All Forum Posts by: Mark Freeman

Before you go into converting the garage into more rooms (Attached or unattached), you may be devaluing your home as a single family home. Be careful of that. Most families would like to have a garage and don't need 5 or 6 bedrooms. You would shrink your pool of potential buyers to just investors. I would just run the numbers on what that would cost you to convert to a livable space, what kind of income that change would bring in, and what happens to the overall market value (since your exit is in the short term).

This is all very true and will be taken into consideration once we get there. Our initial thought is, since this is less than one block from campus, it may be more valuable as a multi-room student housing unit than a SFH.

Thanks,

- M

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Originally posted by @Paul Brockmann:

A LLC is a good way to go, even if you can't do a self-directed IRA LLC.

By creating a LLC, you and this partner of yours will have to get everything down on writing in the operating agreement. I and I'm sure others will say, put everything you can think of into this document. This will keep you and your partner fair and honest and should resolve most arguments.

Now, to get the down payment, loaning against your 401k could be risky. I would see if there's another way to get that small sum of money.

Buying and selling in within 5 years without making significant improvements probably won't get you significant returns. Closing costs and taxes will eat those measly appreciation gains up. I would make sure you can put down the possibility of holding the property as a rental after they graduate.

You're probably correct about the significant returns in only five years. However:

If we sell it for what we paid for it, then that means the kids have lived rent free for their college career
We are thinking about converting the 2-1/2 car garage into an additional 2 bedrooms with a full-bath and sitting room. This should GREATLY increase the value as well as the rents.

Something we're chewing on...

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Thanks All!

Back to the drawing board!

- M

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Thanks Jamie.

Even if we set up an LLC to purchase the property then the IRA LLC invests in the LLC?

This is very helpful information,

Thanks,

- Mark

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New to the forum and until last week-end had never heard of Self-Directed IRA. That being said, here's my story:

A friend and I both have kids attending college in the fall. We've decided that we would save some money in housing and food if we bought a house close to campus and had them rent from us. In addition to the savings, we would then be able to turn around and sell the property. If we sold it for what we bought it for, the kids would have lived rent free for the years in school. That's the idea.

However, I don't have the cash for a down payment. (To put in prospective, we're only looking at a $60k house; my DP would be $6K.) I can borrow the money from a line of credit (LOC), but then with me repaying the LOC and the mortgage, it's money out of my pocket every month. (The rent won't cover both the mortgage and the DP)

So I've heard of self directed IRAs, self directed IRA LLCs, etc. If my friend and I go in on this together, what do you think would be the best route? We want to set up an LLC between us, but should I move my whole 50% into a self directed IRA? just the DP?IRA LLC? Is this even the way to go?

Any advise would be appreciated.

Thanks,

- Mark

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All Forum Posts by: Mark Freeman

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