All Forum Posts by: Daniel McNulty

@Ayana Morali

You can offset capital gains with capital losses. You can sell some stock / etfs / or other publicly traded investments that likely incurred losses thus far this year. They would need to be held in a taxable account though and not in a 401k / IRA or other tax deferred vehicle. Outside of capital losses to offset your capital gains, its may be tough to avoid capital gains based on the scenario you described above.

Its worth noting, if you hold those properties in a tax deferred account already, such as a solo 401k or IRA, your capital gains tax does not matter.

Additions to your 401K will lower your annual tax bill but not your capital gains. Its better than nothing I suppose.... 1031 is an option but it sounds like the timing between when you want to sell and buy again would be a problem. 

Good Luck.

@Anthony Simboli

To simplify it a bit, you need to be self employed or own your own business with no w2 employees to start a Solo 401K. Your traditional 401k from your day job will not work. You need a solo plan. 

There are many more nuances as John described above to actually using retirement assets. First and foremost, you would need a solo 401k. Otherwise, you would have to roll it into a self directed IRA.

There are plenty of providers on here to help with either a solo 401k plan and or self directed ira. 

Good Luck!

@Tim Robinson

Assuming you are referring to US properties and laws, you don't necessarily need a trust. A LLC could easily protect and pass on to your heirs.

You certainly do not need a Real Estate Investment Trust (REIT) structure. Those vehicles are designed for large multi-partner funds primarily to raising capital, which it does not sound like is your goal.

You should probably ask yourself if there are specific guidelines or wishes that you would like to be fulfilled as you pass your property to your heirs. Specific wishes may be better served by a trust, otherwise a LLC would suffice. Note they are not mutually exclusive and any trust you dream up could very well include LLC's to hold / protect the underlying properties in the trust.

I would be happy to connect you with a Trust / Estate attorney and or a RE attorney if it would be useful.

Hope this helps. 

@Richard Ramos

It needs evaluated from the perspective of deal size. If it were always possible, I would say anything north of 10% is ideal. However as the deal size gets larger it simply may not be possible. Further, 10% in a large deal may be a substantial portion of the GP's wealth. I would not expect them to put in more than say 5- 10% of their own net worth into a single deal. 

All that really matters is GP is properly motivated from both a risk / reward side. There are plenty of other terms to properly motivate them should equity contribution be a problem.

@Brook Vosler

The reality is whole life policies in general are overly expensive, terrible investments and unnecessary for almost anyone but the ultra wealthy who may actually benefit from the tax benefits because their wealth is greater than the estate tax exemptions in place these days. 

Its not just real estate investors, its everyone, myself included who are not huge fans of those instruments. Buy a term policy for pennies on the dollar. Save the difference yourself. It gives you more flexibility and better return potential. 

Hope that helps put it in perspective. 

@Erik Montes

The info on REITS above is rather incomplete. Publicly traded REITS are generally completely liquid, just like the stock market. They have no terms. Some produce excellent cash flow north of double digit interest, others are more conservative and produce less. Simply put you do not have to wait years.

In contrast, non-traded (private) REITS do often have such limiting terms as described above. They commonly have investment minimums and only accept accredited investors. However, the terms / liquidity / returns run the gamut, so its a matter of finding what you're looking for. 

The crowdfunding model is a decent model if you are decent at underwriting yourself or you trust those operating. Unfortunately, many crowdfunding sites have mediocre due diligence. 

Whether you are underwriting a property, a REIT or a crowd funding opportunity, make sure you cross your T's and dot your i's. If you are new, there are lots of resources here to educate yourself on due diligence inclusive of various checklists.

Good Luck.

@Michael Jake Higgins

Those are all common questions. Frankly speaking you can design it anyway you want. Traditionally, P/L will be split based on the amount each partner contributed. If a partner wants to pull some out, his share of P/L in the future will be less. 

Unfortunately, there is no limit on the ways these can work. You can accept more than cash from your new partners, which introduces complexity as to what exactly its worth. 

Its worth hiring a pro as there are endless items you should probably cover in such an agreement. Just make sure you think through the ending / exit plan. Ultimately, everyone will want some or all of their money back and thats where poor designed ones blow up. 

Happy to refer you to some excellent RE attorneys if you need any help.

@John Blanton

To Ryans point above, 2.8% CD is excellent, especially if you are referring to the very short term.

If you have the ability to pencil in bigger ticket items with a defined date, you could potentially do better. For instance if your kid is 5 and you are saving for his first car.... sitting in a CD for 10+ years is overly conservative. 

Bucketing your cash reserves by time frame should give you some confidence to add other opportunities. As opportunities approach, systematically wind down to CD's again or something comparable. 

There is something inherently wrong in the description of this product. The underlying assets are not what are traditionally underlying CD's, hence the much better yield. A pool of privately sourced loans (even to doctors) simply carries a different risk profile, so its no surprise it pays more. 

Call it what you want. We are looking at high yield bond to arguably private credit risk profiles, so you are getting high yield bond returns. Much less impressive in comparison. Labeling something CD does not in fact make it comparable to a CD...

Maybe they have terrific underwriting and are very conservative in their lending practice. I don't have the first hand knowledge to say one way or the other. However, it seems obvious there is a mismatch between the perceived risk / liquidity of a CD and the underlying assets of this product. 

If I invested in a pooled structured that was lending to private companies, I would expect a lot more than 6%.... 

Either way, I hope it works out well for you all and that my fears are overblown.

Good Luck!

@Ronald Verdugo

I would encourage you to search the forums for Passco. You can also setup alerts based on certain words, such as "Passco". I hope you find what you are looking for.

Syndicates and other pooled structures certainly require a large degree of diligence that is frankly far different than underwriting a single property. Though hindsight is always 20/20...

Good Luck