How To Get A Loan – Real Estate Taxes – Q&A #10

Kris Krohn here with Limitless TV and
today we’re going back to some Q&A. I cannot believe how many incredible
questions you guys have. You’re inspiring new videos, new topics, and it is
important for me to get your questions answered. So today, I’m gonna handle about
a dozen of them and get you the answers that you’ve been looking for. Alright let’s get started. First question
today comes from James Bicklebut. James, thank you for this question. James asked,
he says, ok Limitless TV super inspiring Kris, I got $100,000 of equity in my
home and right now I tried to get a home equity line and they are they’re
offering me a thirteen percent interest rate or I can take my four percent loan
and do a cash out refinance between four and a half and five percent. What do you
think I should do? Oh my goodness, you’ve got three options
right now and I’m going to give them to you right now James. Number one is, I
don’t know what is happening with the bank you’re talking to on a home equity
line of credit but a home equity line of credits are usually cheaper than a
cash out refinance. So please go talk to a couple of different banks. The only
reason why they’d be quoting something higher is that they’re a non-traditional
bank, or you’re talking to a hard money father-in-law kind of person, a loan
shark, something strange is going on or you don’t have good credit but I’m
thinking you do have good credit cause your second option is you’re thinking, oh
man Kris do I really want to pay for a cash out refinance and go from an
awesome juicy 4% rate to maybe a 5% rate? That’s not a bad option. Remember it’s
all about the arbitrage. If I get let’s say of the hundred, thousand let’s say I
get fifty thousand out, can I place my fifty thousand dollars somewhere that
makes up the difference in that 1% cost of increased rate on the rest? And with
me of course you can. There are plenty of options. We’ll talk about that too. So
this is a really great question. Right now you should be able to secure a home
equity line and it’s gonna be between three and four percent. If for whatever
strange bizarre reason that doesn’t work then I want you to go to the cash out
refinance at 45%. And if you just head all around bad credit James, sell the property. I know you’re
thinking, wait Kris, I have a home. Why would I sell it? You got a hundred
thousand dollars of equity, Go take that money and put it into three properties.
If you want help knowing how to do these things then click the link below and in
the notes section make sure you tell me James,
maybe with your real name not picklebut exactly what you want to do, what you
have available, and I’ll have my lending team jump in. Give you all your options
and we can even talk about me supplying you with properties to help you actually
get that moving forward. Fantastic questions a lot of people in your
situation. In fact, if you’re watching this video and
you’ve got equity that equity doesn’t mean anything unless it’s working for
you. So if it’s equity in a home, it’s doing nothing losing at the rate of
inflation. But if it’s equity an investment property, how do you, how do
you put that into another property and start working almost infinite returns by
velocitizing your money by having the same dollar that was sitting here now
sitting in two places. Alright, next question comes from Eric
Boyd. In a previous Q&A you said that you prefer single family homes over condos
because they generally appreciate in value more. He said, this makes sense. Do
two or three or even four family homes appreciate similarly to a single family
house in the right market. Okay hands down across the board Eric you’re gonna
see single-family homes are going to travel better than townhomes. They’re
gonna travel better and appreciate better than condos and they’re also
going to do better than multi-family homes when you’re talking about duplexes,
triplexes, and fourplexes. Single family homes? it is a sweet spot below the
median and 3 bedroom homes and greater. Ok next question comes from silent gamer. Not so silent today. Hahaha.
What do you think about the idea, I can be such a nerd in my head you guys make
me so happy. I don’t even know if you know you’re doing it. What do you think
about the idea of buying a rental and pay as least as possible towards the
mortgage and keep whatever is left over from monthly rent and do the process
over again. Okay silent gamer has a fantastic question.
Basically says, Kris, when I buy a house I could I could do a thirty-year,
mortgage I could do a 15-year mortgag,e I could do a like an interest-only
mortgage. What should I do? and I want to tell you something that as long as it is
not a negative amortization mortgage, they don’t even exist anymore that was
an ’05, ’06, ’07 product but they may come back so you gotta be super
careful. I’m dropping it for you. The the question is, should I try to get the
lowest interest rate? and instead of trying to pay off the house put it
towards my next investment? Yes silent gamer that is exactly what you
want to do. Snowball I was just sitting now with one of my
clients they had bought four homes with me and we had partnered on some stuff
and they were making $80,000 on each one of their homes.
So think about that. 4 homes times $80,000. They were doing pretty well. Over
$300,000. Nice. And I went back and I said, what do you want to do now? they
said, Kris, we wish that we had bought 10 homes instead of 4. And silent gamer,
that’s what you’re talking about. More real estate done the right way is always
more better. And it’s also more funner. Next question comes from Country Living.
