New Investor From Northern Colorado

New Investor From Northern Colorado

Rental Property Investor · Firestone, CO · Member since 2017 · 30 posts · 8 votes

Just wanted to introduce myself as well as ask a few generalized questions, so here we go.

As a network engineer by trade, I'm fed-up with the day-to-day 9-to-5 churn all while not truly enjoying the life in the process.

I stumbled upon BP a few months ago while following comments in some FI (Financial Independence) blog posts such as Mr. Money Mustache, Mad Fientist, etc.

I've been "lurking" ever since while trying to absorb all of the REI information on here that I can while not overwhelming myself in the process (which has definitely occurred more than once).

In the meantime I've actually gotten around to reading the ever popular "Rich Dad, Poor Dad" (had heard about it for years but never actually took action) and listened to at least 20 other webinars / podcasts.

Anyways, back to the introduction...

I live in Firestone which is just east of Longmont, CO.

The ideas of both fix-and-flips as well as passive income from rental properties is what I'd like to focus on initially, but the market up here in Northern Colorado is just "weird."  Does anyone else here agree with that statement?

I'm looking to get started with my first investment sometimewithin 1Q of 2018 and need some advice on how to setup things correctly from the beginning.

I'd like to create an single-member LLC and fund it with a HELOC that I've already closed on against my primary residence. However, I was just reading about Solo401k and not sure if that is the best way forward. Any advice one way or another?

Also, I need to network with others in the same general area as well as get some references from accountants or CPAs to handle the additional headache of taxes that come along with the territory.

Additionally, I'm hoping to get references of lenders in the area who are familiar with the REI world.

I welcome any other advice from the many others who have achieved their dream of actually enjoying life instead of just living it!

Cheers,

Brady

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Realtor · Denver, CO · Member since 2016 · 499 posts · 129 votes
8y

Hi Brady, Welcome to BP. I live.in Frederick, Co. I work with a lot of investors in finding the right properties and starting their investment journey. The market up north is a little unusual but the prices are a little better than what it is down in Denver. 

As for funding, I would look into a Self-Directed IRA or eventually making an S-Corp. Many people create individual LLCs for each flip.

Good luck and happy investing.

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  • Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    8y
    Brady Lamprecht let’s find the other engineers and create REI voltron.
  • Realtor · Denver, CO · Member since 2016 · 499 posts · 129 votes
    8y

    Hi Brady, Welcome to BP. I live.in Frederick, Co. I work with a lot of investors in finding the right properties and starting their investment journey. The market up north is a little unusual but the prices are a little better than what it is down in Denver. 

    As for funding, I would look into a Self-Directed IRA or eventually making an S-Corp. Many people create individual LLCs for each flip.

    Good luck and happy investing.

  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    8y

    @Brady Lamprecht

    Welcome to the BP family! Great that you joined the site! Here are some recommendations for you:

    Find and connect with other BP members that are in your area: http://www.biggerpockets.com/meet
    Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts
    Read Beginner’s Guide: http://www.biggerpockets.com/real-estate-investing
    Check out BP Podcasts: http://www.biggerpockets.com/renewsblog/category/podcast/

    If you wish to tag someone in the conversation on the forum, type @ followed by their name and then select the name of that person which should appear below the comments box. He or she will be notified of being tagged so that the conversation will continue.

    Wishing you the best!

  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    8y

    Hi @Brady Lamprecht , welcome to BiggerPockets from just down the road. I, too am a big MMM and MadFI fan.

    Are you self employed? I think that's the #1 requirement of an SD Solo 401K, but tagging @Dmitriy Fomichenko so he can clarify. A SDIRA may be a more viable option for you.

    Creating an LLC is a fairly easy process in CO. It's not that expensive, either but you may wish to postpone that until you have a property to purchase.

    I've heard great things about Elevations Credit Union, High Plains Bank and 1st Bank for financing.

    There are two local meetups you may be interested in, one in Erie and one in Denver. Check out the Events & Happenings forum for the next meetup days and times.

  • Justin WindhamPro Member
    Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
    8y

    @Brady Lamprecht

    Welcome, Brady. I like the Firestone area, but the market is a bit different from metro Denver. Whether you use the Solo 401k/SDIRA or non-retirement funds to get started depends on a number of factors. Do you have existing retirement assets you could transfer into a Solo 401k to fund your investment? Do you want to use the income from the investment as it is generated or do you want to build your retirement assets? A Solo 401k or self-directed IRA is a great way to invest on a tax-deferred (or tax-free) basis, but it is not intended to generate immediate income for you.

    @Mindy Jensen The Solo 401k does require that you have self-employment activity, but also that you do not have any full time non-owner W2 employees.

