If you’ve been around this blog for any length of time, you know I do what I do for a very specific reason: paying off my student loans. Up to this point, I have had a very strict schedule I follow when buying and selling. The magic number is 2 years for the tax break.
And then I quit my job. You know, my salaried job with benefits. I took a leap of faith and have never regretted it or looked back.
But with every great thing, comes a not-so-great thing. Wrinkles in the plan. I’ve mentioned before, this life teaches you to expect the unexpected.
This week I hit two pretty substantial wrinkles in my plan that I’ve so carefully followed. Both of the wrinkles are totally out of my control which, of course, makes them infinitely more frustrating.
When I purchased Flip 3 from the estate, somehow, the title company or the state (depends who you ask) “forgot” (or in their words: it slipped through the cracks) to request my grandfather’s death certificate. They requested and received my grandmother’s, but, since Grandpa had been deceased for decades, I guess it was just overlooked. How was this little problem caught? Well, I was reviewing courthouse records in preparation for a June sale on Flip 3…I wanted to double check square footage, price, etc. While reviewing those records, I noticed that my name was nowhere attached to the property. Through a series of calls, we discovered that the request for the death certificate was never made and we are working to rectify that. So what’s the problem? For the last 1.5 years that I’ve been paying on this house, I have been receiving no credit on the tax side. The assessor views those tax payments as coming from my grandparents since my name isn’t attached to it. The owners of record for the last 1.5 years were my grandma and grandpa. Remember my magic number of 2 years? 1.5 years of that number is not in my name for tax reasons. In order to reach my 2 year mark for tax purposes, I will have to live here ANOTHER 2 years after it goes in my name. That’s a HUGE setback. A massive setback.
And if that wasn’t a big enough setback, I started getting my ducks in a row for selling & buying in June. While speaking with my loan officer, I discovered that to receive a mortgage loan as a self-employed individual, I need 2 years of employment history. I have 9 months. The 2 year mark of being a self-employed Realtor is 8 MONTHS after I wanted to sell. Sure, I could go ahead and sell, but getting a loan–either in-house or secondary market- is not an option without the magic 2 year mark.
So what does that mean? Well, it means my plan is no longer my plan.
It means that I can’t sell Flip 3 until March 2018. Even if I ditched the tax break and just paid capital gains, I would not be able to get a loan without 2 years of verifiable self-employment history. My timeline just got extended. Sure, I’m annoyed. I was actually pretty upset about it, but as much as I whine and complain, the bank is not going to change their mind and I’m not going to get the 1.5 years of tax credit back. I did everything right–kept my ducks in a row, paid my taxes, followed my timeline, but between human error and life change, my normal plan won’t be my plan on this flip.
With the sale of Flip 3, it was going to wipe out my student loans. I had planned to have them FINALLY paid off in July. Now, I won’t have access to those funds until at least March 2018- so that’s more interest and payments I hadn’t planned on making. Sure, all of these debacles give me more time to enjoy a finished flip or to slow down the process of remodeling, but that doesn’t help on the financial side– the one reason I do all of this in the first place.
So, I say all of that to say, we’ll be sticking around Flip 3 a little longer than normal. Maybe I’ll come up with more projects that I normally would not have since I’ll have the extra time. So, get comfy, we aren’t going anywhere anytime soon!