All Forum Posts by: Bill Henley

The obvious pitfall is that you must furnish the unit to a level sufficient to generate positive feedback from your guests. You also must do the housekeeping: change the sheets, clean the bathroom, etc.

The seller of our most recent property was the same: no inspection without an accepted offer. I suppose this policy cuts down on tire-kickers, but unless the seller requires the buyer also to waive the inspection contingency, the lack of a pre-offer walk-through really doesn't restrict the buyer. In no-walk-through deal, after we were under contract we had a sewer video done, a general-purpose inspector go over every unit in detail, a seismic engineer inspect and issue a stamped report, and a roofing inspection. If any of these inspections turns up an issue, either concessions are made or the deal is off. Because the protection of the inspection contingency is so strong, I would expect a deep discount from a seller who both refuses a pre-offer walk-through and requires a waiver of the inspection contingency. That would be the same terms as a foreclosure auction; basically a drive-by visual and buyer beware.

Congratulations! I saw that building on Zillow on Day One and was interested but the next day it was under contract! You either had a head start or you acted fast. I think this is a good property, although my wife didn't like the shotgun layouts, which led to our hesitation. As a fellow St. Louis buyer of 2's and 4's, my big question is, who is your lender? We have not got a sub-4% rate with any of the six deals we've done in the past two years.

This is also my thinking, that the enforceability of a loan could not be greater than if your debtor is also your mirror-image creditor. If he/she defaults on a monthly payment, you can default in an equal amount. Of course it would be an unhappy situation for both if it were to come to that, but as a practical matter each party pointing a loaded gun at the other is a high level of security.

I have a traditional IRA, a leftover from a long-ago job, with about $50K in it. I would like to convert this IRA to a Self-Directed IRA, in order to use the capital to add to a program of rental real estate purchases my wife started about two years ago. I have read a few BP threads and a few web sites on SDIRAs, as well as Mat Sorensen's 38-page pdf, "Self-Directed IRAs and Real Estate." In other words, I'm a newb. What I'm getting is that, to use an SDIRA to buy a building with borrowed money, the tax code requires the loan to be a non-recourse loan. What I'm also getting is that a lender -- if you can find one -- will require a down payment of 35-40%. A loan with a 40% down payment makes your SDIRA dollars one-half as powerful as a loan with a 20% down payment.

To avoid the non-recourse requirement, the thought occurred to me, that a pair of SDIRA owners -- Owner A and Owner B -- could make a reciprocal agreement: that Owner A could cause his/her SDIRA to make a loan to Owner B as an individual, with Owner B likewise causing his/her SDIRA to make a loan toOwner A, in the same amount, with the same rate and the same monthly payments. The assets of SDIRA A now include Owner B's IOU in favor of SDIRA A, and the assets of SDIRA B now include Owner A's IOU in favor of SDIRA B. However, the capital itself has now escaped the tax code's IRA rules, because the capital is now owned by individuals. Owner A can now use this money as the down payment on a building titled to Owner A, not to his/her SDIRA, and vice versa for Owner B.

What do the SDIRA experts think of this idea?