How to Prepare for Year-End-Investor Push for Tax Write-Offs

Caeli Ridge pre-recorded this episode on 10/17/2023

Caeli dives into how to prepare for the year-end closings and investor pushes for tax write-offs.

98% of our industry is only focused on non-owner-occupied transactions.

For non-owner-occupied transactions, the end of the year is the slowest but for investors, it is the busiest time of year because everyone is cramming to get year-end tax credits.

Closing transactions earlier is key but starting now is not too late. Make sure you have all the necessary documents ready and available.

Check out the video with the screen share and the documentation in the Community and our YouTube Channel.

https://www.youtube.com/c/RidgeLendingGroup

You can join these live each week by following this link to join the call:
https://community.ridgelendinggroup.com/events/live-with-caeli-each-tuesday-beginning-at-430-pm-et/list

As always, give Ridge Lending Group a call if you have any questions at
855-747-4343 or email us at info@RidgeLendingGroup.com

1
00:00:06.840 --> 00:00:09.279
CAELI RIDGE: Hey, guys, good afternoon

2
00:00:09.450 --> 00:00:32.819
CAELI RIDGE: Caeli Ridge here, Ridge lending. So I'm gonna start by saying I need to beg indulgence today. You can tell that my back drop is probably a little bit different than you're used to. Took advantage of some time in the sun with some family, and well, I probably could have gone back to the room and and showered and and done it there. I decided not to. So

3
00:00:32.950 --> 00:00:34.209
CAELI RIDGE: yeah. And

4
00:00:34.250 --> 00:00:55.529
CAELI RIDGE: that's okay with me, you guys, too. Thanks for being here. I'm gonna just make sure. Yes, I hit record. I'm a one woman show today, too. Karlie is on her honeymoon. And so I am kind of handling all the tech stuff. So I'm gonna have to be letting or admitting people as they come in. So if I'm installing, that's why

5
00:00:55.660 --> 00:01:02.140
CAELI RIDGE: I'm gonna pull up my notes and we're just gonna get started. I'm gonna make this a kind of a hard stop at 2 gang, just so that we have

6
00:01:02.430 --> 00:01:12.669
CAELI RIDGE: enough time. I'm gonna go through my my content pretty quickly, and then I'll leave a few minutes at the end for any Q. And A about the today's

7
00:01:13.070 --> 00:01:19.739
CAELI RIDGE: or anything else. You guys have questions about related to to financing okay or real estate, for that matter, investing

8
00:01:19.810 --> 00:01:31.980
CAELI RIDGE: alright. So today is earmarked. Yup, there's another enter. Yeah, I'm not very good at the multitasking with technology. Today, we're going to be talking about preparedness for

9
00:01:32.100 --> 00:01:43.140
CAELI RIDGE: year end closings. This happens every year, and I always like to take a minute enough in advance to give everybody that kind of one on one, in terms of what they need

10
00:01:43.200 --> 00:01:52.619
CAELI RIDGE: to know and plan for, etc., because what happens is in our industry, in mortgage related industries the last couple of months of the year.

11
00:01:53.000 --> 00:02:02.300
CAELI RIDGE: It it kind of turns into skeleton cruise. First and foremost, you know, 98% of our industry is almost exclusively focused on. Owner occupied.

12
00:02:02.420 --> 00:02:14.920
CAELI RIDGE: transactions where you're going to live. Very few really focus on the investor. So as a result of that you've got the holidays in November and December. So we have short months to begin with.

13
00:02:15.130 --> 00:02:26.469
CAELI RIDGE: You've got people taking extended vacation and time off, because nobody's buying homes on or occupied. People typically are not gonna be buying homes in in the wintertime, so

14
00:02:26.680 --> 00:02:46.230
CAELI RIDGE: they'll flip that coin and then think about investors. This is the busiest time of year for us. Hands down. November, December, the busiest times of year for us, because investors are always clamoring to get their year and tax credits everybody wants to get in their last minute purchases and or refinances. They've got closing costs and things that they can deduct.

15
00:02:46.230 --> 00:03:00.089
CAELI RIDGE: So this becomes a very, very busy time of year for us, and you know it's it's counterintuitive because everybody else is on vacation. Underwriters escrow appraisers right? The rest of the industry is, is kind of

16
00:03:00.150 --> 00:03:12.050
CAELI RIDGE: taking it easy where where we've got. You know, some of our highest volume in the last 2 months of the year. So, as a result, I just always want to make sure that everybody is prepared, that if you have intentions or plans

17
00:03:12.140 --> 00:03:27.520
CAELI RIDGE: to close a transaction between now, and starting right now is not too early, I promise you, between now and December 30. First, it's really important that you you get started and get your ducks in a row, etc. So a couple of things that I wanted to touch on where that is concerned.

