All Forum Posts by: Scott Jensen

Congrats on starting your real estate journey!  We have 3 kids (which feels like a lot because they are so loud!) and are househacking a single family house by renting out our basement.  You could look into doing something like that, rather than looking for a duplex with that many bedrooms.  

Our house is a 2 story with a basement, our family lives on the main level and second story (4 bedrooms up) and we put in a full kitchen in the basement (already had a family room, bedroom, and bathroom).  So, our tenant has a full apartment in the basement, but she does use our front door to come in and out since it isn't a walkout.  We knew her daughter, so felt comfortable with this arrangement.  We were very upfront with her that our kids are loud and jump a lot (since she is living under us!), and her rent is very reasonable to reflect that.  

Hopefully that at least gives you some ideas to think about for house hacking with a family! 

@Avery Robertson Good info in this post. You can also 1031 a DST into a REIT (via 721 exchange I believe?) RealEstateCPA did a podcast on it recently. Also note that in general if you do a DST through a financial advisor associated with a broker-dealer the fees/commissions are usually higher. Financial Advisors that are Independent RIA's will often do it significantly cheaper. (Typical Broker Dealer Advisor charges around 6%? I generally charge 2% for my ongoing clients and 3-4% for non-ongoing clients.)

@Bobby Balow What did you originally have estimated for rehab costs and what is the projected total if you were to get everything fixed?

1. Swapping outlets out is pretty cheap and easy.

2. and 3.  See if the cabinets can be cleaned/repaired/painted. Shelf liners can cover up minor water damage. Obviously make sure the source of the water is taken care of.

4. Depending on how bad the doors are you could just add new matching hardware and paint them all to match.

5. Get the window mechanisms fixed and get new covers. This isn't real expensive but they can be kind of a pain to work with.

6. Transitions and registers are cheap. Get new ones. You can spray paint older registers as a temporary fix.  Just clean them off really well before painting.

7. Have the furnace serviced/cleaned. Be ready to get it replaced ASAP if it does go out.

8. Sheet vinyl is cheap and easy to install. A handyman should be able to do it cheaper than a flooring installer. The stuff does damage pretty easily though. I'm replacing the sheet vinyl with vinyl plank in my rentals as it wares out.

9. Get structural things fixed correctly.

10. repair/replace the handrails and paint them all to match.

Honestly, most of these issues seem pretty minor. The only thing I might hold off on is the furnace.

@Luis Arellano I would recommend talking with an independent mortgage broker who is local to MN understands investment property financing. I've worked with @Tim Swierczek and he does a great job.

@Catherine Peters If you're looking to invest in RE inside a trust it probably makes more sense to set one up than continue the one that was set up by your grandfather. 

Have you taken distributions from the trust before?  Do you have someone helping you with the investments?  They should be able to help you understand the tax ramifications of distributions.

I am not an attorney, but when the grantor of a revocable trust dies the trust becomes irrevocable. I don't see any tax benefits of owning property in the trust.  Probably good to have this confirmed by a local attorney before taking any action though. Best of luck!

My first question would be why are you wanting to invest in Real Estate in the trust?  Who is the trustee?

@Peter Vander Ploeg I agree. There's not a lot of financial advisors that want to deal with real estate investors and there are plenty of real estate investors that want an ongoing relationship with an advisor. I specialize in working with real estate investors and it has been a blast.  When it comes to working with real estate investors I help them track their properties and calculate rates of return each year, provide technical expertise in 1031s, DSTs, depreciation and recapture, long term tax planning, etc.  I would suggest going completely independent and fee-only to minimize conflicts of interest.  Let me know if you'd like to connect some time.

Dan Anderson from AdvisorNet Property and Casualty does good work.  He's the only insurance agent I know of that gets in contact with you periodically to make sure your coverage is still adequate or whether you should re-shop your policy. Google him for his email or DM me and I can send it to you.

@Sharlene Burch  As others have pointed out, that question is pretty far beyond the scope of what can be answered in a forum post. My approach, as well as most of my clients, is to have a mixture of actively managed real estate and passively managed stock market investments. How much, and what type, of each investment is dependent on how much volatility the client is willing to accept, when the funds will be needed, and the client's goals, abilities, and tax situation. Feel free to reach out if you have any questions.

@Tim Swierczek thanks for the mention.

@Brian Henderson I agree with @Derrick Dill above. Another option with the 401(k) if you don't need the money right away is to convert it to a Roth IRA. After 5 years you can take the amount you converted from the 401(k) out as a withdrawal without tax or penalty. There's income tax due when you do the conversion (assuming your 401(k) is pre-tax).