All Forum Posts by: Bill McGrath

@Mark Nolan Thanks for the link.  I've been to the IRS site and have the basics down on the fact that this investment will trigger UBIT.  Now, I have some questions for RE tax experts.

@Daniel Dietz thanks for the tax expert links.  I'll definitely reach out with my tax questions.

Cheers

Bill

Thank you for the replies and information.  I think we've settled on self directed IRAs for this.  I would, however, like to talk to a tax accountant who is familiar with UBIT and SD IRAs before committing.

Can anyone recommend a good tax accountant with RE and UBIT knowledge?  I'm in southern California.

Thanks!

My wife and I are preparing to invest with a group in an LLC that is purchasing two RV parks. We both have IRA funds with different custodians, but would like to roll them over into self directed vehicles to invest with the RV park LLC.

I've read several threads on the pros and cons of Self Directed IRAs and Solo 401Ks. The LLC is purchasing the properties through a 1031 exchange, plus obtaining a loan. I'm still a couple weeks away from the details of the downpayment/loan ratio. I am aware that the accounts for my wife and I must be separate.

I'm concerned about the Unrelated Business Income Tax (UBIT) aspect of a SD IRA. However, I'm not clear on how easy or difficult it is to open Solo 401ks for myself and my wife, in order to invest. At this point, we have no other business to open the solo 401k with, and I currently have a 401k through my job.

The LLC will be paying out a dividend of about 5% per year, which will go back into either the SD IRA or Solo 401K. We are both in our mid 50's, so not too close to retirement.

Given this situation, which is the best way to go?  What are the potential issues?

Thanks for your input!

Hi Luis,

Did you ever take the David Tilney seminar?  He spoke at our local club this week, and was very interesting.  I'm considering taking the seminar for the Master Lease Option info, just wondered if you had pulled the trigger.

Thanks

It's funny, but as I was writing the post, listing the red flags and positives, it was pretty clear what the answer was.  I passed on this.

@Darren Eady, thanks for the quick response, and I'd love to connect.  Good advice is definitely appreciated.

@Steve Babiak, you're right, not much to rehab. I saw the repair estimate, and not any major items, but alot of little things. The house is in pretty good shape, as far as I can tell, but it did spend close to 3 months on the MLS before these investors came in.

@Jeff S, I have run the numbers and seen the holding costs.  It's good to know what to expect on a return for so cal.  I came up with about the same gross profit as you, $29.5k, but it's what they don't know that concerns me, being the first flip.  Thank you much for your input!

I have a deal that's come my way through a mutual friend who is doing their first flip.  They have a hard money loan for 70% of the purchase price, and need the other 30%.  They're  offering 12% for six month, interest only, on $150K.  I've been provided the hard money agreement, which puts me in the second position.  

The house is in good shape, in so cal. Purchase price is $695K, ARV is $905K, with rehab costs estimated to be $60K.

I've been provided the holding costs, and they expect the rehab to take 6 months. 

As this would be my first foray into RE investing (much less private money lending), I'm looking for some advice.  Am I crazy for considering this?

Red flags:  This is their first rehab, second position, money tied up for six months.

Positives: Learn the process by participating, put my money to work, rehab is local.

I've seen the property (outside).  Any advice is greatly appreciated.  Thanks!!

Simon, I like the letter. You hit on some great points. I'll tweak with a few points of my own. I appreciate the response.

Hi Stephanie and Ted, from what I can see, CA has similar rules in place for ss. I'm working on finding a realtor who specializes in this type of thing. I'm also attending a ss lunch and learn next week in my area to learn more. Your post definitely helped point me in the right direction.

Stephanie, Are you doing SS's in WA?

Thanks for the response.

Thanks for the heads-up on short sale rules. I'll definitely dig into the distressed property laws for California. I'll post what I find. I appreciate the feedback.

I've recently connected with a friend who is a mortgage broker, real estate broker, and does BPOs as filler work. We are working out details of him notifying me when he runs across a property that he thinks might be headed for trouble. Can anyone help with some ideas or examples of letters to make contact with owners in this situation(before the realtors do)? The owners would likely be behind several payments.

This seems like a great lead source. I'm located in Orange County (Southern California). As you can probably see, this is my second post (after my initial introduction). Thanks for any help.

Bill