All Forum Posts by: Colby Fryar

Good choice @Omari Heflin-  I totally agree with everything above.  In addition to educating yourself jump in and start evaluating as many deals as possible.  It's like developing your muscles.  You have to do it over and over again and then you will start to realize what is important to you in terms of return, cash flow, appreciation, etc.  Good luck.

The other option is to transfer it into a self-directed IRA, which would remove the tax liability as long as all transactions go through that account. In other words, you would not be able to take any of the profits without being taxed/penalized. Also there are borrowing limits on it and it requires non-recourse lending. You would need to discuss with a self-directed IRA custodian if that is something want to pursue.

@Ryan Gartley-  I am with you there and did exactly the same thing.  You can expect a pretty hefty tax bill.  10% penalty plus the income tax 25% plus/minus.  I would definitely consult with your accountant and make sure you have cash on hand to pay the taxes when they come due.  Depending on whether you have a business or not, there may be certain expenses that you can deduct to help offset the tax burden. 

Congrats @Ryan Gartley.  It really depends on your goals, your level of experience and your market.  What will $115,000 down get you? In my market, it might buy you a couple of duplexes or 4-plex possibly even a 5-unit or above.  There are too many unknowns to answer properly.  If this is your first investment, it might be wise to start as small as possible and not use all of your cash at once.  If you are more experienced, then try a couple of duplexes or a 4-plex. 

@Shane Albert-  @Damon Pendleton's talking about seller-financing or owner carry.  The owner may consider it if he has already paid off the existing mortgage. In other words ask the owner if he would be willing to carry you the balance of the down payment you need.  The bank may or may not approve, however, as Damon rightly pointed out.

Hi Jarvis-  The pros here are awesome by the way- they are all very eager to help newbies like us. If you are not already, start looking at duplexes and 4-plexes on-line as well and evaluate them using the Bigger Pockets calculators.  This is a great way to learn and to get motivated.  Remember investors need capital and deals!

Congratulations Jeff.  Sounds like a great deal!  Let us know how it goes.

Thank you Naftali-  talk to you soon.

Hi Paul-  I am pretty familiar with the Tucson market and am currently looking at off-market deals.  PM me if you would like discuss over lunch or coffee one day.

Colby

That is old- did you also include adequate capex up front?  With an additional allowance for reserves and annual cap-ex that may be adequate?  I typically use 10% for cap-ex/ reserves.  I will wait to hear from the more experienced pros as well.