Dennis Gilgallon - Newbie from North Arlington, NJ

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Dennis Gilgallon - Newbie from North Arlington, NJ

Dennis Gilgallon
Residential Landlord · North Arlington, NJ · Member since 2014 · 3 posts · 2 votes

Hi all:

My name, as you guessed, is Dennis Gilgallon. I am a non-real estate Project Manager from North Arlington, NJ. This is basically between Jersey City and Newark.

I have been researching and researching for about a year now but have just not been able to pull the trigger. I still have a few questions before diving in. I am hoping that some of you may be able to help.

I guess a little background and knowing my goals will also help.

I have some money in my 401K and IRAs. Essentially they are earning very little (probably just keeping up with inflation). I will never be able to reach my goals of retiring (EVER!) if I keep it there.

I have been looking into pulling this money out into a self-directed IRA so I can invest it in real estate and, with proper management, earn a much better return.

Here is where it gets dicey. I don't want to just invest the 401K and IRA in real estate. I want to use it for creating a real estate investment business. I am fuzzy, at best, on the dos and don'ts of self directed IRA and want to do it correctly.

Can anyone recommend a lawyer that specializes in this scenario. I would be looking to form an LLC (in addition to each LLC for each property).

Also, would anyone know of a reputable and expert real estate tax specialist?

My goal is to invest in at least 5 condo/town home or multi-family units in the Northern NJ/NYC (Hudson, Bergen, Parts of Essex, Parts of Passaic, Parts of Union counties).

Lately I have been considering vacation rentals as well but I need to do more due dilligence in that area.

Anyway, thanks for reading. I hope we get to work together and I look forward to sharing my experiences with you all.

Regards,

Dennis Gilgallon

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Brandon TurnerPro Member
Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
12y

Hey @Dennis Gilgallon Thanks for jumping in and introducing yourself! If you haven't yet- be sure to setup some "Keyword Alerts" to get into conversation in your target area.

Also - here's a couple articles you might enjoy:

The 21 Best Real Estate Investing Books Ever

How to Rent Your House: The Definitive Step by Step Guide

Seeya around!

Podcast Guest on Show #92
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  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    12y

    @Dennis Gilgallon

    Welcome to BP community, you came to the right place to learn all about real estate investing!

    Please elaborate more when you say real estate investment business. Keep in mind that when using retirement funds for real estate investing, you can do so, but you can not actively participate in the activity. IRS rules prohibit you from doing any work your-self. You can establish special purpose LLC and have your IRA invest into that LLC so that you have checkbook control and then that LLC can have multiple LLCs hold separate properties, but gain, you have to hire unrelated persons to do the rehab or repair for those properties.

    For tax questions, I'm sure @Steven Hamilton II will be happy to help you. He is very knowledgable when it comes to taxes and general and also has extensive knowledge when it comes to retiremente accounts.

    You may also want to consider Solo 401k. With this self-directed retirement plan you will have more flexibility and it will be much easier to administer and control. You don't need a custodian or LLC to get the checkbook control, which will result in significant savings of the the years. Solo K also has 'Participant Loan' feature, which allows you to access up to $50K in your retirement account to be use for any reason (starting real estate investment business, etc.) tax-free and penalty free.

    1Reply
  • Gil Hartman
    Portsmouth, NH · Member since 2014 · 25 posts · 5 votes
    12y

    Hi Dennis, I would call around to different IRA custodians and discuss the process. There is a ton of information out there regarding this scenario, and much of it is conflicting.

    1Reply
  • Rocco L.
    Real Estate Investor · Naples, FL · Member since 2014 · 46 posts · 1 vote
    12y

    Dennis call frank uzzi esq at [REMOVD]. Tell him Rocco sent you. He is a fantastic attorney who specializes in what you need and I have done numerous deals w him. He is out of Montvale nj

    0Reply
  • Rocco L.
    Real Estate Investor · Naples, FL · Member since 2014 · 46 posts · 1 vote
    12y

    he is also on bp @frankuzzi

    0Reply
  • Paul Timmins
    Specialist · Rockland, MA · Member since 2010 · 7k+ posts · 2k+ votes
    12y

    @Dennis Gilgallon

    Build the team.

    For CPA, tax strategist and legal entities

    Amanda Han Keystone CPA

    Remember you can borrow against your IRA 401 rates 3% you will make more in re.

    Paul

    0Reply
  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    12y

    Hey @Dennis Gilgallon Thanks for jumping in and introducing yourself! If you haven't yet- be sure to setup some "Keyword Alerts" to get into conversation in your target area.

    Also - here's a couple articles you might enjoy:

    The 21 Best Real Estate Investing Books Ever

    How to Rent Your House: The Definitive Step by Step Guide

    Seeya around!

    Podcast Guest on Show #92
    2Reply
  • Dennis Gilgallon
    OP
    Residential Landlord · North Arlington, NJ · Member since 2014 · 3 posts · 2 votes
    12y

    Hi all:

    Thank you all for jumping on this topic and assisting me. I am going to check out those books @Brandon Turner I am a big fan of the Rich Dad and Rich Dad Adviser series. I have been reading (err listening) them up on Audible.

    @Dmitriy Fomichenko thank you for the advice on the the different 401K. I was not aware of the Solo option. To clarify my situation, I want to be able to use the funds from the 401K to use in the purchase of real estate for holding/renting purposes. My concern with a self directed is more that the funds earned would essentially go back in to the 401K. This is not a bad thing. However, my understanding is that these earnings would not be usable effectively until I reach retirement age. The part about wanting to start a REI business was so that the earnings would go back to the business and could be used (if desired) for other purposes.

    When it comes to the running/fixing up of the properties I would be looking at professionals for these tasks. I am not a handyman nor do I want to be one. I would want to hire property management teams to run those investments as they are the experts. I just want to reap the left over money to build my wealth and be able to use it now (or the near future) not in 20 years when I am "retirement eligible".

    Again, thank you everyone for your advice. I hope this is the beginning of some great and fruitful business relationships. I look forward to learning and working with you all.

    Regards,

    Dennis Gilgallon

    0Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    12y

    @Dennis Gilgallon

    knowing more about your situation confirms that Solo 401k will be good solution for you. Just to reiterate, retirement accounts are designed for you to grow wealth tax-deferred (or tax-free when using Roth Solo 401k) to be used during your retirement years. Self-directed account unlocks your retirement funds from limited investment choices when used in a conventional IRA or 401k and gives you virtually limitless investment choices, but all gains and profits must go back into your 401k, sheltered from taxes.

    But with Solo 401k you will have the ability to access some of those funds any time tax-free and penalty free to be used for any purpose you wish. This opportunity is not available with self-directed IRA. And this is only one of several major advantages of self-directed 401k over SD IRA.

    But do your own research, there is plenty of info to learn here on BP forum about this and other topics. Please let me know if you have more questions or need further clarification.

    0Reply
  • Pierre Thernize
    Rental Property Investor · Washington, NJ (07882) · Member since 2013 · 85 posts · 20 votes
    12y

    Welcome Dennis to BP!

    0Reply
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