18
00:03:27.680 --> 00:03:47.360
CAELI RIDGE: you know. Make sure here a couple of just quick details. Make sure you've got your documents that you know you're gonna need the things that expire or renew consistently your pay stubs and your bank statements your driver's license. If you know that's gonna expire things that that you would normally be prepared to submit. Just have them handy and

19
00:03:47.360 --> 00:03:59.790
CAELI RIDGE: ideally we love it. If you can get that, turn time to 24 h or less when items have been requested. I know that that's not always possible, but that would be ideal, and certainly will save you some unnecessary heart firm.

20
00:04:00.130 --> 00:04:12.220
CAELI RIDGE: I would also tell you that you need a minimum of 30 days, and and you've got to count the holidays in there, too. Right? So take those out of the equation. If you're submitting a contract on December first

21
00:04:12.270 --> 00:04:23.029
CAELI RIDGE: closing by the 30 first is, gonna be I'm not saying it's impossible. But it's gonna be rough, because you've got those those days in the middle there that we will lose as recision days and and funding days for the holidays.

22
00:04:23.060 --> 00:04:34.180
CAELI RIDGE: So you need to plan ahead there. The the other thing is is that you want to? If you're gonna be traveling for the holidays, and you're gonna be using a poa

23
00:04:34.290 --> 00:04:53.939
CAELI RIDGE: a power of an attorney power of attorney or the notary, even, for that matter, all of those things need to be approved and handled in advance. So if you know that that's gonna be part of your scenario. Make sure that you communicate that with us, and we will, you know, get everything handled and approved and ready to rock well in advance of actually closing. That'll be important.

24
00:04:54.130 --> 00:05:01.339
CAELI RIDGE: And then just being overall available for signing disclosures.

25
00:05:01.450 --> 00:05:28.579
CAELI RIDGE: Getting to disclosures that come up, and E signing those quickly. All of those things are going to contribute to closing on time the time in which you had elected to close and not delaying or going beyond the 30. First, because, like I started the the call, you know those tax incentives. If something has come up in the middle of the year. And you you've made more income, or you desperately need those extra deductions for the year

26
00:05:28.650 --> 00:05:40.849
CAELI RIDGE: for you individuals real real important that you wanna make sure that you've you're you're heating this advice because I can't tell you how many times year end the year end push

27
00:05:40.890 --> 00:05:43.170
CAELI RIDGE: people missed the mark because they weren't prepared.

28
00:05:43.180 --> 00:05:48.310
CAELI RIDGE: And you know they end up having to pay more in taxes. Nobody wants that right? So

29
00:05:49.310 --> 00:05:59.109
CAELI RIDGE: any questions about that, you guys, I'll look in the chat in just a second. Go ahead and throw those in there, and I'll I'll answer those at the end. The other thing that I wanted to share with you. All is

30
00:05:59.610 --> 00:06:08.520
CAELI RIDGE: Let's plan for 2024 right now is a good time to start planting those seeds and preparing for what might be your goals

31
00:06:08.590 --> 00:06:10.040
CAELI RIDGE: in the coming year.

32
00:06:10.210 --> 00:06:36.769
CAELI RIDGE: The first thing. And you guys hear me stress this all the time. Do not file that 2023 tax return until we have seen the draft version first. Now, the only group that this doesn't really apply to are gonna be those individuals that are just straight. W. 2. They don't earn any kind of self employed income. And those individuals that don't have rental property already. So for those people listening here today or listening after the fact.

33
00:06:37.340 --> 00:07:02.369
CAELI RIDGE: Straight W. 2 no schedule E or yes schedule E schedule C. If you make bonus and and commission as long as it's consistent, and it's it's not in a decline. You wouldn't need us to review those tax returns. Okay, so for you guys, don't even worry about it. We don't need to see the the tax return. In that case it's gonna be what it's gonna be. But for everybody else. If you have rental properties, and you claim or receive

34
00:07:02.420 --> 00:07:26.100
CAELI RIDGE: any kind of self employed income. It's gonna be really important that we get a copy of that in advance of qualifying and obviously gang. This assumes that we are talking about a a full Doc Loan, okay, full Doc Loan, as opposed to a debt service coverage ratio loan, where we're no longer interested in your Dti. Your personal income divided by your monthly debts. That's no longer relevant in a debt service coverage ratio.

