All Forum Posts by: Patricia Miller

@Justin Windham See reply above - it may not have gotten to you.

But not giving up. 

Yet.

@Justin Windham Thank you SO MUCH for asking that question. I was about to reply that I didn't know the details behind "checkbook control" when I decided I should at least do a Google search. It took me to bankrate.com http://www.bankrate.com/finance/retirement/account...

Lacking confidence as a new investor as well as looking just now, for the first time, at how this all works (with or without the LLC and checkbook control) I feel like I am sprinting backwards. All of this seemed like a good idea, but, unless I am investing in killer deals, I see that I could be very disappointed in the results using these precious retirement funds. It also seems that the way to start off with REI is not to try every trick in the book on first deals.

Brief background... we were about 3 weeks from closing on our current home, anticipating some cash to begin investing with. The deal just fell through. I was really hoping to begin by year's end since I have start-up costs and wanted to legitimately apply those as business expenses come tax time. Plan B was to free up retirement funds in the event Plan A (house sale) fell apart. However, with a weak background in this area, it seems unwise to rush forward and do something that I know little about. Yes, I know there are ways "...with little or no money down." 

I am also realizing that a lot of my funds are in Roth IRAs (I am the one who would go the Solo K route, being self-employed) and the larger pot of money between my spouse and me, is what would go into the SD IRA, as he is full-time employed. I am seeing so many complex restrictions and fees here, as far as pursuing rental income goes.

More studying needed.

@Bill S. It's tempting to test the theory. If @Matthew Botos is needing to feed that nerd-dom and has some serious free time - together with a real estate agent who would willingly provide the comps - it might be possible to see if there is a greater rise in rents/property-sales-prices in areas near a light rail just after it opened, compared to those at some specified distance from them. No doubt, such a study would be fraught with inconsistencies. And somewhat useless. But, sometimes seemingly useless information leads to new insights. (Notice, however, I'm not volunteering for this endeavor...) 

P.S. I believe the light rail map above includes lines not yet open. Also, commute times are not an indicator of direction of travel.

@Dennis Thanks for the tip - noted!

@Dennis Tierney

@Justin Windham @Dennis Tierney @Mark Nolan @Daniel Dietz All of this is enormously helpful and motivating. I will buckle down to get a little more background on some of these finer points with the goal of having everything set up for a purchase before year's end. 

NOTES TO SELF:
-prohibited transaction rules
-flowing all funds through SD account/no sweat equity/no personal use
-have everything set up well in advance before attempted purchase
-have reserves within SD accounts for unexpected expenses

Just after posting this, I sold equities from 403b accounts and moved them into same account money market funds - to ready them for transfer to SDIRA and SOLOk once SD accounts are set - so that I don't get cold feet if the market takes a dive and I decide to wait for a recovery before mobilizing funds.

Thanks a million, all!

I'm looking for moral support as I consider moving funds from 403B accounts (heavily invested in equities) to Solo and self-direct accounts (mine and my husbands) for the purpose of acquiring buy and hold properties. I have secured the services of a reputable CPA with expertise in REI - so I know I am in good hands. However, on the psychological side, the thought of taking that money and using it for something that is new to me (although I am determined and committed) seems terrifying -- maybe just as terrifying as leaving it in the stock/bond market given that retirement is just around the corner.

Let's assume, for the sake of discussion, I can be successful at finding a solid deal or two... any words of advice on using money from Solo/self-directed accounts? Cautions? Any personal stories - good or bad?

I realize this is a very general question, lacking substance. But, any pep-talk or motivational words of wisdom would be appreciated!

@Jennifer McPherson Listen to the podcast by Amanda Han, a CPA with special focus on REI. https://www.biggerpockets.com/renewsblog/2016/02/1...

I also recommend her book, "The Book on Tax Strategies for the Savvy Real Estate Investor" - available through BP. It has lots of examples of case studies (including one with Brandon Turner with a name change) about mistakes made and remedies. 

Amanda is from LA but does clients everywhere and advises every step along the way. She is very busy, and pricey - you would have to decide if you want to spend that much. 

One point she makes is that your ordinary CPA is not knowledgable enough to handle all the idiosyncrasies of REI issues - and errors can be very, very costly - so you need to be sure, as you know, that you have someone who really knows the tax code.

Good luck!

So.... what if you pay cash from your own funds rather than using a hard money lender? Let's say you have enough cash to do that (once) but you want to be able extract some of that cash to use on a future property, too. So you use your own cash to secure the deal quickly and beat out the competition, followed by the rehab, rental, and finance (or rehab, finance then rental BRRFR or BRFRR?). No doubt there are holes in this idea like swiss cheese. You still need to go through 2 closings this way, but you avoid the costs of hard-money lenders?

Have at it...

@Ralph R. If you are not in education - you should be! I truly appreciate your very clear response... (screen shot saved and to be read over and over until this sinks into my head). Great backup from @Mike Bargetto - at Bigger Pockets we are in good hands!

So back to the original post @Richard Chan - being a newbie I'm not looking back yet, but as @Bill S. suggests - all that information is there for the asking (especially on BP) - it seems wise to soak it in as best as possible before making a big move with big regrets. Best wishes!