General Question

Ltryptophan's avatar

How is investment property classified if it is not fixed real estate?

Asked by Ltryptophan (10243points) November 1st, 2010

If I intend to buy an object that is not fixed land deed real estate, but does produce income simply by its operation, will the objects ability to produce income be considered when they consider my income to purchase that object. I know for investments like fourplexes full of leased tenants, the income from the property is considered for the debt.

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9 Answers

lillycoyote's avatar

Can you give an example of what this income producing “object” might be? I’m not sure what you mean by “an object that is not fixed land deed real estate.” Are you thinking about buying a hot dog cart or something?

Ltryptophan's avatar

Well, a hot dog cart would do. But I am cosidering a CNC machine.

lillycoyote's avatar

If you’re talking about one of these then no, I don’t think that potential income would be a factor in financing the purchase. A fourplex already full of leased tenants is quite a different animal and a guaranteed income for at least the terms of the lease and probably in the future as opposed to a CNC machine that could possibly sit in your garage, unused, forever. If you already had a business and purchased one it would provide a business related tax deduction but I think that’s about it. Other than that you’re just some guy who wants to take out a loan to buy an expensive machining machine, no different to the lender than some home hobbyist borrowing money to buy the table saw of his dreams.

Ltryptophan's avatar

@lillycoyote I respect your answers deductive reasoning, but how certain are you about that?

lillycoyote's avatar

@Ltryptophan How certain am I? I am absolutely 100% certain that my answer is somewhere between 0 and 100% accurate, with a margin of error of 1.5%. That just seems to be how it would work. More plain old reasoning, no certainty. How can the lender have any degree of “certainty” that you will actually generate any income at all, let alone be able to gauge that potential income in order to determine how it might offset the loan? Even if you want to start a business and apply for a small business loan you have to submit a business plan so that the lender can evaluate the potential of the business and whether or not you know what your doing and can pull it off. But, no I am not certain at all. If you want certainty you should make an appointment with a loan officer at your bank or an accountant or an attorney and discuss it with one of them.

I can only tell you what makes sense to me and at this point I’ve given you all I’ve got.

Good luck, my little amino acid friend :-)

perspicacious's avatar

It is personal income producing property. If you lease your car, that is income producing personal property.

Ltryptophan's avatar

Hmm, I will find a definite answer and post it.

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