All Forum Posts by: Brandt Smith

@Justin Windham I have no issue investing in a 401k /IRA. My problem is with real estate:

1) tax deferred investment in a tax deferred account.

2) Being taxed as ordinary income (big tax hit) on a large amount (I expect my RE investments to grow significantly) vs. a painful 10% + tax on a small amount.

3) more red tape and restrictions to invest in a self directed 401k / IRA

@Michael Rosine, I know people who have over 100 SF properties. Each one has ~$500/month cash flow. Each one contributed ~$20k to their net worth when purchased. That was their path and they do it well.

I also have a friend with 6500 MF units. Other MF friends have anywhere from 500 to 4500 units. As you can guess, they are doing better than well.

What is your current financial situation? You said you are rebuilding your credit. That implies that you don't have the $$$ to do 10+ MF units. In that case, start small with SF. Maybe wholesale a few properties to build up a war chest (and give you time to clean up your credit). Move to SF until you have enough cash to move to MF.

@justin 

@Justin Windham I agree what I recommend goes agains most advisors. Then again, over 50% of advisors have no plan for their own retirement. And I would not consider them "qualified." Most will tell you to put it into a mixed basket of funds that you have no control over.

I personally would rather put my money into safe investments that create passive income almost tax free. Over 5-10 years, my passive income will significantly exceed most IRA / 401k accounts.

I would personally pull it and take the tax hit. 1) you are trying to invest a tax deferred investment in a tax deferred account 2) if you pull it now you take a 10% hit plus taxes on a small amount. If you wait it will be on a much larger amount. 3) Real estate income is pretty much tax free if done correctly. Your IRA will be taxed as ordinary income. 4) investing in a self directed IRA or 401k adds complexity and red tape.

I agree with everyone who suggested the "cash for keys" approach. Try it, even $1k would be better than eviction. But start the eviction process ASAP.

Get them out. You never want someone in your property if they are not on a lease. Ignore the "white haired disabled old lady" emotional noise. They have been foreclosed on, you own it, and you need them out.

If you go to court, don't come across as an ***. Be professional, friendly, but firm.

Looking at the house value vs rent rates I would sell and invest to proceeds into several rent houses. Yes, it will cash flow, but you are leaving $100k locked up to make that happen. Your cash flow from ~5 rent houses would make you far more and your long term return would go up significantly.

Why pay down a low interest loan faster? Use the extra $ to buy additional property.

Be careful what you do and make sure you don't violate your lease or local laws. Also, make sure you don't discriminate by treating the differently than the other tenants. The drug dealers may not be smart but when it comes to the law, what you can or can't do, they are geniuses.

Walk before you run. Your first step is to learn, create your network, and learn. Next, create a plan. What is your niche? SF, MF, and commercial are completely different. They require different skills and team members. Do one well.