Lack of Experience, Inheritance and the SECURE Act

[Connor Phillips]

Hello Everyone, 

I am a longtime reader, listener of BP's work and community. That said my knowledge is fragmented and my tangible experiences close to non existent. Part of that is the lack of overlap in terms of professional experience. I am an Artist and in my 20s. Thus the assurance of leveraging salaries into assets, living in cheaper cities without an arts market and generally having no money to think creatively with have gotten in my way. I have always known the power of real estate investing but the navigation of its possibilities personally have been often halted by lack of money and career searching in a financially unreliable industry. 

I accept a lot of those issues are both self induced and partially inherit. No one majors in Painting with the expectation they will be rich. But in the same token the understanding of intelligently navigating that narrow truth responsibly is possibly all the more crucial in creating some version of financial stability.

That importance I am feeling most acutely this last month when I came into money through the death of my father. My Dad was encouraging of a different life path but he lived in large part in sacrifice of loftier dreams to create a nest egg that would hopefully make things easier for me and my siblings. In an instant a lack of consistent jobs and earnings has been juxtaposed with an inheritance IRA that is close to 200K. A gift I know I am incredibly blessed to have and completely unprepared for. And with those factors I'm navigating the dichotomy.

To get specific, the SECURE act also adds to that unease as it forces all that money to be withdrawn in a 10 year window. Reasonably the interest is to make that money into profit generating assets, not to spend or live on. I have no interest treating that money directly as spendable if not in the shape of an asset. Which makes me turn to real estate. As mentioned I have tracked the blog for years. I can evaluate properties, have analyzed markets and know terms and approaches. But my lack of loan viability and personal money along with me living in expensive cities, the common options seem less than obvious. 

I have no salaried job, and live in expensive markets which collectively likely negate a property being my residence. Which rules out live in flip or a house hack strategy likely. But if I look elsewhere the benefits of the FHA loan become void, and the possibilities of Multifamily likely a too expensive entry. I have flirted with commercial, specifically USPS Post Office investing considering the entry price and long leases but on digging have found volatility with USPS writing favorable leases they can get out of. Facts considering the specialized building type make be steer away. And all of this is on the base assumptions I could muster getting a loan under my name and find a cosigner etc.

All these variables along with the time to withdraw considering the scaled income taxes I will pay make me perplexed. 

I'm a specialized case and I understand my privilege in my problem. No one can directly provide the one answer, that has to come from the source and through trail and error. But if anyone has suggestions in the way to think about this and the trade offs or considerations maybe worth weighing I would greatly appreciate the insight and knowledge. If not just the cautionary tales in what not to do. Being even in these blogs we are all aware that money helps create money when considered systematically. Its with that in mind that my relationship with this is to generate a similar opportunity for my kids and build long-term stability as much as possible. All is welcomed and deeply appreciated.

Best, 

Connor