All Forum Posts by: Oliver Trojahn

That is a scary thought however.  A roof should last 25 years.  and an old furnace or ac actually only costs 800 to replace installed.  Remember, you pay wholesale for repairs not full price.

Also, if you are truly making 146 dollars cash flow your expenses should already include CAPEX (Capital Expenditure Reserve). So, your deal above isn't a deal.

Good luck:)

Two Ruskin Height Rental Houses for sale. Tenants have moved out and rehab completed.

$80,000 for the pair

Looking for a quick sale on these:

7805 E 107th St, Kansas City, MO 64134, 3 Bed / 1 Bath, Garage: Rents for $850

11121 Bristol Terrace, Kansas City, MO 64134, 4 Bed / 2 Bath, Garage: Rents for $950

Please look at internet for details.

Free property management for one year with purchase.

Call Oliver for earnest money and when you would like to close, 636-575-0543

Originally posted by @Brandon Hall:

@Oliver Trojahn

I'd be interested in learning more about how you avoided that penalty as a withdrawal for the purchase of a home is subject to the 10% penalty tax. Are you sure you didn't receive a loan from the 401(k) instead?

You are right in that 401(k)s and IRAs are virtually the same but there are several differentiating factors, this home buying exception being one of them, the IRA's deduction phase out being another.

View these links for reference:

https://www.law.cornell.edu/uscode/text/26/72 (section (t))

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/401k-Resource-Guide-Plan-Participants-General-Distribution-Rules (see the "Exceptions" section)

http://www.irs.gov/Retirement-Plans/Retirement-Pla...

http://www.401khelpcenter.com/hardships.html#.VbKK...

http://www.forbes.com/2010/03/24/tapping-retiremen...

Hope this helps.

 My plan states it is possible.  Not sure why.  I haven't done it personally.

Originally posted by @Brandon Hall:

Originally posted by @Oliver Trojahn:

On second thought, you can withdraw from your 401k penalty free for your first home purchase.  This would qualify.

This rule is for IRAs, not 401(k)s.

I appreciate your response.  I am not an accountant but I do know that my 401k plan allows for a penalty free withdraw for a first time home purchase.  I would assume majority of plans will allow this.  I also think that if they don't you could still take it out and state what it was for to avoid the penalty.  

Not an accounted but 401k/IRA are virtually the same tax wise.

On second thought, you can withdraw from your 401k penalty free for your first home purchase.  This would qualify.

Well I own 2M worth of rental real estate and contribute to a 401k.

I feel bad for someone that makes irrational moves based on a book.  Even with some success and the ability to quit my job right now I am not.  I also put money into my 401k to get the company match and not a penny more.  That is free money my company will pay me.  It is actually part of your compensation.

I dont need a 401k, i put money into it for the match.  That is a 100% gain.  Invest in bonds then.  I said that once.  I dont know if the market will crash, i think its doubtful.  My money will be out of my 401k and in a self directed account most likely.  At no point will I take the 10% penalty.  Again, invest in BONDS in your 401k.

If your company doesn't offer a match this conversation doesn't even matter.  I would reccomend real estate over a 401k with no match any day of the week.

It is concerning that you need $6,500 to close on this deal and you want to use your 401k and take a tax hit to do it.  I would rather use a credit card (which I use all the time for down-payments).

Two things.  The deal (to my surprise) doesn't look horrible.  You should also be contributing to your 401k to get your company match.  You are making a mistake if you give up free money.  The stock market is not going to crash.  If you think that then invest in something other than stocks in your 401k (bonds etc.).  There is no way that book told you to give up free money.  If it did, I would be surprised.

Do not take the money out of your 401k.  You have the money so use that.  I could find $6,300 by lunch to put down on this property.

The seller should pay for all closing costs in this market.

A better question is what is the rents on this duplex?  That will determine what you should pay.

Quick update. It's a 6 tenant NNN strip mall. Fully occupied Talked him to a 30 year note, 1% above WJS adjusted every two years. 10% down. All leases on personal guarantees. Receiving all leases and financials this week or early next week. Still wants to sell at 6.5% cap. I need to determine the cap rate that is acceptable. Rent increases are 3%. The 5% plus was for the first two years in two different tenants. Thanks again all.

Quick update. It's a 6 tenant NNN strip mall. Fully occupied Talked him to a 30 year note, 1% above WJS adjusted every two years. 10% down. All leases on personal guarantees. Receiving all leases and financials this week or early next week. Still wants to sell at 6.5% cap. I need to determine the cap rate that is acceptable. Thanks again all.