U.S. CitiesCity-Data Forum Index
Covid-19 Information Page
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 10-16-2018, 05:21 AM
 
45 posts, read 54,685 times
Reputation: 58

Advertisements

The scenario is I am a Realtor of about 8 years, doing my first flip property, and hoping to buy a 3-4 unit building next year which might push my DTI. hoping an experienced LO or UW might help me out.

So I'm wondering can I get any or all of the flip income counted towards what will qualify for the mortgage?

A lender I know said they won't count it because it is my first flip and there has to be a history. He didn't seem to be sure on how long of a history, he said probably an underwriter call. So I was thinking of two scenarios that possibly allows the income to be used.

One is can I pay myself a commission? Could it be larger than a normal 3%? Could I pay myself almost all my profits in commission and have it counted?

Second idea was to just quitclaim the property to my LLC that I run my real estate business from and count the profit as general income. Can I do that?
Rate this post positively Reply With Quote Quick reply to this message

 
Old 10-16-2018, 06:21 AM
 
Location: MID ATLANTIC
8,144 posts, read 20,006,065 times
Reputation: 9383
The flip income has to appear on a tax return, and probably for 2 years. But you could be lucky and make it with just one. A lender would need to run it in DU to see if it could be done with one year. But most UW would want to see if you could maintain your real estate earnings as an agent and have consistent flip income. In other words, make certain you aren't a one home flipper.

Your LLC will have to report the gains - I would be reluctant to say you could mingle it with out seeing the return. But in theory, yes, if commission is in the LLC, you could put all the income from the flip in the LLC. But still be prepared fo a two year history.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 10-16-2018, 06:31 AM
 
Location: MID ATLANTIC
8,144 posts, read 20,006,065 times
Reputation: 9383
We use income you report as earnings. So, we would review your personal returns, as well as, your LLC returns.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 10-16-2018, 09:28 AM
 
Location: Oak Brook, IL
29 posts, read 20,189 times
Reputation: 27
What do you intend to do with the 3-4 unit? Rent it or flip?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 10-16-2018, 12:25 PM
 
3,806 posts, read 8,259,011 times
Reputation: 4944
Quote:
Originally Posted by rltrdc View Post
The scenario is I am a Realtor of about 8 years, doing my first flip property, and hoping to buy a 3-4 unit building next year which might push my DTI. hoping an experienced LO or UW might help me out.

So I'm wondering can I get any or all of the flip income counted towards what will qualify for the mortgage? Yes, will likely need executed leases, proof of down payments, and a Rental analysis within the appraisal.

A lender I know said they won't count it because it is my first flip and there has to be a history. Wrong. He didn't seem to be sure on how long of a history, he said probably an underwriter call. So I was thinking of two scenarios that possibly allows the income to be used.

One is can I pay myself a commission? Could it be larger than a normal 3%? Could I pay myself almost all my profits in commission and have it counted? In what way, on that single deal alone or are you talking pumping up your income in regard to tax return analysis?

Second idea was to just quitclaim the property to my LLC that I run my real estate business from and count the profit as general income. Can I do that? Do you file business returns? If not, start, and back-date your fiscal year as much as possible. This scenario will not work for an FHA loan.
.
Rate this post positively Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2020, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top