All Forum Posts by: Marcus Robert

Greetings: I'd like some input on using my 401(k) to purchase Rental Properties via a self-directed IRA. I understand that you need a custodian, I understand that you can only transfer the 401(k) once you have stopped working for the employer, and I understand that once you're 55 years old, you can start accessing your 401(k) so here are my questions…

1.) At 55, if I no longer work for my employer and transfer my 401(k) funds, when will I start to be able to take advantage of receiving cash flow from these properties or does the cash flow have to stay in the self-directed IRA?

2.) looking for advice on how to deploy 600+ thousand dollars into real estate and start receiving the cash flow from it without having to pull the 401(k) out and swallow the tax ramifications.

I currently own 13 units and receive healthy cash flow from all of them, but I am looking to increase my cash flow so I can ease into the next phase of my life which includes work of a different kind but not doesn’t having a 9 to 5 job.

Thanks in advance!

Marcus

Hi David:  Thank you for the reply. The numbers work, however the sellers are cryptic in their responses and have a situation where the (they say) the town is allowing them to transfer the liens when one of the main terms is that a sale will trigger payback of the liens working 15 years of obtaining the liens (which they are).  However, when I request the information in writing from the town that this is the case, they refuse to do it. BIG red flag. With regard to financing, I spoke with my loan officer and told her that I am trying to get a clear answer of this junior lien (if you will), and they won’t go forward ( I don’t blame them) without clarity. In addition, they initially documented that they would personally property manage for 1 year as a part of the deal and then reneged. So you can see what type of sellers these are. Hi be decided to not pursue. Thank you for the feedback and professional perspective David!

Marcus

Greetings:  I’ve been presented with a 32 unit deal spread across 9 buildings. However, three of the buildings have grant liens that expire at different times up u til 2029. I am asking the sellers to give me something in writing from the town that specifies that the liens will transfer and they are being cryptic which is somewhat of a red flag. They are telling me that the town says that the “liens will transfer”. However, if I wanted to sell a building (let’s say for example sake) in two years, I would have to pay the liens or try and have them discharged. I was hoping for some thoughts here, mostly if I should be concerned or what I should be concerned about. The numbers are crazy good and I already have property in the area. Thoughts?

Greetings: I am doing a cash-out on my 4-plex. I bought it in 2013 for 274k and it is now appraised at 500k. Even so the appreciation is nice, the Gross rent totals $4640 and has room to go to $4800. Note, I pay electric and heat/hot water in this building which averages $405 p/month. If I look at the 1% rule, at the current income, I am figuring a value of $464,000 and then after subtracting the electric and heat/hot water, I am getting $423,500. Also... at a value at 415k (mortgaging 290,500), I get a 12% cash on cash return w/GRM at 7%. My CF is $1025.00 per month. If I do the full 500k, my numbers are as follows: 1% Rule - 0.9 GRM - 9% CF - 720.00 Comparison.. 18.3 years payoff (5%) versus 8 years payoff (12% Coc). So... Am I utilizing the wrong strategy? Would this be considering over leveraging? Bottom line is I could either by 1 building with minimum Coc of 12% or 2 with Coc of 12%. Each new purchases giving me an extra $1100 p/mth (estimate). Would lobe opinions on this! Thank you. M.R.

Greetings: I am doing a cash-out on my 4-plex. I bought it in 2013 for 274k and it is now appraised at 500k. Even so the appreciation is nice, the Gross rent totals $4640 and has room to go to $4800. Note, I pay electric and heat/hot water in this building which averages $405 p/month. If I look at the 1% rule, at the current income, I am figuring a value of $464,000 and then after subtracting the electric and heat/hot water, I am getting $423,500. Also... at a value at 415k (mortgaging 290,500), I get a 12% cash on cash return w/GRM at 7%. My CF is $1025.00 per month. If I do the full 500k, my numbers are as follows: 1% Rule - 0.9 GRM - 9% CF - 720.00 Comparison.. 18.3 years payoff (5%) versus 8 years payoff (12% Coc). So... Am I utilizing the wrong strategy? Would this be considering over leveraging? Bottom line is I could either by 1 building with minimum Coc of 12% or 2 with Coc of 12%. Each new purchases giving me an extra $1100 p/mth (estimate). Would lobe opinions on this! Thank you. M.R.

I opted to go with a nice older lady who is retired, impeccably clean, and winters in Florida:).

thanks all for the feedback!  

As I am currently rehabbing one of my units, I have the possibility to rent to a Police Officer with K9.  Of course, I am pursuing the typical credit and background checks as well.  As I am aware that the dog is considered an officer of the law as well (or something like that), it is my understanding that they have a liability policy on the dog.  I have to provide an area for a kennel for the dog as it cannot stay in the house.  What I would like to know is what I should be requesting (policies, certifications etc...) as well as a possible clause in the lease? Thoughts on this scenario in general? 

Thank you

Marcus

Hi Robert: I am a Buy and Hold investor from Central Mass. When you devise your sheet to look at the potential issues, make 2 columns... 1 for deferred maintenance (repairs) and 1 for Capex (roof, furnace appliances etc...). A big one is Lead Paint. That could be very costly depending on the situation. Smart you have a contractor looking although a plumber would also be good if you can do it to crank up furnaces, look under sinks for leaks etc... Good Luck!

Hi Justin:  I have a property in a declining area that I bought for 140,000 and it cash flows, grossing 2600.00 per month with room to grow to 2800.  Always decent renters.  If I could do it all over again, I probably wouldn't in this area but its certainly not devastating by any means.  One thing I did deal with is evicting 3 bad tenants in a 4plex (if you can believe that!).  Hopefully all of your tenants will be TAW!  I always have to ask the question about the seller to my self....Self-"If the property is so good, why are they selling it".  I always had to buy fully occupied so the bank would buy it.  Going forward, I ONLY want empty buildings.  Something to consider!  Best of Luck.  MR