Shownotes
Let’s be honest — figuring out how to get a mortgage when you’re self-employed is a bit more complicated than if you had a W-2 job.
Lenders want to see that you have a steady income, but without a consistent paycheck, that becomes more difficult (even for super-high earners!)
Sydney just bought a new home and in this episode, she’s breaking down the entire process and exactly how home buying for self-employed professions is different and what you should consider if you have owning a home on your vision board within the next 1-3 years.
02:00 — The importance of proper bookkeeping and documentation
05:30 — How lenders view self-employed income differently
11:00 — Tips for improving your debt-to-income ratio
13:30 — Navigating the pre-approval process as a business owner
17:00 — Common pitfalls and hidden fees to watch out for
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✅ BOOKKEEPING CHECKLIST
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💵 BOOKKEEPING AND FINANCIAL ANALYSIS SERVICES FOR BUSINESS OWNERS
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👋 CONNECT WITH SYDNEY & KRISTEN
Website: https://knowyourworthpgh.com/
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YouTube: https://www.youtube.com/channel/UC3wzOVSDSC-xsmLg8JJ8MJg/
Transcripts
riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: everybody wants to reduce their income
Speaker:as much as possible, but if you want to get lending for a loan for the business
Speaker:or a line of credit, if you want to buy a house, if you want to buy a car, you
Speaker:want to buy an investment property, and you've been Really skimming your income to
Speaker:show that you don't make a lot of money.
Speaker:You're not always doing yourself a favor if you're hurting yourself from
Speaker:getting some of those opportunities.
Speaker:Welcome to the Know Your Worth Show, where we teach you how to think about
Speaker:your money differently so that you can achieve your sexy money goals.
Speaker:I'm Sydnee your money Maven and owner of Know Your Worth.
Speaker:And I'm Kristen Sid's Dimepiece bestie team member and busy mama
Speaker:twins here to make sure that those of us without a financial degree can
Speaker:still level up with each episode.
Speaker:Let's get started on reaching your next goal.
Sydney Conway:Welcome to the Know Your Worth podcast.
Sydney Conway:I'm one of your hosts, Sydney Conway.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: And I'm your other host, Kristen Fedeli.
Sydney Conway:We're so excited to be back with you.
Sydney Conway:And it's just the two of us this week.
Sydney Conway:Just
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: since it's been just the two of
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: is why we brought other people on
Sydney Conway:because it gets a little too unhinged.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Give you a little bit
Sydney Conway:of reprieve from this.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Yes.
Sydney Conway:You're welcome.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yeah.
Sydney Conway:But we're back.
Sydney Conway:And today we are going to be talking about buying a home as a self employed
Sydney Conway:individual or a 1099 contractor, someone that doesn't receive an income
Sydney Conway:from a standard W 2 or doesn't receive all of their income from a W 2.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Okay.
Sydney Conway:And why is this relevant to us right now, Syd?
Sydney Conway:Tell the, tell the listeners.
Sydney Conway:Of
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: just did it.
Sydney Conway:And from the first time I bought my house, my first house that situation, I was
Sydney Conway:just, I was by myself buying the house.
Sydney Conway:I had pretty solid W 2 income.
Sydney Conway:I think at the time sort of set the scene for the first house.
Sydney Conway:I was 20, I think it was 24 when it finally went through, but 23, like when
Sydney Conway:I was looking pre approved, I was 23.
Sydney Conway:By the time we closed it, my birthday passed, I was 24.
Sydney Conway:My house was 106, 000 in Verona, Pennsylvania.
Sydney Conway:So, really reasonable, cheap house.
Sydney Conway:Tiny, 1, 100 square feet.
Sydney Conway:Like, Super small, cute house.
Sydney Conway:And we did it through, well I say we because it was me and Alex, but when we
Sydney Conway:were buying this, we were just dating.
Sydney Conway:So I bought the house in my name, even though obviously it
Sydney Conway:was our house by the end of it.
Sydney Conway:And in terms of shared responsibility, but for the legality side and for the
Sydney Conway:purchasing side, I was by myself in that.
Sydney Conway:So, I went through an FHA loan process.
Sydney Conway:It was the first time home buying.
Sydney Conway:Loan, which has a little bit easier kind of, what's the term that I'm looking for?
Sydney Conway:They make it easier.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: process.
Sydney Conway:Yeah.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yeah.
