All Forum Posts by: Deborah Smith

My mother is planning to retire, and depsite having a CPA daughter and son-in-law, she still believes she knows best when it comes to finances.

So, I am posting this so that perhaps, in your own words, you would be kind enough to share your thoughts whether this is a good or bad idea:

She plans to cash out her entire 401k ($12k) and use it to pay off her credit cards so she can retire debt free.

Additional background info - she has no other investments. She owns a SFR in poor condition with about $75k (maybe?) in equity only because she put $100k down on it back in 2008 (she is of the belief she has zero equity). She has burned through ALL of her savings and maxed out her credit cards. Nothing in the house is of value. Her car is worth maybe $1500. She is disabled, and if she quits or otherwise loses her job, she is not employable anywhere else (really, trust me). She plans to live entirely off of social security, which is $856 a month. She is 65. She makes too little to qualify for an apartment (even senior subsidized housing), and cannot afford to keep her home at a $700/month mortgage payment.

Given that situation, please let me (and her) know your thoughts on whether it is a wise financial move to cash out her 401k to pay off credit cards.

Thanks in advance for your input, either way you lean!

After being MIA for the past 3 months, this seems like a good thread to comment on!

On 9/30 we welcomed our first baby. So the business goals are a little less lofty and personal financial situation are a little fuzzier than usual but in no particular order:

1. Aquire at least one additional property

2. Become more organized paperwork wise

3. Learn more about (and hopefully utilize!) a more creative financing solution

4. Explore investing in other cities

5. Do better tax planning

Did he provide you with an engagement letter? CPAs are required to do so - and that would outline his estimate of billing to you.

Not sure why he'd be asking for the same info repeatedly - but in his defense (as a fellow CPA) you are likely (and hopefully) much more in touch with the ins-and-outs of your transactions than he is, and sometimes it takes us a little bit to really connect all the dots. Remember, he's learning what you did, from a financial perspective, from whatever paperwork you gave him, and in a much shorter time than it took to do the transactions.

Just a quick update - I walked away from this deal.

I will spare you all the details... but basically seller refused to sign addendum based our agreement regarding credits. And then I found out he didn't have funds to close and credit me for the prorated rent and security deposit, either. So our agreed upon credit for repairs was cut in less than half. Clearly their intent was to deceive since they made an agreement with me they couldn't act on.

Related to the tenant - I was able to get a lease and was told no estoppels due to language barrier. This was also not true as I went to the house and met the tenant. Apparently the seller told her I already owned the house and so he wouldn't do repairs. So the lady had been waiting for me to come by so she could show me all the new water damage from the recent rains. Lovely.

So, I walked away.

Thanks again for the input!!

I have never heard of this, neither has my agent...

Long story short - seller had agreed during inspection period to do some repairs and he has not. Sale was actually scheduled to close today - and I agreed to a credit of $2000 in lieu of certain repairs.

However, today - my lender through a curve ball and stated that I can not have more than $1,000 (approximately 2% of purchase price) as credits from the seller on my settlement statement - or my loan can't be funded.

Has anyone heard of that before? Have any ideas for a creative work around? Seller apparently has zero cash and the $2000 credit was going to be ALL of his proceeds from the sale.

A little stumpted... mostly frustrated. Any insight is appreciated! Thanks!

Welcome, Edwin! I'm a newbie, too, located in Phoenix.

I am curious as well - what do you plan to do with the 40 acres? Is it in the city or outskirts?

In agreement with Michael Galloway - on point on the strategy and regarding the new money. The plan is typically aquiring homes 10 years old and newer and either need no work, or minimal work. Buying fast and furious (though it was a BIG 2012 push and has slowed down considerable - no doubt due to increased prices and lack of inventory) IPO within 1-2 years of aquiring desired number of properties. Hold 5-7 years then sell them all.

My professional background is actually in this arena... CPA for the financial accounting side of property management/investment. I was looking for a new job a while back and actually interviewed with several of the big players in the Phoenix market so I am familiar with what they're doing. I actually now share an office with one of them, though I work for a different company.

Patienty waiting for the 5-7 years to pass :)

When we bought our primary residence, it was a BofA REO... they, of course, required that we get pre-qualified through them in order to make an offer. Well, surprisingly, their fees were not bad so we decided to use them as the lender as well. Get this - they could not fund in time to close on their own sale, so we had to switch lenders at the last minute in order to close. I realize they're different divisions of a large company, but that just had me laughing... AND... then they purchased our loan a few weeks after closing.

Joel Owens - Agreed! I wanted credit but it was a no-go for the seller, so I agreed subject to satisfactory re-inspection. I think part of what happened was he realized I was serious when I contacted our agents yesterday to let them know a roofing contractor would be there on the 26th to provide an opinion on the completed work. (The roof is the biggest ticket item on the list). Funny how RIGHT after that email was sent they called to ask if I would take a credit instead.

Ibrahim S - I did not include estoppels in the original contract. I feel a bit foolish having done them in the past at a day job for commercial tenants - but for whatever reason, it didn't come to mind! I have a feeling the amount I will likely ask for as credit will cause this to fall apart.
Some of the best advice I ever received - if it is meant to be, it will be.

Thanks to all for your input - much appreciated!