All Forum Posts by: Dylan Mathias

Hi Jack, 

I have looked into self directed IRA's a little. I am not an expert so do not take my advice as legal but from my knowledge this is what I know.

The short answer is no. When investing through your retirement accounts it has to be through a LLC (most common i believe is checkbook LLC). You cannot mix personal funds with your money in your self directed IRA.

I am assuming it is a post tax IRA and if it is there are some limitations.

1. you cannot take advantage of depreciation so I have heard that fix and flip is better. 

2. You have to buy house outright. If you secure additional financing it gets more complicated and you will have to pay taxes on the additional finance part. 

You want to make sure that everything is bought with the money in the self directed back account and your money is never commingled with your personal funds. 

There are a lot more people that are more knowledgable then me but it is a start and I hope it helps. 

-Dylan 

I have heard that if there is another recession or things hit the fans, the banks have the right to withdrawal the HELOC. I find that this takes away a lot of value that a HELOC has to offer.

I have only read a couple articles about this though so I could be missing some information. 

Hi all, 

I have always wondered if you can create your own company and brand but use a broker like Caldwell to do the brokering. For example market yourself as a company and just use Caldwell as the broker. 

Also down the line, what rights would Caldwell have if you decided to take that brand and start your own brokerage using that brand since you are a 1099 employee. I know you can't poach your old clients but you can send them and email letting them know you. 

I know it probably varies by broker to broker though. 

Love to get peoples thoughts and feedback on this. 

Hi Reid, 

I think it is a matter of what you are wanting and where you are in your investing career. Personally I would not accept rent in cash but it really depends on the person and their situation. 

Reasons Against Accepting Cash:

1. If you are looking at securing more loans in the future, having a good debt to income ratio will help you secure a loan easier. The banks will be more inclined to give a loan when they see your rents are higher compared to the debt you have financed. Accepting cash and not reporting it will hinder this. 

2. You do not have to be worried about being audited by the IRS (peace of mind)

Reasons for Accepting cash:

1. If you are at a time in you life when you are not looking to get anymore loans and want to minimize your tax liability, accepting cash could be a great way to do this. 

There are obviously more positives and negative to both sides but those are a couple that hopefully help a little. Long Distance real estate investing by @David Greene is a great source. I just read his book and he goes into the pros and cons to this exact problem. 

Best of luck, 

-Dylan Mathias

@Steve Vaughan

Thank you for your response. I totally see where you are coming from and think it is actually smart. I was planning on doing exactly what you are saying to do. I took advantage of my employer match and this year I will be in a lower tax bracket because I am leaving my job and starting a company with my brother. On paper it is looking as if we will make very little with all the write offs from starting the company. I was going to take advantage this year when I will be in a low tax bracket to roll over to my Roth. I personally think I will be making more than I am in retirement and I do not think taxes will be this low in 50 years so I really like the idea of getting my money into a Roth and letting it grow tax free. 

@Michael Plaks

Thank you for the comment Michael. You misunderstood me. As of now I am slowly moving my funds into more conservative investment like money markets, bonds ect. I was heavily aggressive being almost purely invest in stocks the last couple years and have done very well. I would love to get your thoughts on this but from what I have read and the little experience I have, I think the stock market as well as real estate is extremely overpriced. There has to be a correction in the next couple years and it is just a matter of when. My strategy was to be aggressive and now I am leaning towards safer investments (Money Markets, CD's and Bonds) for now until I have a better idea of what the future of the economy looks like. 

I am only looking to invest my retirement accounts in real estate if we get a big correction. I live in an area (Northern California) where houses are more elastic per say. During downturns they get hit harder because people over extend themselves to buy here but then they rebound faster then most parts of the country and have great appreciation. 

I might be naive but I am willing to take the risk of loosing a little on the upside because where we stand, there is a greater chance to the downside. 

Love to get your thoughts on this. 

With that being said I will for sure look into the 401k option as well. 

@Steve Vaughan

Thank you Steve. I have had very good role models in my life that I have to contribute most of it too. If you were in my shoes would you just leave the money I have accumulated in retirements fund in stocks, bonds and mutual funds and forget about it? Then just use my liquid assets to buy real estate. 

I could also very well do fix and flip with that money. I have a lot of good friends that are contractors. 

I get mixed answer from people. Some say you should either be a buy and hold or fix and flip investor. I like the idea of doing both but what are your thoughts on this?

@Alina Trigub

Thank you! I also just learned about the Checkbook IRA LLC witch seemed very interesting as well. I will check those options you mentioned though and do some more research.

@Steve Vaughan

As of now about 60% of my net worth is in retirement accounts. I was fortunate to work at a company during college that had around a 50% match on their 401K so I took advantage of that. I am now 24 and am starting my own company and besides my yearly Roth IRA contributions I will be keep everything outside of my retirement accounts for awhile.

With that being said I would only do this process if we have a huge correction in the market. I believe more in buy and hold but also see where you are coming from with utilizing the instruments that get taxes at the ordinary income in the tax sheltered account. I live in Northern California where if you get in at the right time there is very good appreciation. I am just trying to figure out ways I can maximize my money if tomorrow there is a huge correction in the market so I can take advantage. 

I really do like the 1031 (defer, defer, defer, die) method where you can defer taxes until you die and then your heirs get the new cost basis and don't have to pay taxes. 

@Carl Fischer

Thank you! Does your firm also offer the service to be the custodian of a checkbook IRA?