All Forum Posts by: Frank M.

If you can actually get $100/mo for free machines vs Coin-Op, the numbers look good. 

But. Will the area sustain that? I mean, when there's turnover of tenants, will the new ones pay that higher price, knowing the machines are part of the deal? 

The more general question is whether any amenities with real value can actually result in ongoing premium rent. When you list the apartment for (normal rent)+$25, will you get responses because you list that feature? I can list an $800 apartment, and even with gas/electric included, worth $150, easily, still have a tough time getting responses to a $950 advertised price. 

Keep in mind - you have until tax filing time (including the extension to 10/15) to recharacterize any or all of the conversion. So, in my opinion, it's better to convert too much, then, while doing your taxes, decide how much to back out to get your taxable income exactly where you want it. 

 Really? I'm aware of bad 401(k)s, but one should simply not deposit to one that charges 2.5%. Better to invest in a regular account, and use an ETF. If the S&P returns 8% (low, but let's stay with that number), 2% or so being dividends, you'll have a bit of tax along the way, and the chance for long term gain treatment, losing 1.2% or so to taxes. But the ETF expense itself shouldn't exceed .05%/yr. 

 Shane - you pretty much nailed it. While in the 10-15% bracket, it's Roth all the way. If you can convert the matched deposits to Roth and stay 15%, do that too. Deposit to get the match, then use IRAs/Roth IRAs. The Roth wasn't there when I started, but it would have saved me a lot of tax if it was. 

The interesting paradox is that with rates so low, the spread between 15 and 30 yr payments is higher, as a percent.

For a $100K loan, 30yr 4%, the payment is $477. 15 yr, 3.5% (I see an average .5% less for 15) the payment is $715. 50% higher. This is nearly $3000/yr. 

One question for me is whether this cash can be better used elsewhere. If you plan to accumulate more properties, say one per year, by the 3rd year, it's $9000/yr cash you won't see, and won't have available to help you accelerate the next deals. 

If the property has great cash flow, this may not matter to you. But, if after expenses, you have $1000/mo to cover debt, $715 leaves you with little flow, and the 50% rule is long term, any one year can see a heater go or the roof need replacing. I'd rather work to build up the reserves and not have that higher payment due each month. 100 year mortgage? Ha! As long as the rate is fixed, bring it on. 

The CU foreclosed. So yes, they own it. I see your point, there's really no "taking it over."

I was just imagining they've be more motivated write a new loan against it than another bank. 

A property I am looking at is owned by the CU. Not a short sale, it's REO.

Does anyone have any experience approaching a credit union and offering to take over the loan? Or for whatever reason, do they need to cash out at any price? In this case, if any negotiating were possible, I'd offer a check for 25% of the loan balance and ask for a short term note on balance, even 5 years would be fine. 

I am pro Good 401(k)s and anti Bad 401(k)s.

The difference is night and day. My company 401(k) offered a dollar for dollar match on the first 6% of income deposited. So a $60K salary with $3600 deposit would see $7200 added each year. The S&P offering has a .02% expense. 50 years' expenses would add to just 1%. This is an example of a great plan. 

Bad plans would have lower matches or none at all, and fees any higher than about 1/2%. Really bad plans are over 1%, and with no match, I wouldn't deposit to them at all. There are plans that charge 2%. This level of fee should be considered criminal, in my opinion. 

Of course, if one wants to invest big time in real estate, the company 401(k) isn't going to help with cash, but for job changers, this can be moved to a self-directed IRA.

from Schwab-Solo-401k

Charles Schwab is simply providing brokerage account for your Solo 401k, and MySolo401k.net is your Solo 401k provider. In other words, even though Schwab also offers Solo 401k, their Solo 401k plan document restrict you to only investing in stocks and mutual funds; however, by using our Solo 401k document, which allows you to serve as trustee of the Solo 401k and invest in alternative investments such as real estate, precious metals, tax liens, promissory notes, private stock, etc., as well as process Solo 401k Loan, Schwab is not involved in the administration of the Solo 401k.

In other words, Schwab's role is to provide the brokerage side to the account. But the dropbox link you offered shows that TD supports the Real Estate in the self directed account. (Page 58) 

It seems to me, if you want the account to hold stock (at Schwab) as well as RE, the plan is good. Otherwise just using TD will get you what you need. Unless I'm missing something?

 If the house were bought for investment, to rent, I'd agree without reservation. In this case, if the IRS and the Bank got together, wouldn't the conclusion be that any expenses incurred in the first year be excluded from even being adjustments? Unless of course they were capital improvements. The routine homeowner maintenance/repair wouldn't get added to basis, and he couldn't have planned to make it a rental in the first year. 

(Note, I'm offering an opinion, and asking. Does the 'no rental' that first year have this affect or am I jumping to a false conclusion?)