All Forum Posts by: Brandon Addison

Thanks for your patience and clarity, Brian!

Let me see if I can summarize :)

1. Contract employees (like me) are able to contribute to a Solo 401K.

2. Contributions to the Solo 401K incur standard payroll taxes (in my case 15%)

3. Pre-tax may be liable to tax consequences for "flips," but holding properties are not liable to taxes until distribution. 

Ahh! Thanks for clearing that up, Brian!

I took the two sentences from the linked article above to say that it was not an option:

"Solo 401k can be established by anyone who has legitimate self-employment activity (part time is OK) and who does not have full time employees working for them. Independent contractor are not considered employees."

So I have two follow up questions: 

1. Do I avoid paying Social Security/Medicare tax if place all my money in the pre-tax option?

2. Are tax consequences of a sale of future property incurred at time of sale or at time of distribution?

I've done some reading on the advantages of Solo-401K options (this article was awesome!).

I am hoping to use funds from my adjunct teaching to invest in real-estate and was hoping I'd be able to shelter this income by dumping it exclusively into the Solo 401K. It doesn't appear that the Solo 401K applies to contractors, however. 

Since the Solo 401K isn't an option for me, are there other tax advantaged options that 1. Allow me to significantly reduce taxes on the contracted income 2. Allow me to invest in real estate?

I appreciate everyone's thoughts. 

I wanted to loop back around on this one to tie up the knots. Went with the re-fi and locked into 3.75% and effectively got $2,500 back (credits were put into escrow account which we are closing to access those funds) while eliminating PMI. I feel like we hit the lottery...

If this residence were different from our primary we may have taken the equity and invested in another property, but the $400+/mo reduction in our mortgage was too good to pass up. 

This leads me to a follow-up question: I could have taken out the equity, but if I did that I would have needed to make a risk-adjusted return greater than $400/mo to "justify" that decision, right?

Hello everyone!  I currently work full-time and am involved in writing projects/adjunct teaching. I'm in the initial stages of looking to invest in real estate for the purpose of diversifying my long-term investments. I'm leaning toward a buy-and-hold strategy, but my wife is *very* risk averse. We live in Los Angeles (earthquakes don't concern my wife as much as real estate) and investing in real estate in this area is very difficult for a beginning investor who is not looking to take on a substantial amount of risk.

I am originally from South Bend, Indiana, however, and my childhood best friend remains in South Bend and is close to becoming a CPA. He also has interests in getting into real estate and because of our long-term relationship, I think we could make good business partners. He has an accounting background that could help us immensely and he is close enough to the area to be able to address pressing issues. The cost of real estate in South Bend is significantly cheaper and partnering spreads the risk substantially (it also presents the opportunnity for trips home to family to be business/pleasure, representing tax benefits). 

The only hesitation I have is that his friendship is worth more to me than becoming a billionaire real-estate investor. I'd be interested to hear from any current investors who are in partnerships. What are the things we need to consider as we assess this opportunity? 

P.S. I've read the BP Beginners Guide, which discusses partnership. Good info there! I'm just trying to see if there is any additional info in the experience of others. Thank you all for your consideration!

Hello BP forum!

I'm beginning the process of exploring real estate investment as a means to create passive income, but I'm currently in the researching phase.  In attempting to learn about broader investment principles I have a personal question that I am currently mulling.  I want to know what things that I should be aware of in personal and future re-finance situations.

In my current personal situation, my wife and I purchased our first home in October of 2015 and have enjoyed a number of the benefits of home ownership. We also got what I believe is a phenomenal deal. Some recent comps (sq footage, neighborhood, quality, etc) in the area indicate the property value has increased nearly $100,000 since October (at the time of purchase other related comps were going around $50-60 more than our purchase price). 

Due to appreciation of homes in the area, I'm looking at re-financing to eliminate my PMI *and* lower my interest rate. Mathematically, it seems to make perfect sense. The re-fi would add over $400 a month in cash flow due to PMI reduction and the lower rate. The re-fi's I'm considering are no cost re-fi options (FYI: no official appraisal on the property).

Of course, I have interest in this as my personal home, but I'm also curious if this were an investment property what the best course of action would be to monetize the current "market" price of the property. Letting it sit would be inefficient, but I'm curious what investments strategies could be used in a situation like this.

Thanks for any thoughts!