All Forum Posts by: Daniel Dietz

@Chris Seveney I have been looking at CRM/Management  Apps for my 'day job' of running a kitchen and bath remodeling business. 

Keap is up on my list pretty high but it is pretty pricey too compared to some of the other apps I have been looking at.

Which version do you use and are you using it just for real estate investing or other busienss needs too?

What did you like about it more than others that made you chose it?

Thanks, Dan Dietz

@Daniel Gerardi,

I guess there are two reasons, but I still need to confirm my thoughts on both with my LLC lawyer and Plan Provider.

The first is that when you go into a venture with ANY disqualified person/entity, which my understanding that it is when you 'partner with yourself' as well as the previous one I was in with another disqualified person, there are a LOT of restrictions and laws to watch.

From my recollection before we disbanded that partnership a few of the limitations were things like; once we made our initial contributions for our first purchase, we were not allowed to make ANY more contributions to buy more properties, or even if capital improvements were needed. We also could not ever buy or sell shares or 'change percent ownership' from how it started. Basically 'one and done' which we were not at ALL aware of when we started.

A couple good resources on Youtube to learn more are Mark Kohler, Clint Koons, George Blower and Mat Sorenson.

I guess the other things is that I dont see any reason NOT too, at last up to the amount of contribution/basis where there is NO penalty or tax. I would feel different if I had to eat up part of that with taxes or penalties. I have a large amount of basis as I have contributed for about 20 years.

I would love to hear if anyone has a reason NOT to do it. I just don't see any at this point.

@Kyle J. thanks for that reminder.... I forgot about that, and you are right.... rentals and a business he sold on a 20 year note are where it comes from.

Thinking of myself, I won't ever reach that in earned income, but when I 'retire' and possible start selling off some rentals and throw in capital gains I will probably get to that point, but not 'earned'.

For others reading this in the same situation as me, there are a LOT of syndicators out there that also work with "sophisticated investors", which many of us with a moderate amount of real estate experience might qualify for. I have been working on building networking relationships here and elsewhere with those types, in a anticipation that in 8-15 years down the road I will likely want to sell off part of my Self Managed portfolio and reinvest via Sydications.

Dan Dietz

Hi,

Check out Dave Cooper at Paper City Savings in the Plover/Stevens Point area. We use him and we are about 2 hours away. I know they do not go outside of WI, but not sure if they do Milwaukee of not. Tell him I sent you.

They have an LLC product, that at least pre-corona was 20% down, 25 year amortization and a 10 year lock on the initial rate. Very reasonable closing cost and great to work with.

Interesting question! Unfortunately I probably won't ever reach that level so dont need to worry about it :-(.

It does make me wonder though as I know someone like this - earns 500K - 1M through investments each year with NO 'earned income'. Obviously he is a 'high income person'... would he not be qualified because of this?

@Account Closed I hear that question a lot of 'why rentals' in a Self Directed Account.

For me at least, and I am sure a lot of others too, it was/is because *that* is where most of my assets *already were*. I did not have much 'cash' available to invest with, but I *did* have enough in my retirement accounts to buy or put down payments on 8 units. In cash I only had enough for two units and did that also with some creative financing.

So I looked it as "how can I make these funds in my Self Directed Accounts make the *best return", and preferably in something I understand". In *my case*, that was CLEARLY in rentals over Notes, Stocks, etc..... So I looked at it as *even though* I dont get the exact same tax favoritism of of traditional 'cash rentals', it *still* give me the best return *even without* with tax benefits.

Hope that makes sense for those reading to understand why *sometimes* it is still a good choice, depending on your goals.

@Daniel Gerardi I HAVE taken ROTH Contributions for just buying property and NOT put in back into another account such as the SOLO401K. My reasoning that time was to get the leverage ability of a traditional loan with low down payment..... meaning I could get into a a 100K rental for 20K down instead of the 40K needed for non recourse loan - essentially doubling my buying power. There IS the issue that at some point when depreciation runs out that income will NOT be 'tax free' anymore like IN a ROTH, but I plan to definetly do at least some 1031s so that was not a big issue to *me*, although might be for others. 

The method of taking from ROTH IRA Contributions and putting them into my SOLO401K ROTH is new to me, but from what I am learning running numbers and looking at pros/cons I expect that I will do it in the next year when the right deal comes along.

An example is one I am slowly working on (cold called a landlord that I heard wants to retire soon) is a package of 3 properties for about 700K. He is willing to Seller Finance for about 100K down. I dont have that much is EITHER my ROTH IRA or SOLO401K, but *if* if took the reserves in my ROTH which owns two rentals, and is LESS than the Basis in that account, and put that into my SOLO401K ROTH I *would* have enough. And to *me* that seems more logical that doing a 'joint venture' between the two accounts.

@Carl Fischer I have taken a very rough look at that, and agree that it can be VERY small is anything.

More the reason is because I *already have* a SOLO401K that I own property in, and between that account AND my ROTH SDIRA I have a large amount of reserves and equity in the properties in the ROTH SDIRA that I can tap into. It seems like I could more easily accomplish my goals of buy larger properties by *combining* the equity of the two accounts into one, and that the SOLO401 would make the most sense. Think of it in terms if I have 50K in each account and found a property that I need 100K down for it would be easier to do that with just one entity it seems.

I also thought about looking at having those accounts 'partner' with each other. There seems to be a lot of disagreement if that is a good idea or not due to a person's accounts being 'disqualified to each other'. I had been in a similar deal with a disqualified person, and even when following the rules there seems to be a LOT of limits on it. Such as not being able to add more contributions to buy more properties.

So with all of that in mind, just taking the contributions from my ROTH IRA penalty and tax free to my understanding, and making large contributions INTO my SOLO401K over the next couple of years (that I do NOT anticipate I would have excessive income to do other wise) seems to be the most logical choice.

But I very could be wrong too ;-)

Dan Dietz

@Mike S. I understand what you are saving about 'income earned from your business'.

Why this would work, at least in my case and many others too is this.... say I earn 40K at my business, and dont have any funds left to make a yearly contribution this year. Now lets also assume that I take 20K from the contributions/basis of my EXISTING ROTH IRA out. I now have 60K to work with for the year and am able to make a 20K contribution to my SOLO401K/ROTH. Similar would be if I got a 20K inheritence in addtions to my 40K income for the year.

When that would NOT work is if I made say 10K from my business. Now even if I got an extra 20K from another source, I could not put more than the 10K of 'earned income' from the busienss in for that year.

Hope that makes sense

THIS ^^^^^^^^^^^^^^^^ 
It saved me a lot of typing, but 100% spot on. I used the philosophy of telling everyone that I talk to almost what we were doing, and it has turned into Private Lenders and Passive Partners on several deals. They were both people I ALREADY knew, just had to to let know WHAT I was doing and let it marinate a bit ;-)