All Forum Posts by: Mark S.

Like many others have said, my biggest obstacle is me.  I've been on BP for longer than I care to admit (I guess if you REALLY want to know how long I've been in analysis paralysis, you can check out my profile ;-), and still haven't pulled the trigger.  

I definitely have the extra time, but am having trouble finding deals. I've been looking on Craigslist, have a local realtor set up MLS alerts for me, but haven't found what I'm looking for yet. Like someone else said, sometimes the rules of thumb are difficult to come by. For example, instead of 2% rule, I've seen it closer to 1.2% being "decent" where I am. I know many others will disagree (and somehow are finding better deals), but so far, I'm not.

Cash is a secondary concern.   I'm working on building more cash, although finds from other investments could easily be pulled if the right deal surfaces. 

@Jeff G., I am with you and have this debate with myself constantly.  One thing that no one has directly mentioned yet on this forum post is the taxation of REITs.  Most REITs, although their dividend yields are attractive, are paying ORDINARY dividends (versus QUALIFIED dividends).  This can have a major impact come tax time, depending on the type of account you hold the REITs in.

My personal strategy is having my Roth IRA almost entirely invested in a diversified portfolio of REITs. Yes, the money isn't immediately accessible to me (I'm not 59 1/2) - and I know you can always access contributions (not earnings) tax/penalty free regardless of age, but that's another story here - but when I do withdraw funds much later in life, everything will come out tax free. I'm essentially just reinvesting the dividends, even when certain REITs have been on a downswing, to accumulate as much as possible. Then, I have a tax free bucket of massive cash flow in retirement. No, this doesn't give me an immediate benefit today, as I don't benefit from the cash flow today, but then again, aren't most real estate investors building rental portfolios for financial independence at some later point in life?

I'm not saying REITs are better or worse, each has its place; I am saying, though, that I would very carefully look at the account type that you're holding REITs in.  If you're buying REITs that pay ordinary dividends in a taxable brokerage account, you definitely want to factor that taxes you'll likely be paying when you consider your return figures.  

Always consult a qualified tax professional for you own personal situation.  This post is not intended as advice, just information and my personal opinion.

I agree with @Matt Mason.

This may not be the best answer to park "chunks" of cash (due to the caps on how much you can have), but I am a HUGE fan of high yield checking accounts at credit unions. You need to shop around, as they all have different interest rates and hoops to jump through, but I actually find it sort of fun. My newest checking account pays up to 5.09% APY on balances up to $20,000. I have another one that pays 3.00% APY up to $10,000. There are many other, similar ones out there. For longer term timeframes, large cap stocks with solid dividends are my preference, especially when they pay QUALIFIED (not ordinary) dividends. More preferential tax treatment. Just my two cents.

@Phil Van Dyke@Steve Spencer

Hey guys, new investor looking to get into buy-and-hold rentals in Richmond/Lexington, KY (Madison County / Fayette County).  I would likely be using conventional financing.  If that's not an issue and you'd like to add me to your lists, feel free.  

I've been on BP for a while. I've listened to every single podcast, (used to be a lot more) active on the forums, attended a couple of webinars, read several books (reading Millionaire Real Estate Investor by Gary Keller right now), and have used the Rental Property Analysis Tool numerous times to evaluate deals. I'll admit I've basically sat out this past year when it comes to real estate investing and was focused on other things. I'm not getting any younger and know I need to get in the game. I found a property that COULD make a decent rental, but it definitely needs work (new floors, new windows, updated kitchen and bathroom, etc.). I walked the house with my realtor this morning. Neither one of us are any good at estimating what it would take to rehab it, and without an inspection, I'm sure there are other things we're missing. The area seems great, it's right off a main road that connects two larger towns (one has good jobs, the other not so much). I think I'm more excited about getting started than I am about the actual property. I'm considering making an offer and almost using this as a learning experience if it doesn't go well, but I'm not sure that's the best move. Since it's a low priced SFR instead of a multi, one thing that makes me feel a little better is that one possible exit strategy is always to try to sell to an owner-occupant buyer. Ideally, I'd like to have it as a buy-and-hold rental. To me, this poses less risk than a more expensive multi-family tha I would more than likely only be able to sell to another investor. Any thoughts?

@Digger Odell, also if you're planning to replace the funds and re-invest with the proceeds of the ultimate sale of your first home, you could do this in the taxable account, but not the IRA. The IRA would need to be funded via regular annual contributions, rollover contributions, etc. So, basically, not only is it likely better to take from the taxable account for tax reasons, but also for the ability to later replace/reinvest the funds. You should consult, as others have said, your tax advisor and/or financial advisor.

So, you're expecting to put $30,000 down and recoup $28,800 in the first year?

Sorry to hi-jack this thread, but I am also looking for small multi-family (2-4 units) - duplexes, triplexes, quadplexes in Kentucky within about 30 minutes of Lexington, KY.  Ideally looking for A and B class neighborhoods.

I hope it's not bad etiquette to post a "me, too!" on someone else's thread, but hopefully there's more than enough to go around.

Thanks.

I'm not sure I would want to rent to a tenant without a bank account.  That's just crazy.