All Forum Posts by: Chris C.

This flies in the face of everything that we have ever learned about retirement accounts.  So I want to start this by stating that it is stupid for 99% of the people out there to cash out retirement accounts but I would like feedback on my situation.

Brief update on my situation:

1. I plan on retiring from my full time job in June of 2020/ Cash Flow will be very important
2. I am 44 years old
3. I will be living off my rental, fix and flip income, and other real estate related activities
4. My company is freezing our pensions effective June 30th 2019.  We have the option of rolling over this pension or cashing it out.

My thought is to cash out my 401k and pension and payoff as much real estate related financing as I can with the funds left after taxes and penalties.  This will accomplish the following.

1. Increase monthly cash flow by $1800
2. After paying 10% penalty I will save $4400 over what I would pay in interest in 2 years / In other words, interest savings more than pay the penalty
3. In my opinion the taxes are a wash as I would have to pay those now or when I retire.

There you go,  please poke holes in this plan and tell me what I am not considering.

There is actually a criminal law for this in South Carolina.  Not sure about your state.  If you pay a contractor and he never provides any materials then you can call the police and press charges. The problem in if the contractor drops off $5 worth of materials then it no longer applies.  I would look into this in your state.

Once I decided to go the sub divide route it wasnt difficult at all.  I spoke with county planning ahead of time, got it surveyed, county approved the plat, and had it recorded.  After that as far as the banks are concerned it is 4 separate properties.

I could not find one that would lend on multiple SFR on the same parcel. Had to get it sub divided then finance each one individually.

@David Bailey  How are you calculating the 6% tax?  It's not as straightforward as it may seem.  The county has a good calculator to help you get a more accurate number.

https://www.greenvillecounty.org/appsas400/RealPro...

@Charles Kao  I could develop more lots but these are on Septic.  In south carolina you can only put 1 home per ~1/2 acre depending on the county.  I am also developing out several lots I already purchased closer to home so it would have to be a really good deal since this property is 2 hours away.

@Mike G. I run across properties quite frequently that don't make sense for rehab and flip but would make sense as a rental.  Message me and we can discuss if you are interested in this market.

@Mike G. Nothing specific at this time but I am always looking for a mobile home park if I can find a deal.  We already have 25 rentals consisting of a mix of mobile homes, mobile home lots, and a few stick built homes.  I have had a lot of luck in the mobile home market and continue to try to find deals in that market. 

We also flip about 8-10 homes a year to fund the purchases of additional rental units.

Since I have not owned or managed a mobile home park I really appreciate the insight I get from asking other BPer's their experience.

Thank you all for your input.  I decided to pass on this deal.

Typically on these deals you should be getting it at good enough a deal that you can list it on the MLS without doing hardly anything and make the same profit as if you rehabbed it. I always rehabbed these until recently. I have found that if I just clean it and list it then I make about the same profit without all the hassle. Of course every deal is different and if I thought I could make significantly more with a rehab then I would do it. If the property you have found is already on the MLS then I would pretty much guarantee it is not good enough a deal.

Example:

Rehabbed ARV: 100,000

Admin Cost: 15,000

Rehab Cost: 15,000  (Just updating everything)

Profit: 15,000

Purchase: 55,000

Instead:

Purchase: 55,000

Rehab Cost: 1000 (Some clean up and landscaping)

Admin Cost: 15,0000

Profit: 15,000

Sell for: $81,000 to someone that wants to put "sweat equity" into it and make same profit. It is now the cheapest house on the MLS in that market and gets tons of traffic.