Newbie from Sedona, Arizona.....

New Member Introductions
12yFollow

Newbie from Sedona, Arizona.....

Clary Roberts
Wholesaler · Pine, AZ · Member since 2014 · 40 posts · 6 votes

Hello there from Sedona, Arizona.....

I am a 62 yr old married man about to retire from my full time job and am a licensed realtor as a part time job.

My wife and I are considering and starting to learn more about manufactured homes.  We are thinking about buying a lot and placing a manufactured home on the property to resale for a profit.  In Sedona there aren't many MH's or lots that allow them, so an older model on a 0.25 acre lot sells for around $105 psf (a 1,500 sq ft MH would sell for around $157,500!)...a lot which will require adding a $10,000 septic system would cost me around $50,000.  Our thinking is $50K for lot, $50K for MH, $10K for septic and $15K for adding a deck and misc we'd be into the project for around $125K.  If we get a newer model and can sell it for around $160K we could make a nice little profit of around $35,000 at best.

So, I hope to get some advice here from people who are like minded and perhaps tried this type of project or can guide me to others who can offer specific advice to either encourage us or offer a reality check.

Our average house on an average lot in average condition sells for around $185 psf and it goes up from there quickly to around $300 psf and up.  Most selling for around $230 psf.

Most MH are selling for around $105 psf for an older model and yes that includes a 0.25 acre plot of land.

So I'm hoping to do this full time as a replacement income from my forced retirement at age 65, but start part time now.

On another note....since I'm over 59.5 yrs old, I believe I can take the money out of my 401K and do a ROBS (rollover business start up) 401K and use those funds to purchase land, MH and improvements.  I have a lot to learn about that also, wondering if I have to put the profits back into the 401K or can I withdraw them like an ordinary 401K and pay the tax on that....I'll be keeping my CPA busy for while!

Looking forward to sharing and offering whatever feedback I can to others here.

Have a wonderful weekend!

Clary Roberts

3Reply
90 views

Most Popular Reply

Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
12y
Originally posted by @Clary Roberts:

On another note....since I'm over 59.5 yrs old, I believe I can take the money out of my 401K and do a ROBS (rollover business start up) 401K and use those funds to purchase land, MH and improvements.  I have a lot to learn about that also, wondering if I have to put the profits back into the 401K or can I withdraw them like an ordinary 401K and pay the tax on that....I'll be keeping my CPA busy for while!

Clary, you don't need to do ROBS to invest in real estate using your retirement funds. The intend of ROBS is to invest in your own start up business. Learn more here: 

http://www.irs.gov/Retirement-Plans/Retirement-New...

What you need is a self-directed IRA. Or if you are self-employed or own a small business self directed Solo 401k might be better option. It will offer you the ability to have checkbook control over your retirement funds as plan trustee, ability to take personal loan from your account and not being taxed on leveraged real estate. Those are just a few of the advantages over IRA. There is plenty of info on the subject of self directed investing here on BP so be sure to educate yourself.

2Reply
See this reply in the discussion

26 Replies

Jump to latestLatest
  • Christopher Hunter
    Real Estate Investor · Cypress, CA · Member since 2013 · 877 posts · 94 votes
    12y

    @Clary Roberts welcome to BiggerPockets Clary.

    0Reply
  • Clary Roberts
    OP
    Wholesaler · Pine, AZ · Member since 2014 · 40 posts · 6 votes
    12y

    Thank you Christopher! 

    Have a wonderful and blessed weekend my new friend!

    0Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    12y
    Originally posted by @Clary Roberts:

    On another note....since I'm over 59.5 yrs old, I believe I can take the money out of my 401K and do a ROBS (rollover business start up) 401K and use those funds to purchase land, MH and improvements.  I have a lot to learn about that also, wondering if I have to put the profits back into the 401K or can I withdraw them like an ordinary 401K and pay the tax on that....I'll be keeping my CPA busy for while!

    Clary, you don't need to do ROBS to invest in real estate using your retirement funds. The intend of ROBS is to invest in your own start up business. Learn more here: 

    http://www.irs.gov/Retirement-Plans/Retirement-New...

