All Forum Posts by: Josue Vargas

I have two rental properties in Puerto Rico (not the same as in USA, rent there is low but costs are low too), and one deal done here in the states (hold for 4 years, took the appreciation of ~20%). Just recently purchased a SFH in mind to rented out after paying the majority of the mortgage (perhaps within 5 years) and then buy another SFH for investment (hold and rent). So my experience here is not great but with a good start I think. Now looking for alternatives to put my former employer 401K at work in RE. I need to learn more about options on SDIRA, notes, etc. or take the tax hit... Thanks for the advice!

I have not search yet for the topic in BP but will do.  

Is this something the average financial consultant could help me out (example good medium local company, not the Fidelity or Edward-Jones type)?  

Also you said is low risk with due diligence.  I'm new to this and while I can learn I do not have the time to spend on the short term, so I don't want  to put all my assets in that investment account with something I'm not familiar.  Believe there are companies that manage this type of investments.  Or investing in notes is something very specific that I should look for more expert consultant? 

So, did you take the tax and penalty hit and moved on with the REI? What type of property did you invest with your retirement plan?

Would that include very minor stuff like painting a wall or two, fixing the broken kitchen faucet, exchange of light fixtures, and this type of things that will take less than $500 overall?  What if I sub to fix-up these things?  What should I do if I need to fix something that comes-up in the inspection report and is in need of repair? 

Recently I had questions about moving or withdraw funds from former employer 401K account to invest in RE. I've learned it takes a lot of impact with taxes and penalties and better off to move funds to Self-directed IRA.

Someone suggested to move the 401K funds to self-direct IRA and invest in RE and mortgage notes, since the move will not take taxes or penalties implications.  I'm not sure how this works.  

Any help from experienced investors with this type of transactions? 

Thank you,

Josue Vargas, P.E.

This have been very helpful.  Thank you all for your input and information.  I have learned key points and looking forward to talk to a professional financial consultant.  

Cheers,

Josue Vargas, P.E.

If I take the tax hit, I can use approx. $80K, but leaving in the table approx. $30K, and that's a big hit. I don't have the time to do flips or "BRRRR", I'm full-time employee and travel is an issue too. I'm looking for properties in areas that have little to non-vacancy and rent to individuals with high or stable income. Where I live there are pockets of areas with the following options: Low up-front cost single family near military bases, or luxury town-homes for people with businesses that frequently travel to the area. After all, in the market I'm living and the type of properties I'm looking for there is very little chance of having a property with good cash-flow. I do not want to spend the time and have headaches with tenants with low income or properties that will deteriorate faster (maintenance, cap expenditures, plus chances of eviction).

@James Canoy

What I’m hearing in this forum is that I cannot take a loan against my former employer 401K where the bulk of the money is now. Wondering if I can transfer to current employer 401K account and then take a loan against it.

That is correct.  I have two accounts with Vanguard, one from former employer and one with current employer.  Can I move my former employer account to the current and then take a loan?  What are usually the terms to pay-off the 401K loan?

Also, I have an ESOP with former employer that will start distributing on Apr this year, one payment each year for 5 years.  I believe if I cash-out will get hit with the same penalties and taxes as 401K.  

Thanks for the advice.  As a note, I have about 40% on Roth in the plan.  That said, I will be paying taxes on 60% of the 401K withdraw plus the 10% penalty.  I'm currently in the 24% IRS bracket, so after all I will get hit with approx. 26% overall.  I will explore options to move the 401K into a SDIRA and then figure out what can I do for investment in RE.