35
00:07:26.100 --> 00:07:39.829
CAELI RIDGE: So if that's what you're after, then again, it's not gonna apply to you. But if you're trying to go full, Doc, Fanny, Freddy loans or a non. Qm product. That's also considered full. Doc, make sure that we're reviewing that tax. Return in advance. If you're ringing the bell

36
00:07:39.900 --> 00:07:49.109
CAELI RIDGE: then maybe your plans are to buy an owner occupied next year. Another real big reason that we wanna see that first, especially if you've been purchasing properties in 2023

37
00:07:49.170 --> 00:08:10.719
CAELI RIDGE: and and for a variety of other reasons. So we need to be able to calculate those gains and losses from all the different schedules that you might have and give you the feedback, and some of the feedback that we're going to give you is going to include things like, you know what, John, I really want you to file an extension. I don't like the the way that 2023 return looks.

38
00:08:10.740 --> 00:08:27.270
CAELI RIDGE: I. 2022, was great. We already know that works. Let's file an extension and just buy us some extra time. That might be some of our feedback for you individuals that maybe purchase properties late in the year. That can be problematic on a schedule E, because you won't have a lot of income to claim.

39
00:08:27.340 --> 00:08:51.080
CAELI RIDGE: But you're gonna have a significant amount of expenses. So those 2, hand in hand are gonna ultimately hurt you. So if your Dti is right on the line there, that loss probably almost a certain loss if the property was purchased late in year isn't gonna be or works your advantage. Or let's say you had a major renovation that had to happen. Okay, we're gonna make sure that your Cpa commented.

40
00:08:51.080 --> 00:09:06.610
CAELI RIDGE: and put the appropriate amount of days that the property was in service because a lot of times their their software will just default if you've ever looked at your schedule, E, there's a place kind of in the middle up middle ish

41
00:09:06.620 --> 00:09:19.589
CAELI RIDGE: under each of the columns for the properties that will say how many days the property was in service, and more often than not the software just defaults to 365 days. Well, if it was out of service for 8 months, and you only collected 4 months worth of income.

42
00:09:19.810 --> 00:09:22.080
CAELI RIDGE: but they left it at 3, 65.

43
00:09:22.240 --> 00:09:37.250
CAELI RIDGE: The calculation is going to divide the income by 12 months, not 4 months, and it's going to bleed into probably producing a gain. So those are the types of things that we're going to be looking for on your behalf and providing you with

44
00:09:37.320 --> 00:09:48.540
CAELI RIDGE: advice that says, if you want to do this, then these are the options that we recommend. Obviously, you guys will make an informed decision based on that information. And you know

45
00:09:48.850 --> 00:09:57.610
CAELI RIDGE: whether it means paying more in taxes or the deduction, etc., will be up to you to to make that decision, and if you think it's helpful.

46
00:09:57.830 --> 00:10:14.100
CAELI RIDGE: you know we have a lot of clients, very sophisticated clients that just don't spend any time understanding tax returns, and God, who would really want to. But if you don't, even if you just don't want to deal with it, it's very common for us to work directly with your Cpa.

47
00:10:14.150 --> 00:10:34.799
CAELI RIDGE: Because, as I've said before, many times, the Cpa's job is to save you money right? Their their role is to reduce the amount of taxes that you're gonna have to pay if you've got a good one. They don't know underwear and guidelines. They're not gonna know some of the the details and nuances that go into a pre calculated formula that Danny Freddie puts out.

48
00:10:34.800 --> 00:10:46.079
CAELI RIDGE: So we're the bridge there that we can. We can communicate with them. We can look at it together. We'll provide them the missing information that they wouldn't otherwise have, knowing what your goals are, and then

49
00:10:46.210 --> 00:10:56.600
CAELI RIDGE: we submit back to you. Here are the the scenarios. Here are the options. And then you guys tell your team how you want to proceed. so real real important.

50
00:10:56.930 --> 00:11:05.849
CAELI RIDGE: Let us see those draft tax returns now similar to being prepared. This happens quite a bit, and I'll I'll start by saying, guys, we get hundreds

51
00:11:05.960 --> 00:11:10.839
CAELI RIDGE: of of tax returns that our clients want us to review hundreds of them

52
00:11:10.940 --> 00:11:38.629
CAELI RIDGE: every year, you know, throughout the year, depending on, you know, whether they call an extension or whatever. So please do not expect to send us a a draft tax. Return a week before the fifteenth of April, and expect to file on the fifteenth. That's not gonna happen. I've got people that often times will send it on the fourteenth of April and say, Hey, I gotta file tomorrow. People look at this. No, we can't. It's just not. It's not possible. So plan ahead sooner the better, especially if you guys want one. On one consultation with me personally.

53
00:11:38.630 --> 00:11:52.490
CAELI RIDGE: make sure that you get those in. I mean, if you can press your Cpa. If you guys, if you're one that files on time every year, if you can get that return in January or or February. Amazing. We'll have plenty of time to look at it and go back through and and strategize, etc.