    What you need is a self-directed IRA. Or if you are self-employed or own a small business self directed Solo 401k might be better option. It will offer you the ability to have checkbook control over your retirement funds as plan trustee, ability to take personal loan from your account and not being taxed on leveraged real estate. Those are just a few of the advantages over IRA. There is plenty of info on the subject of self directed investing here on BP so be sure to educate yourself.

    2Reply
  • Brock W.
    Real Estate Investor · Phoenix, AZ · Member since 2014 · 17 posts · 2 votes
    12y

    @Clary Roberts

    Welcome! glad to see another zonie.

    I'm curious as to your opinion about the RE market in the general Verde Valley area. I like the area just based off my liking for the AZ wine industry.

    Regards,

    Brock

    0Reply
  • Rob Scarborough
    Investor · Smithville, MO · Member since 2014 · 160 posts · 19 votes
    12y

    @Clary Roberts - Welcome to BP.  This is a great place to pick up advice and information.

    1Reply
  • Clary Roberts
    OP
    Wholesaler · Pine, AZ · Member since 2014 · 40 posts · 6 votes
    12y
    Originally posted by @Dmitriy Fomichenko:
    Originally posted by @Clary Roberts:

    On another note....since I'm over 59.5 yrs old, I believe I can take the money out of my 401K and do a ROBS (rollover business start up) 401K and use those funds to purchase land, MH and improvements.  I have a lot to learn about that also, wondering if I have to put the profits back into the 401K or can I withdraw them like an ordinary 401K and pay the tax on that....I'll be keeping my CPA busy for while!

    Clary, you don't need to do ROBS to invest in real estate using your retirement funds. The intend of ROBS is to invest in your own start up business. Learn more here: 

    http://www.irs.gov/Retirement-Plans/Retirement-New...

    What you need is a self-directed IRA. Or if you are self-employed or own a small business self directed Solo 401k might be better option. It will offer you the ability to have checkbook control over your retirement funds as plan trustee, ability to take personal loan from your account and not being taxed on leveraged real estate. Those are just a few of the advantages over IRA. There is plenty of info on the subject of self directed investing here on BP so be sure to educate yourself.

    ....this may or may not be a minor detail, but I am employed full time for the next two years for American Airlines. Not sure if I can take the money out of the 401k and put it into a self direct IRA, not my area of expertise, sounds like you know a lot more about the subject than I do. I appreciate the link and will read it, thanks.

    0Reply
  • Clary Roberts
    OP
    Wholesaler · Pine, AZ · Member since 2014 · 40 posts · 6 votes
    12y
    Originally posted by @Brock W.:

    @Clary Roberts

    Welcome! glad to see another zonie.

    I'm curious as to your opinion about the RE market in the general Verde Valley area. I like the area just based off my liking for the AZ wine industry.

    Regards,

    Brock

     Brock,

    You are an ASU grad?  My daughter Jamie Roberts just graduated from their two years ago.

    I know the Sedona market well, but not so much the Verde Valley, I've only been up here two years.

    Clary

    0Reply
  • Jerry K.
    Specialist · Phoenix, AZ · Member since 2011 · 698 posts · 629 votes
    12y

    @Clary Roberts  Welcome to BP!  I'm an Illinois resident at present, but I invest in tax liens in the Sedona area.  Actually have 10 liens (all vacant residential land) that I can foreclose on in Rimrock at any time.  Earning 16% on them for the last 4 years.  Had more, but some owners paid back the taxes (I'll take 16% on my money any day!).  Every time I buy tax liens in Sedona or Village of Oak Creek they redeem fairly quickly.  

    Hope to retire there someday, but have a few more years around Chicago to get my boys through college.

    0Reply
  • Darron Stewart
    Investor · Hattiesburg, MS · Member since 2014 · 280 posts · 98 votes
    12y

    @Jerry K. 

    Remember with tax liens it is all about the numbers, if you invest in about 100, you should get 3-5 properties!  We are trying to hit about 200-250 and hope to end up with a few good properties, plus quite a bit of pocket change too!

