Penalty Free COVID Roth IRA Withdrawal? Need Private Money

[Matt Camilliere]

Hi BP Community,

Firstly - has anyone had any experience taking money out of their Roth IRA during COVID-19? I heard there's a 100k withdrawal allowance with no penalty and a 3 year grace period to replenish withdrawn funds. I'm thinking about pitching this to a few potential investors to fund part 2 (below) of this post - what are the tax implications of an early withdrawal and has anyone had experience doing this yet?

Secondly - I am looking for private money (5 figure range) to partially cover hard money costs (15% down, 2.5 points, 11.5% interest - 100% funding). I am based out of Austin, TX and am open to discuss with anyone looking to make an easy 8-10% on their money (ATX would be nice, but not necessary). $$$ needed for Flips and/or BRRRRs.

If anyone has further advice on raising private money please advise!

[Alex G.]

Re: second part of your post.

You are OK with paying what roughly amounts to 13+% to a hard money lender who is well secured in the 1st lien position. Yet you plan on offering 8-10% to a private lender in a secondary position who will be taking all the financial risks in your transation while you have none.

To call this "make an easy 8-10% on their money" is just plain silly. If you looked at the list of foreclosure postings in Travis and Williamson county, you'd find a good number of these hard money & construction loans being foreclosed every month. Probably well over a hundred bodies could be found at the foreclosure cemetery over last 3-4 years of the rehab boom in Austin.

A friend, who is an experienced rehabber, was sued by the buyer who bought his remodeled home. He subsequently spent 2.5 years in court and paid tens of thousands in legal fees to his lawyer to defend himself. He was eventually forced to buy the house back and give the buyer all his money.

There are no easy rehabs. Risks of multiple kind are a-plenty in every one of them.