Where to put my money NOW

Question

I am in the beginning phases of putting together an investment team specifically targeting multifamily properties. I have a few questions regarding money and recommendations of putting it moving forward. I normally contribute about 1250 dollars towards my TSP (Im currently active duty) and I pay my wife a "retirement" vehicle of 350 a month for her Roth IRA. Obviously with the economy downshift over the last week or two, I have lost a significant amount of money in both the TSP an Roth IRA.

1) Should I roll the current TSP and wife Roth IRA amount into a SDIRA and make new payments of 1250+350, so 1600 month to the SDIRA?

2) Leave the TSP and my wife Roth IRA I pay monthly a lone and open a SDIRA and contribute the 1250+350, so 1600 month into the SDIRA?

3) Can my wife roll her Roth IRA into my/our SDIRA or does that have to stay in individualized accounts?

3) I am not very sophisticated with SDIRA, but understand the premise of do's and don's with it along with the tax advantages of using the money to potentially get into a deal and that portion of capital gains would go back into the SDIRA as a "retirement vehicle". Rinse and repeat to allow some breaks a long the way In my real estate journey.

Lee

Carl Fischer · Answer

@Lee Ancona

First don’t jump unless you have a reason. Don’t sell low and buy high. I administer SDIRAs and they provide more choices and diversity but only when the time is right.
cash is king today and Generally hold it while things are crazy. “When in doubt get it out”
if you think the markets/assets are tanking sell what is going down and buy it back when it’s bottomed or on the way up.
if the markets/assets are going up buy the assets going up the fastest and furthest.
Account type will depend on your assessment of the economy and asset types.
Panic does not end well—get a plan preferably before panic sets in.

Try to not only to survive but to thrive in the uncertain times.
what you do will depend on your assessment of what is happening. There are ways to mitigate risk but those strategies can’t be easily put in the forum.

Carl Fischer · Answer

You have to check with your TSP provider and see if you are allowed to convert/rollover to an IRA. You and your wife will have to have separate IRAs -they cannot be combined into one IRA. However the IRAs could invest in the same property with an equivalent percentage of ownership based on the money spent from each Ira.

@David Pere is suggesting you don’t sell low and buy high and it may be prudent advice today.  it is cheap and easy to open up an SDIRA  so you are prepared if you want to use it.

Michael P. · Answer

You can’t just roll money out of a TSP you can only access it when you retire or else you can take a TSP loan up to 50,000

Levi Rudder · Answer

@Lee Ancona I don't know anything about the TSP, but you could roll the Roth to a SDIRA account (I use Quest Trust Company, because of their ability to fund deals quickly and the education and support they provide. *I'm not compensated in any fashion by them.) Rolling the funds over and not just funding new accounts would allow you to fund deals faster due to their bigger balance available to work with. But, it would be in an individual account and not a joint account. However, in a lot of states retirement accounts are considered community property and if you got divorced, you could still be entitled to half the balance, if that's what you are concerned about.

What size multifamily are you interested in, and would you have a manager or self manage? A quad you would probably be ok self managing, as long as you don't do the repairs and maintenance yourself while using retirement funds. I'm not an accountant or an attorney.

Greg Scott · Answer

It is my understanding that you  cannot use a SDIRA to invest in properties you buy & manage.

There are lots of other costs and pitfalls in using an SDIRA in real estate investing.   While it can be done, most investors I know pay the tax and penalty and invest outside the government-run plans.

Ian Walsh · Answer

At the moment...under your mattress.

Lee Ancona · Answer

Thank you for your reply, it is much appreciated. I currently do not have an SDIRA and understand that I can utilize the monies in that vehicle as a down payment to get into real estate properties, which will provide some tax free advantages. My questions are, can I roll my current amount in my TSP (401k equivalent) into an SDIRA and start contributing to the SDIRA (max amount) and whatever I have left over put back into the TSP account. Furthermore, I would like to maximize my opportunities to succeed in my first commercial real estate deal. I believe the SDIRA would be able to assist in this, however, I am trying to figure out the "gate plan/way ahead" as you spoke about. Additionally, can I roll my TSP account money, my separate Roth IRA, and my wife's Roth IRA all into "my/our" SDIRA? thank you again for your reply and assistance, I love learning.

Lee Ancona · Answer

Thank you for your detailed reply. I am not worried about the accounts "becoming a community property" in case of separation or divorce. I was asking that question to see if I can roll over the amount in my wife's Roth IRA to "My/our" SDIRA. For example, if I have 100k in my TSP (military equivalent of 401k), and 25k in my Roth IRA from a separate account and my wife has 25K in her Roth IRA, can I roll all of these accounts into the SDIRA and then continue contributing the 1200-1600 dollars monthly into the SDIRA (I understand there is a max contribution amount), so max it out and then contribute the rest to my TSP.

Currently I am looking in the small scale of commercial real estate from quad to 50 doors right now. If the deal presents itself and the numbers make sense, I will go larger.

Where to put my money NOW

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