All Forum Posts by: Emma S.

Chris - great to hear from someone in Orange County who wants to collaborate.

Will be in touch. Hope we get a few more folks...

Anyone interested?

A recent post about Mastermind groups inspired me to start this thread. For many folks living in high priced areas where small investors are completely priced out of REI, our choices are:
1) stay out of REI completely
2) invest in notes or HML
3) invest out of state

While I appreciate & give great weight to the advice of seasoned investors like Jon Holdman who caution against investing out of state, I think it can still be highly profitable as long as one fully understands the risks and plans for contingencies. I know there are people who are interested from a number of threads on this topic:
http://www.biggerpockets.com/forums/311/topics/95065-buying-site--and-city-unseen?page=1
http://www.biggerpockets.com/forums/12/topics/79813-target-neighborhood-analysis-and-evaluation
http://www.biggerpockets.com/forums/12/topics/87878-guide-for-out-of-state-real-estate-investing

So with that, I was wondering if we can get a group of like-minded individuals who are:
- interested in out of state investing
- preferably all from the West Coast (for ease of setting up meetings in PST)
- interested in divvying up research areas (e.g. geographical areas, jobs/economic data etc.) for each group member to work on & report back to the group.

Also wondering if such groups could be hosted somewhere on BP Joshua Dorkin?

Emma

p.s. for those like me who may not know what a Mastermind group is, a good summary is on this thread:
http://www.biggerpockets.com/forums/86/topics/89319-mastermind-group-in-chandler

Bill B. many great ideas from Toastmasters to finding a niche that utilizes your strengths etc. J Scott is a great example of one who is obviously successful in RE despite being an introvert (although that's hard to believe since he's such an active participant with super helpful posts). A couple more ideas:

Even if you don't feel like it, practice smiling a lot! They say that smiling is a universal language. People are naturally drawn to a relaxed smiling face than one that is stern or expressionless.

The other thing is that you may be surprised how powerful passion can be in breaking through barriers & fears. As someone else said, educate and immerse yourself in RE & your confidence will grow because you will feel that you have something to contribute.

Best wishes!

Bed bugs have little to do with being filthy. Since she just moved in, she likely brought them with her. Or she may have traveled somewhere, stayed at a hotel or had a guest staying over or any number of things.

I had the misfortune of experiencing bed bugs a number of years ago when I lived on the East Coast. I moved into an apartment, found out there were bed bugs, the apartment manager had the unit sprayed, I lost 2 days from work doing TONS of laundry, getting rid of my bed & replacing it & still had them. I read later that they can survive in the carpet or walls for up to 3,4 months without feeding. When a neighbor told me it was a recurring problem for the past year, I begged the apartment manager to let me out of the lease which she generously agreed to. I moved into a townhouse, got rid of my new bed AGAIN, tons of laundry, another 4-5 days off work etc. Guess what? I took the bed bugs with me. I cried. I was so stressed out! Without even telling my landlord, I got a pest control company that came highly recommended and paid $750 for the 2 bedroom townhouse. Their price was double that of other companies but they offered a 1 year guarantee and upon their advice, I did not even have to throw out my new bed after their treatment. It worked. Here is a link to the treatment they used: http://www.americanpest.net/bed-bug-services

So all this to say that once these little critters are there, they are super difficult to get rid of. Unfortunately, even if your tenant moves out, you will most likely have some bed bugs left behind in your building. Maybe you can explain that your long term tenant never had bed bugs & see if you can split the cost of the treatment. She is most definitely miserable living with these things and may agree. Better do it ASAP before they spread to other units.

Good luck!

Toby Johnston Steven Hamilton II Just to wrap it up & be clear:

From Steven's comment above (also reading multiple threads & Solo 401k companies sites), it appears one can roll over an IRA into a Solo401k even before making a dime from your business. Even a lawn mowing business where you presumably would not make that much money.