We’re selling our home in West Virginia we want to move back to Pennsylvania but
we can’t get a loan however, we own our home outright. What
are our options? Ok this is a fantastic question. Option number one, sell the
house. Homes that you’ve been living in and our owned paid off outright don’t
always make the best rentals. Especially if you’re moving out of state. I do not
like owning out-of-state property if I only have one home out there because
I’ve got no loyalty with the property manager. I’m worth a hundred bucks a
month to them. You do not buy loyalty for $100 a month. So number one option, sell
the home. And my advice is, sure you could buy your house paid off in Pennsylvania
but frankly it might be better to put a 20 or 30 percent down payment and have
the rest of the money sitting in investment properties producing more
cashflow and building more equity than paying off the house itself. Country Living, those are your two best options because if you can’t get a loan then
selling it and placing it that way is something that will help you. You might
be saying, but Kris if I can’t get a loan then I have to use the money to pay
off my home in Pennsylvania. This is not true. If you can’t get the loan you have
other options. You can cosign, there are credit partners. I invest, I have my partners all the time
come to me with piles of money. They want investment properties, they want
retirement income, but guess what? They don’t have the credit. So you know what I
do? I rent somebody else’s credit, safe and secure and it works. You got options.
If you want to pursue any of those, click the form below and let me know and I’ll
have my team be in touch with you. Next question comes from Joe Mar Johnson. He
says, Kris in one of your videos, you talked about buying a primary residence
with 3% down but if you do this aren’t you going to have homeowners insurance
and mortgage insurance? Well you’re always going to have homeowners
insurance. Mortgage insurance is usually what you have on a property until it’s
20% paid off. And you know what? It is cost of doing business in real estate.
It’s not always avoidable. But I’ll tell you what, I would rather have mortgage
insurance and put 3% down and walk into a Pirate Booty of equity rather than
waiting to have a 20% down payment which might take me a lot more time in many
many more years all because us trying to avoid perhaps a hundred or two hundred
dollars a month on the mortgage insurance. It’s not a deal-killer.
Okay next question comes from unsought bar888 What taxes are you
responsible for when renting out your property? This is a fantastic question. If
you’re renting out a property that already has a mortgage in place, you
might have already wrapped in your PITI. Principal, interest, taxes, and insurance.
So generally the landlord is responsible for all those taxes. I’m not really aware
of a landlord that ever went to attend and said, hey this is what your rent is
but then you also got to pay extra for taxes. It might exist but in my hundreds
and hundreds and hundreds and thousands of homes, I’ve never actually encountered
that. So generally, all that’s on you and it’s not on your tenant. Okay Eddie
Cervantes great question he says, do you think investing in commercial property
is more profitable than investing in homes? Eddie
it absolutely can be. It’s just that commercial usually takes a lot more
money. Now I don’t get interested in commercial generally until there’s a lot
more money that needs to go into it. I was sitting down with some of the other
that are like, Kris why aren’t you doing just one big commercial project instead
of five hundred little baby houses? Because I have a system in place, I love
the diversification of five hundred baby houses. I’ve, this last month I sold five
houses. I did not put any money in these houses years ago. My partner’s got their
downpayment back and then we each got ten to twenty five thousand dollars on
every one of these homes that we sold and so if you think about it, those homes
I got great diversification it’s easier to liquidate. Lots of different little
assets. Some people will argue it’s a lot of extra work. I don’t think so if you’ve
built the right team. I will look into commercial. I do commercial deals
especially when they have really compelling ROIs. If they’re just comparable to my single families I don’t touch them.
And then real estate where I’m averaging ten to twenty percent a year on my
single-family homes, there’s not really much reason to go into
commercial. Sometimes commercial requires a lot more money and it can be a lot
more extra money and don’t ever put all your eggs in one basket. Because if it
was scraping everything together to do the commercial deal, I would say no bueno.
I want you to go back and I want you to do a pile of single-family homes. You’re
ready for commercial when you got a massive chunk you can put in but it is
only a minority of your total asset base. Fantastic question. Okay from Derrick C.
Can you explain how you use an LLC to mitigate your risk as an investor? You know, it’s interesting. An LLC has protected me from time to time but in
the end I don’t want you to think that it is this crazy bulletproof system.
There are some things out there that are crazy bulletproof like life insurance. I
stash lots of money in life insurance because you know lawsuits can’t get to
it, governments can’t regulate it, they can’t get their hands in that cookie jar.
What an LLC does is it tries to create a bifurcation between your personal and
your business and you’re only going to be able to protect what you put in the
LLC. I would never for example take my art business of things that I paint and