Sydney Conway:Like they do, there's some seller assistance where the purchaser, the buyer
Sydney Conway:of the home, that's an FHA loan doesn't have to bring as much cash to close the
Sydney Conway:sellers assist with the cash to close.
Sydney Conway:So sometimes it's negotiated in the sale price of how much
Sydney Conway:that goes up or down because.
Sydney Conway:The sellers bring some cash to close to assist with the buyer.
Sydney Conway:And that's a wonderful option.
Sydney Conway:If you're a first time home buyer, if you're self employed, you can
Sydney Conway:do the same thing anybody can get.
Sydney Conway:Or a lot of people can get an FHA loan.
Sydney Conway:I won't say everyone, cause there are requirements to it.
Sydney Conway:So When you are buying a home through FHA, there's some like different requirements,
Sydney Conway:like I said and you just need to make sure you do some research on what those
Sydney Conway:are and if it's applicable to you.
Sydney Conway:Same with the VA loan.
Sydney Conway:If you were a veteran, it's, you know, a similar different, but you know, process
Sydney Conway:in that there are different steps to take.
Sydney Conway:So for this time and I believe my income at that point was about
Sydney Conway:50, 000 was my income a year.
Sydney Conway:W 2 income, I wasn't making any money anywhere else.
Sydney Conway:It was just.
Sydney Conway:I had no other stuff.
Sydney Conway:I had no debt.
Sydney Conway:I didn't have anything, you know, other than that.
Sydney Conway:It was very clean, easy process of like pre approval.
Sydney Conway:I think I was only pre approved for like 130, 000 though.
Sydney Conway:I mean, it's closer to the 2008.
Sydney Conway:It's harder to get pre approved for higher amounts now.
Sydney Conway:They're very strict on how much you can be approved for, for different Reasons.
Sydney Conway:So I knew my, you know, my limit was low.
Sydney Conway:I only needed 7, 000 to close on that house and my mortgage
Sydney Conway:on the house was 820 a month.
Sydney Conway:So it was a dream.
Sydney Conway:It was the best price situation.
Sydney Conway:It was great.
Sydney Conway:So I think there's a big misconception that you need to
Sydney Conway:save a ton of money to buy a house.
Sydney Conway:If you do FHA, you don't need a lot to put down.
Sydney Conway:You do not need to put 20 percent down on a house.
Sydney Conway:That is something that the.
Sydney Conway:I will make a sort of stereotypical claim here that that is the, that is the Dave
Sydney Conway:Ramsey people that will say you have to put 20 percent down on a house to buy it.
Sydney Conway:If you don't put 20 percent down, you just have to pay PMI, which
Sydney Conway:is their mortgage insurance.
Sydney Conway:I paid it on the last house.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: like
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: not a big deal.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Yeah, when I bought my first
Sydney Conway:house, I was like in my twenties, I had my first teaching job.
Sydney Conway:I was making $50,000 some, my dad helped me buy it.
Sydney Conway:My dad might as well have a Dave Ramsey tattoo.
Sydney Conway:And the only thing I ever heard was like, PMI, PMI, PMI.
Sydney Conway:And like, I had this irrational fear of like this PMI.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yeah, yeah,
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: have like, like secondary
Sydney Conway:sweats when I hear you say it.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: yep.
Sydney Conway:I mean, people are really like, you need 20 percent down.
Sydney Conway:Like, you do not.
Sydney Conway:I've been 23 years old.
Sydney Conway:Like, I, I think I actually had saved 20, 000, which was still.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Wow.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Not even quite 20%, but what was
Sydney Conway:lovely is I didn't put 20 percent down.
Sydney Conway:I only put 7, 000 down and then I had cash for things in the house.
Sydney Conway:I could, yeah, I could, I could go in and then not be house poor by having no
Sydney Conway:cash and then needing to use debt to pay for health, you know, like, so I could
Sydney Conway:be a little bit more reasonable and pay.
Sydney Conway:A way lower interest rate on the value of the house and the PMI than
Sydney Conway:if I were to use credit card debt to finance the couch and the, you
Sydney Conway:know, rugs and things like that.
Sydney Conway:So, just things to consider.
Sydney Conway:You do not need to have 20 percent down.
Sydney Conway:If you do have 20 percent down, you don't have to pay PMI, which is a small
Sydney Conway:mortgage insurance based on the size of the mortgage you're taking out.