54
00:11:52.500 --> 00:11:59.300
CAELI RIDGE: So that's that's a big one. When we're talking about what to plan for for 2024 and what you want to do.

55
00:11:59.470 --> 00:12:04.439
CAELI RIDGE: Let me look at my notes here and see. I know that there were some other things that I wanted to share with you in that regard.

56
00:12:04.720 --> 00:12:08.460
CAELI RIDGE: I talked about that

57
00:12:11.050 --> 00:12:25.090
CAELI RIDGE: you know the other thing, too, is is communicating with us your your dedicated bone specialist, or if it's me that will that you're working with one on one just understanding what it is that you want to accomplish in the year. And it's not just about real estate, right? Maybe you've got to buy a new call.

58
00:12:25.320 --> 00:12:44.830
CAELI RIDGE: Your lease is coming up, or you know your your tires are falling off, and then you need to have a new vehicle, or maybe you've got a kid that's gonna be going off in college. You need to co-sign for student loan, whatever those variables may be having the discussion with me or your dedicated loan specialist is going to be important so that we

59
00:12:44.900 --> 00:12:57.679
CAELI RIDGE: have those details. And when we're working with calculations of debt to income ratio. We can recruit those things right and position you so that you're able to accomplish all of the things that you're trying to do for the year and planning ahead

60
00:12:57.720 --> 00:13:08.329
CAELI RIDGE: is is important. Right? If if you ring the bell, it's wrong, and there's not gonna be much that you can do after the fact. If we didn't know and prepare for it. Okay,

61
00:13:08.650 --> 00:13:13.880
CAELI RIDGE: so credit. That's the other thing that we want to look at. What's coming up. What has happened?

62
00:13:13.950 --> 00:13:19.519
CAELI RIDGE: When do we want to? Feasibly full credit in the year, knowing what your your

63
00:13:19.650 --> 00:13:32.510
CAELI RIDGE: kind of transaction dates are going to be? Let's say that you just did. You're in the middle of of a fix and flip, maybe. Okay, just as a random example. And you've leveraged your utilization in some of your credit cards is really high

64
00:13:32.590 --> 00:13:55.829
CAELI RIDGE: and we've got something that's coming up. And let's say that we're in February. We have something coming up as a purchase a new construction. Let's say it's a Florida new construction that was delayed. It's finally gonna close in in June, right? So having those conversations and understanding what your plan is will allow us to prepare you appropriately and say, Okay, listen. The credit report is good for 120 days. That's how long for most

65
00:13:55.850 --> 00:14:02.730
CAELI RIDGE: programs from the day that we pull your report to the need for a new report is 4 months, 140 days.

66
00:14:02.770 --> 00:14:30.820
CAELI RIDGE: So knowing when to pull the report to maximize your credit score, to make sure that A, the qualifications there right there may be some minimum credit score requirement or B, we're yielding the best rates that we can. There are differences between interest rates 7, 20 versus 7, 60. So those are some of the other things that we would talk about in scheduling some time with your dedicated loan specialist similarly assets right? Does everybody know how to calculate the reserve requirements?

67
00:14:30.910 --> 00:14:44.729
CAELI RIDGE: Is everyone familiar with that? Do you know how to read? If you're using retirement accounts? Do you know how to read the terms of withdraw of those accounts? And is it eligible for satisfying reserve requirement? So those are some of the conversations that you definitely wanna be having

68
00:14:44.760 --> 00:14:54.340
CAELI RIDGE: in advance again, so that we can prepare or hitting all those milestones, and and making sure that you're you're getting everything done in the year that you want to get done.

69
00:14:54.530 --> 00:15:00.759
CAELI RIDGE: Let me just take a pause, and I've got I'm gonna talk about kind of the

70
00:15:01.100 --> 00:15:06.150
CAELI RIDGE: state of the market. Let's see if there's any questions, though, from you guys.

71
00:15:07.170 --> 00:15:14.540
CAELI RIDGE: And for those that joined a little bit late. You'll notice I started the the call by saying, my backdrop is a little bit different than normal.

72
00:15:14.570 --> 00:15:27.899
CAELI RIDGE: I was I was begging deference and and just hoping that you don't mind. I took advantage of some fun with with family here in Scottsdale, and it is glorious. I almost feel like I should show you my my view. Maybe I'll do before before we we leave.

73
00:15:27.940 --> 00:15:31.150
CAELI RIDGE: Oh, okay, I don't see any questions. Nobody going once.

74
00:15:31.650 --> 00:15:34.490
CAELI RIDGE: We've got one from Sean, hey, Sean?

75
00:15:34.660 --> 00:15:44.400
CAELI RIDGE: His question is, is it 25% down with Dscr debt service coverage ratio month. Can you go over the 140 days per background? Check again?

