All Forum Posts by: Brad Gibson

Wow. Hadn't thought about a self-directed IRA.

Allow me to give some additional context. I'm currently blessed to be able to sock away the max contribution to a 401k with my current company & get a near dollar for dollar match from my employer. 

My wife & I have approximately 300k currently in traditional 401k plans & will continue to max those out each year. 

The thought was to jump start the REI portfolio in an attempt to reach a tipping point & replace a significant portion of our current monthly income with the added bonus of equity & possible appreciation.

Still think the self directed IRA is the way to go?

In addition, can the IRA LLC borrow from Fannie or Freddie? If not, then financing deals will need to be a little more creative.

I'm a new brand new Real Estate Investor. I did my very first deal this past month. Bought a SFR (4-2) with a tenant already installed and approximately $450 free cash flow before repairs and Capex. I'm banking all of that cash flow toward the next down payment along with everything I can save from my "real" job.

So, looking for advice on whether to cash out my Texas Teacher Retirement (about 100k before taxes & penalty) to put toward the down on two or three more rental properties. I no longer work in the school system, so I am no longer contributing to the pension.  

Here are the facts: If I leave it, I can retire at age 62 and draw approximately 40k per year until I pass away.  If I withdraw it, I have to pay income taxes plus the 10% penalty to the IRS for early withdrawal.

I figure I can turn that into 2 or 3 down payments on SFR's that will cash flow about $400 to $500 per month each or perhaps look into a duplex or quadplex...I haven't run numbers on what those cash flow.

Any advice or angles I'm not seeing with this.  Thanks in advance for your perspective.

Welcome aboard. You've come to the right place to learn and get advice. There is a local REIA, but I haven't had a chance to connect with them. Don't be afraid to ask and get advice. I think it helps to keep from having to learn every lesson the hard way.

I looked into Austin near UT campus since it appears my son will be attending school there.  I could find really nothing that would cash flow.  Everything was cash flow negative.  It seemed to be the case just about anywhere in the Austin city limits.  

It might be a great place to buy and hope for appreciation, but it certainly doesn't appear to be a good place to buy and hold for cash flow investment.

About the only thing I could think of is a house hack type off situation that might pay off.

Thank you Alfonso. I'm currently vetting someone, but will keep you in mind should something change. I'm looking to continue to buy in Lubbock, so I'm happy to have another REI to potentially team up with in the future.

BG

Thank you Senthil.  Would the home warranty require a deductible of some sort or are the repair visits $0 out of pocket for covered incidents?

Would a normal home inspection suffice as the check for the working order for the appliances and other parts of the home?  Anything I should look out for specifically?

As to where I found the property, I got the initial lead from Investability.com.  I've got a membership on the site (free) and I've been playing with different cities and niches within those cities on their search engine.  My primary search is always for cash flow.  Be wary about the rosy cash flow outlooks for most of the results.  It is my experience that the rent seems to be higher than reality & the expenses need adjustment too.  It is a good first screening tool, but then due diligence is the order of the day.  I've run the numbers on scores of homes, but only a few met my cash flow standards.

BG

 Thank you for the feedback.  Unfortunately, I cannot do the management myself.  I reside in Midland, TX and both the Mrs. and I have very full time jobs.  I don't mind paying someone to handle the management so long as my PIA factor is low.

 It is between Indiana & Quaker.  Obviously South of 98th to put it into Cooper District.  Thank you for the input.  

Everything I've read says you make your money when you buy.  I don't know that this one is a "home-run" in that department, but I think it'll cash flow OK and keep me from being cash flow negative.

I'm looking at a possible deal in Lubbock, TX and would like some input.  Here are the specifics.

*4 Bedroom 2 Bath in Cooper school district (highly desirable small school system, but home is still within the city limits).

*1,831 Square Feet

*$127,000 sale price

* 20% down on conventional 30 year mortgage with a 4.375 percent rate

* $5,000 estimated closing costs and $0 in rehab.

*$1,400 per month rent with vacancies in the area averaging less than 7%

*$1,680 per year management expense

*$200 per year accounting and legal

*$1,200 per year in repairs

*$1,260 insurance per year

*$2,200 per year in property taxes

Thanks in advance for any advice or analysis.

BG

Thank you Anthony.  I will look up the local Real Estate Investment club.  It appears they meet monthly, so I will try to make the next meeting to see if I can tap into their expertise and wisdom.