All Forum Posts by: Patricia Miller

Hello @Ryan Campbell, I am in the same boat having been looking at listings since March. It has become clear to me that in Denver you have to develop great strategies and skills for finding the duplex/quadplex that will cash flow outside of MLS listings because you won't find them there. Denver also presents other unique challenges to investors due to population, business, and construction factors. Never mind the fact that there are a whole lot of people looking to buy a property (increasing by the day) to live in themselves.

From what I have seen, most MLS listed duplex properties in Denver (and most other properties, too) are at a purchase price that would put you so far away from the 1% goal - it would be impossible to cash flow them now or in the near future. (1% being the rough guide for considering a property, rent/month is 1% of the purchase price of the property). A duplex for $500k with rents at $2500/month (total) pop up all the time. How you would cover expenses with that scenario, I don't know. I'm sure there are some others available that would work with different numbers, however few there may be, you just have to figure out how to find them.

Others with experience could advise or assist you and there is no shortage of info on BP about how to develop those skills.

Best wishes.

@Bill S. Forgive me if you have answered this before, but what do you think is holding rental rates down in Denver compared to property values. Is it because properties are appreciating faster than rental rates, or maybe because the appreciation of property began before rental rates had a chance to catch up? Either way, it makes me feel a little guilty about the idea of investing in Denver given all the people who are simply looking for an affordable place to live.

Also, this article didn't help, 

The Two Sides of Denver's Real Estate Boom

http://www.5280.com/news/magazine/2015/09/two-side...

@Hem Kumar

Yes, indeed. I was about to give up on the the idea of retirement funds as a resource, even though I knew it was being done. As always, BP and the forums get me going again with renewed optimism and determination.

Best of luck! Let us know how it works for you and I will do the same.

Thanks, @Javier Carbonell I'll give it a listen.

Thanks, @Michael Badin

Ignore my post Brian's explanation does it better...

@Daniel Dietz @Brian Eastman  Holy cow, your explanations are clear, but my understanding is a bit weak -- I will read through these multiple times to make them clear to me! At any rate, thinking of UDFI taxation as something to avoid at all cost seems to be where I was steering in the wrong direction. After all, if I was investing strictly using Hard Money Loans (no SDIRAs involved) - I certainly would be paying out some bucks to get a deal going, just not the IRS... all a part of the cost of doing business. As long as I can anticipate those expenses (taxes or otherwise) from the outset and the formulas spit out a positive result before making a move -- I should not get too anxious about UDFI taxation - especially if it allows for leveraging, higher cash-on-cash, etc.

Thanks!! Motivated to move forward.

Thanks for clarifying @Brian Eastman. I most definitely don't want to set up a situation resulting in UDFI taxation - I'm pretty sure my CPA won't let me make that mistake. So if I understand you correctly, once you commit those SDIRA funds for a cash purchase of a property, you can only use the non-recourse loan for the entirety of another purchase or you run into either the UDFI situation or violation of self-dealing rules. 

@Brian Eastman

@Michael Badin If you don't mind me asking - what is the title of someone in your line of work. I'd like to look them up in my area in CO. Thanks. 

@Hem Kumar Thank you for asking these questions - I have precisely the same ones. Except, I need to ask further whether the additional funds (the 25K, that is) added to the 75K for the second property could come from another source other than the SDIRA that funded the first deal. 

Also, I want to clarify @Brian Eastman... I am assuming that most custodians of SDIRAs are accustomed to this type of arrangement, with the non-recourse lenders, I mean, as this seems like the only way to get the most from your IRA for REI. Otherwise, one would be limited to a very few properties (unless, of course, the account is quite ample). In my area, I can't get a single property for 100K.