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Cynthetiq · 05-16-2010, 03:47 PM

I'm sure there are good books to read up on such things, but better than that is a real life accountant. If you don't already have one, find one. While you think you can do better than an accountant using Turbo Tax or another online source, chances are a real life accountant can answer important questions that these systems cannot which can and will net you better refunds. The question to ask yourself isn't how much does the accountant cost, but how much more do you get back (legally of course) above what you pay for the accountant. In other words when I do the return myself I get X, and when I let the accountant do it it's X+Y-Z which is still more than X. The final nail for me is emulating what successful people with more money with me do, and I haven't met one that doesn't have an accountant.

The next thing to remember is that your investment will be tied to a family member. If you cannot stomach having to kick out your family member if they cannot afford to pay rent for whatever reason during that 5 year lifetime, this may not be the correct path for you to take. Remember you'll be on the hook for all the payments and if they can't pay, you still have to pay.

You may hedge your bets by finding a 2 family home and renting to two parties this may be something to allow you to spread more of the risk.

All income generated from the rental property is going to be taxable. A good accountant is going to depreciate the property on a schedule, and by that schedule you'll be "losing" money on paper, thus taking a deduction to offset the income. About that income, this is why an already rented property may be an easier purchase or qualify for a mortgage, and that is because that income will be included in your paperwork as income you'll be making as part of your mortgage qualifications.

Taking money out of the investment property to purchase your next property is risky because what if the 1st property doesn't gain enough equity when you are ready to by the 2nd property?

When I took the 1st property in 1999 and then refinanced it in 2008 to take out money to buy the 3rd. We were hoping to finance the entire 20% but because the 1st property didn't appraise as high as we had hoped we didn't get as much and had to use more savings to get to the 20%. It wasn't an ideal for us but it still worked out that we didn't miss the REO (bank owned) opportunity.

05-16-2010, 03:47 PM	#3 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	I'm sure there are good books to read up on such things, but better than that is a real life accountant. If you don't already have one, find one. While you think you can do better than an accountant using Turbo Tax or another online source, chances are a real life accountant can answer important questions that these systems cannot which can and will net you better refunds. The question to ask yourself isn't how much does the accountant cost, but how much more do you get back (legally of course) above what you pay for the accountant. In other words when I do the return myself I get X, and when I let the accountant do it it's X+Y-Z which is still more than X. The final nail for me is emulating what successful people with more money with me do, and I haven't met one that doesn't have an accountant. The next thing to remember is that your investment will be tied to a family member. If you cannot stomach having to kick out your family member if they cannot afford to pay rent for whatever reason during that 5 year lifetime, this may not be the correct path for you to take. Remember you'll be on the hook for all the payments and if they can't pay, you still have to pay. You may hedge your bets by finding a 2 family home and renting to two parties this may be something to allow you to spread more of the risk. All income generated from the rental property is going to be taxable. A good accountant is going to depreciate the property on a schedule, and by that schedule you'll be "losing" money on paper, thus taking a deduction to offset the income. About that income, this is why an already rented property may be an easier purchase or qualify for a mortgage, and that is because that income will be included in your paperwork as income you'll be making as part of your mortgage qualifications. Taking money out of the investment property to purchase your next property is risky because what if the 1st property doesn't gain enough equity when you are ready to by the 2nd property? When I took the 1st property in 1999 and then refinanced it in 2008 to take out money to buy the 3rd. We were hoping to finance the entire 20% but because the 1st property didn't appraise as high as we had hoped we didn't get as much and had to use more savings to get to the 20%. It wasn't an ideal for us but it still worked out that we didn't miss the REO (bank owned) opportunity. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!