76
00:15:44.450 --> 00:16:13.659
CAELI RIDGE: Nice Arizona. How'd you know it was in Arizona? So yeah, 20, you can do 20 down on a debt service coverage ratio the the I'm noticing. And this is the same for conventional to gang the difference between the points for the rate at 20 and 25% down a lot of times. I think it's your advantage just to put the extra 5% down. Because what's happening in that case, this is actually a really good question, Scott. Excuse me, Shawn, I'm glad you asked it.

77
00:16:13.780 --> 00:16:26.649
CAELI RIDGE: this gets into secondary and and being in a high rate environment right now, everybody. If you've heard me talk on this before, and if you haven't, this will be probably real good intel for you.

78
00:16:26.830 --> 00:16:54.689
CAELI RIDGE: The servicers that pick up the rights, the mortgage, backed securities that are bought and sold on the secondary market. The servicers pay a premium for the rights to service these these loans, and by service. That means who that you're you send your payment to, and they disperse the funds, and they're there to answer questions about escrow and and all that stuff. That's your servicer who you make the mortgage payment to. They send the taxes to the county, the insurance, the insurance, the prince of interest. Yadda, yadda! Right well, they pay a premium for the right to service these loans.

79
00:16:54.710 --> 00:17:13.109
CAELI RIDGE: Now what's happening is in this right high rate. Environment. Rates aren't static right? They're not a straight line. They go up, they come down, and I think that everybody is in agreement. They will be coming down at some point when I'm not going to get into that today. Probably. Well, we'll talk about rates in a second but

80
00:17:13.530 --> 00:17:18.849
CAELI RIDGE: 6 months, 12 months, 18 months, whatever it doesn't really matter. But they are going to be coming down

81
00:17:19.460 --> 00:17:32.310
CAELI RIDGE: when the loan pays off. The servicer is going to lose money because the premium the servicer paid to get access to service. That mortgage-backed security usually takes about 36 months from acquisition

82
00:17:32.600 --> 00:17:34.000
CAELI RIDGE: before they're profitable.

83
00:17:34.050 --> 00:17:54.349
CAELI RIDGE: Okay? So if that loan that you locked it at 7 and a half percent refinances in 24 months from then it's going to be at a loss to the servicer. So they understand this, and they're hedging. So any of you that have seen or have gotten a loan done or seen a quote in in really, the last year, plus, you've noticed that there's extra points associated with it.

84
00:17:54.350 --> 00:18:17.330
CAELI RIDGE: That's why they are covering. There's no premium pricing. You don't get to choose to pay 0 points right now. You're paying those extra points. So anyway, questions about that, let me know. But back to your question, Shawn. Debt service coverage ratio has both 25% down and 20 down. But I would encourage you to get quotes on both. It's it can change daily, based on the market.

85
00:18:18.110 --> 00:18:21.750
CAELI RIDGE: And see right. How many times have you heard me say, do them out.

86
00:18:21.840 --> 00:18:29.589
CAELI RIDGE: and it'll be easy to figure out which option is going to be better for you, that 5% difference in capital versus the payment difference.

87
00:18:29.610 --> 00:18:33.850
CAELI RIDGE: Divide the 2 numbers right? It'll give you the number of months it takes you to recapture.

88
00:18:33.920 --> 00:18:38.799
CAELI RIDGE: I like to say, and largely depending on how long you're gonna keep the property, you know.

89
00:18:39.570 --> 00:18:43.219
CAELI RIDGE: 2 years or less. You probably want to

90
00:18:43.370 --> 00:18:50.679
CAELI RIDGE: put more money down. If it's more than that. Given that a lot of times, I think that we are going to be refinancing in the next couple of years.

91
00:18:52.100 --> 00:18:58.460
CAELI RIDGE: 20% down right anyway. And if you guys have any questions about that math, please just email me and call me and say, Hey.

92
00:18:58.480 --> 00:19:11.109
CAELI RIDGE: here are the 2 scenarios. We'll look at the rates. We'll do the math together. The more time times you do it the better you're going to be added. Just let you know. And then, Shawn, you said, can you go over the 140 days for background check again. I think you're talking about the credit report.

