All Forum Posts by: Bernie Huckestein

Funny, this was the other way around for me --  couldn't get my wife on board for quite some time.

Her fear is always: "at our age we don't want to lose ground, we may not be where we would like to be but we are comfortable"....I did as others have mentioned here,, stuck with the numbers, explained the numbers (and mitigated risk) --  ultimately we purchased a duplex. 

As luck would have it (and the numbers indicated) this was a very good deal....been like clock work 1st of every month the bank account grows net about $700 after everything including capex/repair allocation.  I will say she saw this happening month-in and month-out and is not only now in full support, she is active in the business...finding, looking, and for the small amount of doors we have today property management.

We are even converting some old 401k money to SDIRA.

bernie

I am looking for (or looking to create) a spreadsheet to make financial projections on use of SDIRA funds -- does anyone know where I might start...here is my general thoughts / situation but I'd like to find/create a spreadsheet to model different alternatives:

I have $200k which can be moved to a SDIRA, although I need to do additional research I think I can get non-recourse finding for 50% ltv.  I have about 14 years before I am forced to make withdraws.

For my illustration here I would assume to purchase 4 single family homes ~$100k each. Back of the napkin calculation let's just say these would produce $5,000 a month gross and $3,800 NOI, loan payments ~$1,300 leaving $2,500 cash flow to the IRA monthly. That is a 15% return, I know using the rule of 72 in 4.8 years my 200 and now 400, then if re-invested @15% my $400k becomes $800k in about 9.5 years and the $800 becomes nearly $1.6 M by the time I need to withdraw funds.

This is what I want to model to determine the best current alternative + to keep the money working I'd need to add another investment every two years or so.

In addition to the $1.6 million you would have the loan pay down and any appreciation which after 14 years could easily add another 15-20% (blended).

I've tried to keep the example above simple but also realize the spreadsheet model would need to accurately account for:

Cost to purchase, cost to sell, UBIT, management, etc., etc.  --  for me I am not terribly concerned about UBIT as I think worrying about that is like stepping over dollars to pick up pennies, although maybe it changes my return from 15% to something a little less.

On a similar note, this might be a great BiggerPockets calculator with a couple of tweaks it could be used for IRA investor or a standard business modeling tool if all monies are remain in the business / not withdrawn to pay personal living expenses.

I can create this spreadsheet but I am not particularly good at making things like this user friendly....appreciate any direction others might have for something currently available or something that could be used as a starting point.

Thanks, bernie

Did you mention expenses for insurance and property taxes or maybe you have that calculated in the mortgage payment?

You should add expense for capes, building / yard maint, + you have not accounted for vacancy or property mgmt - even if you self manage I would allocate 10% for property management That said could still looks like a go depending on financing. For me in my area I would take the true NOI minus $250 a door (cash flow) and if the remainder covers the mortgage nut it would get additional due diligence

The Cap rate is a function of your net income and property value. If you change the ARV up but the NOI is the same the cap rate would go down. (And yes the higher the better). Here is a CAP rate formula which will show why the number goes down for you CAP Rate = NOI / ARV or if you know the CAP rate you want: Offer price = NOI / CAP rate Hope this helps Bernie

Came across a potential opportunity that has Gov subsidized housing.  I've not previously considered section 8 type housing and am trying to determine my willingness to do so.  I'd welcome input and / or a partnership opportunity with someone experienced with this.

In general:

Nice property with individual town home type units (10) and a mix from 1 to 4 br...not counting the low-income requirement could be very nice if there is an opportunity to convert normal occupancy --  building and layout is attractive -- about 50% of the tenants are living like slobs and not who I would want to have.  I am told the current management / lack of management does not really pay attention.

While I don't think you can force people to pick up after themselves (in the apartment) I do understand with the state program, the landlord does have the opportunity to enforce the lease rules (community upkeep, noise, external trash, etc) or the tenant could lose the sweetheart deal they have for housing.  Current landlord just does not do it.

I will share the numbers with those interested via PM; however,

Initial numbers provided:

$125k gross rent  --  about a 1.8% ratio

$57k annual expenses they do not factor vacancy 

Also, seems to be an assumable loan for part of the sales amount (but this is what locks it into the state program)

- some things are missing here but also some items seem very high and potentially not managed $20k Maint (16%) --  not including grounds, plowing etc....near $6,500 water/sewer, and nearly $10k in heating (each unit stands on its own and has there own heat but the state program I believe is to include heat).

Long way to go to determine how doable this potential deal is but before I spend a lot of time wanted to first get a comfort zone or partner idea with subsidized housing.

Appreciate your comments and I expect some will be "don't walk, run", others may have ideas on how to make this a success --  bernie

Assuming the 2k is all-in cash flow from your currently property which allows you to live rent free + pocket a few hundo, I would keep this property without question.  Not sure what the market is in MN but I would leverage the other 70k you have to purchase additional property that covers your student loan nut with monthly cash flow.  This way it should: 

Be less stressful

Allow you to pay your student loan note + gain from mortgage loan pay down, tax benefit, and appreciation

As for the 250 in equity, look around for a bank that will give you and investment line of credit (ILOC) --  took a while for me and mine is less than $250k, but I found a local bank that makes it quite attractive. 

In my case I am now purchasing a 2 unit BRRRR with a local bank loan for $80k @ 20% down, will use the ILOC to fund the $25k rehab, then Refi with the same ILOC bank @$110k for 30 years...will take me 90 days and they have waived the seasoning period since it is "all-in-the-family". On paper I even get $5k of my deposit money back but in truth that will be used up in holding / closing cost.

Using the BRRRR calculator here (and using high expense numbers) the deal in the end will cash flow about $300 a door if I self manage / $225 if not.

KEEP IT!

your attorney would probably subcontract to a title company here in Maine which one would likely depend on where (town/county) the property is in. I'd try and go direct as your attorney will mark it up.  I live and invest in Maine PM me with contact info if you want -- I'll help if I can. 

Bernie 

I've looked around for it but can't seem to find where or how to set a meetup...is there an article or instruction somewhere for this?

Thanks

We will just need to set a date that location is fine for me.  I am out of town from the 10th to the 17th but I do agree it is important to start doing this hopefully at a regular clip so that if one is missed there is already another scheduled @Kevin Conroy, @Ivan Sokolovich, @Lisa Sessions