All Forum Posts by: Carl Fischer

@Marcus Auerbach

You can play with tax rates with seller financing-price and interest rate long term capital gains.

In today’s environment the banks pay less than 1%on money left in their accounts.

Sellers know the real estate and have a chance to get it back in case of default and keep the down payment.

It is secured, tangible, insurable, and the rate of return is known not like the stock market.

It produces monthly income similar to social security without the government involvement-mailbox money.

It can be spread over a long period or ballooned.

It generally doesn’t show up on the borrowers credit making them ineligible for another bank loan.

@Dustin Peters It all depends on what your goals are. The good news is that you're making money and you have some to save. I think it's always good to save in a tax-advantaged way because it really increases your net worth and cash flow depending on your circumstances. For myself and my company, we decided for a 401(k) because it was advantageous to ourselves as owners and to our employees. I presently do not use a tax-advantaged plans for my real estate related businesses. The tax advantages with real estate are built in, and W2 income is minimized in saving on social security and Medicare taxes from not making rental income W2 income, according to my CPA. Depending on your situation and maxing your 457 plan, I think you're at a good start. I also have personal IRAs for myself and my spouse to add additional money. I use both my company 401(k) and my IRAs for real estate investing and real estate related investments such as notes or tax liens. If you have any questions, I feel free to connet.

@Mary Arobaga-Reardon - You got a very good answer from @Brian Eastman. If you want to purchase income-producing real estate, I would consider doing it in your 401(k) or your IRA. If you're looking to purchase a home, I think you are on the right track with E*Trade for borrowing that money. You also have the capability to possibly borrow up to $100,000 for three years under the CARES Act, so look into that. There are some rules and regulations surrounding that, but so far, I think the government has been very lenient. If you have any additional questions, feel free to connect.

Hello @Kevin Reid. You have some very good and interesting questions. Let me first say that I am primarily a buy and hold real estate investor, and when there is a great deal, I'm all over it and buy it. I do buy raw land when it is a great deal, and some of it I develop. Some of it I leave vacant because its very low carrying costs, and I will have it available to build when we go into a recession. Right now, I don't feel like we're in a recession because the cost of the tradespeople and materials are still high, but in 2009-2011, it was easy to find tradespeople at good prices to build the home/commercial property. My answer to you, then: if you can get a great deal on the lots buy it. Make a decision on what the rent would be. In your specific area, it is hard to find affordable housing under $200,000. I have been looking into that area and considering pre-fabbed homes on those lots to sell or rent. And those seem to be affordable compared to a lot of areas in Florida. 

As far as getting your retirement home, I am not sure how old you are and how far off retirement is for you, but you can always sell the property you own and buy another one in the same area, or use that house as your retirement home. That is your choice. I am personally a fan of building or developing property, because if you do it correctly, you will have minimal problems in the future. I learned that from my engineering background, and being a buy and hold person, I don't want those problems. Good luck.

Hello @Michael H. - This is a great question. I've had good and bad experiences by lending to people who re-lend their money out. I don't think anybody watches my money better than I do, but time to deploy funds is important. If you can find a good underwriter, build a relationship with them, and understand their processes, that can be very helpful. However, your security may not be tied directly to a property. It may be in a fund, and if things go south, it's a lot harder to collect/take a foreclosure. Secondly, I would take a look at their history in private lending. Most people have been very successful in it from 2012 to today, as the real estate market has increased in value. Therefore, there has been a lot of equity that could be considered reducing risk. Be careful either way that you go. I would also suggest taking courses in private lending before you get into either one of these. I've written a Private Lender's Checklist: 12 Tips to Ensure Your Deal is Done Right here on BP.  If you do not understand these criteria, you should re-evaluate your readiness. Obviously, there is more than these items on this list to consider, but I think it is a great way to utilize your SDIRA once you have the knowledge and understanding. If you have any additional questions, I would be happy to connect.

Hi @Jon Woosley. I would like to start off by saying thank you for your service. It is much appreciated. To quickly answer your question, I would say start with properties in your own state and local area if at all possible. Having one property doesn't give you very much clout with contractors such as AC, electrical, plumbing, property managers, and professionals such as title companies, attorneys, and CPAs, etc., so you will have to do some of the work and coordination yourself in meeting people. I personally have had properties in FL, NJ, NY, WI, NC, and TX and I would suggest not only having local properties in your area, but there is some diversity in safety in having properties spread out. You need to build quantity and your network in those areas. 

The other thing I learned was to make sure these properties are in areas you would like to visit or spend time in. No matter how well you think you can set it up, you will have to go out to those areas at least once per year (and spend some time there). There are advantages and disadvantages to both ways, but starting out, keep it close to home. If you have more questions, I would be happy to connect.

@Jack D.

Your welcome and good luck.

@Jack D. and @Taylor L.
I have been fortunate to see appreciation in leveraged property and have the non recourse loan paid off a year before selling it -so there was no UDFI on the $200k appreciation or any depreciation recapture tax and little to no UDFI when rented most likely because of the 50% LTV. I am in the business so it was not a daunting endeavor. Lending is great in an ira but buying and holding property in an ira/401k has some advantages- like selling a property and then also holding the note and mortgage. I hope this helps.

@Evan Koehler

My mom and dad were in real estate as well as their moms and dads. I grew up around it. It was natural for me -I started looking to buy property in college.  I Did the negotiating for skiing houses over vacations as a teenager to cover my costs. When I graduated college  I launched rockets at Kennedy space center because it was exiting and fun but I also did real estate to gain financial freedom. More money in real estate. I loved real estate even more when I could do it tax free and tax deferred. It was interesting when I read rich dad poor dad. Mailbox money is very nice but I made it the old fashion way -by working hard. There were no BP forums, meetups, or investor groups when I started. No gurus telling me how I can do it fast. I think real estate is a get rich slow process. 

@Eric Littlepage

Get a cpa-you are a rehabber-I’m pretty sure you would do a rehab better than a cpa and I would bet a cpa will do your taxes better than you. 
I was surprised when I got my first cpa 25 years ago how much time and money he saved me. It was probably one of the reasons I have been successful.