All Forum Posts by: George Pauley

I recently exterior painted a couple of my SF rentals.  I actually had the painters coordinate with the renters to determine what days would be most convenient to the renters.

I forget all the reasons why this is not usually considered a good idea. Tom Wheelright (rich dad advisor, cpa) has quite a bit to say about using 401k/IRA for real-estate investing.

A few issues I remember... First, thereis a tax disadvantage. Because the home is in your IRA, the mortgage interest isn't deductable. Second, lenders usually want you to have substantial reserves when investing in real estate. Can you afford a few months of no renter in place? Can you afford to fix the roof, the A/C, etc? So the lender will ask that you hold back quite a bit. This means you might only be able to use about 1/2 of the cash in your IRA. And that reserve you're holding in your IRA has to be cash, ie, not invested in other potentially risky investments.

Pick something you love.  If you don't love it you'll likely not finish, and or not end up working in that field.  Pick something that pays well.  Real estate investing is MUCH easier if you have cash, solid income, and a good credit rating.  

I'm a computer scientist and love it, and that job gives me more than enough money to invest in real-estate.  

My first property was a complete and total disaster!  I'm SO glad I bought it!  :)  

Accept that you are going to make mistakes.  We all do.  I like to say that I learn a new mistake with each property I buy.  Each mistake hones my skills even more.  Each new property I buy has fewer problems and more profit.  But if I hadn't pulled the trigger on the first property, I wouldn't have bought the second, or the third, etc.

Pull the trigger!

Thanks for the recommendation.  I would never have guessed that there is a whole book out there on turnkey investing!  As a turnkey investor, I look forward to learning how someone else thinks about it.

When your folks pass, and you inherit the properties, the IRS gives you a one time step-up in basis value on the properties.  In other words, if you sell the properties today for $100k of profit, you owe taxes on $100k.  Albeit, at the advantageous long term capital gains rate, so probably about $15k in Federal tax.  But if you sell the property after your parents pass you owe $0 in tax.
Moreover, I'm working hard to teach my children that they can also hold on to the properties they inherit from me.  Even better, they can then start depreciating them all over again.  And then finally pass them on to my grandchildren who will receive yet another basis value step up from the IRS, and they can start depreciating all over again. 

Definitely some difficult things to consider. But, as a parent, I've come to consider my death as the single most important financial transaction I will ever make, especially with respect to leaving something to my children.  Just trying to give you some alternate viewpoints to consider.

You might want to check out Arizona Real Estate Investors Association.  Good opportunity to meet other Phoenician's currently in the business.  

https://azreia.org/

"Rich Dad Poor Dad" seems like an obvious starting choice.  Not mathy at all.  But introduces the passive income mindset.

I usually try to be as leveraged as possible as this increases my ROI. That said, I keep 3 months mortgage and about $2k per property in reserve. I actually have every single @#$@% property vacant at the same time. :P

I think this has more to do with what you want.  Do you have a day job, and plenty of income, but not a lot of time?  Then go turnkey.  Plenty of time, no money, then you definitely need to be more hands on.  You usually pay a premium with turnkey because they do all the work: find, rehab, rent, manage.  You're trading money for time.