All Forum Posts by: Greg Junge

Hi Bp, So I have a 200k mortgage on my primary residence that's worth about 250k. But I plan on renting this house out in a year but I want to get a heloc on it before I do that, so I can get a highed heloc when it's my primary residence. Plus it's easier to get a heloc on your primary than a rental. If I had the 200k available to pay this mortgage off, get a heloc for 80% or 90%, then take that money out and use it for investing, essentially I have the same amount of money if not more, and a heloc on my primary that will be a rental soon enough, and I can pull from in the future again for investing. Has anyone done this or see any flaws in my thinking? All information and opinions are appreciated! Thanks, Greg

Thanks for the responses everyone. I guess I used the term brokerage instead of custodian. I'm set up through Advanta IRA, which is a custodian, not a brokerage.

I just opened a self directed IRA and transferred my money to this brokerage who specializes in self directed IRA's. I want to open up a checking account and have all the paperwork in place. Let's call it 70k that's currently with this brokerage. My question is, when I go to Chase Bank to open this LLC bank account, which isn't an issue with them, do I then transfer that 70k directly from my brokerage to that LLC checking account with Chase? Is that the legal move to do since I have the paperwork set up already for the sdira and LLC bank account being linked? Chase has a minimum of $1500 that I need to keep in the checking account to avoid fees, which isn't a problem. Any help is appreciated!

@Paul T. - I'm not sure about this working in apartments or condo's. I assume most condo's are out because of the HOA not allowing it. I know there are a handful of condo's here in Phoenix that allow airbnb, but I personally wouldn't buy in a hoa because they can change the rules very easily.

@Bryan Clement - Yes it's a nice deal for me and for my tenant, win win.  I can't take credit for this, my buddy did a deal with this same person a few years ago and I'm following his lead, only with financing, which makes it even better using leverage.

@Kristin Zajac - Yes I love the triple net aspect of these deals, makes it truly passive.  As far as the rent amount, that's negotiable and it has to make sense for both parties.  It's usually over market price by 25% or so, which is good for me.  I simply look at my cashflow after paying my mortgage (my only true expense really) and if the numbers work, then I do the deal.  I have a tenant that has been doing this since day 1 on airbnb, and has a track record. I wouldn't rent this out to anyone, since they need to be successful to remain in the house. 

@Nancy Bachety - My property that I run for this airbnb scenario is in Scottsdale, Az, which has a huge draw in the winter time for out of state people visiting. This house isn't in a HOA and I don't see Phoenix changing their laws anytime soon, but you never know. My lease terms are longer terms, anywhere from 5 to 10 years with a small escalation built in every year.

Hope this info is helpful and any more questions, please let me know. 

I'm actually doing this right now except I'm the owner of the house, and leasing it to a long term tenant who is then airbnb'ing the property. My tenant has been doing Airbnb since it started, agreed to a 10 year lease, with 2% escalation clause, meaning the rent raises 2% every year. And it's triple net, meaning he's responsible for all repairs, maintenance, pays my property taxes and home owners insurance. I'd only be responsible for full roof replacement and ac replacement if needed. I'm making about 1k a month off this deal so I am happy and he's happy because he has an awesome house to make money with using Airbnb. I'm in the process of buying another house with this same model in mind. For me, it's awesome cash flow, passive, no need for a property manager, and I'm banking on both cash flow and long term appreciation, since these houses are in a nice part of town. Just wanted to share that to this post. And everything is clearly spelled out in the lease, so there are no surprises about what he is doing.

@Julie Gates I can speak as a full time Realtor and investor of buy and hold properties. As a realtor, there is no way to check if there is another offer on the table unfortunately. I've had clients ask me this question and all I can say is legally and ethically, real estate agents are supposed to be honest and not lie. That being said, are there agents that might not be ethical and honest... Yes, as with any profession. Ask your realtor about adding an escalation clause to your offer. Depending on what state you live in, that might be an option. This curtails the chance of someone saying there is an offer that you think is a ghost offer. Again, it depends on the state but that's an option.

@Eran Withana I ran into this problem just a few months ago. I listened to 2 popular CPAs here on BP. One wanted a 2k consultation fee, which may be worth it but I can't justify paying that. The other person never responded to me so she is dead to me, never give her my business. I found that asking your local network for a real estate minded cpa is the best way to go. I found one that was recommended by my estate planning attorney and he's fantastic, local, and didn't charge me to ask him questions for an hour plus. He listened to me, my game plan and I am even opening his eyes about how self directed IRA's work. Some people can and will pay a consultation fee, I'm not willing to and found a diamond by networking. Best of luck to you. If you want my cpa's info, message me and I'll gladly share. - Greg

Thanks again Fellas, this conversation was greatly appreciated!

@George Blower and @Brian Eastman. Thanks for the help fellas. Brian, funny you mention the conversion. About 3 years ago I converted some monies from a traditional IRA to my Roth and paid the taxes of course. Are you saying that amount has a 5 year waiting period for me to invest it?