All Forum Posts by: Christie Gahan

Feb2, 2024 video from Brandon Turner. His new fund will be HML. Similar to discussed.

youtube.com/watch?v=zYmq6nyVWYw   

P.S.  Private money lenders get paid upfront.  : )

For the sake of discussion ....  I'm gonna take your Dad's side.

Your Dad should not take the money out. Why?  Losing that tax deferred status is a big deal.  If Dad left the $50k in a tax deferrd acct invested in mutual funds that have a similar rate of return to the last 100 years ....  it should double aprox every 7 or 8 years.  He could live another 30 years so his money could double four times.  Starting at $50k ....First, doubles to $100k .... Second, doubles to $200k, Third, doubles to $400k and Fourth doubles to $800k .   Hmmm.  That's starting to look like real money.   : )     Tax deferred or Tax free compounded growth is no joke.   If he were to take the money out, he just wouldn't make this kind of traction.  Everytime he makes $100 , $50 goes to taxes.   

Shannon: You have been doing well and your Dad has prob had fun watching you.  ( I would)  But, think about the experienced investors that post here.  Candidly, 1 in 10 deals will be stinkers.  Even if you do everything right.  Squatters, insurance hikes, zoning changes, supply chain issues .....  No body is immune from this junk.  How much of your Dad's retirement savings do you really want tied up in this?  10% ?   25% ?   

I love self directed accounts but they are not going to be much help here.  I love that you are taking action and learning.   If Dad wants to move forward with the lending .... he  could form his own business.  Charge you points and fees and 12% or more.  The "profit" goes in to his new Self Directed Solo 401k .... and he starts a new tax deferred account.  But, we are getting a little paperwork heavy ......   If you are not afraid of the Lawyer/Accountant factor .... your Dad could partner with you on a deal with a lot of first year deapprectioation to offset some of the taxes from the 401k w/drawal.

It's time to get a really good accountant that loves strategy.  Not a tax preparer.  You want an accountant that specializes in small business / self employed.  Take Dad.  Have him/her run the numbers.  Awesome investment in your future.  Best of Luck!

Bjorn is correct! 

Another thing to learn is that different markets have different characteristics.  Usually, the markets with the best cash flow have a smaller potential equity gain.  ( Meaning if you sell it in 5 years it will be worth a little bit more.)  The other end of the spectrum, is a small or negative cash flow but potential for large equity gain. ( When you sell it in 5 years you have a six figure gain.)   If you are secure in your personal finance you may choose to go for the lower cash flow / higher equity gain scenario.  But, remember your potential repair costs can wipe out your rental income if you are making just $200 a month.   

 Kenneth: Get you lawyers to make a list for you that cross references the states you are interested in investing in with their state income tax laws.  Some states have zero state income tax.  Some states will require you to file income tax in their state if you make any income there.  Your home state may require you to pay a second state income tax on profits as well as the federal IRS bill.  

 Hopefully, this investor is in a good place.  But, I'm wondering.  Who picked the appraiser?  If we went to a realtor of good standing and asked them for a property evaluation / recommended price... what would that look like?  A little padding of $15k per property is about half of that equity.  What would the cost be to sell?  If that is at about 10% .... he's even.  

I'm reading a P&L that came up with a NOI that did not take in to account property taxes? How is that a thing? Is the formula ....

Income - mandatory expenses ... ( taxes, insurance)  

Income - taxes, insurance and utilities ( if covered in rent)

Income - taxes, insurance, utilities and ......????

OR, is the important thing here, that you run your own numbers and make sure that you are using the same formula every time? Can you leave something out if it is in your risk tolerence level? I'm thinking West Coast investors here that are looking at equity. There are lots of investors in my area that think a cash flowing property is one that pays the mortgage. They are willing to pay all CapEx, repairs, etc out of pocket.

 Russell Brazil:  I agree.  If God Forbid, something bad happened .... the LL is getting sued. A good attorney is going to have a "battery addendum" thrown out.  Has the form been tested in court?  What is allowed by statute?  Has this changed in the last 12 mos?  If somethng happens, it will take up a lot of your time and money.  Just buy the batteries yourself.  

Hi Benjamin!  So that is not considered rent?  How do you enforce ?  It's a great idea Thansk

 The state laws are different everywhere.  My local court does not allow attorneys in small claims court.   Of course, none of us would give legal, financial advice.  We just tell each other what our own experience is.  I like to learn enough about a topic so that I understand what the accountant or the lawyer is telling me.  Nothing worse then paying somebody $300 per hour and not understanding!