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Holly's Income and Assets

Holly's Income
1. $64,456 run rate on w2 from San Jose State University - She is paid on a w2 and considered a salaried employee. However, she is a PhD Scientist and her time is allotted to grants so calculating her income from her paychecks is not straight forward. Holly is paid for 7.2 hours of work a day at a rate of $34.30/hour. Her paychecks are unequal because she is paid on the 15th and 30th based on the work hours during that pay period. You will need to compare a payroll table published by her HR department to her paychecks to confirm her .9 FTE and to calculate her run rate for the year based on a paycheck..
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Holly's Assets
1. Inheritance - Holly's mom died 2/11/2021 She is using inheritance money already acquired from that for down payment See supporting doc for cover letter, inheritance inventory, death cert, and Attorney Letter and contact information, receipt for 180k and 1st page of will
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2. New Zealand Checking Account - Holly has a checking account in NZ and money is needed from it to settle to avoid pulling money from a HELOC to keep rental income calculations simple and maximize borrowing power. The account exists because she did an International Consulting project last year in addition to her regular work and pay from San Jose State which she can do from other labs too.
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3. Rental Property - 526 Swoop Hill Road (no longer owned) - Investment property on 2019 and 2020 returns that has been sold. See ALTA for proof of sale.This was a PNC mortgage that should no longer be on her credit report.
4. Rental Property - 621 Wyeth St (new to Holly as of 2/3/2021) - Investment property she owns with Bryan that she "bought into" via a refinance one 2/3/2021 . This is a US Alliance HELOC that should be showing up on her Credit report already or very soon.
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Bryan's Income and Assets

Bryan's Income
1. Sch C - $21,316 in lesser or average on three Schedule C's
  YTD reports in following section.
2. Sch E - ($5,162) in NOI on 4 rental properties via standard tax return analysis. 3 Properties had typical years and 627 S. Paca St. had worst year in 15 years by a factor of 2. View supporting doc for a 1/4 summary of 2 year performance.
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  1. 621 Wyeth St was refinanced from a traditional mortgage into a HELOC in 1st and that HELOC was paid to zero in February 2021. What is showing as $1,547 in NOI for 2020 will be $16,884 in NOI for 2021 with all other factors remaining constant.
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  2. 627 S. Paca St was a vacation rental and it was negatively affected by COVID with a decrease in gross rents by $30k as compared to year prior. That property was changed to a lease based rental in September 2020. Current leases on it are $3375/mo. These are individual leases with 3 separate tenants. One lease per room. This is referred to as "co-living" and it has been around for over a decade in Baltimore with larger commercial properties now doing it as well. Please see doc below. on this. . If all other expenses remain constant, that property will result in a $1328 NOI in 2021 vs the -$13,150 in 2020. A 75% rental factor applied to current leases or appraiser rent schedule may be a better analysis. That said, no adjustments should need to be considered as long as proper credit is given for the new income via the 621 Wyeth Refinance and paydown.
    view supporting document - summary doc
    view supporting document - detail doc
    view supporting document - a co-living rental
Bryan's Assets
1. I have approximately $350k in equity in 4 rental properties
2. I have approximately $60k in bank accounts
3. I have no other retirement or investment accounts

Bryan's Income Details - Schedule C - YTD information...

This Quarterly Information below should be totally and completely irrelevant if you are dealing with someone who has more than 2 years of profitable tax returns as a self employed person and you are lending at 80% or less LTV. The baseline assumption is they have skin in the game and they realize the risks of not earning income. Self Employed people (typically) get no unemployment when things go sideways and they have learned to hunt for themselves as needed. A far safer risk than any w2 employee.

It is non-audited and non-filed accounting information. Most banks ask for an income statement. Very few ask for a Balance Sheet which would provide more insight. That said, given only 2-3 months of bank statements are typically requested, a review of these documents anytime after q1 would be totally and completely useless as anything can be made to look like anything needed. The q1 would be a bit harder to manipulate EXCEPT that bank statements show nothing about Credit Card Statements, Payables or Receivables. Don't create the reason for people to lie. Ask them if they are still in business and ask them if they feel they will do comparable to last year and be done with it.

In my case I've focused on IT Consulting in Q1. As an aggregate my incoe is up by over $1100/month as compared to 2020, yet my loan officer is telling me we are short on income?

The problem is the Underwriters are still using an archaic system where they evaluate each revenue stream individually, the ding for drops but don't credit comparably for increases. That needs to disappear.

Tall Ventures LLC - Business / IT Consulting Since 2000. In industry since 1995.
Tall Ventures Q1: Income Statement Balance Sheet
Q1 Net Income : $8,306 vs $3,037 in 2020 Quarter comparison (up by $5269 in quarterly comparison)
I expect to do between $25k and 40k+ this year vs $12k last year.
1/1/2021-4/30/2021: Income Statement Balance Sheet ($8153 ytd vs $4049 last yr run rate)
Raven Rehabs LLC - Licensed Home Improvement Contractor in MD since 2005. In the building trades industry since 1998. This is primarily used for working on my own properties at this time. with minor amount of work for others.
Raven Rehabs LLC Q1: Income Statement Balance Sheet
Q1 Net Income: $584 vs $1716 in 2020 Quarter comparison (down by $1132 in quarterly comparison)
Baltimore MD - Bulk of my construction $ in Baltimore is made during Summer and in Early winter visits.
Monterey CA - I make some money in CA with constructions services. A little so far this year.
I expect to do between $2k and $7k this year vs 6800 last year
1/1/2021-4/30/2021: Income Statement Balance Sheet ($2491 ytd vs $2288 last yr run rate...)
Realtor / Property Manager / Real Estate Related Consulting - Licensed Realtor since 2002. Landlord since 1998. In the industry buying, selling, investing, developing and managing since 1998. Realtor License is active but used primarily for my own use only at this time.
Realtor / Property Manger Q1: Income Statement (no balance sheet. See income statement for comments. )
Q1 Net Income: $1,140 vs $1756 in 2020 Quarter comparison (down by $616 in quarterly comparison )
I expect to do between $4k and $8k this year vs $7025 last year
1/1/2021-4/30/2021: Income Statement Balance Sheet (null) ($3150 ytd vs $2341 last yr run rate...)

Bryan's Income Details - Schedule E's - Exception Handling

Schedule E - 1040 Technical Comments

The CPA Bryan used from 2002-2019 tax season allocated full property performance on Sch E and then multiplied by 50% on the taxable line (see 2019 605 Wyeth St SchE for that example.)
A new CPA for 2020 documented full property performance on a tax worksheet included in the return and then each Sch. E line item was divided by 2 showing Bryan's portion of each item on each line.
Most underwriting systems seem to require only the owners share entered, so be mindful of the 2019 returns in that case, or visa versa.

Bryan's Income Details - Other Comments...

At one point in time I made a lot more money with each of these Schedule C's and on one of the Rental Properties....

For the past 4+ years I have been self-funding the development of a new type of Educational Curriculum and Open Source Software offering, with the support of many others who are also contributing time while earning a living with their own trades or employment. (expand for details)
https://soul-proprietor-guide.weebly.com/ https://www.zap-accounting-software.com/
Our goal is to produce a new style of free and low cost curriculum related to " Small Business and Personal Financial Education and Digital Tools". This "commercial education" material is currently missing in our middle school, high school, junior college, college and graduate level education in a proper form.

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