- Hey everybody,
- It's been a few months since I last posted so I thought I'd update you as to how I put your advise to good use so far...
- First I did some research as to where in the country you can still invest in rental houses at a low enough cost to still have some positive cash flow. I looked for cities that have a strong employment ratio, that have historically had a steady increase in home appreciation and has begun to make a steady come back after the plunge in 2007.
- Of all the of the top areas that met that criteria we chose Austin TX and Sarasota FL, because we are familiar with those areas and have family connections there.
- I decided to pull the down out of my 457, take the tax hit, and invest in a rental home in Austin. We paid 175k for a very nice 3 BR/ 2 bath house on a quarter acre and rented it two days after it was listed for $1500, giving me a + cash flow of about $500 after tax, insurance, and 100/mo put aside for surprises.
- If you're interested in Austin, Deb Groom is an excellent realtor. She really worked hard to get us a great deal and helped us buy what WE were looking for, not just what she wanted to sell, if you know what I mean. She even oversaw some repairs, helped us get a renter in there, and did all the back ground checks for a small fee.
Since then we have contacted Mark Nolan with My Solo 401k . Now that I have a rental property in Austin, we are considered self employed and qualify for a solo 401K retirement fund. Mark helped us set that up and we rolled the majority of our funds with the hopes of now holding our future properties, or other investments, within the 401k leveraging the mortgage with a non- recourse loan (which are required in solo 401k s)
A word about Non-recourse loans: there are only a hand full of banks that will do these, they are very picky about which states they will even loan in and the property they'll loan on, they require 35-50% down and a higher interest rate. On the plus side, you are deferring your taxes by keeping the property within the 401k.
If anybody has a non-recourse lender they liked working with, please let me know.
Right now we are trying to determine if its best to buy the next Sarasota property using a non-recourse where 40-45% down is required, but tax is deferred, or take the tax hit now but only have to put 20% down. Any advise on this is appreciated!