Sydney Conway:So.
Sydney Conway:Fast forward to this year we found like our dream property.
Sydney Conway:It was a foreclosure, which is a whole kind of different bear.
Sydney Conway:But Alex and I are both self employed now.
Sydney Conway:Neither one of us.
Sydney Conway:work for other people.
Sydney Conway:We're both W 2 employees now of Know Your Worth.
Sydney Conway:We, we are an S Corp.
Sydney Conway:We get a W 2.
Sydney Conway:We pay payroll taxes, but it's our own business and the lenders know that.
Sydney Conway:It is the same, they basically treat you like you are a single member LLC
Sydney Conway:anyway because they know that you have the power to change your paycheck
Sydney Conway:if you want to change your paycheck.
Sydney Conway:You could.
Sydney Conway:up your pay for a certain number of months and just to show a pay stub that's
Sydney Conway:higher and it not actually be that.
Sydney Conway:So they're aware of all of it.
Sydney Conway:So one of the biggest things that I learned from this, and not that we
Sydney Conway:were doing anything, but that I want to tell other people is they will ask
Sydney Conway:you every question and they do not care how suave you are at explaining it.
Sydney Conway:They will say cut and dry.
Sydney Conway:No or yes.
Sydney Conway:Whether or not they are right, like you will not sugarcoat
Sydney Conway:something to a mortgage lender.
Sydney Conway:So you can't say, oh, I have this business and this business is over
Sydney Conway:here, or we were closing the Maverick.
Sydney Conway:So we knew, hey, this payment for rent is going away.
Sydney Conway:Doesn't matter wasn't our income before they won't add it in so they
Sydney Conway:won't take anything into consideration That's not truly set in stone and
Sydney Conway:that really you can't prove that's been set in stone for more than like
Sydney Conway:a year It's pretty hard to prove it hasn't been more than a year at least
Sydney Conway:so for the single member LLC to the S Corp They don't understand that your
Sydney Conway:payroll was in equity and now your payroll is in the profit and loss statement.
Sydney Conway:So to them, it looked like our business had done worse from
Sydney Conway:the first year to the next year.
Sydney Conway:And that wasn't true at all.
Sydney Conway:It had done significantly better, but it's just a matter
Sydney Conway:of where my payroll shows up.
Sydney Conway:And then also we hired Alex.
Sydney Conway:So going forward, given it all worked out.
Sydney Conway:So I wouldn't recommend anybody to not go after your dream house or property
Sydney Conway:if you just made the switch, but no, it's going to be a little bit harder.
Sydney Conway:It's going to be a little bit hard.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: to have to document and show and
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Exactly.
Sydney Conway:And with that, so you need to have at least two years of your personal
Sydney Conway:and your business tax returns.
Sydney Conway:You need to have your profit and loss statements, but at the same
Sydney Conway:time, they really don't care because they think you can change them.
Sydney Conway:Like, they don't care what your internal profit and loss
Sydney Conway:statements look like at all.
Sydney Conway:They want you to have them to show that you're like a trustworthy person, I think.
Sydney Conway:You know, it's just like a box of like They were able to provide them so we
Sydney Conway:can rely more on like their tax returns.
Sydney Conway:But they don't care at all what that, Oh, this year we're doing really well.
Sydney Conway:Do you want to see my profit and loss statement?
Sydney Conway:No, five filed tax return official document.
Sydney Conway:And that was it.
Sydney Conway:That was really different.
Sydney Conway:And then they wanted to see every bank statement from every bank account that we
Sydney Conway:had personally and with the businesses.
Sydney Conway:It was a lot.
Sydney Conway:It was a lot.
Sydney Conway:It was like a full time job for a little bit of like whenever they were asking
Sydney Conway:questions and we had to get back to them quickly so that they could review it.
Sydney Conway:It was a lot.
Sydney Conway:So just have your ducks in a row whenever you're going to
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: maybe like tell yourself it's going
Sydney Conway:to be a marathon, not a sprint.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yeah.
Sydney Conway:Yeah, definitely.
Sydney Conway:And the biggest thing too that they really, because I kind of
Sydney Conway:talked to our lender after so that I could try to give a little bit
Sydney Conway:more advice to everybody else too.
Sydney Conway:And one of the biggest things that they stress with business owners
Sydney Conway:Is your debt to income ratio.
