All Forum Posts by: Steve Smith

Stay with the SFH locally, do NOT go out of state and do NOT do multi.

Think about selling your worst and replacing them with better houses, perhaps 1031 to push the taxes out a bit. If you don't have a Roth, get one and get some dollars in it to invest in SFH options, teaming with a good friend investor where you can help them, they help you. I like the 3 down to double your portfolio, but only if the bulk are GOOD houses. Be sure to ask the seller for a option to "move" the mortgage for future expansion, and the option to release a house or two you wish to sell.

If you're still working W2 jobs, you might start thinking about retiring early (especially if you don't like work) and spending more time developing your rental portfolio. About 10 free and clear homes will pretty much replace an "average" W2 income job. 

You have some great options.

Excellent strategy! Be sure the LLC is properly set up, and there's a thought to NOT be the managing member, but be able to control things.

A trust expert would most likely help.

but, sounds like the trust already passes the income thru to the bene, who pays (may pay) the taxes. Why would the trust pay tax on the purchase of a property?

I'm sure you'll get a lot of answers on this but it depends on your risk tolerance and thresholds. If you just had averages losses over time, you'd be ahead without insurance.

Can you recover from a loss, and would one loss wipe out a lot of your portfolio? If you had one building and lost it, it could be a huge loss. If you had 100 buildings and lost 1, probably no big deal and the savings in premiums would likely pay for it.

I know several investors "medium sized" with 20 to 30 units that self insure all of them. Some of their properties are waterfront, with premiums in the 5% of value range (or more), which makes sense to self insure. I know a few that don't even have liability. They are personally "disconnected" and their property manager is "broke". Their cash flow is substantially better.

Worth thinking about.

There's a lot of merit to that song and dance, but requires skill in buying SFHs below market often with seller financing to get good terms and skill in management. However, it's probably the safest real estate investment out there. You say it's not your kind of music, but with your current portfolio, you're all ready there. I'd bet you didn't get those properties paid for free and clear when you bought them, unless someone gave you a wad of money. Some debt would shelter a lot of income, give you appreciation, and the tenants would pay off your mortgages. 

It may not be worth the hassle of creating a "job" for yourself to contribute to your IRA, but the number could easily favor that hassle. Philip has some good thoughts on that.

If your IRA is not a self directed Roth, convert it to one, and you can do that over 2 years or more to minimize taxes. Get up to speed on using your Roth to control real estate with leases and options and you can easily double the worth of your Roth every few years to provide for tax free retirement income. A lot of the Roth custodians have good and free educational info on creating wealth in your Roth. Also seek out some of the good investor gurus that know how to do this.

Lots of good ideas.

Real estate is the BEST way to wealth, bar none. Learn it, buy SFHs for long term rentals. NO DUPLEXES, too much work (need to spend time with the kids). Get a self directed Roth IRA and convert your current IRA into that. The Roth will be your retirement. Use it to control real estate with leases and options. You'll need friends in the business to help with that (experienced investors only). You'll need a LOT of education on real estate investing. But only from those that have done it and still teach it. Don't take courses from Kids under 50 years old, you want the experienced ones only and expect to pay in the $600 range for a weekend course.

 First of all, you're too young to be free and clear (unless you've met your financial retirement goals. You need more debt. Buy more leveraged properties and/or put some debt on your current properties. Enough to give you a few year of close to no taxes with paper losses, and then have a "bad year" and roll your ira into a self directed Roth. Work that to control real estate for future profits to reinvest within the Roth until you've met your goals. And use your rental income to pay down your new debt over time. SS is a very small part of retirement income. You should have all the money you'll ever need in perhaps 10 years or so and tax free income from the roth.

Good info, but there's an argument to NOT own real estate In your sdira... too much risk. Much easier to just control it with leases and options and reap the benefits of rental income and appreciation easier.

Also, while Equity Trust may have some good info, be very cautious of who you choose for a custodian. Some have some questionable history with doing things wrong, costing some investors thousands.

What is the best way to list your kid (friend) on the trust documents so they get the property (I currently have them as successor beneficiaries).

Is there any advantage of putting them as Trustee?

You don't say how much equity you have in the property, but guessing, with that payment and you put 20% down, you have close to $100k in equity.

You could sell that equity (or part of it) to and investor that would cover the negative $1000 a month. Perhaps, give him 75% of the house to cover the negative. He would contribute that $1K for 8 years before he hit that $100K equity. And if you live in ANY decent town in the US, that property should increase about 3% per year. After 8 years that property should be worth about $800K and the rent should be in close to $3K a month and you'd have north of $300,000 in equity.

You could continue to rent or sell, and you'd get back close to $75k for your effort managing it for 8 years, but you'd have no negative. The investor would get $225K, giving him about 18% on his money. Win/win. And you would have had a very good seminar to learn from for your next deal.

I did a very similar deal years ago, where I had a negative cash flow and came out fine.

You'd want to work the math over a bit to be sure it's accurate.