All Forum Posts by: Account Closed

The purpose of claiming deductions is to increase your disposable income on money that is or can be taxed. I don't need to claim all those things you mentioned. I have a Roth IRA - all the income is tax free already. Not exactly a downside...

@Ian Ippolito You are exactly right in regards to my debt service numbers. The loan payments on each house is between $200 to $300 per month. The $900/month home is in an HOA so there is about a $130 fee per month there. Management fees are 8% to 10% on all homes so that equates to less than $100 per month. Taxes and insurance are all around $50 or less per month - I got some slick and legit deals on those. When it comes to insurance, always go with the super high deductible, and ultra low premium. You will almost never have to file a claim on an investment property in most circumstances. If you have a good PM, they will regularly inspect the home and repair minor issues before they become major.

The $900/month home will steadily go up in rent each year so I'm projected to make about $1000/month this year.  The other two in the $600's will probably remain around those numbers simply because of the tenants in that area.  Lower rents, but more stable longer term tenants.

Overall, I'm making almost $26,000 gross profit. After all expenses my NOI is between $13,000 and $14,000 in the first year, with it charting upwards in each subsequent year.

@Tabitha Rivera Here are a number of thoughts to consider.

1.  I'd recommend getting a good property manager to manage the home so you don't have to worry about it on a day to day basis.  A good PM will make sure it is always rented out and that you're aware of what needs to be done to keep it in top shape.  It brings a peace of mind to the investment.

2.  If you hold onto your money and save up more, you have to consider this.  The interest rate on most savings accounts these days is pitiful compared to the monthly rental income you could be making on that one home.  If financial hardship occurs in your life, do you want a home that is generating income there to back you up or a savings account that will run dry if you can't find another job in a reasonable amount of time?  I wouldn't count on unemployment income either as that is usually not enough to pay the bills.

3.  Among getting an inspection done, get an appraisal too.  Find out what he/she has to say about the value of the house to make sure you're paying what you should be.

4.  Decide what you want out of the investment.  Do you want appreciation or cash flow?  I mostly go after cash flow houses, but there are others who prefer faster appreciation.  What is the home supposed to do for you in your life?  Help pay bills?  Free up your time?  Something else?  Answering this, will help define whether you should purchase the investment or not.  If you don't know why you're purchasing it, you probably shouldn't.

 Try this Ann.  https://youtu.be/lJehr-VXXlc Title of the video is  "How Does UBIT Impact my Investments?".

@Jay M. It sounds like (based off your comments) that Mark's main business model is selling education to his students. This reminds me of Phil Pustejovsky and his Freedom Mentor sudo scam. You also mentioned you never bought any of Mark's land through his company so that leads me to believe this is mostly a "Throw your money away in education that can be found for free program". If you had said you were a satisfied customer and described the success of your purchase and ROI you are getting out of it, then I'd be more inclined to pursue a land purchase further, but for now I'm going to pass and focus on other areas of investing.

 Great question Ann.  I was able to get a 5% interest rate on all 3 properties.  No points were charged in the traditional "Retail" sense, but there were plenty of closing fees and Marshall Reddick charged a "Loan fee" for prepping and managing the private loan transaction.  I forget how they calculated it, but it wasn't that bad in the grand scheme of things.  Growth Equity Group did not charge any loan origination.

@Drew Castleberry I do not recommend for beginners to open up a checkbook control LLC IRA. It's much more complicated than you think. Open up an IRA with a custodian first and get the hang of it for a year or two while you talk to others who have checkbook control IRA's. If you use a checkbook control LLC / IRA, you have to do a lot more paperwork yourself and keep accurate records, process transactions, etc. You are the custodian in a sense and held to a higher responsibility due to the extra demands and work associated with it.

 Drew, check out my post here.  https://www.biggerpockets.com/forums/223/topics/263515-2015-equaled-my-first-3-properties-using-my-sdira

I have lots of experience from the past year doing deals in my SDIRA and can answer a lot of questions.  Yes, you can get non-recourse financing although not many banks provide it (mostly the smaller ones).  Here is a good list of non-recourse lenders (http://www.sensefinancial.com/non-recourse-lenders/).  You will find that through seller / private financing you will achieve better terms and rates especially with only 35k.

Also, make sure you pick a good custodian.  Most operate all in the same way, but Pensco and Equity Trust offer bank level online access that connects with Mint, Personal Capital, etc. so you can see your data all in one place.

Yes, you will have to pay fees to your custodian in order to process transactions, just like a stock broker like Fidelity will charge you fees to process transactions. SDIRA fees can be higher, but the returns you make on your investments will offset those fees if you have enough RE in your portfolio. You would basically tell your custodian to make automatic ACH transfers to your mortgage lender every month and have them cut checks to pay for HOA's, insurance, etc. just like you would with your regular bank. They can typically put all that on auto-pilot for you so you don't have to worry about it.

Also, if you use seller financing, get a loan servicer in place to handle the tax paperwork for both seller and buyer.  They also handle month to month record keeping to ensure payments are made on time so the seller doesn't have to generate those statements every month.

@Jay Hinrichs Many thanks!  This is why I'm on BP.  I appreciate the raw and straight up explanation.  Sounds like Mark would be the one making the money in these situations with customers feeing him note/interest payments.  My suspicions / gut feelings from the start seem to be verified.

Thanks @Jay Hinrichs.  I still don't quite understand how one makes money off of raw land other than simple appreciation over time.  While I've been listening to some of @Mark Podolsky's podcasts (I still have a lot more to listen to), I'm still in the dark about how one can make some worthy returns purchasing / selling.  It seems like one buys the land, and then hopes it becomes valuable to a developer or rancher down the road.  Is that the idea or is there more to it?