All Forum Posts by: Jack Faysash

Laura, great question. I’d suggest selling your primary residence within 5 years of moving out to make sure you can claim the IRS publication 523 exclusion. To the point of taking out loans or using cash, that’s more of a personal question. Of course you can take out loans and buy way more, but you’re also taking risk, and paying interest. But it all comes down to your situation. I personally really enjoy the power of cash. Interest rates are only going up from here for the foreseeable future so I’d suggest getting the ball rolling if you will need a loan. 

Johnny, if you liquidate your 401k, you'll be subject to a 10% early withdrawal penalty plus income tax on whatever you take out. If you have a large sum in the 401k, this would be a horrible idea, you'd likely jump up multiple tax brackets for the year. But if you're willing to pay the additional taxes in order to have the freedom to quit your job, that's up to you. You can take a loan from your 401k like Ashish mentioned, but you'll have to pay that borrowed money back, plus interest, within 5 years of taking your loan, in most cases. You could quit your job and roll it over into a self-directed IRA to invest in real estate, but any profits would have to roll back into this IRA. You could quit your job and roll your 401k into a roth ira to avoid the 10% penalty, and withdraw CONTRIBUTIONS tax free after 5 years (not earnings).

I’d highly suggest purchasing near USF. Students are much more likely to rent by the room as all the student housing apartments already operate based on the rent by the room model.

Like mentioned already, your budget isn’t realistic. If your looking for a flip that will come out in decent shape after, your going to be spending at least $125k, probably closer to $150k. Buying a crappy property will probably ultimately lead to crappy tenants. I’d suggest buying something modest around $170-$220k, and make any repairs you need from there. Look in a 20 minute radius of all the military bases in San Antonio.

Here’s a screenshot of the capital gains rates. If you can arrange your income to be under $41,675 you won’t have to pay anything. Otherwise, 15% on $4k isn’t the worst, part of the game of investing in the stock market. Good luck on your real estate investing.

Quote from @Andrew C.:

Here in WI, as in most US states, you need a broker's license in order to manage other people's properties. But you can, ofc, manage your own.

What does 'your own' mean when there are entities involved?

What does 'manage' mean here? Clearly, you can pay some people for some things. What are the limits?

If I own 2+ LLCs that own rental properties, and I wanted to self-manage, I assume that I can do that on behalf of each of the LLCs because I own them?

Can I setup a PropMgt LLC, that I own, to be the property mgr for the property owning LLCs that have the same ownership, or does that no longer count as 'self managing'?

And...as a self-managing PM...I can hire people to do parts of that overall job. I don't have to swing all the hammers. :P Can I hire someone to inspect contractors work once they're done? How about to meet prospective tenants to show the property? They'd be paid by me, or my personal PM company, to do specific things. Is that the distinction between hiring someone to work for my PM co and just hiring someone else as the PM? Or, are there things I must personally do in order for it to be 'self managing'?

Andrew, I see no need for a separate LLC to manage your own, but would be something you'd want to do if you are managing for others. You can deduct all business expenses, such as paying contractors and inspectors, as you would with any other line of business.

The bigger pockets tax strategies book is a quick read and a great place to start for getting a general understanding of tax strategies and deductions specific to real estate.

Quote from @Chris Seveney:

@Jack Faysash

Agreed with you until you noted someone could safely make a 30% roi. If people could safely get 30% roi then no need to invest in real estate.

To the original poster do not lay down the mortgage as you may not be able to get a heloc - keep the money liquid for the right opportunity.

I suppose I’d rephrase to confidently - at least personally any investments I’m making I’m confident I’ll get a 30% ROI within a year. I don’t think this is always the case with the stock market, but it’s always smart to put money in during a drop. Real estate hasn’t caught up yet to the losses in the stock market.

Austin, 

I'd space the money out on stocks/mutual funds/etf's over the next year. I personally think there's better money to be made there considering the state of the stock market. I'm sure there are plenty on this forum who will disagree with me, but I think if you do the research you can safely make a 30% ROI, which just isn't doable in the short term with real estate. For the long term I'll pick real estate 10 out of 10 times.

Invest near UCF and you can skip the rehab! College students won't mind a very average place haha, but all about the tenants base you're looking for.