All Forum Posts by: Jason Thomas

I'm certainly not experienced like the others here, I'm just getting into the game, but I intend on entering the Cleveland market soon and as such have been doing tons of research. From what I've learned, that area is a C neighborhood as others have mentioned. Others' experience with the city of Lakewood is valuable and worth noting (I certainly have).

In terms of the price though it seems maybe a little high for investing purposes, of course without the rest of the numbers I couldn't say for sure. Once you figure in tax, insurance, owner paid utilities and then account for maintenance and vacancy rate, seems like the return might be borderline... It all depends on the actual costs you're looking at.

Since I'm still learning, I'll certainly check back to see what you decide at the end of the day...

@Rajeev Kotyan When you said...

(9) You can do a conversion in-kind, and does not have to be cash, provided you have a fair market appraisal of the investment within the IRA or 401K just prior to the conversion. This can be used as strategy to reduce your taxable amounts if done correctly

... Did you mean that I could theoretically transfer my traditional 401k into an IRA, buy homes, then transfer them into a Roth after that?

Which would mean if those homes were small, low cost homes, say $40k in value. I could transfer one per year over to my Roth and pay a much lower tax rate then transferring $120k all at once.

Step 1) Transfer my existing 401k into an SDIRA / Solo 401k. ---> No penalty/ no tax

Step 2) Buy Homes

Step 3) Transfer 1 home per year to Roth ---> Pay tax at $40k rate instead of $120k rate.

That's a great strategy!

OK, now the picture is getting clearer...

@Ken Badziak that's a good tip! If I decide to go with the Roth, I'll definitely explore that option!!

@Rajeev Kotyan That's a great list of all my options plus some pros/cons to using them for real estate. As @William Morrison pointed out... regardless of what I do, the Roth seems to be the end of the line, once the money is there, it can't go anywhere else.

You guys have been great, really appreciate all the information!

@Brian Eastman

Thank you so much! I think I understand what your saying. I can't use the existing 401k to directly fund the Roth. I would take the entire $120k as a distribution, pay the taxes, pay the 10% penalty and then deposit what's left into the Roth. So another 10% on the $120k would bring me down to $81k to deposit into the Roth, not $93k.

Losing a third of the fund to taxes and fees would really hurt.

The question is... will $120k give me (at least) the same after tax income in retirement as $80k would without paying income tax.

I'm exploring my options to roll over a 401k from an old employer and want to make sure I am understanding the basics here. I realize that I'll need more specific and detailed advice from my own advisor, but the expertise of this community would be great appreciated. The total of this fund is about $120k.

Moving it to a traditional IRA I would retain all $120k, but pay taxes on my withdraws, both principal and earnings, based on my tax bracket at the time I withdraw it after age 59.5. If I invest and create passive rental income that allows me to withdraw $5k per month I will only get to keep less than $4k of that because I will be taxed at a rate corresponding to an annual income of $60k. Correct?

Moving it into a Roth IRA I would pay income tax on it right now, which, if I did the math correctly on the income tax, would leave me with about $93k in that Roth. Now, If I take that $93k and create the same passive rental income to the point that I can withdraw the same $5k a month after 59.5, I would get to keep the entire $5k/month - $60k/yr. I wouldn't have to pay any income tax on it at all because I already paid taxes on my original deposit and earnings in the Roth are tax free. Correct?

That seems way to simple. Can I really take that 401k, roll it over to a Roth IRA and then not pay any taxes on withdraws after 59.5 years old. If my rental investments are successful, I could live virtually tax free after the age of 59.5.

Please help! What am I missing?

Hi everyone,

I'm not involved as of yet, but have been trying to get enough information to figure out how I want to enter the REI community. I have read that getting conventional loans for properties around $50k can be difficult. I'd like to propose a situation and get all of your advice on how feasible it would be to do.

The thought is to buy 5-7 rental properties at a price point of about $50k with 20% down. I'll just stick to 5 for this example. Total cash down would be $50k and total financed would then be $200k.

I personally have great credit, decent income (from my 9-5) and would have no problem qualifying for a $200k loan on a $250k property if I were buying a home for myself. I've also read about banks wanting several months in reserve on rental properties, this scenario would leave me with plenty of reserves so that wouldn't be a problem either.

My question is; How likely is it that I can find a conventional lender that would do this?

I've trolled the site for a little bit now and have seen so much knowledge on different subjects and such a willingness of everyone to help those of us still trying to figure it out! I really appreciate everyone's advice!

I'm super new to this world so I apologize if I seem naïve, but I have seen people manage their properties through multiple companies. For example the own 10 properties through FIRST LLC and then another 10 though SECOND LLC. Each LLC is operating as a separate entity so would this not be a way to finance 20 properties simultaneously?