New to Real Estate · Los Angeles, CA · Member since 2021 · 70 posts · 31 votes
I am currently looking to fund my first deal within the next 6-12 months, and wanted to see if you guys had any advice on how you would approach the situation in my shoes. I am a first time investor & would appreciate any tips/ advice from you all. Thanks in advance.
Looking for:
• Multifamily rental in Indianapolis
My current financial situation:
• ROTH IRA - $98 K Total (YTD Growth, 24%) / Available to take out $10K (w/o penalty, from either Roth or Simple, only 1 acct). ($46K in contributions)
• Simple IRA - $39 K Total (YTD Growth, 16%) / Available to take out $10K (w/o penalty, from either Roth or Simple, only 1 acct). ($33K in contributions)
• Financial Advisor Acct - $32 K Total (YTD Growth, 44%) / $20K in contributions. Still not sure what the penalties are to pull money out, but i have a call scheduled with him next week to find out. FYI its a traditional brokerage account.
Seems like you have made a lot of good moves and Indy is a great town for rentals.
I'd encourage you to look at single family homes instead of plexes. A single family home won't suck up as much of your cash, so you'll have funds for a rainy day. Plus, they are easier to manage and later sell. You also won't have a problem with appraisals on either the buy or sell side, which can be problematic in a market where you won't have a lot of comps.
Regarding source of funds, I would use the money in the brokerage account first. There are no penalties and no paperwork associated with liquidating and using that money. That is an after-tax investment, just like your real estate investments will be. I know it’s probably hard to think about pulling the money out now, when it has done so well invested in the market. However, the market is not always so generous, and it’s best to take the long-term view. I mean, if the the stock market was always going to deliver such huge returns, very few people would be investing in real estate, but it doesn’t, so many people do invest in real estate. A large portion of your net worth will still be staying tied up in the stock market even after selling much or all of your brokerage account holdings to invest in real estate.