All Forum Posts by: Joshua Hanning

Originally posted by @Craig Sloan:

@Jaden George good for you for thinking about things like this at your age.  Real estate investing and Roth's both have pros and cons.  The Roth would certainly be more passive.  @Joshua Hanning suggestion may be the best of both worlds but it can also be complicated.  I'd be tempted to say start the Roth now, continue to learn about real estate and look for great opportunities.  You can always take the principal invested out of the Roth and use it for a down payment if a great property comes along.  In the meantime you could at least be growing the Roth while waiting for your first investment property. 

@Craig Sloan makes a great point.  It should be stated that you can draw against your contributions (not the growth) without penalty, but only after the Roth has been established for 5 years.  It makes sense either way to establish the Roth now so that you have options later on.  You don't have to establish it with the full contribution limit either.  Shop around and you will find that some require $1k-$2k to start, while others may open it for much less if you establish automatic regular monthly contributions.

Why not both? If you are able to invest in a Self Directed Roth IRA, You could effectively have the option to use those funds to invest in an investment property. There are many types of self directed IRA's and you will want to research them to make sure the one you get can hold real estate (you will get some that say "Yes you can invest in Real Estate" which is not the same as purchasing property in your Roth IRA) With the proper product, all proceeds that come from the Rent or sale of the property are Invested back into the Roth and will grow Tax free without counting against your contribution limits. The flip side is that expenses will also have to come out of the Roth, such as Vacancy, Maintenance, CapEx, and Management...because you will not be able to manage the property yourself. Please seek out the guidance of a CPA and Financial Advisor knowledgeable about these types of products.

@Josh MADONNA One thing you did not mention, is how much of the property is on the busy two-lane Highway? It may be possible to put up Billboards and rent for advertisement if there is enough of a footprint. There is a positive to inheriting the property. The fact that it was inherited means that the initial expense of taxes (while your father held it) and purchase price was it has already been accounted for. Selling it for anything would reduce the amount of losses you take in the future. Thinking of the initial 10k and 10k in taxes as your expense may make you prone to hold the property longer than necessary. If the property was inherited by means of a will, then it is likely that the capital gains or losses will be assessed at the property's value from the time of inheritance. This is assuming you have had it appraised at the time of inheritance. If you sell it for a loss, it might provide a write off. Otherwise, any improvements (such as billboards) and taxes are the only costs out of pocket for this investment, should you choose to keep it. As far as selling it for recreational use, don't discount it before looking into it. Guns aren't the only way to hunt, and there are plenty of rednecks itching for a mud hole. One man's trash... I wouldn't simply stop paying taxes, however. The government is known for getting their money, and the IRS desn't Need to take you to court to garnish your wages or withhold any future tax refunds.

REI can potentially mean something different to each of us. Decide whether you are looking to buy and hold, traditional flip, live in flip, etc. Then search BP for a local real estate Meetup in your area...then listen. find the person that is killing it in your space and engage them in conversation. Listen to what others are saying about them. Take your time and see if they are someone you can trust and respect. If you have the capital to invest and an idea of the type of investment, you should be able to take your time and do your research. Bring them the deal and offer them 50% of the deal in exchange for their experience. You will either win or learn. You will learn far more and much faster by doing than you would from any guru course.

Without knowing your current situation, it's hard to give you accurate options. do you currently own any property that you can Leverage? Are you planning on refinancing after you've rehabilitated the property? Have you considered a HELOC on your primary residence? In addition to that, you can always pole family and friends to see if they have any savings or money in a self-directed IRA that they are willing to invest for a particular percentage fee once you refinance. If it is money from a retirement account, people may be more willing to wait to get their return on investments while you rehab the property. If you get commitments ahead of time, you will know better what you can spend.

forgive me, Antione. ...the joys of auto-correct.

I do agree with Anthony, but $4k left with $500 monthly payments would affect your approval amount. A refinance may be in order if you are unwilling to wait. Personally, I feel that being debt free (or at least debt free-er) allows for much less stress as well as the ability to save faster. Also, multiple inquiries won't negatively affect your credit if they occur within a 2 month (I believe) window, but soliciting now and then again later might.

The primary question, at first glance, is whether the loss of $750k would ruin you if things did in fact go south. Do you have access to the funds to throw into a money pit should one reveal itself. Use the BP Calculators to double-check your numbers, but It sounds like you have some wiggle room. Sounds like your contractor is talking about Section 8 housing. That comes with its own set of problems/conditions in exchange for the guaranteed rent. I would suggest searching some of the other BP forums for those caviats if you are unsure. Remember that your Contractor is the expert on the rehab, but may just be regurgitating something he heard once about a government program. Take his comments (and mine) with a grain of salt.