Sydney Conway:So if your business is doing well, but you're carrying a lot of debt, whether
Sydney Conway:it's with your business or with your personal, it really doesn't matter.
Sydney Conway:If you owe a debt to someone else.
Sydney Conway:It counts immediately against you.
Sydney Conway:It doesn't matter at all.
Sydney Conway:Like, immediately counts
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: I'll never own a house again.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: true.
Sydney Conway:That's not true at all.
Sydney Conway:You just need to know what your debt to income ratio is and take that into
Sydney Conway:consideration when you're looking.
Sydney Conway:That's all.
Sydney Conway:And sometimes they want you to pay off the debt first.
Sydney Conway:But that's annoying because then you're down payment and it's just something
Sydney Conway:that I think would have been nice to know before so that I could have mentally
Sydney Conway:prepared for some of the conversations.
Sydney Conway:Like Alex and I had a credit card balance.
Sydney Conway:That they were like, pay it off right now, and we were like, but we were
Sydney Conway:going to use, like, we wanted to save until we knew what the down payment was.
Sydney Conway:Like, we didn't want to pay off and get rid of the cash.
Sydney Conway:And Pay it off right now.
Sydney Conway:And then it shows that you don't have basically a 500 a month bill.
Sydney Conway:So we said, okay, pay it off, you know, or a 300 a month bill or whatever
Sydney Conway:it is and just pay it right off.
Sydney Conway:So we paid it right off and they were like, oh, now you're approved.
Sydney Conway:And we're like, oh, okay.
Sydney Conway:So, and how much do we have to put down?
Sydney Conway:And they were like, what doesn't you pick what you want to put down?
Sydney Conway:And we're like, oh, okay, well.
Sydney Conway:All right.
Sydney Conway:Sounds good then, you know, so then we we down we did 10 percent down on this
Sydney Conway:house, so we were going to do like 15 or 20, and then we just decided to pay
Sydney Conway:off that debt and put down like 10%.
Sydney Conway:So it's different, you know, it's a different process.
Sydney Conway:It's a little bit stickier.
Sydney Conway:So I would definitely go through the pre approval process first before you start
Sydney Conway:looking, because a lot of these questions come up in the pre approval process.
Sydney Conway:So if you're interested, just go through the pre approval process.
Sydney Conway:They will run your credit but they won't do a hard pull on your credit
Sydney Conway:most likely until you say you're moving forward with the offer.
Sydney Conway:So if you're interested and you want to get pre approved, they can do a soft pull
Sydney Conway:on your credit to see what your credit is.
Sydney Conway:Put kind of the offer together of what you'd get pre approved for.
Sydney Conway:They want to do a hard pull on the credit because it gives them more information.
Sydney Conway:It's a more solidified number for them.
Sydney Conway:But you can ask them to only do a soft pull and then kind
Sydney Conway:of see if it will work for you.
Sydney Conway:And then do the hard pull when you decide you want to move forward with the offer.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Does the hard poll hurt your credit score?
Sydney Conway:Is that right?
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yes.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Why?
Sydney Conway:In what arbitrary land does asking what your own grade is hurt you?
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yep.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Like, doesn't that feel like
Sydney Conway:we're in like a weird simulation?
Sydney Conway:Like, that doesn't even make sense.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: No, it doesn't at all.
Sydney Conway:It does not.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: I want to know something about myself.
Sydney Conway:But now I'm in trouble because I asked.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yep.
Sydney Conway:I don't understand why a hard pull on your credit should hurt you at all.
Sydney Conway:I think that if you decide to then move forward with the offer of whatever
Sydney Conway:you're doing, you want to buy the car and there's the pull on your credit.
Sydney Conway:It's just looking to see if you can afford it.
Sydney Conway:Like, I don't, I agree.
Sydney Conway:I don't, I don't get it.
Sydney Conway:I honestly think credit is one of like the dumbest things out there.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Taxes, it really just, yeah,
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: yeah.
Sydney Conway:And your credit is annoying that your credit's like so out
Sydney Conway:of your control sometimes too.
Sydney Conway:Yeah.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: I remember whenever so I bought
Sydney Conway:my house by myself and then we moved to Virginia and we built a
Sydney Conway:townhouse together as a couple.
Sydney Conway:And my husband worked for a company, but he was self employed as a contractor.
Sydney Conway:So he made over a hundred thousand dollars, but he had a
Sydney Conway:sketchy ass accountant who made it look like he made nothing.
