Credit Scores: Library Fines to Car Rentals

There are many items that can adversely affect your credit score that you are unaware of.  Library fines lower credit scores for individuals.  Here are some other activities that can lower your credit score.

  • Credit ScoreAlthough libraries do not report to credit reporting agencies directly, they do turn to collection agencies for unpaid balances.
  • Storage units will turn unpaid balances over to collection agencies.  Even if items are left in the storage unit and auctioned off, the payment still needs to be paid.
  • Closing certain accounts can lower your credit score.  Yes, we know that closing credit accounts can affect your credit score, but closing any kind of account can as well.  Make sure that after you close any account, you pay any final or recurring bill so that these are not sent to a collection agency.
  • Renting vehicles can be tricky.  Some car rental agencies will run your credit report before lending you a car and/or if you decide to reserve the car with a debit card.  It is a safe bet to use a credit card to reserve the car, even if you want to use the debit card to pay for it, that way they do not run your credit report.

A collection account can lower your credit score by 25-100+ points, and can stay on your credit report for up to 7.5 years from the bill’s due date.  Credit reports and credit scores are tricky so it is important to learn as much as you can.

What items would you add to this list?

Is Refinancing Before Real Estate Investing Helpful?

As real estate investors, refinancing can help lower your total debt ratio and/or get cash out to increase liquidity.  Lowering total debt can help you qualify for more or larger loans, and could improve your overall credit score.  Getting cash out can help with financing additional real estate investments as equity is a good source for down payments.  If refinancing is able to lower debt ratio and get cash out, it is very helpful in the real estate investing process.  Also, down payments and reserves can be acquired by refinancing if there is lendable equity in the primary residence.

Not many people realize it, but refinancing for just 1% can make a large difference depending on your total mortgage amount ($300,000 debt lowered by 1% = $3,000 per year or $250 per month).

Before refinancing, determine how long you plan to live in the home, how long you have been paying on the mortgage, and if your credit is in good standing.

ReCasa Financial Group   614-221-6770
NMLS #9722 OH: MB.803923.000 IN: 08-0038 LB  PA: Licensed by the PA Department of Banking
130 E.  Chestnut Street, Suite 200 Columbus, OH 43215
Michael Troutman  NMLS # 319798  OH LO 037303.000

Tax Deductions for Real Estate Investors

Many expenses for real estate investors are tax deductible.  Many do not know the difference between repairs and improvements, but it is important to know this when it comes to filing your taxes.  Repairs are fixes that keep the home in working condition and can be written off, but improvements, which add value, change a function in the home, or extend the life of the property, cannot.  However, improvements can be deducted over years.

Schedule EThroughout the year, you should save all receipts and other documentation pertaining to the property, and file deductions on Schedule E. You can deduct expenses associated with:

  • obtaining the property mortgage including real estate professional commissions, insurance premiums, and mortgage interest
  • home owner association/ condo dues
  • interest on business credit cards
  • advertising the property
  • cleaning and maintaining the rental
  • legal fees associated with the property
  • state and local taxes, and fees for filing yearly taxes
  • rental property utilities
  • travel expenses associated with the property

The wear and tear of the rental property can be a write-off too.  However, only portions can be deducted over a number of years.  This starts once the property is ready to be rented and should stop when the cost is recovered or you are done renting it, whichever comes first.  This is the trickiest deduction, so it is important to have your CPA or tax expert handle this.

As real estate investors, what other expenses have you written off?

Benefits of a Pre-Approval

Prequal LetterNot only is getting a pre-approval/ prequalification letter beneficial to you so you can determine the loan amount that you will be approved for, but it also demonstrates to brokers and realtors that as an investor, you are able to purchase a property and eager to do so.  They will have a bigger desire to work with you over someone who has not been pre-approved/ pre-qualified.  A pre-approval/ prequalification letter states that you qualify for a particular loan amount by a specific lender.

How has getting a pre-approval/ prequalification letter helped you in your real estate investing?

To get a free pre-approval/ prequalification letter for your next rehab investment property, call ReCasa Financial Group today at 614.221.6770.

Millennials Expected to Change Homebuying Game in 2015

Millennial HomebuyersMillennials are expected to play a large part in the housing market recovery in 2015. reported that in 2015, millennials will account for 65% of first time homebuyer sales, meaning, those who have lived at home for many years, will now be ready to move into their own home.   This group of homebuyers is expected to purchase more homes than Generation X (those born between the early 1960s to early 1980s) during 2015.

Read about millennials in 2014 here:

As real estate investors, expect to have a larger audience with a higher demand for properties within the next 5 years.   When thinking about rehabbing for millennials, it is important to know what they are looking for in a home, as they have different desires compared to homebuyers in the past.  A majority of millennials prefer:

  • To be close to jobs, shopping centers, night life, and good school districts.
  • Modern and open spaces allowing the entertaining of guests.
  • Small single floor homes with hardwood, tile or laminate instead of carpet.
  • Energy efficient features including solar power.
  • The ability to easily access services while not spending too much on the home, rather being able to save money especially on utilities.

The purchase price plays a large impact on homebuying for millennials as they are known to have a large amount of debt including student loans.  When working with realtors to market to millennials, remember to include these amenities and make the property listing mobile friendly.

Millennials grew up around technology advances, and due to that, they resort to various social media sites and websites sites for information, before turning to family and friends for feedback.  They will also most likely do their own research before reaching out to a real estate agent.

What additional tips do you have regarding rehabbing for millennial homebuyers?