How Would You Financial Proceed? Any Tax Specialist Out There?

Question

Hello Everyone,

Me and my team of International Investors....

Just kidding, been listening to BiggerPockets podcast, couldn't resist.

Anyway, here is my finances laid out, if you were me how would you proceed? Currently, I find BRRRR is most appealing, based on my finances alone do you agree? (I'll be 56 next month) I am reading the BRRRR book and listening to the podcast, three months ago I had never even thought about real estate investing so I have a lot to learn.  I work a fulltime job at night and sell real estate in the day.

Rather than tell you guys what I think I should do, I'd like to see what you think.

Thanks for any advice,

Charlie

Home Value                         $245,000

Mortgage                              $97,000

Rollover 401k                       $145,910

Roth                                       $22,632

Current Employer 401k     $45,000

Expected 2019 Income      $100,000

Work Paying for College     $18,000

Car Debt                                $9,000

Cash                                       $10,000

Travis Watts · Answer

@Charlie Shew Great points. There are definitely similar strategies that you can use in multifamily syndications that resemble BRRRR. For example, there is a group I invest with that buys value-add apartments, fixes them up, increases occupancy and sets rents at market rate, then refinances the property and returns the invested capital to the investors and we all continue to hold the asset long-term, with no money left in the deal (AKA an "infinite return"). Most syndicate groups simply rehab and sell the asset within 5 years with the goal of doubling investor's capital, or coming close to that goal. But not every group operates this way. And for a SD-IRA, I have found that syndications are just easiest to invest in without getting caught up in all the rules and regulations, but you certainly can do the LLC and have a third party manage the asset. There are a few additional rules to be aware of, a SD-IRA custodian could help answer those.

Charlie Shew · Answer

@Travis Watts I have tought about that, well I have been trying to study every angle of every opportunity. I personally would like to invest in multi-family or apartments. My concern in syndication is this. Once I invest, I can not BRRRR, therefore, I only get one investment. Second, I have been listening to every biggerpockets podcast (up to podcast 225) I started thinking the person who does the syndication takes an acquisition fee and management fees plus there are property management fees. Not trying to sound greedy (having a deal is better than no deal) but I'd like to figure out if I'd be better in an SFH if I do not mind being a little hands-on.

I have contacted a few self-directed IRAs, it's my understanding I can open an LLC and invest into that LLC. But like you said you can not self manage. At least one says its perfectly fine.

Charlie

Travis Watts · Answer

@Charlie Shew Have you ever looked into converting your rollover 401k to a self-directed IRA and investing in real estate syndications? That is what I did with my rollover 401k many years ago. Just one more outlet for real estate opportunities. I don't know about doing BRRRR with your IRA because there are rules around self-managing etc. I invested in real estate syndications and note-lending opportunities for a better return than I was getting with mutual funds. Best of luck!

Basit Siddiqi · Answer

@Charlie ShewLooks like you some equity in the home you can tap into for some capital.You also have some 401K account balances that you may be eligible to take a loan against for additional capital.These should be enough for down-payments on investment properties.However, I would still continue to educate yourself(read books + listen to podcasts + explore the forums) until you feel comfortable.