Sydney Conway:Well, we didn't know anything because I had always been
Sydney Conway:working for the school district.
Sydney Conway:So I didn't know shit about being a contractor.
Sydney Conway:He had always had jobs through corporations.
Sydney Conway:So we went to like, Do this whole process.
Sydney Conway:And they were like, you don't have the money to do this.
Sydney Conway:And we were like, yes, we do.
Sydney Conway:Look at our accounts.
Sydney Conway:Like we had so much money.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yeah.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: like, no, you don't actually.
Sydney Conway:So it was like a really hard lesson to learn.
Sydney Conway:It set us back like a year because we did have to change all that stuff and,
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Mm hmm.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: know, report it differently.
Sydney Conway:But we were what, like, we just didn't know.
Sydney Conway:We didn't know what we didn't know.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yep, the government will get its money.
Sydney Conway:So it's like one of those things where if you want to report really little income,
Sydney Conway:and that's what a lot of people want to do, you know, that's what I want to do.
Sydney Conway:I don't want to pay taxes if I don't have to.
Sydney Conway:And so, but if you are not reporting your income or you're trying to get out
Sydney Conway:of reporting your income to pay taxes, you're making it harder on yourself.
Sydney Conway:If you want to buy
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: life.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: investments or things that are kind of
Sydney Conway:like borderline, not borderline, but like.
Sydney Conway:You know what you can afford and so if you're looking at like your
Sydney Conway:house or your car that are at like, Oh, I know I can afford this.
Sydney Conway:Well, if a bank doesn't know you can afford it and your tax return doesn't
Sydney Conway:say you can afford it, you won't get it unless you can pay for it in cash.
Sydney Conway:Like,
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: right?
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: cash is king.
Sydney Conway:That's, that's for sure too.
Sydney Conway:I mean, if, if, if You can pay for your whole house or car in cash.
Sydney Conway:Do it.
Sydney Conway:That's great.
Sydney Conway:You know, there, go back.
Sydney Conway:Dave Ramsey's writing that.
Sydney Conway:Pay for it in cash if you can.
Sydney Conway:But if you're somebody that can't pay for your whole house or your whole car
Sydney Conway:in cash, you need to think about how you're setting yourself up and how you're,
Sydney Conway:how you look to a lender or to a bank.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Wow.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Cause that's a big part of the process.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Yeah.
Sydney Conway:Were there any other like hidden fees or pitfalls or anything that
Sydney Conway:you guys like stumbled on and you were like, Oh, well that sucks.
Sydney Conway:Right.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: it really felt like we were like being
Sydney Conway:like scoped out for like money laundering.
Sydney Conway:That's what it felt like.
Sydney Conway:So we have three businesses and our personal accounts, you
Sydney Conway:know, so we and Alex and I each have separate bank accounts.
Sydney Conway:We have a joint bank account and we have separate credit cards.
Sydney Conway:We've all separate things too, and we have a joint account for all of
Sydney Conway:our bills, but then we have business checking and saving business checking
Sydney Conway:and saving business checking and saving.
Sydney Conway:So we have so many accounts and we keep really good records of all of them.
Sydney Conway:And that's, that's the takeaway for me is that I'm really glad that
Sydney Conway:we do have good records of things.
Sydney Conway:So one of the fun things that happened for this process was.
Sydney Conway:We put in the closing check.
Sydney Conway:We sent a check to the closing company for the hand money.
Sydney Conway:No, so not for the closing check.
Sydney Conway:Sorry for the hand money, just at the beginning of the process.
Sydney Conway:And I got a call from our real estate agent, like two days before
Sydney Conway:we left for Germany that said the closing company accidentally
Sydney Conway:shredded your hand money check.
Sydney Conway:So they just, Lost it.
Sydney Conway:Never deposited it.
Sydney Conway:Just like, threw it in the shredder on accident.
Sydney Conway:Yeah.
Sydney Conway:So they said, you need to go to the bank right now.
Sydney Conway:You need to do a stop payment on the check, the cashier's check, which
Sydney Conway:is very hard to do because cashier's checks are certified for a reason.
Sydney Conway:So then the bank thinks you're stealing money from them, some sneaky way of, like,
Sydney Conway:someone's going to deposit it overnight while the stop payment's in process.
