increase your value however, it does not equal a dollar for dollar appreciation. You could be losing money by selling after purchasing a solar system for your house. Be sure you want/plan on staying in your home for longer thann 5 years.
If you do plan on selling in the next couple of years it may work if you lease the solar. The lease will be a smarter choice because its just like a utility however it will be more of a fixed cost and probably lower than paying pg&e or city of redding electric. If you do sell the home with a lease, the new buyer will need to also qualify to take over the lease payments before they purchase the new home.
I would love to answer any questions you have below.
Did you know you, if you are self employed you can get away with just using 1 year tax returns instead of averaging the last 2 years.
If you are self employed there are many things you want to considered. Its important to talk with a lender prior to filing your tax returns. If you are self employed you want to avoid payign taxes but also you want to maximize your purchasing power when it comes to purchasing a home.
Reach out to me with any questions below.
3 Ways to get rid of your mortgage insurance.
First way is to refinance into a new home loan that does not require monthly mortgage insurance.
The second way to get rid of mortgage insurance is to get an appraisal after 2 years of owning the home and as long as you have 25% equity they will remove the mortgage insurance.
The third way to get rid of mortgage insurance is to pay down the mortgage to 75% loan to value before the two year mark.
The earnest money deposit is what you give to the title company when you get an accepted offer on a home that you are purchasing.
This deposit lets the seller know that you are serious about the offer and are willing to forfiet a deposit if you decide to change your mind.
Dont worry though. This deposit can be protected.
How do you know if you really wannt the property. You need to get your home inspection, maybe a pest inspection etc. Most good realtors will make sure you have 17 - 30 days to inspect the property, to make sure you really want to close on the home.
If you decide to cancel the deposit is refunded back to you as long as you cancel with in the 17 - 30 day time period. If you decide to close on the home the deposit will be applied to your down payment.
If you have questions about your earnest moeny deposit please message me below. I am happy to respond ASAP.
We are eager to hear from you
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