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Over the next few weeks you will see Blog Posts not only from me but from our Referral Partners-HIGHLY EDUCATIONAL in our world today!

As always please let me know if you need to speak to me!  I am always available!

It’s finally possible for self-employed borrowers or independent contractors who have difficulty documenting their income to actually get a stated income loan to buy a non-occupant property for investment purposes.

The “debt-service-coverage” loan program helps these investors, house flippers and landlords who have multiple expense write-offs on their tax returns to buy investment properties without having to document their income.

The new option – use the anticipated monthly rent as income to qualify for the loan.

No Income Stated or Verified

If you have been aggressive with deductions on your tax return but have adequate cash flow, this type of loan may be for you.

The debt coverage ratio measures the ability to pay the property’s monthly mortgage payments from the cash generated from renting the property.

Lenders use this ratio as a guide to help them understand whether the property will generate enough cash to pay the mortgage expense.

The debt coverage ratio is calculated by dividing the property’s month net operating income (NOI) by a property’s monthly debt service. The monthly debt service is the total of the mortgage principal and interest payment, taxes, insurance, and any HOA fees.

Investors can qualify if the net operating income from the property is equal to or greater than 1.0 times the monthly debt service.

So, if you have a property that can generate $2,000 per month in rent, investors can qualify with an “all-in” mortgage payment of $2,000!

Debt Service Coverage Ratio (DSCR) Investor Loan

  • Loan-To-Values up to 80%
  • Credit Score down to 600
  • Qualification based upon cash flow of subject property
  • Interest only option available
  • 5/1, 7/1, and 30-year fixed options available

Non-Owner Occupied and Investment Purposes Only

This is only for Non Owner Occupied properties for investment purposes.  You will be required to sign a statement that states you live in another property that you own.

Please do contact Tom Bonetto for more specific information regarding qualification!

Here’s the link to the article: https://lendingcoach.net/debt-service-coverage/

 

Part of the reason the media companies are so successful marketing to real estate agents is because real estate agents believe in magic. Just sign up for a premium account, buy a ZIP code, and you will get “leads.”

To many, being a real estate agent seems to be all about lead capture and buying leads.

I remember back a few years ago the common wisdom was that the lead aggregators would go out of business. I guess some of them did, but lead capture isn’t all that different. Instead of buying the leads that the aggregator captures, agents capture their own.

Agents like to be able to have automated processes so they can capture leads and send out canned marketing emails. It doesn’t cost much or take a lot of time to send out a zillion email messages to thousands of leads.

When Facebook and Twitter first came on the scene, some real estate agents and experts viewed social media as the new way to get lots of leads cheap. A Facebook page was like magic. Some agents took marketing to a new level, putting automated tweeting properties on the Internet to drum up some business for themselves.

Sure, we would all like to just put our feet up and let the business roll in. We can automate and can every task using the wonderful technology that we have.

Each time something new comes on the scene, it’s treated as if it were invented just for real estate agents. We can just put pictures of our listings on Instagram and the business will come in. I remember reading articles about how you could use Vine to market real estate. Apparently short looping video of stationary houses was the next big thing.

 

“Each time something new comes on the scene, it’s treated as if it were invented just for real estate agents.”

When Instagram rolled out its time-lapse video stabilization tool “Hyperlapse,” right on cue an industry expert wrote about how it can be used for marketing homes for sale. Super-fast videos of homes for sale and of everything else are apparently the next big marketing tool.

 

This year drones are magical. We can throw a drone at a property for sale and apparently it doesn’t matter what the video looks like or what it shows. It just needs to be taken by a drone.

 

When I started my blog, it seemed like blogs were considered magical, too. Agents would start a blog and then post some statistics every other day and pictures of their listings and wait for the good times to roll.

 

Then, agents discovered that writing blog posts is work. It takes time, and is not a path to instant success. So agents gave up on the idea of blogging — unless they could do it on a platform where they got lots of comments and plenty of praise from other real estate agents.

It is work to tweet in person instead of just using auto tweets. It’s harder to write a separate email tailored to each situation, instead of using canned messages. And it is working to publish unique content on a blog that is about local real estate.

Sometimes it is even all right to pick up the phone and have a conversation that isn’t scripted, but where we listen and respond.

The spam that hits my inbox is often from companies offering magical solutions that will easily lead to unimaginable wealth. If I were selling products or services to real estate agents I would use the same type of sales pitch, because it works. Many real estate agents believe there are easy magical ways to use technology to make a lot of money with little effort.

Sometimes we lose touch with the fact that real estate is still a relationship-based business. It doesn’t matter if we build relationships by direct mail or through Twitter. It’s the relationships themselves that bring us business. Those relationships are not generic or magical. They take time and effort and are usually built one at a time.

Successful agents who have been successful for longer than a few days or years all tell me the same thing: They work hard. When they have been working hard for many years, then the magic happens.

I rise at 3 AM almost every morning-I go to bed early, but I get a TON of work done before anyone gets out of bed!  This is the way I like to work. I do use all the current media tools to do my job, but I firmly believe that picking up a phone or better yet meeting in person is the way to establish a relationship.  My Clients absolutely know that I want a long-term relationship not a one-off deal.

