All Forum Posts by: Glenn Gray

Hi Kyle. I chose to convert previous employers Roth and Traditional IRA to a SDIRA with checkbook control. These funds I intend to grow for retirement and do not need the money now. The funds have been available in the checking account for a month and a half now. I'm currently looking for either a fix/flip or fix/hold investment. The investment will require leverage as I have less than $25k in the SDIRA, so I'll have to use a hard money lender, private financing or rather scarce non-recourse long term loan to complete the investment.

Glenn

I have been to one presentation. I didn't get much out of it though. It was a local investor selling coaching services. I haven't returned because I live on the north side of Denver and most of their meetings are on the south side and start at 6:00pm. The traffic is too much to contend with for a 0 return.

@Cordell Pearce just wondering how this situation turned out. Was it resolved?

I had an experience in past life, investing in Dallas, where a contracted plumber walked off with $2500. Small claims court was a bust as the Justice of the Peace Deputies couldn't find him to be served. Filed complaint with Texas State Plumbing Board, but that didn't help either. Seems his license had already expired before I hired him - my fault for not looking that up to see if he was in good standing.

End of the day, I never saw a dime of that money again. Expensive lessons!

In my experience, contractors have been the riskiest variable in the game.

Glenn

I agree!

Always been a fan of the saying:

- If you don't know where you're going, any road will take you there.

Chart a course, then proceed smartly.

Glad I came across this discussion! If anyone is interested in co-authoring a "How NOT to Invest in Real Estate" guide, feel free to reach out to me. I believe I've made almost every beginner mistake via trial-and-error, that there ever was.

@Rick Baggenstoss that is a great bullet point list of commandments, and worth reiterating:

- do not over leverage
- have reasonable cash flows
- moderated risk with portfolio strategy and/or high quality properties
- diversify income streams into related businesses and strategies
- effectively predict or react as the market changes

In my first venture at REI, I violated each of them, at one time or another. I did manage to conclude my REI business with minimal damage - $50,000 seed debt obligation from private lender. I have repaid that obligation, yes by returning to W2 based earnings in the Engineering field, but did sustain a devastating blow to my credit rating. Oddly enough, it wasn't my business related finance obligations that demolished my credit rating, as I was able to dispose of 3 poor cashflowing rental properties (2 4-plex, 1 8-unit) and cover the banks. Instead, the co-financed upside down primary residence, which went to the ex-wife at divorce, and her declaration of bankruptcy and deed-in-lieu, killed my credit rating.

To your original question @Michael Woodward I intend to rebuild as you are, smarter...better...but slower. I don't intend to give up my W2 job this time. Instead, I will augment my earnings until the stable cashflow stream, meets/exceeds it. At the beginning of this year, I was able to return to home ownership, purchasing a HUD foreclosure, which I intend to fulfill the 1 year owner occupant obligation, then rent. Based upon current BPO, I stand at 70% LTV. Not the 50% which several others have listed as minimum criteria, but it's comfortable for me. I intend to do the same next year, as long as HUD hasn't dried up and I can get in before properties go to open bid status. That's my short term 1-3 year strategy for increasing buy/hold/rent portfolio of SFR. I also intend to increase capital by locating flips, 1-2 per year, but in partnership. Lastly, wholesaling ventures, but I have significant learning to do before I'm adept at this technique, since it is a first for me.

Hope that's good food for thought. Best of luck to you, and ever onward!

Glenn

"I've found that buying rehabs with leverage is not allowed."

My understanding of a "Check Book IRA" or Self Directed IRA in accordance with IRC Section 514 does allow for debt-financing within a SDIRA but requires a non-recourse debt instrument. A non-recourse loan is not guaranteed by the individual. Instead, the non-recourse loan is secured by and limited to the collateral, in this case the real estate property itself. Because the loan does not involve the individual/ account owner, it is not considered a prohibited transaction by the IRS.

Glenn

@Hollis G. I too utilize a Self Directed IRA (SDIRA), however the capital basis is not enough to purchase real estate without leverage. Besides hard money, I've had no luck finding asset based lenders (non-recourse) that will fund flipping. I'd love to find other SDIRA investors to pool funds with on a project, as this seems like a strategy of least resistance. As for fix/hold strategies, the only lender I've located that provides non-recourse products is North American Savings Bank (http://www.iralending.com/) but I've heard they are very finicky and very slow.

Hopefully this thread will grow to provide more ideas.

Have you made any additional discoveries since spawning this discussion thread?

Glenn Gray

Bridget,

@Anson Young hosted an great Podcast that touched on wholesaling strategies:

http://www.biggerpockets.com/renewsblog/2013/09/05/virtual-investing-deals-heated-market-anson-young/

In addition, there is a local REI meetup group that you can hit up for expanding your network and getting information regarding "bird dogging" techniques and general Denver market analysis and current events. There's a monthly meeting tomorrow:

http://www.meetup.com/IRRofColorado/events/140543002/?a=md2_grp&rv=md2&_af_eid=140543002&_af=event

Lastly, a search on keywords, such as wholesale, bird dog, etc. will yield a tremendous number of articles that will give you food for thought. Once you've digested some of that information, you may develop a comfort level with some of the techniques you'd like to focus on. As they say, there's more than one way to climb a mountain.

Glenn

Hi Bridgette,

I have to echo Anson's remarks, what are you looking to invest in?

Glenn