Sydney Conway:So you can't, you don't get the money back for 24 hours after the
Sydney Conway:check is officially, like, stopped.
Sydney Conway:So it's in limbo for like that 24 hours.
Sydney Conway:You don't have it in your account.
Sydney Conway:Well, then we were it like we were leaving for Germany.
Sydney Conway:It was Labor Day or Memorial Day weekend.
Sydney Conway:So the banks were closed.
Sydney Conway:So we left for Germany and we didn't have this check.
Sydney Conway:So the bank's just holding it for us.
Sydney Conway:So we had this 5, 000 check just like in limbo.
Sydney Conway:It wasn't in any of our accounts.
Sydney Conway:It wasn't showing up anywhere.
Sydney Conway:We get back from Germany three weeks later, and we're there for like 17 days.
Sydney Conway:We go to the bank and we deposit it.
Sydney Conway:Well, then we're going through this process of the mortgage company
Sydney Conway:checks, all of the ins and outs, especially when you are self employed.
Sydney Conway:Because they want to make sure that you're not receiving income
Sydney Conway:from somewhere you shouldn't.
Sydney Conway:It's part of like the terrorism.
Sydney Conway:Act, anti terrorism, whole thing that goes on.
Sydney Conway:I don't know the correct name for it, but they need to verify every dollar in and
Sydney Conway:out of your account that is significant.
Sydney Conway:So we had to go through and like initial and like describe every transaction in.
Sydney Conway:So for golf lessons, we do for, you know, for the, you know, coworking space
Sydney Conway:income for the know your worth income for a distribution, we took the house.
Sydney Conway:Every single dollar for like six months.
Sydney Conway:It was
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: That's great.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yeah, it starts out with
Sydney Conway:like three months or normal.
Sydney Conway:I think normally for most people, it's only like two months, three
Sydney Conway:months and then they were like, oh, well, you know, we need more comfort
Sydney Conway:over these and then they were like, well, you know, where's this 5, 000?
Sydney Conway:I'm like, this is what I explained to you before.
Sydney Conway:It's the stop payment and they were like, well, it's missing for like three weeks.
Sydney Conway:So they basically thought we like sent it somewhere for like some bad activity and
Sydney Conway:then like, cause it's just disappeared.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: a suspect trip,
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yeah, we left the country and then
Sydney Conway:we brought it back into the account.
Sydney Conway:Like, and it's like so minimal.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: doing?
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Like, yeah, we're money
Sydney Conway:laundering for, you know.
Sydney Conway:Such a high dollar amount here for 5, 000 and down payment of, I don't
Sydney Conway:even know, 000, whatever it was.
Sydney Conway:And oh, it just was like nuts.
Sydney Conway:But so then we had to take our whole description.
Sydney Conway:We had to email the bank that we were working with.
Sydney Conway:They had to email back that they certified that it was real, but
Sydney Conway:then the email didn't count.
Sydney Conway:So we had to take it down to the waterfront bank because
Sydney Conway:that's where I was at that day.
Sydney Conway:And if you're from Pittsburgh, that means I had to cross
Sydney Conway:like two rivers to get there.
Sydney Conway:And yeah, it was just a process.
Sydney Conway:So, thankfully the documentation, so this is why proper bookkeeping is really ideal.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Yeah, let's just throw that out there.
Sydney Conway:Here's the plug.
Sydney Conway:Yeah, that sounded like the Oregon Trail.
Sydney Conway:You were like, I had to cross two rivers to get there.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: In my covered wagon.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: did you get dysentery?
Sydney Conway:Oh, well, you know what?
Sydney Conway:I'm super glad that it worked out and you're in your house, but
Sydney Conway:man, I bet you needed a drink.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yeah, a few.
Sydney Conway:It was a process.
Sydney Conway:It was a process, but buying a house as a self employed person is definitely
Sydney Conway:harder than if you have W 2 income.
Sydney Conway:Just know that.
Sydney Conway:So you need to make sure that you have clear records.
Sydney Conway:And that you are comfortable with the income that you're reporting so
Sydney Conway:that you can show you make money to buy the stuff that you want to buy.
Sydney Conway:So everybody wants to reduce their income as much as possible, but if you want to
Sydney Conway:get lending for a loan for the business or a line of credit, if you want to buy
Sydney Conway:a house, if you want to buy a car, you want to buy an investment property, and
Sydney Conway:you've been Really skimming your income to show that you don't make a lot of money.
