All Forum Posts by: Dhar Rawal

@Zane Bradshaw Real estate investing has generated bigger and predictable returns for me compared to stocks. However, that's what works for me. 

I know there are plenty of people who have made fortunes in the stock market. 

@Mike Reynolds There are three constraints on the offerings that can be listed on RehabDaddy:

1. They have to be about real estate or related businesses
2. Issuers have to be Texas-based
3. Offering size has to be under $1 million

@Jenny Wall, when I converted, there were very few SDIRA providers so evaluating was not too time-consuming. I chose based on fee schedule and looked for a fee structure that was not based on a % of asset value and that did not have per transaction fees. The conversion process is actually very straightforward, you do not need a CPA. I paid nothing for the conversion itself. These days there are a lot of options and guidance is plentiful...

@Douglas Corona Thank you. We will launch the first offering within the month. You can register on RehabDaddy to stay posted. Loans and raises are not limited to rehabs. All real estate projects are in scope. But... issuers can only raise/borrow up to $ 1 million. And since we are approved under Texas Intrastate Crowdfunding regulations. both issuers and investors have to be TX residents. We have a road-map to expand nationally, but one thing at a time :)

@Zane Bradshaw Thank you. Not sure if you are based in the US. 401K is a US specific retirement savings program with tax benefits. I got it to $250k over 10 years, from salary contributions and investing in stocks (mediocre up/down returns). SDIRA is simply a 401k that is self-managed instead of some bank/mutual fund etc. Partnership revenue is split based on equity share.  We actually raised $1.35 million to fund the purchase and rehab and then had a smaller capital call for the additional repair that was required

@Daniel J. Thanks

@Cliff H. There is no requirement that all investors have to invest from IRA's if one investor does. Each investor gets the appropriate tax treatment based on where their money comes from

@Rich Lopes 5 investors contributed. Putting that investor group together was another challenge. Thanks for your kind words on RehabDaddy. Yes, it is similar to RealtyShares. After this deal and a few more, I realized (just as the founder of RealtyShares did) how cumbersome this whole process was. 

I saw the need for a trusted platform, saw the changes in securities regulations, and came to the conclusion that crowdfunding is the kind of disruption that has the potential to completely change the investing landscape. I have spent the last two years building the RehabDaddy platform with a vision of making it easy for investors to earn great returns, without having to go it alone.

The difference is RealtyShares is for accredited investors only. I feel ALL investors should have the opportunity to participate, so I've chosen to go the intrastate crowdfunding route. We are currently approved to raise funds in Texas. Once operational, we plan to spread to other states as well

@Michael Le My best...

@Kenneth Hynes If the funding comes from an SDIRA, the income and capital gains both flow back into the SDIRA. I was actually queried by the IRS and because I am very careful about not touching those funds directly (I don't have SDIRA LLC or checkbook control like some SDIRA companies are pushing), I cleared their query easily.

@Robert Guilfoyle, @Minna Nah - Thank you!

@Tony Robinson, you hit the nail on the head! Tax tricks and rules of thumb are useful but they are just data. The hardest part is coming up with a strategy, systematically "de-risking" it, and then taking action. It is incredibly difficult to act on conviction when almost everybody is telling you how stupid or risky your idea is.

@Gautam Venkatesan, I had started testing real estate as a strategy in 2006 by leasing my own house. Once I had figured out the business model, I bought a few small properties to understand the scaling costs. I quickly realized that small multi-family are generally better than single-family at volume, and a 100+ unit apartment is even better, because all units are in the same place and now you can afford to hire management and service personnel. 

I started networking with commercial brokers and apartment managers to understand the unit income and costs ($/door in and out). By 2009, C+ apartment expenses in Houston were running about $4500/door/year for the apartment size I was targeting. Rents, vacancy, and days on market was fairly simple to obtain. From there it was easy to figure out what was a good deal and what was not. 

Since I was investing 401K money, I could not manage it myself. So the next step was figuring out how to find good managing partners with proven experience/expertise in apartment investing, and more important, who I could trust. This is a whole other can of worms which I won't go into right now. But it is just as important as finding and evaluating properties. Hope this helps!

Thanks, Gary

You are right. I don't think I would have done the conversion if I was not 100% convinced that there was huge upside on the deal. The thing that helped a lot was the tax payment over 3 years law. That seems so jury-rigged I am inclined to believe some big campaign donor billionaire (or two) pulled a few string to get congress to put that law in place. Who knows...

The key is to prepare while you wait to find that killer deal. So when it shows up, you are locked and loaded

Thanks, Cliff. No penalty but you do have to pay taxes. Luckily there was a special provision that allowed me to pay the $65k tax over 3 years.

I did my best to minimize my taxable income and stay in a low tax bracket those 3 years. Also leveraged my stock losses to offset the $250k bump in income :)

Don't think the 3 year provision exists now, you'd have to check

Xin, key is not to commingle IRA money with after tax money. If you do commingle, keep your total stake under 50% and let someone else be the managing partner.

Disclaimer: I am not qualified to offer tax advice. Recommend talking to your CPA

Thanks Saurabh