All Forum Posts by: Pat K.

Hi Arnold,

I wonder if this info would be helpful to you. I found this on BP

Typo correction: the lender that is working with clayton that will do 100% financing of new clayton homes to be moved into your lot is: 21st Mortgage. The Community CASH program finances new clayton homes for parks.

Examples: True Home has a 14’x72′ 3/2 basic home for $19k plus hauling, setup and ac putting total cost in a park near a factory at around $25k. Financed to a tenant this might be a $350/mo mortgage plus lot rent is the total a tenant would be paying. We are raising lot rent for the new homes coming in.

Riverbirtch has a nicer home for $23k plus shipping, setup and act putting total at around $29k with a proportionately larger mortgage.

Contact Betty: BettyBeeler at 21STMORTGAGE.COM

We found wholesale HVAC to be cheapest at: http://www.blevinsinc.com they are nationwide. Setup your park’s account and see what discount you get. A 3ton split heat pump 14seer is around $2.2k plus install which they find local installers for often around $700 per.

https://www.biggerpockets.com/renewsblog/2016/05/23/advantages-working-mobile-home-builders-dealers-investor/

Hi Justin,

Thanks again for your thoughts, always very informative.

Hi Justin,

I'm sorry, please forgive me. I didn't make myself clear in the above post.

In the above post you state a solo 401K is restricted against transacting with a disqualified person. I believe the Solo 401k rules permit you to combine personal funds–and is referred to as Tenancy-in-common Ownership–with your Solo 401k in making the purchase.

Tenancy-in-Common Ownership: allows you to buy real estate with personal funds and Solo 401k funds. Each will own a specific percentage of the property. As a result, the income and expenses associated with the investment will be proportionally shared based on the ownership percentage. This type of arrangement also permits you to invest your Solo 401k with family members such as your spouse or siblings. Again, the key is to adequately reflect each investor’s percentage of ownership on the paperwork and that the expenses and income are proportionally shared by each party to the transaction. 

https://www.mysolo401k.net/purchasingbuying-real-e...

Always a pleasure chatting with you Justin.

Hi Justin

I agree, the simpler the better. I always recommend to clients that they seek out professional advise with any and all investments with retirement funds. Self directed IRA/401K's are great, but professional advise is essential!!

What do you think about a newly formed IRA/LLC and a new investment asset so long as the IRA is not enabling the the disqualified person.Meaning the IRA owner could make the investment without the help of the IRA. Both would be taking proportionate risk and burden of the investment, when they are investing at the same time and when they both are receiving ownership with the rights to profit and loss based on their specific dollars invested?

I enjoy your comments Justin.

Hi Justin,

Yes, you are correct, my mistake about the IRA funds. If the funds were part of a solo 401K then those funds could invest with the investor, correct???

Hi Joel,

I am not an expert with commercial lending nor self directed IRA's. But here is my thought, maybe Justin can jump in with his thoughts too.

If your client wants to use some of their IRA funds for the purchase, why not let the IRA loan the money ($300,000) to your client/the investor?? The IRA does not need to be a co-purchaser. The IRA can lend money at market rates (don't want to discount the rate because of self dealing) The IRA will charge/make whatever % interest rate, which the investor would be paying any way to another commercial lender. So on the $300,000 the investor is paying them self whatever % rate to their own IRA. Maybe with tax savings??

The investor gets a 1st recourse loan/mortgage with a commercial lender with the better rates, they also get a 2nd recourse loan/mortgage from the IRA with the better rates. When the investor wants to sell, they do a 1031 exchange. I think maybe this would work for your client??

I think people get all mixed up/confused when dealing with IRA's and 401K's. Always remember IRA's and 401K's are separate entities from their owners!!! Sometimes the IRA's / 401K's will be co-owners, sometimes they will be lenders!