  • Rental Property Investor · Firestone, CO · Member since 2017 · 30 posts · 8 votes
    8y

    Thanks everyone, I appreciate all of the helpful advice for a beginner.  

    @Lane Kawaoka Not sure what you mean by "REI voltron", but I'm definitely open to expanding my circle.

    @Kevin Grinstead I hadn't heard about using a SD IRA for real estate investing before vs using an LLC. Are you aware of a quick run-down of the pros / cons you can point me at? Concerning the idea of using a separate LLC for each flip / deal, I don't think that is really necessary (at least for me at this stage) do the all of the associated fees and tax hassle.

    @Dmitriy Fomichenko Good advice on how BP is designed to work, thanks.

    @Mindy Jensen No, I still have a day job (sarcastic yay) so if that is a stipulation for having a Solo401K then that is a no go for my situation.  Also, thanks for the information about the financing ideas.  What about Premier Members or Bellco?  

    @Justin Windham I have retirement funds from my current employer that I can't transfer out, but do have a several other traditional and roth IRAs from Vanguard, Betterment, and WiseBanyan that I could use should the circumstance call for it.

  • Rental Property Investor · Firestone, CO · Member since 2017 · 30 posts · 8 votes
    8y

    @Justin Windham Not sure why my edited post didn't tag you correctly, but see my response above.

  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    8y

    Thanks @Mindy Jensen for the mention!

    Brady, there is a misconception out there that if you have an LLC - you can quality for a Solo 401k. The truth is - you don't have to have an LLC to be eligible for a Solo 401k plan. According to the IRS rules you must have legitimate business or self-employment activity, it can be in any form, including LLC, corporation, partnership, or just sole-proprietorship..

  • Rental Property Investor · Littleton, CO · Member since 2017 · 61 posts · 18 votes
    8y

    Hello and welcome from south of Denver :).

  • Justin WindhamPro Member
    Banker · Nationwide · Member since 2015 · 4k+ posts · 1k+ votes
    8y

    @Brady Lamprecht

    If you don't have any self-employment activity, your retirement investment options will be focused on a self-directed IRA. Roth IRAs are a bit special in that they cannot be transferred to other retirement account types. If you wanted to self-direct both your traditional and your Roth IRAs, you would need to setup both traditional and Roth self-directed IRAs. This can get a little pricey if you want checkbook control of the funds, but it might be worth it for higher asset values. There is a lot of information on self-directed IRAs and 401ks on BP. You'll probably find what you're looking for if you search around a bit.

  • Investor · Wellington, CO · Member since 2017 · 79 posts · 30 votes
    8y
    @Brady Lamprecht, I liked the idea of using retirement funds to purchase properties until I realized that the whole point of my investing is to retire early, well before 59 1/2 years old. With that in mind, I only contribute to my employer's 401k to get the matched money because I like the idea of being able to borrow money from it. I was doing a lot of research into retirement savings and investing to help my mom make some decisions and the solo 401k seemed like the best option (she is self enoloyed) and the closest similar thing is a self-directed IRA, which sounds like a lot of work trying to avoid prohibited transactions with disqualified persons and keeping all transactions at arms length. You probably have enough input in yor thread here but I thought I'd give you my two cents. There is a custodian called Sun West Trust located in New Mexico that comes recommended by Dave Van Horn. They have a lot of information available for free, including a book that they will mail to you.
  • Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    8y

    @Marshall Easlick,

    While truly self-directed Solo 401k plan gives you more control and flexibility on top of other benefits such as large contributions limit (up to $60K/yr), exempt from UBIT on leveraged real estate, checkbook control and ability to access your retirement funds early via loan feature, this plan too is subject to the same IRS prohibited transaction rules just as they apply to SD IRA.

  • Bill S.Pro Member
    Moderator
    Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
    8y

    @Brady Lamprecht welcome. Just my 2 cents. You are making it way too complicated to start out. You will get bogged down in minutia and use up your will power solving all these "technical" issues. You won't have anything in the tank to actually go out and bag an investment property or a flip. Finding a good property is probably 100x harder than setting up an LLC or getting the funds from a solo this or solo that. Work on what brings results (buying real estate in your case). Too many people work on the wrong thing and never own real estate.

  • Rental Property Investor · Firestone, CO · Member since 2017 · 30 posts · 8 votes
    8y

    @Bill S. Thanks for the feedback. Yeah, as an engineer by trade, I have a tendency to make things more complex than they need to be because in my world, if you don't have a good foundation to build on, you end up doing a lot of rework, which I'd like to avoid in the REI world.

    I understand that I WILL make mistakes (and hopefully learn from them), I'd like to learn where other people had to do re-work and try to avoid that at all costs.

    I'll see if I can simplify my plan somewhat. :)

  • Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    8y
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