Sinlge Family Rental Purchased By a Defined Benefits Plan

[John Myers]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $225,000
Cash invested: $225,000

This is a long term buy and hold investment. This is a single family home and is used as a long term rental property.

I own a real estate brokerage and it is set up as an S corporation. One benefit of an S corporation is the ability to create a Defined Benefits Plan (Retirement Plan). The plan was created by a company that specializes in retirement plans.

Creating the plan was a bit costly and there are annual costs to prepare documentation for the Federal Government. 

What made you interested in investing in this type of deal?

There was cash in the S corporations accounts. My accountant discussed creating a defined benefits program through the S corp. It made sense from a financial perspective.

How did you find this deal and how did you negotiate it?

A sales rep with the builder called me and said they need to sell this house fast.

How did you finance this deal?

This was a cash deal paid from the defined benefits plan.

How did you add value to the deal?

This was a new home and the Plan hired a landscaper to landscape the backyard. It was a new home and needed no repairs.

What was the outcome?

The home is still held the Plan.