All Forum Posts by: Felix Sharpe

How conservative were you in calculating that return? If it was aggressive just recognize that and if it's conservative then that's great but find it hard to see where new construction yields 9% CoC

@Felix Sharpe hey!

Congrats on being so close to Door No. 2 — that’s a big step forward! Based on what you’ve shared, a few thoughts:

A 7%–9.5% cash-on-cash return on new construction is quite solid, especially in today’s interest rate environment. New builds generally mean:
Lower maintenance costs

Fewer surprises

Attracts quality tenants

Better depreciation/tax benefits (especially if cost segregation is done early)

So from a deal standpoint, it sounds like you’ve found something worth considering — particularly if it’s in a landlord-friendly, high-demand market.

On Borrowing from the 401(k)- This can be a smart short-term play if you’re disciplined. 
Pros:
You’re paying yourself back with interest.

You avoid taking on high-interest debt from banks.

You’re leveraging money that might otherwise be idle or underperforming.

If you repay within the timeline, there’s no tax hit or early withdrawal penalty.

Cons:
You’re taking that money out of the market temporarily (opportunity cost).

If you leave your W-2 job for any reason, that loan may become due faster.

It's important to factor in the repayment plan and ensure the rental cash flow doesn’t get too tight.

If this property is through a turnkey provider that includes property management, rehab, and tenant placement — like us at Rent To Retirement — you’re mitigating a lot of the risk of surprises. That adds a safety net when using funds like your 401(k).

Since you plan to repay the loan in a year, and the property cash flows with a strong return, I’d personally lean toward yes — as long as you're confident in the stability of your W-2 and the market fundamentals of where you're investing.

Wishing you much success!

Melissa Justice

Investment Strategist

Hey @Felix Sharpe! I'm curious what lead you to decide to do new construction for your 2nd property rather than buying a turnkey or a light value add property? 

Hey @Felix Sharpe, so I am with @Grant Woodward.

Run the numbers and try to get a good idea of the cost of the work you are going to do plus the downtime that the STR will experience while work is being done.

60k isn't going to go too far when buying and setting up another place.

Post a pic or the listing for the place so we can get a look. It might not need a ton and you can get some direct advice.

If you want 4 people then a queen over queen bunkbed looks like it will work. If going this route custom build it and reinforce it. I have done it in a STR but as stated above the bathroom situation might hurt you in reviews especially in groups of primarily adults or adults and teenagers.