93
00:19:11.160 --> 00:19:31.099
CAELI RIDGE: The credit report. This is a conventional guideline. We do have some products that are 90 days versus 120 days. So make sure you inquire about that, depending on what kind of financing you're getting, but more often than not it's 120 days or 4 months that the credit report itself is valid for. So we pull it today, and 120 days later is when we have

94
00:19:31.310 --> 00:19:46.740
CAELI RIDGE: so pull a new one, for the reason that's important is depending on what you've got going on. If your credit card debt is being utilized above 50 right? Your credit cards? Are you doing a rehab or something on a property, or whatever right? It doesn't matter what's on there. But

95
00:19:46.740 --> 00:20:08.759
CAELI RIDGE: over 50% utilization. If you have a $10,000 limit and you've got a balance of 5,000 or more. That's when your scores really start taking a hit. So if you know that, that's the case, we just need to plan it right? There's a couple of quick hacks. I'll give you guys, since we're talking about this, if you don't want to throw a bunch of money at at at revolving consumer to that at that point in time you've got it earmark for something else.

96
00:20:08.820 --> 00:20:20.299
CAELI RIDGE: One kind of loophole. You can always go back to the creditor and ask them to extend the limits, increase the limits. So you might have to wait 2 to 4 weeks before the system.

97
00:20:20.330 --> 00:20:29.129
CAELI RIDGE: Updates. But in that vein, obviously, you can't charge anything more on the card. But if you've extended or increased the credit limit, and you've left the balance alone.

98
00:20:29.340 --> 00:20:41.549
CAELI RIDGE: you may not have to throw any any cash at that. You can just kind of trick the system, if you will, to see of a lower utilization right? And lower utilization, better credit score, etc.

99
00:20:41.610 --> 00:21:00.530
CAELI RIDGE: Let me know if I if there's anything else on there, Sean, I will address it. We've got another one from Doug. Hi, Doug. His question is how long after having high utilization, but it gets paid down. Does the score react? Good question? I'll read the second part in a second. Well, no, that's related, isn't it? For example, if I just charge an expensive family.

100
00:21:00.870 --> 00:21:03.910
CAELI RIDGE: maybe trip and charge up my discover card.

101
00:21:03.990 --> 00:21:13.630
CAELI RIDGE: but we'll pay it off in 2 weeks. How quickly will that be? Reflected? Excellent question. And it's gonna depend on the day in which the

102
00:21:13.740 --> 00:21:32.889
CAELI RIDGE: the creditor reports to the repositories. Okay, so and everybody's gonna be different. So what you're gonna want to do is you're gonna want to call discover. And you're gonna wanna find out, hey? Discover what day or days in the month. Do you report the data, tape their data, tape to the repositories, repositories, or equifax transient and experim?

103
00:21:32.940 --> 00:21:53.559
CAELI RIDGE: Okay? So when you find that out what day of the month. Then you can kind of figure out on which day you've paid it down when it's going to be reported. You wanna make sure that you're not pulling or allowing us to pull, or anybody to pull until you've you've hit that mark. Okay, perfect. Yeah. You if you pay, if you pay off every month. Great! But just find out what day

104
00:21:53.680 --> 00:22:08.789
CAELI RIDGE: of the month or days. Sometimes they report multiple days in the month what days those are, and then we can plan accordingly to make sure that when we run your credit as needed, we'll do it once. It's reflective of hitting the repositories and and optimizing that score.

105
00:22:08.920 --> 00:22:18.280
CAELI RIDGE: Good questions, guys. Thank you so much. Alright. So I'll look back here in a second. Let's go to interest rates and and my prediction.

106
00:22:19.540 --> 00:22:23.610
CAELI RIDGE: let's talk about the fed. Okay,

107
00:22:25.420 --> 00:22:27.699
CAELI RIDGE: The fed has been extremely

108
00:22:27.740 --> 00:22:51.180
CAELI RIDGE: clear, I believe in, I guess, in the fed language. I mean, if you're not used to it, maybe it's it doesn't sound as clear as it is, but they've been pretty straightforward about what their intentions are with interest rates, and to my, and not from what I've seen, I have not seen them do anything but make good on the expectations that they've set. They have continued to stay steady. They are dead set on the inflationary rate, being 2%.

109
00:22:51.360 --> 00:23:05.049
CAELI RIDGE: You know, my own 1.3 cents worth of you guys. I don't know where that number came from, or why. That is the absolute end of all ends. I can't answer that question. It's actually a good question. I wish I could.

110
00:23:05.060 --> 00:23:13.200
CAELI RIDGE: But that's that's what they're after. And and that's where I think they're going to ensure that we are before they they take their foot off the gas. Now

111
00:23:13.280 --> 00:23:24.019
CAELI RIDGE: that said a lot of people, you know, grumblings, I'm hearing, you know, rates are gonna stay high for longer than I think a lot of people wishful thinking out there.

112
00:23:24.290 --> 00:23:32.819
CAELI RIDGE: are predicting the fed. I think that if you guys want to know what's gonna be happening with rates. Start listening to the fed. It's all published. They have their minutes. They, you know, they meet.

113
00:23:32.870 --> 00:23:34.139
CAELI RIDGE: I don't know. What is it?

