All Forum Posts by: Frank Gucciardo

Are you 100% sure she submitted her info and is not using a stolen identity?

@Scott W. - I think the confusion is coming in at the fed and state tax you are including.  You are not taxed on a 401K loan.  The money you receive from the 401K Loan is not taxed at all by either fed or state.  

If you were to withdraw that same amount of money before you hit retirement age then you will be hit with Fed, State, and penalties for early withdrawal.

I took out a 50K loan from 401K with zero tax implications.

I think the payback everyone is looking at, pre-tax versus post-tax dollars is over analyzing a fairly simple transaction.

@Brandon Hall, thanks for responding here. Completely understand and agree the opportunity cost and that you seriously have to weigh the opportunity you are using the loan for against what you may miss out on in your 401K (ie. dividend payments, upswings, downswings, etc..) is a major factor.  I think that is the single biggest factor to consider when taking out the 401K loan. 

I still contend that you are going to pay back any loan with after tax dollars, whether it be 401K or a bank loan.  That factor is never going to change no matter the source of the loan.

In my case, my 401K loan had no origination fees or costs, was quick to get, does not show on credit report, and is used as a short term bridge loan until I can extract the equity from the house and re-amortize the amount over 15years (instead of 5).  Also, I weighed the benefit of getting into the particular property that I'm under contract on versus the short term opportunity cost risk and deemed it to be sufficient to take the funds out of the 401K.

I have and it made zero difference.  What are you expecting me to have seen?

Sorry but I fail to see the logic being proposed here.  There is absolutely no difference if I am taking my after tax dollars to pay back a 401k loan or a bank loan.  The only risk is opportunity cost by taking those funds out of the stock market.  

I am not taxed on the loan when the money comes out of my 401k.  Any payment to any loan would be using those after tax dollars.  What difference does it make if I'm paying a bank or paying myself... It's a wash.

Forget the movie, It comes with it's own caboose.. SOLD!

Thanks @Liam Robinson

Update on this for anyone who still cares.  We agreed on 280K and I was going to assume a small loan they had through the towns beautification program (3K) so agreed upon sale was 283K.  However, and there is always a "however" - The owners of the restaurant had first right of refusal and they exercised it and bought the property.

Update #2 - while looking at a property that I'm currently under contract my RE agent told me that all the tenants moved out of the property as soon as ownership changed hands... ooof!

Good news in all of this is we continue to press on and are under contract for a tri-plex FannieMae owned property... inspection is week after next, fingers crossed all goes well.

Hi Paul and welcome to Bigger Pockets.

I'm up in the Hudson Valley and have offers in on several places for my first investment property.  I'm actively looking in Kingston as well.  It's a better option than Beacon (over priced) and Newburgh (War Zone).  The Arts scene is starting to come alive in Kingston, it has a very walkable downtown area, and a great bar & restaurant scene by the Esopus waterfront.

You do have to be careful as to where in Kingston you are looking.  Some places are very cheap but are in areas that are not going to be good investments for another 10 years+.

We should talk sometime and see what comes out of it.

Frank

Quick update here in case anyone cares or was following - I countered with 280K (my max offer price) which was declined.  I'll let this one season for a few months and see if it's still on the market.

Looking at 6 other properties in the mean time.. mostly duplexes.

My commit is to have first property under contract before the end of the calendar year (but not forcing a bad deal).

Unfortunately, If he's living month to month and has very little money maybe buying is not the best option for him right now.  He may have difficulty putting up the down payment, closing costs, etc.. which would put him in a deeper hole.

Maybe the best way to go about it is to help him get his finances in order first and then talk about home ownership again down the road when he is in a better place.

Just my .02