Today I am packing to go to Toronto for CoStar. Out of 65,000 Commercial Brokers I am privileged to have been asked to this meeting. As I understand this there is only 13 Brokers going to Toronto.  CoStar is bringing their video team from London to shoot videos-stay tuned for more!!!

Listen to Learn

I had a very trying week, and yet I’m glad it was. The problems that arose helped teach me that I still have some work to do on my listening skills. I’m betting that you might too, so I’m sharing. Building and selling Real Estate for the most part is pretty rewarding. Everyday the team at my company interacts with clients who use our tools to be more productive. The goal is to maximize the technology so folks can either make more money or save time. So it’s really rewarding for us. Now that doesn’t mean that it’s always a ball of fun anymore than your work is, but for the most part what we do is really rewarding. And when things get troubling or difficult, I try to step back and find the cause. Not always easy. And while I hate to admit it, problems arise most often because of poor communication. Communication can be internal or customer facing, it doesn’t matter, the outcome is the same – someone’s upset or at minimum, not delighted.
I didn’t tell you anything new did I? Communication has always been hard and it’s getting harder because printed words – emails and texts, aren’t very conveying. Come on, can you really tell my mood right now? Of course not. So I’ve laid out a problem or issue. So how do we make progress towards something different? How do we improve communication? Simplistically we know the answer. Listen more and speak less. Easy to say. Hard to do. I have an idea. How about we all act like 3 or 4-year olds and ask question, after question, after question? That way we put ourselves in a position where we can actually spend more time listening and less time talking. And guess what? It’s almost impossible to ask questions via email. It’s too tedious – all that Send/Receive, Send/Receive, Send/Receive!
Here’s the catch. You have to really be curious and want to know the answers. You have to really want to hear the other person’s answer or point of view. You can’t be contrite. And while you may be reading this thinking that I’m talking about the people we work and interact with frequently, it’s just as valuable or even most valuable to have conversations with your customers. The satisfied ones are full of advice and knowledge they can share and the unhappy ones can give you direction.
Today I often hear that people don’t want to call or stop in to see someone, because they feel they are being intrusive. A “pre-email” or text is thought of as polite; maybe. But if what you want to learn holds value for all parties, I find a call or in-person meeting is welcome. Problem is people on the calling side are many times acting in a self-serving way. Bad, very bad. I talk to a lot of people about communication and connections. I’ve learned so much. It takes a lot of practice. It isn’t always easy for sure. I’m convinced we can do better. We can be “connected” AND benefit from the amazing tools we have to share and connect. Remember the ice bucket challenge? How about we come up with a challenge for people to listen more than they speak? I have no idea what that might look like as a “game” or “challenge,” and I’m hoping all you smart folks might. I ask you. Am I off base? Is communication just fine? I’m anxious to listen. You can even call me if you like. 602-688-9379. Oh my! How novel. I ANSWER my phone.
Happy 1031? IPX1031


NO TRICK: A Treat for Unsuccessful 1031 Exchanges!

A treat from the IRS? Taxpayers should not be spooked if they are unable to complete their 1031 Exchanges. A treat may exist for a calendar-year taxpayer who initiates a 1031 tax-deferred exchange during the last few months of this year only to find that the exchange fails (they are unable to purchase new replacement property within the time periods set forth in Section 1031). Since the exchange period will go into 2018, the IRS provides an option called “tax straddling” which allows most taxpayers to pay the tax that is due on their 2018 return as opposed to their 2017 return.

Of course the major benefit for a taxpayer who successfully completes a 1031 Exchange is 100% deferral of taxes and the ability to invest all of their equity into new property. Unfortunately, if a taxpayer is not able to purchase new property to successfully complete the 1031 Exchange, the taxes associated with the sale of their investment property will be due. However due to “tax straddling” the taxpayer may receive a one year tax payment deferral thanks to the coordination between IRC §453 and §1031 provided in the §1031 regulations.

How does this work? If a delayed 1031 exchange begins in the latter portion of 2017, the exchange period may run into 2018. If the exchange fails or if the taxpayer (having a bona fide intent to do an exchange) receives cash boot in 2018, the 1031 regulations treat the exchange as an installment sale allowing the taxpayer to consider that the exchange proceeds were received (and are taxable) in 2018.

However, if a taxpayer prefers to pay their taxes as soon as possible, in accordance with IRC section 453 (d) a taxpayer may “elect out” of the installment method. By electing out, the taxpayer can recognize the gain in 2017 instead of 2018. To elect out, the sale should be reported on Form 8949, Form 4797 (or both) and not on Form 6252. The election must be made by the due date, including extensions, for filing the 2017 tax return. For more information about the procedure and forms to use, see IRS Publication 537 and consult with your tax advisor. Additionally, tax straddling does not apply to all sales and any gain attributed to debt relief will have to be recognized in the year of sale.

The IRS does not penalize investors for attempting to complete a 1031 Exchange. Tax straddling provides an added incentive to taxpayers selling investment property at the end of the year. Why not attempt to complete a 1031 Exchange when a one year payment deferral is available as the back-up plan?

Please call us at IPX1031 to discuss tax straddling and other valuable tax-deferral solutions. Be sure to consult with your tax advisor before participating in a 1031 exchange.

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