114
00:23:34.980 --> 00:23:46.820
CAELI RIDGE: 12 times in 8 times a year. I don't know but you can get all all of that information and and start reading through that, and listening to what they have to say, and should be pretty clear on on what happens. Now

115
00:23:46.980 --> 00:24:02.950
CAELI RIDGE: take all of that, and put it to the side for a second, because there are certain circumstances, of course, that can derail everything that I just said and the the hard truth of it is is that the better the economy is doing, the higher the rates are going to be.

116
00:24:02.990 --> 00:24:20.630
CAELI RIDGE: Okay. That's just the way it goes, the worse the economy is doing the lower the rates are, gonna be. We can't have it both ways. Do we want gas and food and and these other things to be more affordable. Or is that what it is that we want to see? Happen? Then, you know.

117
00:24:20.820 --> 00:24:23.919
CAELI RIDGE: we're gonna we're going to see the higher interest rates.

118
00:24:25.640 --> 00:24:38.890
CAELI RIDGE: It's it's as horrific as it sounds. Great. Tragedy tends to couple with lower interest rates. Example, those horrible images that we're seeing over in Israel.

119
00:24:38.940 --> 00:24:50.670
CAELI RIDGE: I won't get into a political conversation here, but that could be a catalyst that drives interest rates lower. So you know, there's there's exceptions to the rule, and and just know that that

120
00:24:50.700 --> 00:24:57.500
CAELI RIDGE: the better the economy is doing, you're gonna expect that the rates are gonna be higher, that that employment, the the jobs

121
00:24:58.310 --> 00:25:11.599
CAELI RIDGE: the jobs report. I can't figure it out, and and people a lot smarter than me have been wrong in predicting that. But that thing is just on fire, I just and I don't. I don't understand it myself, but that's not helping interest rates. I'll tell you that.

122
00:25:11.920 --> 00:25:15.849
CAELI RIDGE: anyway. Oh, somebody is in

123
00:25:15.930 --> 00:25:20.429
CAELI RIDGE: and wants to come in a little bit late. Let's let him in. There's Jack.

124
00:25:20.660 --> 00:25:40.490
CAELI RIDGE: okay. So my my prediction for interest rates. I think they're gonna be higher for longer. But I'll tell you something else. Gang I'm seeing cash flow, man. And remember, I'm we're licensed in 48 states, and we get all the appraisals we see it all the time. I get to see what the cash flows are, and I'm still seeing it at 7 and a half and 8%.

125
00:25:40.490 --> 00:25:53.040
CAELI RIDGE: We've got debt service ratio at at sometimes 9. I've even seen higher than 9 when your credit score might be a little depressed, or the loan amounts really really low. Both of those those criteria tend to make debt service ratio rates

126
00:25:53.410 --> 00:25:55.340
CAELI RIDGE: higher than than normal

127
00:25:55.440 --> 00:26:05.289
CAELI RIDGE: But cash is out there, and if you're saying that you you can't find it or you're you're not able to cash for then you're looking in the wrong place. You need to start opening up

128
00:26:05.330 --> 00:26:16.549
CAELI RIDGE: and finding other markets to consider and or start considering the short term rental market or the Midterm Rental market. One thing that's interesting. I'll leave you with this unless you guys have more questions. You know.

129
00:26:16.890 --> 00:26:32.939
CAELI RIDGE: diversification is key. My overreaching advice to every one of you is is diversification in some way, shape or form have your core strategy, but you need to be diversified, and this, that statement comes from my own mistakes, my own past my own background. I was a one trick pony.

130
00:26:32.980 --> 00:26:37.499
CAELI RIDGE: It was all about appreciation. It was just kind of one

131
00:26:37.710 --> 00:26:58.719
CAELI RIDGE: one particular strategy, and I did not have good diversification. And it was a problem. A big problem. Oh, 809. Kick my ass. Okay, that won't. I won't get into that sub story. But one of the things that's really cool that I have been talking about lately is a midterm rental. Now everybody knows the traveling nurses, furniture, finder, or for furnished finder. I think it is

132
00:26:58.730 --> 00:27:04.830
CAELI RIDGE: pilots, you know, people that are are on the move all the time. Those are fantastic, but check this out.

133
00:27:05.250 --> 00:27:18.099
CAELI RIDGE: What about the idea of professional athletes? Now you're gonna want to be in a state where it has all the major pro sports teams. Ohio might be a good one. That's the one that I've just been using, because that's where I first learned about this

134
00:27:18.120 --> 00:27:33.080
CAELI RIDGE: football basketball, baseball hockey right? Those are the 4 main main ones. So you wanna pick a state that has all of those and on the higher end you're probably looking at, you know, depending on the market, of course, at least a 4 or $500,000 property.

