All Forum Posts by: Patsy Waldron

@Justin Windham

Thanks for the clarification. I should have mentioned that what I read was that 3 or fewer flips inside a solo 401K would not incur taxes... Does that number seem accurate?

Is that accurate? From my research, the solo 401K is exempt from UBIT (unlike the Roth IRA) because the money is pre-tax, and it will be taxed at distribution.

Going to add to the chorus of positive comments about Justin and Discount Solo 401K.

I looked into and talked to a few providers when I was looking into setting up a solo 401K last year. I decided to go with Justin because:

1. He was very knowledgeable and patient in explaining everything and answering my questions. Customer service is paramount to me, and I want clear answers especially when I am getting into something new. Justin explained everything very well- the set-up process, the legal side of the solo 401K, how his firm figures in the long-term picture (filings, etc) in a way that made me very comfortable going with him.

2. Justin was super responsive from the beginning, and continues to be. I will e-mail him a question and usually receive an answer (clear, concise and courteous- the golden combination!) within a few minutes or a couple of hours. This is priceless when you have to make a quick decision about something.

3. His price point (both for the initial set-up and the annual account maintenance fees) was lower than the other firms I liked looked into. Over the life of my account, this will amount to thousands of dollars.

4. He is very pleasant tip talk to and deal with- he has a sense of humor! 

Can't recommend Justin enough. 

@Rene Brown

If you're on mobile it won't tag, period. Bug with the platform.

I am in the same boat as you, and here's what I have found. There are at least 3 different kinds of funding, which is why you are seeing seemingly conflicting information:

1) Conventional and commercial funding through banks: cheapest option (lowest interest rates), but hardest to qualify for, as they almost always (as in 99% of the time) require proof of income and have pretty stringent debt-to-income ratios (typically max. 41-43%). Usually takes about 60-90 days to close. Loan terms/amortization usually 15 or 30 years for loans in personal name, and anywhere from 5 to 25 years for commercial. 

2) Hard money lenders: Usually lend for short terms (6-12 months common, although I've heard of up to 2 years), and usually high interest rates- starting at 10% seems common, and it goes up the more risky the borrower. Good option for the new flipper, not so much for anything else. They always require an entity. They sometimes look at your personal credit, and sometimes don't. They usually want the borrower to have some money to start out with- something like 10% of the deal.

3) What I call "institutional private money facilitators"- Lenders like Lima, Lending One, B2R, Colony American Finance, etc. They essentially channel private money (people with IRA funds or just lots of cash, looking to invest passively for a good return) to real estate projects. Some of them require extensive personal credit information, but many of them are no doc lenders- they only look at the deal itself, and what your cash situation is. They do long-term loans at lower interest rates than HML, but higher than banks, i.e. around 8%. They also always require an entity.

I finance through a lending "facilitator" and am pretty happy with the experience. Rate is 8.5%, loan term and amortization is 30 years. 4% origination fee, flat document fee, and that's it. My personal financial situation never was/is a part of the equation, except for showing enough cash for down payment, fees and 6 month's reserves.

Hope this helps.

Congrats on a great find and thanks for sharing your experience! My husband and I moved to a new city a few months ago, leaving behind our big, beautiful house (*sheds a tear*) and have since discovered Bigger Pockets, so we are considering house-hacking a duplex in our new city. It will be weird/scary going back to having "next-wall" neighbors again, but the financial benefits are too good to pass up! Just need to find the right property now. A fixer-upper would be ideal, but in the current environment it may be hard to find one in a decent neighborhood. 

Thanks for the inspiring story!

My two main complaints with PMs are:

- Lack of professionalism: Shows in lack of communication, poor quality of service to tenants, lack of follow-up on owner requests, sub-par selection of tenants, etc. 

- Excessive cost: Advertising 10% upfront and then charging for everything under the sun is deceptive at best, and dishonest at worst. Not sure what the 10% every month is for if you're going to charge me to call a repair person! I would rather the PM charge more upfront and eliminate any upcharge when scheduling repairs. Transparency would go a long way towards establishing trust and increasing satisfaction. 

If part of your target demographic is young professionals, definitely put in a dishwasher! They tend to work long hours and will use it vs. having to hand-wash dishes. Plus, this generation pretty much expects such amenities as standard. 

I am just finishing a rehab and put in a new dishwasher because of those reasons. Higher-end tenants expect them, and higher-end rentals have them.

@Rick Rucker

"There are also some "nice guys/gals" in real estate that want to be everybody's friends. You need a realtor .... to know how to be a velvet hammer."

AMEN!!!! 

Real estate brokering is not for the faint of heart. I get impatient with realtors who get skittish about negotiating hard for their client. I really wish the commission system for buyers' agents would be replaced by something else that incentivizes buyers' agents to actually get the very best deal for their clients.

Greater Cleveland REIA is the one I attend occasionally. It's affiliated with Ohio REIA, if that makes any difference...