My [b]primary intent for setting up a HML business was for the purpose of having "self-employment" to qualify to open a Solo 401k. (Otherwise, I'd just do HML or something else with the $ without setting it up as a formal business).
But of course I don't want to do anything illegal. So let's say I have a HML business but I'm only doing periodic lending where I make interest income of say a couple of thousand a year. Is that a legitimate business or can the IRS say the "HML business" is a sham because you don't have ordinary income subject to self-employment taxes only interest income?

Very interested in both of your takes on this question.

Dawn A. from what I've read:

1) returns are likely to be lower by loaning money in a pool versus individually since there is a pool manager involved.

2) When you pool your funds with a hard money lender and they lend it out, are you not in control on who the money will be lent to? Definitely less control

3) Can you withdraw your money when you pool it at any time or do you need to wait until all the loans have been paid back? Apparently it's difficult to get out any time once you invest according to this page: http://www.privatemoneylendingguide.com/investors/articles/hard-money-lending-overview

Toby Johnston the HML was not going to be within the retirement fund. To clarify, I was talking about 2 different vehicles of investing:

1) I already have a traditional IRA with $ sitting in a money market after pulling out of equity markets some months ago. I was looking to transfer it to a SD IRA to invest in RE notes when I discovered the concept of Solo 401k.

2) Separate from & outside of the existing IRA funds, I thought of setting up the HML activities as a business so as to be able to contribute a higher amount of $$ to the rolled over Solo 401k in the future. How to set it up was the subject of the thread. So yes, it would be after tax money.

But it sounds like you have to have payroll to be eligible for contributions to the Solo 401k.

Thanks all, really appreciate your input.

Jeff S I've been using SD 401(k) to mean Solo 401(k) but looks like they may not be the same thing? I need to play catch up in retirement funding & the Solo 401k seems to be the one that allows the highest contribution. Hence, my reason for wanting to set up a sole proprietorship. So although I want to put in only 25k towards HML initially, I'm expecting to put in more later. The other attraction of the Solo 401k over the SDIRA was the ability to take out a loan against it if/when I acquire the expertise and start investing in rental properties. So I'd rather have all my retirement funds in one account than IRA/401k here and there.

Thanks for pointing me towards fractionalized vs. pool loans, it sounds like a better option per the description of it on that website. Would you please elaborate on why you said to work with HML's in my area? Would that be important even though there is a pool manager that handles things?

Ann Bellamy yes, I don't want to actively look for loans so a pool set up is what works for my situation. You said "you need to make money first from the business that forms the 401k, so 25K isn't going to be enough to produce much income". I was also wondering if contributions to the Solo 401k can also come from earned income at a different job (not the sole proprietorship).

John Thedford yes a Solo 401k is what I'd like to have but right now I'm not self-employed. That's why I posted this question about be a self-employed HML. Your retirement plan is exactly the one I want to adopt. Would love to have rental properties too but my main limitation is time - I cannot devote the time it takes to look for, acquire & manage investment properties. Do you do lending as well? If so, what company do you use?

Raymond B. got it, thanks! Ann explained why I couldn't do the same for @ Steve Hamilton and @ David Beard to see if they know the answer to the question I just asked Ann.

Hi, I'm fairly new to RE investing. After reading and learning so much on BP, I'm considering starting out with passive RE investments (HML and mortgage notes). I read the threads on becoming a HML. I'm thinking of setting up a "business" to be eligible to transfer my traditional IRA into a Self Directed 401(k). Then I want to be able to do annual contributions to the SD 401(k) from the proceeds of a HML business. I want to do mortgage notes within the 401(k). So here are my questions for the experts:

1) I'm assuming HML is considered a "business" activity not an "investment" activity, correct? If yes, can it be set up as a sole proprietorship?
2) Does it make sense to start off HML with limited funds (25k) by investing in a pool? I came across one pool that accepts investor funds starting at 25k.
3) What do you think of this site? http://www.privatemoneylendingguide.com/investors/index.php

I would really like to hear from HML's @ Ann Bellamy, @ Jeff S and also the tax guy @ Steve Hamilton and @ David Beard about setting up the solo 401k correctly.

Thanks so much to everyone for sharing your invaluable advice!