Some General Questions For A Beginner.
I have been reading everything I can get my hands on about investing in real estate. I have bought the sheets course and been through it twice. I have found a good agent that I've been talking with a lot. I think I am finally ready to start getting my feet wet.
I currently have a 2 story house with 4 bedrooms in a town close to two local colleges, I have been living there since last october, almost a year. I bought it with zero down and the seller paid the closing costs.
I have found this other property that is close to my current house. It is ideal for my own interests. So I thought that I would buy it and rent my current.
My first question is, what is this about if you don't live in a house for two years you don't get capital gains or something? Please explain
Another question is, my bank is telling me now that I can get the zero down again but the mortage want me to have at least 5% of my own money in the transaction. Is that just like a down payment? Anyone have any ideas on how to get around this because I'd like to put a little money as I can in order to make some improvements?
Another question, my agent has told me that since I bought my house last october that now it is uncommon for the buyer to ask the seller to pay for the closing cost? Is this true, sounded a little funny to me.
Welcome to the club (of RE investors).
1. Well done on your first deal last Oct. That is better then most deals people find when they are getting started.
2. The US tax code allows you to sell your home with the profits up to some limit tax free. The limit is based on if you are married or not. 250K single, 500K married.
You only get to do this once in 5 years and you have to have lived there for a specific period of time. There are some minor exceptions.
Bottom line is if you are not expecting to sell then it does not matter that much. It sounds like you want to buy and hold to build a portfolio.
3. Nothing down means none of your own money. The bank asking for 5% is saying they do not want to do a nothing down deal. You might be able to borrow the funds somewhere else and still have them be happen.
BTW - max'ing the leverage is not always a good thing. It depends on the cash flow.
4. The agent is correct but things vary by market, by the conditions in the market, etc. Always ask the seller to pay the closing costs. Just do not be surprised if a good deal does not have such a concession from the seller.
John
[addsig]
BTW - max'ing the leverage is not always a good thing. It depends on the cash flow.
explain what you mean please?
Thanks for the reply!