135
00:27:33.140 --> 00:27:38.879
CAELI RIDGE: But but think about these kids, these pro athletes that have signed a contract for 2 or 3 years.

136
00:27:39.370 --> 00:27:47.960
CAELI RIDGE: Typically speaking, they're not from that area. They're traveling from home to be present for that season of that, that sport.

137
00:27:48.250 --> 00:28:03.260
CAELI RIDGE: and what is being required is is that they're made to sign leases for several years at a time. And you know the other thing, too, is a professional sports athlete. These kids, just to be on the roster are making. I mean, they're 20. Nothing right.

138
00:28:03.260 --> 00:28:21.739
CAELI RIDGE: They're making what half a million, 3 quarters of a million or more, I mean, that's the base phase. So they can pay the the rent necessary. And like I said. They're being required to sign this lease for 2, 3 years of the time. So I just think that that's a really cool way that mitigates even more risk.

139
00:28:21.820 --> 00:28:35.399
CAELI RIDGE: The returns seem to be really good. From what I've I've observed so far, but that just might be another feather in the cap, things to to to look at and consider when you're diversifying.

140
00:28:35.580 --> 00:28:42.229
CAELI RIDGE: Jag says, Okay, what do you think of areas like Cleveland, where the population is declining year on year.

141
00:28:42.990 --> 00:28:48.470
CAELI RIDGE: Oh. I don't know if I'm qualified to answer that. I guess my my instinct would be

142
00:28:50.680 --> 00:28:51.660
CAELI RIDGE: it it

143
00:28:51.990 --> 00:29:11.240
CAELI RIDGE: you would expect them that the housing prices will start to follow suit right? If if that's really happening in that area, I would. I would consider neighborhoods, don't just, you know, wouldn't blanket it to just Cleveland. I would be looking in in lots of different areas of Cleveland. But there may be some advantage that you can. You can lever there.

144
00:29:11.350 --> 00:29:13.220
CAELI RIDGE: you know.

145
00:29:13.690 --> 00:29:14.500
CAELI RIDGE: and

146
00:29:15.110 --> 00:29:40.980
CAELI RIDGE: if the population is declining, appreciation might be declining, find out. The city will typically find some tax credit or some way in which to incentivize businesses to be there. Start looking for those things. And and you know, if there's going to be big business, big box business, then you're gonna wanna find out where they're building and where they're hiring and where they're they're

147
00:29:41.690 --> 00:29:47.030
CAELI RIDGE: employees are coming from. They're gonna need housing, etc. So yeah.

148
00:29:47.270 --> 00:29:52.840
She says. Also, it seems to steady cash flow. Markets are often the ones with slow and steady declines in population.

149
00:29:53.330 --> 00:30:22.810
CAELI RIDGE: Maybe. Yeah. I mean, you know there's there's exceptions to every rule. I feel like a broken record sometimes, because II say same things a lot. But, generally speaking, thing, the higher the appreciating market. And this I'm talking about a long term rental, single family long term rental. Right now, the higher the appreciation, typically the lower the cash flow, and vice versa, right? The the lower, the appreciation, the higher the the cash flow. Diversification, I think, is is the key overall in in that in in

150
00:30:22.830 --> 00:30:45.440
CAELI RIDGE: every way real estate in in their testing so single family short term, midterm 2 to 4 units class A, B, maybe even some C appreciation markets. Look for that exclusively as long as it cash flows something and and offset with some some real strong cash flow. And look at some alternative means as well of investing

151
00:30:45.450 --> 00:30:52.369
CAELI RIDGE: syndications or or private lending notes. Right? All of those things are part of real estate, and and

152
00:30:52.380 --> 00:30:58.850
CAELI RIDGE: I would be looking at. diversifying, at least in some way with with one or a multitude of those.

153
00:30:58.960 --> 00:31:13.440
CAELI RIDGE: Okay, so I think that's it. Unless I don't see any other questions. So I'm gonna call it, it's 20'clock. Thank you guys for being here. I really appreciate it. You know how to reach us. But I'll just tell you. Ridgelining group.com info at Ridge learning group.com. 8, 5, 7, 4, 7,

154
00:31:13.720 --> 00:31:22.180
CAELI RIDGE: 434-38-5574 Ridge. We are on standby. Anything you need. Just give us a buzz. I'll see you guys in a couple weeks. Thanks for being here today.

Calling All Real Estate Investors

How to Prepare for Year-End-Investor Push for Tax Write-Offs

How to Prepare for Year-End-Investor Push for Tax Write-Offs

How to Prepare for Year-End-Investor Push for Tax Write-Offs

Listen to this podcast on