Let me know what you think!

hi Joseph,

You may want to try Suburban West Abstractors

https://www.subwest.com/ I have used them previously. I usually do my own research using the online court house records search.  If you do not fully understand how to purchase sheriff sale properties, you should learn that first. This is not an area where you learn as you go. You could end up buying more (liens) than you thought. As an example: lets say there is a property with a first ($200,000) and second ($50,000) mortgage. The market value of the house is $260,000

 The second mortgage is doing the foreclosing. So at the sheriff sale you are bidding on that second mortgage.  So if you are the successful bidder, with a high bid of $55,000 you may think you just got a great deal and you are going to make $200,000.

Surprise, you get the first mortgage ($200,000) too!! That first mortgage does not get removed!! you also need to pay for state transfer tax. If the property was occupied and the parties do not move out, you will need to start an eviction with the sheriff office. That can take some time and money, and then they may destroy the property when they finally do leave.

What may be safer if you are new to foreclosures, to contact the homeowners weeks before the sheriff sale. No pressure.

Hi Larry,

Please don't put yourself down by calling yourself a corporate drone.. and then feel the need to justify to us why you are. (as long as value is right) It doesn't sound good.

The fact is... you have a job, like many people, so you can pay your bills and have a life. 

I am a little confused with your statement that you would like to "one day convert an IRA" Is this a personal IRA or some type of company retirement retirement plan?? If this is a personal IRA, as soon as you open any type of business and become self employed, you can convert it to a solo 401K.

You could open a Tupperware or Mary Kay Cosmetics business and then convert your IRA, so long as you work the new venture as a real business, trying to make money! If you think you will open some type of business and not work hard to make it profitable (just use it as some cover to convert your IRA to a solo 401K) think again! If you get caught by the IRS doing this, you will not be happy!!!

As Justin says, you could be a consultant or sub contractor within the industry you currently work, you could do this on a part time basis and this would be your self employment business to convert your IRA to a solo 401K. You probably should search Google for business ideas, as we can not really give you any ideas, as we do not know your areas of expertise or likes!

As far as your questions about converting IRA/401k's, I would highly suggest you pick up the phone and call Dmitriy and Justin. Why not call the experts??? They would be most helpful for your situation and will give you valuable information. Seriously, IRA/401k's are not an area you want to go it alone without expert help!!! You are dealing with tax law and the IRS!!!

Best of luck to you!

Hi Demetri,

You will not be able to invest in real estate when you have your funds in an account with Vanguard. You will need to move your account to a custodian who allows for alternative investments. 

I highly recommend  www.mysolo401K.net

Their website is full of great information and they welcome you to call in with any additional questions you may have.

Brian from Safeguard Advisors gave you an informed answer. However, when going to their website, it seems they are making the statement that if your solo 401K obtains mortgage financing that you will need to personally guarantee the loan. It is just not worded/written clearly on their site. 

A Non recourse loan means You Never personally guarantee a loan!!! Only the property guarantees the debt.

This is what their site says:

Lending Guidelines

This type of loan is higher risk to the lender, and their underwriting policies are going to me more conservative as a result. Typical guidelines you might find are as follows:

Down payment of at least 30%. Condos as high as 50%

10% – 15% cash reserves in the plan at the time of the loan

Terms range from 5/1 arms to 25 year fixed rate loans

Rates will generally be 1% – 1.5% higher than a typical investor loan with a personal guarantee. A range of 4.75% – 6.25% is common, depending on the loan terms.

Clean, cash flow properties work well. Options are limited for properties requiring extensive repairs or raw land.       http://www.ira123.com/learn/ira-mortgages-lending/

Please see the following site, it may be written more clearly for you  https://www.mysolo401k.net/reale-state-401k-purchase-methods/

• As Trustee of the Solo 401k, do not guarantee a loan to the Solo 401k as the regulations do not permit it.
• The loan to the Solo 401k must be a non-recourse loan, meaning that the trustee cannot be held personally liable for the repayment of the loan; nor can the lender take recourse against any other assets of the Solo 401k, only the property purchased with the non-recourse loan. https://www.mysolo401k.net/reale-state-401k-purchase-methods/

Also, make sure to check each companies fees. They can vary from a few hundred dollars to a few thousand.