my real estate business and commingle them. Because if I have a problem in one
business it bleeds into my second. So I will use as many LLC’s as it takes to
create separation in my different business endeavors. There are LLC’s out
there called series LLC’s. These are proven to create a single entity LLC but
with individual protection for property so it’s like an LLC with corporate veil
protection between all the different properties. They’re more, they’re more money to set up and so I don’t set them up because your likelihood of
getting hit is very very small. When someone has an issue on a house they’re
not trying to attack all your assets. Generally, they’re attacking the house
and the house will take care of most things. Remember you got homeowner’s
insurance and you have to have that it’s super important. That’ll take care of 99%
of problems that happen less than 1% of the time but should it escape and go
outside of that? It could hit the other assets in the LLC so it’s meant to
create a corporate veil of protection between assets. This video is going long
but I got six more questions so now I’m going to revert to my short quick
answers okay? First one comes from Jesus Jimenez. He says, hey Kris
not sure if you can if you’ve answered this question but basically my parents
used my credit to buy their house and now they don’t want to refinance it but
I want to buy another house so what should I do?
Fantastic question. You’re wondering whether you should put more money down
on the next house? but I tell you this put your parents on title and then have
them do a rate and term refinance. What that means is, you’re not trying to pull
money out you’re just trying to shift control so that it comes off of your
credit. And that kind of refinance the only reason why they wouldn’t be able to
do that is if they don’t have the credit to be able to refinance. If they do and
if they can, they should. And a refinance is easier than a purchase. So
make sure that they are reflected on title and a refinance is gonna be way
easier because they’re already owning the home. So do that.This next one comes
from Gabey. Kris, love your questions I’ve got a question.
I own a duplex with a partner. I was the hard money, it’s gone up $50,000 in value.
I was the hard money lender but now my partner wants to buy me out. And the
question is, should we split the equity? The answer is yes you split the equity.
So you get your money out and if there’s $50,000 of equity, a true fair buyout at
fair market value would be you getting 25 of the $50,000. Now sometimes, we’re
not acting at fair market value and sometimes partners will be more
conservative and your partner might say hey I only think that thirty
thousand of that is fair. Let’s split at fifteen thousand fifteen thousand. But
either way, you should get credit. Shellfish. When, renting out a house
should report it on my taxes? Yes do this. Maria Quint,
Quintanilla. Maria Quintanilla. Hello, I love your videos they’re very motivating
thank you I got a question. I got eight thousand saved up but tons of money in
my 401k. If I pull it on my 401k there’ll be taxes and penalties should I do this? Maria, yes this is actually what I specialize in.
I get really fired up about 401ks and IRAs and these ridiculous vehicles that
are my money that ugh! I’m not gonna start. Go watch one of my videos I’ll
rant on it. Here’s what I’m basically saying, yes use
your 401k, your money sitting in real estate will do way better for you than
sitting in your 401k. Is it worth it to pay the tax and penalties? Always. Why?
because until you wait to a certain age all you’re gonna do is avoid the penalty.
You’re always gonna have to pay your taxes. So you know what? Take the tiny hit
and get your money working for you. If you have questions on how to do that or
if you want to partner do a pile of deals with me I want you to click down
below, hit the link, and put that in the request and my team will contact you and
get some basic information and we’ll be able to share with you specifically all
your options of what you can do. RT happens. Love your videos, tons very
useful. Question, Quicken Loans or not? Answer, depends. Is it a good rate? If it’s
not, don’t do it. Is it a bad rate but you have an investment that earns you a high
profit margin? Maybe it’s worth it. It’s all opportunity cost. If you can qualify
for Quicken Loans you can probably qualify for some others as well. Okay
John Burgoody. Once the house is acquired what is the best way to get the house
rented out? John, hire a property manager. That is your, have them do it. They’re
gonna charge you 8 to 10% of the gross rent that they collect and it’s their
responsibility. Go with a successful firm. Go with the firm that has lots of houses.
They’re getting lots of calls and they can refer people to your specific house.
If you want to do it yourself go to my lease option video where I’m gonna show
you how to put obnoxious bright neon colored signs in the lawn and trust me
it’s going to pick up the attention of people that may want to do a rent-to-own.
It’ll mean self-managed, it’ll mean more cash flow also me in down payment. I’m a
fan of that. If you got a little extra time, that’s the way to go. Okay friends,
thanks so much these are fantastic questions. Thank you for watching today’s
video and if you have more questions be sure that you respond below. If you’re
not a member of our tribe then go ahead and subscribe and post your questions so
that we can make more videos and more Q&A videos to make sure you got
everything that you need to succeed for real estate investing to having a
powerful rock-solid mindset.