Sydney Conway:You're not always doing yourself a favor if you're hurting yourself from
Sydney Conway:getting some of those opportunities.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: right.
Sydney Conway:So plan ahead for the opportunities.
Sydney Conway:If you can.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Exactly.
Sydney Conway:Exactly.
Sydney Conway:And meals and entertainment's another like kind of funny one that it was
Sydney Conway:and I, I should probably clarify on this one just to make sure I'm saying
Sydney Conway:it the right way, but they added back in all of the meals and entertainment
Sydney Conway:that the business had as income to.
Sydney Conway:So that was one of the things that was interesting because on your tax return,
Sydney Conway:like not all meals and entertainment are deductible for your business.
Sydney Conway:It's 50 percent meals and entertainment.
Sydney Conway:Well, when you're buying the house, all of it is added back
Sydney Conway:as income for purchasing a house.
Sydney Conway:So they want that doesn't mean to do that, but it just means again, like
Sydney Conway:a lot of people will put meals and entertainment, you know, they'll go
Sydney Conway:on coffee dates with their friends and say, it's a business expense and it's
Sydney Conway:meals and entertainment, and that's only 50 percent deductible for taxes.
Sydney Conway:So it's not always the best thing to do.
Sydney Conway:But when you were buying a house, they did add it back in as income for us.
Sydney Conway:So that was interesting.
Sydney Conway:Just something I didn't know what happened.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Yeah.
Sydney Conway:How did that affect you guys?
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: I mean, we've gotten pretty
Sydney Conway:streamlined with that number for the business in the past 2 years.
Sydney Conway:I think I was probably 1 of those people in the 1st year.
Sydney Conway:Like, I wanted to go on business meetings and given a lot of my friends are clients.
Sydney Conway:So we did talk about business.
Sydney Conway:All the time, but I was definitely somebody, I think, in the beginning, it
Sydney Conway:was like, oh, this is a business expense, you know, like, and it was, but it
Sydney Conway:doesn't need to be all the time anymore.
Sydney Conway:You know, we can not call everything, you know, it needs to truly be
Sydney Conway:that business expense that we feel comfortable validating and supporting.
Sydney Conway:You're writing down who we're with and having that be a true business expense.
Sydney Conway:So the past two years were pretty streamlined.
Sydney Conway:So, you know, it was, it was what it was at that point.
Sydney Conway:But rent was the biggest part that was kind of a annoying, but that was
Sydney Conway:because it was another business we owned.
Sydney Conway:So that was part of it was like, Oh, well, this is going to be income to us
Sydney Conway:because we're closing this business.
Sydney Conway:So this whole line item we get to keep now.
Sydney Conway:And they were like, no, it doesn't matter.
Sydney Conway:It doesn't matter.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: matter.
Sydney Conway:Two years ago it would have mattered, but now it doesn't.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yep.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: So my takeaways are prepare yourself
Sydney Conway:for lots of documentation and justification, get a bookkeeper,
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Yep.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: get your ducks in a row and be patient.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: And I think get pre approved now, like,
Sydney Conway:figure out what you can afford and just, you know, start to look from there.
Sydney Conway:And if it's not what you want, then just put your head down and put your books in
Sydney Conway:order until you get to that point too.
Sydney Conway:Start goal setting for how can you set yourself up, not just with income, but set
Sydney Conway:yourself up on the books to buy a house.
Sydney Conway:And
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Well, thanks, Syd.
Sydney Conway:Thanks for sharing your Oregon Trail journey with us.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: we did really end up in the middle
Sydney Conway:of nowhere a little bit here too, so
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: Good.
Sydney Conway:You could homestead on that property easily.
Sydney Conway:All right, buddy.
Sydney Conway:Well, thanks a lot.
Sydney Conway:And then next week, I think we're back with just us again, and then
Sydney Conway:have some more guests on our way.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: Sounds great.
Sydney Conway:Yeah.
Sydney Conway:Thank you all for listening.
Sydney Conway:And thanks for letting me talk your ear off for about 25 minutes.
Sydney Conway:riverside_kristen_raw-synced-video-cfr_sydney_smyers's stu_0081: I love it.
Sydney Conway:It's my favorite.
Sydney Conway:Bye.
Sydney Conway:riverside_sydney_raw-synced-video-cfr_sydney_smyers's stu_0080: and enjoy your week.
