Tip compliance is basically a deal made with employers and the IRS for tipped employees to pay taxes on their tips. Here are gaming industry guidelines.
While some may disagree with me, tip compliance rates are generally lower than the tip earner actually receives. So, on paper, the tipped earner is realistically making more than they show. IE: They bring home more cash and their effective income tax rate is less.
The tightening of credit will definitely hurt the tipped worker on a tip compliance program because it is harder for them to qualify for a loan with full income documentation.
When you go to Las Vegas next time, take a look around the casino and realize who is tipped: the card dealer, bartender, cocktail waitress, valet driver, bell person, busser, food runner, floor person, cage employee, etc. Those are the people who have a real need for housing.
They will have choices to make if they want to buy a home since the ease of the stated has gone by the wayside:
- Increase tip compliance &/or
- Save a large amount of money for a down payment &/or
- Have a parent co-sign the loan
All the Best,
Realtor®
Nevada Realty Solutions - Your Dream, Your Investment, You\'re Home!
8942 Spanish Ridge Avenue
Las Vegas, NV 89148
direct: 702-580-1783
fax: 702-995-8237
Renee@ReneeBurrows.com
http://www.ReneeBurrows.com
If the tipped employee works at an establishment that pools tips, it is possible to document the tipped income that is paid out by the establishment and thereby help tipped employees document their income for mortgage purposes.
We have several casinos here in St. Louis and that is how I've gotten several dealers into homes.
Bob Mitchell
ValueList Real Estate Services, Inc.
commissions, 1099, tips etc are all hard to prove income
in restaurants, you have to declare all credit card based tips or 8% of all cash... that means someone routinely averaging 15% has almost 1/2 that income undeclared
the thing is, with a stated income loan, the income can be pieced together with bank statements
if tipped employees make sure they keep good credit, there are still good programs for stated available through the big lenders that I use... even Stated Stated!
Renee,
Just a quick clarification -- I'd have to say 99% of the dealers in Las Vegas have 100% of their tips reported. All of the tips are pooled, cut and then distributed on their checks as reported income so it will not effect them. It's all claimed.
Bartenders, waiters and Cocktail waitresses are going to get hurt the most and they have some of the highest non reported incomes in Las Vegas...
Renee, I generally agree with you, but not this time. I think you should be happy because "tips" can be accounted for in a full doc loan. If your client makes more than is reported by the employer then they still have the option of a SIVA loan. Look on the bright side.
Bill Roberts
Chris: Exactly!
Bob & Paul: Some establishments do pool tips and they do get reported.
Rey: I have heard about that too!
David: I hear that interest rates on those are higher than they used to be, thus forcing affordability downwards.
Rey (Again!): Perfect point!
Patricia: MUhahhahaha!
Bill: I am trying, thanks for the explanation!
Donna: OUCH!
Kaye: Giving you a big round of applause!
You obvious don't understand the "little" people who work for "little" money out there, and how much they need the extra help to make a living. Quote: "They bring home more cash and their effective income tax rate is less". That should be left up to them... They have the choice to disclose it. Because "tips" can be accounted for in a full doc loan.
After all they are not Real Estate agents... Not that they can not be, but unfortunately some are still on the other site of the spectrum and have to make a living from the "little" income.
As for one I always feel the temptation to give generous "tips" and hope that they make a good use of it and handle it with wisdom.
Arina writes:
You obvious don't understand the "little" people who work for "little" money out there, and how much they need the extra help to make a living. Quote: "They bring home more cash and their effective income tax rate is less". That should be left up to them... They have the choice to disclose it. Because "tips" can be accounted for in a full doc loan.
After all they are not Real Estate agents... Not that they can not be, but unfortunately some are still on the other site of the spectrum and have to make a living from the "little" income.
As for one I always feel the temptation to give generous "tips" and hope that they make a good use of it and handle it with wisdom.
Excuse me Arina but I use to be one of those "little" people working out there making "little" money. They do make a lot more money than you may think. You seemed to have missed the point of the entire post. Since this is about the tenth time you have belittled my postings in the last month and a half, I really ask that you get a reading partner who can help you understand before you reply. Now, please adjust your attitude and go make it a great day. OH and PS: My August economic statistics are out so you can go rip that blog apart because after all, those statistics have NOTHING to do with housing!
Thanks Renee I used to be one too... Lots of us are in Vegas!!!
As far as the "reading partner" I don't need one.
I like to stop here and prommise not to comment on your posts.
I obviously don't appreciate that comment that you left. I don't understand the little people. BAH! Dollars to donuts says that most "little people" are making more money than most agents in this town these days. FYI: You are more than welcome to comment but leave your attitude at the door. You are also welcome to disagree but do it with respect and you will get a respectful answer in return.
Thanks.
I see you like to have the last word... I respect that but I still keep my opinion (not attitude).
I used to be one myself in the past and on the other end of the spectrum today!... I will never forget that! I can have a better view of both sides. Don't want to upset anyone just to express my concern for misunderstanding, if I may. Honest opinion. If I was wrong...bear with me!
Sorry, but I'll be careful, in the future, not to interact. Truth is I dislike confrontational exchange of comments on this forum. It is not productive nor is helping anyone... Promise to stay away.
Arina: Maybe I like to have the last word because this is my blog. The whole point of this post is that this is a homeownership primer for people that make tips who want to possibly buy a house someday. Trust me, I got approved for two home loans and three home equity loans during the time frame I was a tipped wage earner, you can't go full doc and get conforming rates with house prices today, making minimum (or slightly above) wage and paying tiny tip compliances when you are full time, let alone extra board.
In NO WAY was I talking down to people who work hard in this town. Waiting on tourists is mentally and physically exhausting and unless you have done it, you don't know what toll it takes on your mind and body and every penny is earned. They deserve to know what they need to do to buy a home in this town and to get close to conforming rates.
This was my point that you blew out of proportion and tried to twist into something mean spirited.