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rental or not rental prop is the question??

I live in state of Texas and I currently own a townhome in Richardson,TX. Very soon I will be moving into my newly constructed home in Allen, TX so this home will become my homestead. With that said, does my Richardson home automatically get labelled as investment property?? Or is it so when its only rented out?  If yes for investment prop should i look into creating a LLC? Any thoughts?  If yes for investment property also can i refi home like i would normally do so or does investment prop fall into a different refi category??

Any thoughts?
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November 20 2012 - Richardson
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Answers (4)

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Amber, If its a 2nd home (ie is not being rented) can i  get it refinanced with a better rate?
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November 27 2012

As far as lending goes, it would not necessarily be an investment property if you are not renting it out. Are you still planning on spending some time there? If so, and you are not planning on renting it out, it would be considered a 2nd home. 2nd homes and investment properties are treated differently in the mortgage world and you may end up paying a higher interest rate for an investment property. As for creating an LLC, you should consult a lawyer and a CPA, but most residential mortgage lenders will not allow you to transfer the mortgage for your property into an LLC. Just some things to keep in mind when you are deciding what you would like to do with the property.

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November 27 2012
I would recommend consulting a local estate attorney and have them help you plan a strategy to protect yourself and minimize taxes.

If you are looking to refi I would consult a few loan officers and see what options you have.

Best Regards,
Robert Adams
Broker/Salesman
The Adams Team at
Rothwell Gornt Companies
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November 27 2012
You probably want to claim your newer home as your homestead to save more money on taxes.  Your townhome doesn't necessarily get labelled as anything, you just wont have the homestead exemption on it to save some money on taxes and give you "homestead" rights.

As far as creating an LLC this you will want advice from your lawyer.

You may also want to check with your lender to see if they will allow you to transfer the asset to the LLC.  Some will some wont.  Some might consider it a change in ownership and call your loan.   

You potentially can refinance investment properties, but they often have higher requirements...such as higher credit score, higher equity requirements, higher reserves.   You just have to check with a great lender to see what options are available to you.  If you need help just let me know.

If you need help getting it rented, give me a call.
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November 27 2012
 
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rental or not rental prop is the question??
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November 27 2012 | 4 answers
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