How much $$$ do I need?

[Renata McCulloch]

Good Morning, I have a small IRA (less than $20k) to start investing in RE. Is there a way to start investing in notes without having a huge amount of cash? Who is doing this in Seattle? I keep hearing it can be done, but not sure how. Would I be better off purchasing a SFR in the Midwest to rent? I welcome your comments. Thank you in advance. Renata M

[Christopher Winkler]

Thank you Tiger, appreciate the plug. Depending on who your IRA is with, we have seen them approved same day, thank you Quest IRA. You will need a self directed IRA that will let you invest in non-traditional assets. I use Quest for my own IRA and I am not paid to talk about them, though I love them. Everyone answers, "Quest IRA, this is Yuri, How can I make your day?"

So if your IRA is not self directed, go to their site and contact them to get the transfer started. Otherwise we work with the others. We set up a series LLC and the investment is in the LLC, so they have no problems funding it. I can explain the mechanics.

Regarding that price point, it would make sense to go with a 2nd lien vs a 1st as the firsts we bought last year for similar investors turn out to be such low valued houses that unless you rehab them, you will not make little to no money. I always put a rehab into a 1st lien now as we typically have to foreclose, so you have to allocate for that also. Also holding costs are higher than 2nds.

So with 1-2 2nd liens, we like to keep $5k in reserves for misc costs, and most of it will go to attorney costs should they not want to work with us. That is what wakes them up and it can cost $500 to $5,000, so thats why its good to have a reserve.

Then we attempt to get them repaying or settle for a lump sum and the debt is out of their life, otherwise we foreclose. I have a list of current & done deals, and a business plan for anyone that would like more info if you PM me. Also would love to answer any questions you may have.

Thank you again Mr. Tiger!