    0Reply
  • Brock W.
    Real Estate Investor · Phoenix, AZ · Member since 2014 · 17 posts · 2 votes
    12y

    @Clary Roberts

    Yes, I graduated from there several years ago. I just use it for my profile because it's a good picture.

    Brock

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

    Hey @Clary Roberts 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.

    Seeya around!

    Podcast Guest on Show #92
    0Reply
  • Clary Roberts
    OP
    Wholesaler · Pine, AZ · Member since 2014 · 40 posts · 6 votes
    12y
    Originally posted by @Dmitriy Fomichenko:
    Originally posted by @Clary Roberts:

    On another note....since I'm over 59.5 yrs old, I believe I can take the money out of my 401K and do a ROBS (rollover business start up) 401K and use those funds to purchase land, MH and improvements.  I have a lot to learn about that also, wondering if I have to put the profits back into the 401K or can I withdraw them like an ordinary 401K and pay the tax on that....I'll be keeping my CPA busy for while!

    Clary, you don't need to do ROBS to invest in real estate using your retirement funds. The intend of ROBS is to invest in your own start up business. Learn more here: 

    http://www.irs.gov/Retirement-Plans/Retirement-New...

    What you need is a self-directed IRA. Or if you are self-employed or own a small business self directed Solo 401k might be better option. It will offer you the ability to have checkbook control over your retirement funds as plan trustee, ability to take personal loan from your account and not being taxed on leveraged real estate. Those are just a few of the advantages over IRA. There is plenty of info on the subject of self directed investing here on BP so be sure to educate yourself.

     Dmitriy,

    I am currently employed by American Airlines and will be for the next 2 years, I am over 59.5 yrs old so I'm wondering if I can transfer or roll over some 401K funds into a self directed IRA to purchase land and put a mobile home on it.

    My CPA has advised me that many of the ROBS are being viewed as distributions and in my case that would mean a 45% Tax rate!

    I am not self employed, I work part time as a realtor.

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

    @Clary Roberts 

    working part time as a realtor means that you are self-employed. As a realtor you are not receiving W2 wages, but your broker pays you as independent contractor and your income is reported to you on a 1099 at the end of the year (that is your self-employment). 

    0Reply
  • Clary Roberts
    OP
    Wholesaler · Pine, AZ · Member since 2014 · 40 posts · 6 votes
    12y

    So, can I transfer (roll?) some of my 401K funds into into a SDIRA?

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

    @Clary Roberts 

    1) If your 401k is with the current employer, you need to contact your 401k plan administrator and inquire with them about "in-service distribution" 

    2) Since you qualify for Solo 401k you will be much better off going this route than SD IRA.

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

    Welcome to BP community @Clary Roberts  It is a great place to meet new friends and learn about various aspects of real estate and more. 

    Wishing you the best! 

    0Reply
  • Edward Synicky
    Rental Property Investor · Yorba Linda, CA · Member since 2012 · 336 posts · 69 votes
    12y

    @Clary Roberts 

    Welcome fellow Bigger Pockets member! This is a great forum and I am sure it will help you learn many facets of the real estate investment world. I purchased my first investment property over 40 years ago and only wish that I had a resource like BP community when I got started! So you are in a good company.

    Some say that your net-worth equals your network, and this is the place to make right connections. You should also find investors locally and network with them face-to-face. Find people close to you using MEET feature. Also, look for investor meetings on Meetup.

    All the best!

    0Reply
  • Loren Whitney
    Investor · North Idaho · Member since 2011 · 332 posts · 107 votes
    12y

    Welcome to BP @Clary Roberts 

    As you begin the Solo(k) or SDIRA process, take some time to learn about the tax strategies behind in-kind distributions. This is the process of pulling some or all of the real assets being held in the plan. This may or may not apply to your strategy but it's definitely worth understanding before getting started. I've found that creating your exit strategy first is always the best way to ensure success.

    0Reply
  • Clary Roberts
    OP
    Wholesaler · Pine, AZ · Member since 2014 · 40 posts · 6 votes
    11y

    update: it's now June 21, 2015 Happy Fathers Day! I'm a very proud father (and Grandpa too!) 

