Does having your own home help or hurt you with investing?
IMO, you HAVE to own your own home!
I don’t specifically know that it helps you or hurts you but I believe it to be the first step in REI! In fact, if you rent from me and are operating REI out of the property and do not have my written permission, you are violating the terms of the lease!
Keith
Interesting, Keith. Somone commented that the bank looks at your personal residence as a liability because it’s competing for funds - to make your own mortgage.
*sigh
Lenders tend to laugh when people want to buy investment properties and don’t own their own home…They will probably still do the deal, but they will laugh.
Why not purchase a four unit as a “home” and start there?
Keith,
Im a little stunned in your response.
you mean to tell me if i rent from you, you can prevent me from making money? I would LOVE to see that rental agreement and here from you the justification for that. with the info you gave there…that makes no sense…
As far as having to own your own home " must " to get into real estate …?
please please please explain your theory on this too…
on december 2, i am closing on a property in south florida 100 feet from the ocean for 274k rehabbing 64k reselling 500k+
no money down - no verifiable income - no credit check
at closing im getting back 7k+ so my appraisal and down payment $1400 total are reimburrsed
now with the 5,600 dollars left over…im using that as a down payment on my second property $5,000…
second property is contracted for ONE MILLION,SIXTY THOUSAND dollars and at closing ill be getting back over 35k
rehab on this one is under 100k and resell is 2.1 million…
ALL DONE WHILE i LIVE IN A 1 BEDROOM 1 BATH APARTMENT
noone has ever checked my credit and since im an investor…no verifiable income…
Any questions ?
L.H.Williams
well, I didn’t meant to stir a fight. My situation is a bit unique in that I’m separated/divorcing. I’m still in the marital home, but have been cautious about investing because of my spouse. Between the downturned economy, and the separate but equal “marriage” i’m in… ugh.
I wasn’t sure if I should use my savings to invest (buy and hold for cash flow) or buy and move the heck out.
<<well, I didn’t meant to stir a fight. >>
You’re not stirring a fight, realnew…he’s picking one.
<<you mean to tell me if i rent from you, you can prevent me from making money? I would LOVE to see that rental agreement and here from you the justification for that. with the info you gave there…that makes no sense…>>
That’s exactly what I mean…here’s a shocker for you – even if you rent from me, it’s still my property. If I say that you can’t run a business out of my property without my written permission, that’s what I mean. If you don’t like the terms of the lease, don’t enter into the contract. Likewise, if I say you can’t sell crack out of my property…guess what??
<<[b]on december 2, i am closing on a property in south florida 100 feet from the ocean for 274k rehabbing 64k reselling 500k+
no money down - no verifiable income - no credit check
at closing im getting back 7k+ so my appraisal and down payment $1400 total are reimburrsed
now with the 5,600 dollars left over…im using that as a down payment on my second property $5,000…
second property is contracted for ONE MILLION,SIXTY THOUSAND dollars and at closing ill be getting back over 35k
rehab on this one is under 100k and resell is 2.1 million…
ALL DONE WHILE i LIVE IN A 1 BEDROOM 1 BATH APARTMENT
noone has ever checked my credit and since im an investor…no verifiable income…[/b]>>
Yeah, yeah, I already saw your post elsewhere, complete with running banners and no discernable point…that is your choice and YOUR opinion…if you read my post it says (even right up front, before I say anything else), “IMO, you HAVE to own your own home!”. BTW, “IMO” means “in my opinion”.
While I’m giving MY OPINION, here’s another: You come off as a pompous blowhard braggart…now, I’m not calling you names here but that’s my opinion of your demeanor. Personally, I don’t care where you live but a poster asked for opinions and I gave her mine…if you don’t like it, “OH WELL…” I personally believe for credibility and the lessening of tax burden, average investors should own their residences. Now if you can’t qualify, that’s another issue.
And, BTW (that means “by the way”) – don’t twist my words out of context to draw attention to yourself and your point of view.
Any questions?
Keith
LOL
Keith is correct. When I rented out my last condo (the second time around), I specifically added the “no running a business out of this location” in the rental agreement. As bizarre as it may sound, the first time I rented out the place, a gentleman was breeding racing turtles out of the condo and people would continually come over to see his stock. The neighbors didn’t care for people coming over at all hours of the night and told me about the business. Needless to say, I asked the tenant to either conduct business elsewhere or move out. He moved out.
If it is something as unobtrusive as REI, I would not hesitate to give my permission but I am going to know what is going on in my properties! It is bad business to just let the tenants do as they please…kinda like letting the loonies run the assylum!
Keith
I suggest that the first investment property that you buy should be your primary residence. Look at EVERY piece of real estate as an investment. Financing for owner occupied properties typically will be at the lowest rates and will carry a lower down payment requirement.
Buy the primary residence like an investment. Have equity when you move in. Stay for 2 years. Sell and take the profit tax free. Repeat.
hurts - debt-to-income ratio issues…
I agree with Steve. All of my purchases are viewed as investments. We are looking for a new home right now, but I refuse to buy one that isn’t a great deal based on basic investment principles: appreciating area, good schools, open floorplan, decent price/sqft, room for upgrading, etc.
What if you purchase a duplex or fourplex and live in one of the units? The bank will often use the rental income as a hedge against the debt ratio. They won’t count 100% of it if you don’t have previous landlording experience, but it will help.
You should be able to get tax breaks if you use your primary residence as your so called investment property. I.e. when you sell it you can utilise a tax transfer sale. You should consult your accoutant for the details.
And, please, nodody jump doen my throat if I have the wording wrong.
NESam
I’m not sure that I understand your statement “…if you use your primary residence as your so called investment property. I.e. when you sell it you can utilise a tax transfer sale.”
If it is your pirmary residence, it is automatically disqualified from a “tax transfer sale” (if you mean a 1031). As your primary residence, it qualifies for capital gains exclusion up to $250K ($500K for married couples) as long as you meet the requirments (time, etc.). This is actually better than defering the taxes.
Keith
Keith is correct.
Plus, if you have a duplex, you can use the primary residence exclusion for your unit. You can do a 1031 exchange for the rented side.
…or keep it, convert it to rental, and depreciate. If you have lived in it for 2 of the last 5 years, you can still claim capital gains exclusion. THis means that you can live in it for 2+ years and rent it out…as long as you sell it before the 3-year point in the rental, you can take the exclusion. If however, you rent it out for less than 3 years and exclude capital gains, you must still recapture the depreciation…
It can get complicated…if it does, check with your accountant or “tax bubba”…
Keith
Yes, you have a better handle on it than I. I was once told that capital gains can be avoided if you are selling a property and using the proceeds to purchase another directly. Is this a 1031? I will have to look that up, obviously I have more homework to do. Thanks for your input.
It depends on where you are. A lot of people in New York City live in buildings that are lease only. They do it for the lifestyle. They may have rent controlled lease or a killer apartment on Park Avenue, or whatever. They do it for the lifestyle. Their business is real estate but they lease their primary residence.
Yet another REI FIRST for me I have never ran into that problem before well not with racing turtles!