26 thoughts on “How To Get A Loan – Real Estate Taxes – Q&A #10

  • Hey Kris I'm 15 and I want to succeed in my early 20s is there any situations you can give me to learn and make decisions myself so I can get knowledge early on then you can tell me if I made a smart decision or a bad one.If your reading this thank you for taking your time to.

  • hay love your videos. i am moving to the us soon. i was wondering how much money minimum i must save up to start investing in real estate. as soon as i am 19 i will be moving. love your videos and keep up the good work

  • Hey Kris, can you answer a question for me in the comments? My girlfriend never owned a home but her dad wants to put his house on her name. If I had to guess its worth at least 250k and they've been living in the house for at least 15 years. I imagine it has a lot of equity. If the house were to be put on her name would she inherit that equity?

  • I'm 19 going on 20, I live in an apartment where rent is crazy and my debt to income is relatively high. What advice would you give someone like me (Young teen with stable credit and relatively high debt to income ratio) who is looking to purchase his first home as an investment property. I love the videos! Thank you for sharing the knowledge.

  • Hey Kris, I have worked at my current job for more than two years. I am looking into buying an investment home. I do have consumer debt and am not sure where to start at. I live in Deep South Texas and really don't know the market. I would like to partner up with you and your team but want to know if there is an initial cost?

  • my dad have me a double wide trailer. the trailer has holes in the roof, no siding on the outside, has no water or plumming or power ran to it and is framed on the inside. should i

    A. Get a loan for $10,000 fix it and sale the house for 25,000 or more

    B. live in it

  • I'm in consumer debt currently.
    My question: in one of the Q&A videos you were talking about getting your credit score to mature. Do I attempt to get out of my consumer debt and work on saving money and in conjunction working on my credit score?
    Or do I save money to get into real estate first?

  • your information is great but, I am middle/lower class I make 48k a year and I had bought my first home before I ever saw any finance videos. I don't want to sell where I live because I have 3 kids that I don't want to be moving around. my house is valued at 130k and my loan is at 109k so I cant HELOC yet. I don't have any mentors/partners/ or money. how does one attempt to get into the game without hurting his family? I also watched VIPfinacial info so should I find other debt weapons and cash stack the houses like Matt does? or should I be buying more houses instead of looking to pay off in 5 years?

  • Hi, love your videos. I am really looking to invest in rental properties. I have over 20k in cash. Credit score of 746. I graduated from college in may with 35k student loans and got a job of 60k+/year. I really want to buy my first before the end of this year😧. Do you think i will be able to get a loan and how do i go about it. Thank you

  • Kris, awesome videos. You've managed to make sense of the mess that is real estate. My main question regards your partnerships. Recently I came across something called Fundrise. Another one of those silly ad popups like Robinhood. If you haven't seen Fundrise, it's essentially a way to invest in properties like you would stocks. A small investment of $500-$1000, and with that you are "entitled" to gains from your investment. (Rent earned, sales, etc…) Any thoughts on it? Also, without giving away too many of your trade secrets, how does it compare to your partnerships?

  • Hey Kris, I am having trouble qualifying for a mortgage because of our debt to income level. But I CAN qualify for a business loan. It comes with a 7.5% upfront charge but is then interest free for the first year. What do you think of taking out a 60k business loan and purchasing a home outright? Then once I can show rental income, I will have a better debt to income ratio and can take the equity out of the home.

  • Hello! My name is Mike and I am 24 years old and started watching your videos after a year of buying my home. After watching these video's I guess I started my journy without even realizing it lol! So would it be a good idea to buy maybe..a Duplex to live in and rent out the upstairs to pay mortgage and rent out my current home? I talked to people and have 2 interested in renting my home out and already have a for sure yes from someone to rent in the duplex. Good idea? Or any other ideas?

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