    I've been talking with HomeVestors about joining their organization and they have referred me to Benetrends to utilize the funds I have in my 401k, not much, just over $200,000 to form a corporation and use those funds to buy my first fix and flip for profit.

    I'm not very savvy about the differences mentioned above and only aware of Benetrends and Guidant because of referrals and their marketing.

    If anyone on these forums can help a simple minded old guy decipher the differences and make an intelligent decision before I commit to something I might regret, I'd greatly appreciate the input from you.

    Whether it's from actual experience or just an educated guess...I'd love to discuss the options,

    Both in regards to HomeVestors in a rural setting, but primarily concerned with the 401k issue I am considering and trying to understand and evaluate the comments by Dimitry.

    Thanks in advance and hope you all enjoyed your Fathers Day (I sure miss my Dad).

    0Reply
  • Josiah W.
    Lender · Miami, FL · Member since 2015 · 134 posts · 5 votes
    11y
    Originally posted by @Clary Roberts:

    Hello there from Sedona, Arizona.....

    I am a 62 yr old married man about to retire from my full time job and am a licensed realtor as a part time job.

    My wife and I are considering and starting to learn more about manufactured homes.  We are thinking about buying a lot and placing a manufactured home on the property to resale for a profit.  In Sedona there aren't many MH's or lots that allow them, so an older model on a 0.25 acre lot sells for around $105 psf (a 1,500 sq ft MH would sell for around $157,500!)...a lot which will require adding a $10,000 septic system would cost me around $50,000.  Our thinking is $50K for lot, $50K for MH, $10K for septic and $15K for adding a deck and misc we'd be into the project for around $125K.  If we get a newer model and can sell it for around $160K we could make a nice little profit of around $35,000 at best.

    So, I hope to get some advice here from people who are like minded and perhaps tried this type of project or can guide me to others who can offer specific advice to either encourage us or offer a reality check.

    Our average house on an average lot in average condition sells for around $185 psf and it goes up from there quickly to around $300 psf and up.  Most selling for around $230 psf.

    Most MH are selling for around $105 psf for an older model and yes that includes a 0.25 acre plot of land.

    So I'm hoping to do this full time as a replacement income from my forced retirement at age 65, but start part time now.

    On another note....since I'm over 59.5 yrs old, I believe I can take the money out of my 401K and do a ROBS (rollover business start up) 401K and use those funds to purchase land, MH and improvements.  I have a lot to learn about that also, wondering if I have to put the profits back into the 401K or can I withdraw them like an ordinary 401K and pay the tax on that....I'll be keeping my CPA busy for while!

    Looking forward to sharing and offering whatever feedback I can to others here.

    Have a wonderful weekend!

    Clary Roberts

    you can use your IRA and get line of credit with us which will be multiplied by 5 on the value. Ex. $50,000(IRA) x 5=$250,000 in a line of credit to invest

    0Reply
  • Chris Kerschen
    Wichita, KS · Member since 2015 · 22 posts · 2 votes
    11y

    Welcome and good luck on your investments!

    0Reply
  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    11y

    @Clary Roberts

    You may qualify for a ROBS 401k under a real-estate operating company provided you plan to fix and flip properties, manage them and take a fair salary for doing so.

    1Reply
  • Clary Roberts
    OP
    Wholesaler · Pine, AZ · Member since 2014 · 40 posts · 6 votes
    11y

    @Mark Nolan

    Is your plan/company different than Benetrends?  Homevestors did recommend working with Benetrends to do what I want to do = use my 401K funds without being taxed...

    0Reply
  • Mark Nolan
    Professional · Carlsbad, CA · Member since 2012 · 12k+ posts · 1k+ votes
    11y

    @Clary Roberts

    We are in the same industry as them.

    0Reply
  • Brian T. Grooms
    Developer · AZ · Member since 2014 · 77 posts · 60 votes
    11y

    Hi Clary,

    How have you done with your strategy? Any success?

    I used to live in Flagstaff and am soon moving to Sedona. I am very interested in vacation rentals and other RE investment opportunities in NAZ

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free