All Forum Posts by: Clinton Holmes

Hello Massachusetts / Boston Real Estate Investors,

I'm wondering if anyone in the area has had success creating a self directed 401(k). I'd like to set one up so I can invest in real estate rehabs, and was hoping to get recommendations from someone who has actually done it. 

Thanks in advance for the help!

Clinton

@Rob Beland & @Eric D. & @Russell Brazil

Apologies for the late follow. I ended up using Systems Electrical, recommended by Russell. A man by the name of Paul did all the work. He did an excellent job. Timely, efficient, and affordable. Definitely recommend them to anyone. 

Thanks for the help guys, I appreciate it!

Clinton

Hello Massachusetts BPers,

Does anyone have a good electrician they'd recommend that does work in the North Shore area? 

Appreciate the help!

Clinton

Netanel Malihi similiar to Joe, Im not familiar with the IS market, but have advice on the what to do in a bubble question. Have a plan every outcome. The market can only do 3 things: go up, go down, or stay where it is. Put together a strategy that makes your profitable no matter what the market does. Ex. If you can get a property now that cashflows, and are happy with the cashflow alone, then you dont care which way the market goes anymore. Also, every month you put it off, is a month of rent you could have earned. Doing nothing still cost something. Hope that helps, Clinton

@Shaun Reilly

@Ann Bellamy

@Rob Beland

All good points above. I agree with Ann, I think four sections are enough.

I'd propose using a geographical division of Metro Boston, North Shore, South Shore, and Western MA because I think a lot of real estate community in MA already divides it up this way. That allows investors to discuss the nuances of the markets within the forum of that geography.

Shaun also made a good point about how there is already clear segregation between North Shore and South Shore. I think there is a similar segregation between East (aka, Metro Boston) and West (say, Framingham and beyond). 

Just my two cents, for what's it's worth. 

Clinton

Originally posted by @Mark Nolan:

@Dennis Hertzler

@Dennis Hertzler

Here is some more information on how the ROBS 401k works.

• A new C-corporation is established.

• Corporation sponsors a new 401k/PSP.

• The IRA funds are transferred to a new brokerage account opened for the 401k/PSP.

• The new franchise corporation issues stock shares to the 401k/PSP for the benefit of the franchisee.

• The franchisee must be an employee of the franchise business and he or she may take a reasonable salary.

• The franchisee’s family members may be employees of the franchise business and receive reasonable compensation for their services.

• To the extent that the corporation generates profits and elects to distribute those profits to the owners of the business, the percentage of the profits associated with the shares held in the 401k/PSP will flow back to the 401k/PSP brokerage account.

 So in this example above, the C-corp becomes capitalized by exchanging the funds in the 401k/PSP for shares issued? 

Thanks for clarifying!

Clinton

@John Citro

 I agree. Re-post and see if we get a few more. Have a great day!

@Rick Jones

I definitely see your point about trying to maximize your focus for one large payday rather many smaller. It is a very Trump, Art of the Deal, way of thinking. 

To @Richard C. point though, the less diversified you are, the bigger the chance of going sideways. I'll take that one step further to say, if you're going to go for a big deal like this, make sure you know what you're doing. A big, expensive Brownstone rehab is not exactly something a newbie flipper wants to cut his teeth on. Do some of the smaller deals first and work way up. 

Btw - don't get disenchanted! The idea is about scale is right, I think you're just seeing some hesitation from the forum b/c these types of rehabs carry significant risk and are not suited to the everyday Joe. 

Good Luck!

Clinton

@John Citro

Its a great read! I recommend it to everyone that is considering starting their own business. 

How many total do we got now, 4 including yourself? Did you have a date and time in mind for the first event? 

-Clinton

Lukas Katko I have a couple thoughts here. First, 12 mo leases are common for students. Most will stick it out. Some will try to leave or sublet to someone else when they want to move. Second, in general you will have more turn over on student housing. Definitely check what he estimates for a vacancy rate and what local property managers managing that type of property say is average. Third, students will almost always mean more wear and tear. He had 7.5% of rent for repairs, which might be enough, if that doesnt include capex. Remember, most likely you will be touching up the units every year when the previous years students graduate. Finally, trust but verify the info provided. If you go by the 50% rule, I estimated cashflow closer to 2k per year, not 15k. So take a closer look at those expenses and see if they are reasonable, and the property justifies running at better than the 50% rule. Let me know what you end up doing! Clinton