Go all in with Real Estate??

Question

Hi Everyone.

Just want to get some opinions from you all.

What do you guys think of withdrawing money from other forms of investment and adding more rentals at this time?

Have any of you done anything like this?
Would this be a really dumb move?
Is diversification still the best strategy?

I just don't think the markets are going anywhere anytime soon and it frankly scares the hell of me so I'm contemplating getting out for good.

Please weigh in and thanks,

John

Account Closed · Answer

Hi John, I'm all in RE at the moment although I stay relatively liquid with my strategy. I try to buy low, let them season for 1-year, then do a cash out refinance after a year. Most of the time, I can pull most of my cash out of each deal. This strategy has served me well, but that's how I stay liquid. The net positive cash flow from the rentals are about an annual salary of a newly graduated engineer now. There were moments that I was even considering cashing out our IRAs, take the penalty hit, and plow all of that money in RE. At the end of the day, I decided to leave them alone. It's a couple hundred. To some, it's a lot of money, but to others it's not much. Well, now you know my RE position. To me, it's an opportunity once in a life time. The key is to stay liquid to weather through potential storms along the way. It has been an interesting ride for us. Best of luck with your adventure.

Account Closed · Answer

Leon, I'm the wrong person the ask this. I don't know. :(

Leon Y. · Answer

Ned Carey Thanks for confirming. Then yes, go all in with real estate!

Ned Carey · Answer

Ryan & Leon, you can invest your IRA money in real estate without taking it out of the IRA. No penalty. You use a self directed IRA and the IRA buys the real estate, notes, mortgages, tax liens etc. just like it would buy stocks or bonds. Equity Trust Company is just one of many IRA custodians that offer self directed IRAs. Search the forum I know there are a lot of threads about self directed IRAs. I currently use my Self Directed IRA to buy tax liens. I have partners who have used their retirement funds for their share of the properties we do together.

Leon Y. · Answer

Going all in. No other time is real estate ever going to be this cheap. Wouldn't say it is the riskiest investment at this moment but you'll do better the more you learn. Minh L. and Ryan M. just a question about the IRA as I am not too familiar. Is it possible to still invest in real estate through trust deed investing/creating a note without the withdrawal penalties?

Ryan M. · Answer

Personally I don't want to be all in on anything. I know the op didn't cash their retirement but would someone go out and pay 30% penalty & tax on money to throw it all in re?

Ned Carey · Answer

Buy low sell high. Stocks, bonds and gold are all at or near record highs. Real estate is the only major asset class that is still low. Presuming you know what you are doing, I see no better bet than real estate now. That doesn't make it right for you. What is your knowledge and skill level in real estate? Real estate is one of the riskiest investments you can make. However the risk is proportional to your knowledge. A skilled and conservative RE investor can reduce his or her risk to very low levels. In general the less knowledge you have the more important diversification is.

Larry K. · Answer

You should. RE is better. Many people dont understand this because mutual funds and stocks are easy to package and sell to the people so that is where their mind is. But if you have your real estate game down then yes, go all-in. In fact invite a few friends along for the ride (private investors).

John Mastro · Answer

Thanks all for your thoughts on this. I`m going to go ahead and move my money out of the markets and buy some more rentals. I just don`t think Wallstreet can be trusted to do whats best for me. Regards, John

George King · Answer

John, I just completed a purchase of rental property through a self directed IRA with funds from a SEP/IRA which I had previously invested in equities. I can't get comfortable with the stock market and I have a good sense for real estate. Too many variables and outside influences on stock values that one cannot control. I like the tangible nature of real estate. Rentals in the Maryland suburbs of DC will turn a 6% return on cash after expenses and I can't find that anywhere else. I manage my own properties and that certainly helps. If we start to see some appreciation in the real estate market, that's a bonus. Its a no brainer to me. Not sure why others aren't doing the same thing. Good luck