All Forum Posts by: Jason Young

Hey there. I just sent you a message. 

@Lane Kawaoka finally someone that gets it.... or just agrees with me 😆 maybe we’re both idiots.. just kidding. It’s nice to have the argument for and against it and hear everyone’s thoughts and point of views. It seems that most that are against it feel as if you’ll never pay these taxes or that you’ll definitely make more in a 401k. 

Something I hadn’t thought of that is a good point... what if you lose your job or get laid off?? Sure maybe you can take a loan out of your 401k but what if you had an asset that was paying you monthly. That sure would help if you’re not working. @Lane Kawaoka you hit the nail on the head for me!! 

Thanks guys!!

Thanks all, Yeah I honestly don’t have much confidence in the stock market. As long as I’ve had this 401k it really hasn’t even done that well IMO and I feel like it was pretty well balanced from when I was younger until now. My picks were more on the riskier side but I feel I should have a lot  more in my account... maybe double. @Scott Winter I’m thinking of not going the SDIRA route because of the hassle of it all. The risk of doing something wrong and not following those rules completely. Yes it’s an unconventional way to have more options with retirement but my thing is everyone is caught up in the tax deferment/tax penalties, but you’re going to get hit with taxes either way..yes I’ll get hit with the early withdrawal but then the money is mine. I can do whatever I want with it. If I were to blow it on a sports car then that would be a terrible waste. However, if I invest it wisely then I can start having that money make a return to my pocket now... AND in retirement. It’s like why wait until then to start paying me back? I could be dead by then anyways. I see everyone’s argument and they are good, so it is a hard decision. Either way it’s all a risk. There’s no guarantees in anything or the stock market. I gotta run for now, but this is making us all think 🤔 😝 

Thanks everyone, I’m not sure what I’m going to do. My wife tends to think I can’t really leverage anything, like Fred said I think my debt to income won’t work out but maybe I could look into it and see how much I would have to put down. 
I kind of like what this guy is saying...

https://www.youtube.com/watch?...

I think I’m going for it too. My wife likes the idea. I just went to look at the condo. It’s going on the auction block Wednesday. Hopefully I can get it at the right price and hopefully this doesn’t end up being a bad decision. Any other feedback is greatly appreciated and thanks everyone for your help. 

Yes it’s tax deferred but I’ll still pay taxes on it either way right? Perhaps more later because it will be worth more. I guess what you’re saying is I’ll pay taxes on the income from it by renting it over 20 years? I can see that argument for sure. I think I probably could take a loan from it it, but I hate borrowing money from anything unless I really need to but it is nice to be able to tap into it if needed.

Thanks. I guess maybe I’m missing the point. You say equity locked up in a property has zero return. Wouldn’t the monthly income produced from owning itin full be my return? I’m having a hard time visualizing all the debt I would take on with Helocs, etc. This is also why I’m probably having trouble scaling up from my first rental property because I paid for it in full and now have no capital. I could sell it and make good money but I’m enjoying the passive income. I’m not even sure I could get a heloc or cash out refi because with my mortgage and other expenses I’m pretty maxed out... I don’t have any debt but my main home, but I don’t think I can be approved to borrow much more. 

Thanks, I guess my goal is just to have that steady stream of income now and into retirement. It just seems like with the 401k/IRA it's only going to pay me back later, not now. By the time I retire this could pay me $240k easily over the next 20 years and then when I retire it just keeps paying me.. and I still have an asset that should've appreciated nicely over 20-30 years.

Maybe there is more taxes I’ll see later like early withdrawal. I’m really not sure but I’m thinking even with all the tax hits it could be worth it. 

I’m not really sure how the leverage works to get more properties. With my current mortgage and expenses I don’t think I could get approved for much more. I already have another rental as well that I bought with cash a few years ago and it pays me that nice steady monthly stream that I could essentially double with this potential next property. However I am looking at ways to scale up from my first rental. My liquid cash is running low so figured using this 401k money might not be a bad idea. 

It seems either way I’ll be paying the taxes now or later, it would only be slightly less taxes later if I get hit for the 10% early withdrawal now. Essentially, it’s like I’m only losing 10% but I get all my money to start paying me back now. 

I didn’t want to go the SDIRA route because again that doesn’t start paying me back until later in life. It almost seems like a no brainer... start getting paid back now AND in retirement or just.. later in retirement.. hell I could be dead by then lol

Like you were saying basically... will the rental pay me back more from now until I die or will the 401k pay me back more from retirement till death?? I guess it’s all a gamble really. I could make up the tax hits in less than 3 years probably. Hmmmm

Like I said though I do have another 401k.. it’s just so new that it doesn’t have much in it. But if I keep that going from now until retirement that should work out pretty good too hopefully, since I can’t retire until at least 20 years from now. I would like to find ways to retire early though ;-)

Thanks for helping me think 🤔 

Hey BP fam,

Hoping to reach some savvy investors with this question. So I decided to close my old 401k from a previous company. I was going to move it into an IRA.

When I talked with my IRA rep he says I shouldn't have gotten the checks sent to me directly but instead sent to them so it rolls over and I don't get hit for taxes.

Well it was too late and the checks came anyways, which they say I can just shred them and do the rollover correctly and not take the tax hit.

This got me thinking though. I see on the checks how hard I would get hit by the taxes (not too bad).. some were Roth and some traditional so I did already pay into the Roth taxes. The net amount leaves me enough to be able to buy some property in cash, albeit.. something modest but still property that I could rent out and have it start paying me back now and into retirement. 

Other than the tax hit, am I missing something? Am I the only one that thinks this is a good idea? I’m 42 so retirement is still a ways off.. I wouldn’t be able to see that money until then anyways. If i use that money now.. that same money could be paying me back now and into retirement, all while hopefully gaining in property value.

The only other problem is this is the bulk of my retirement. I have other 401k’s with my new company, but nothing close to this amount. But I’m not so sure I trust this money in the stock market anyways. It took me 20 years to accumulate that and if I use past performance to guess at the future value... it doesn’t look good. Those mutual funds are a crapshoot anyways. 

I know this is a little off topic but I do want to get another rental and I’m not really interested in going the SDIRA route. I’m just thinking this could easily make me $1k/month now and for years to come and into retirement. Hell by then it would probably make me $2k a month after all expenses. Just figuring $1k/month net over the next 20 years is $240k. Why get paid back in retirement later when it could start paying me now... and then..?

Thanks,

Jason