All Forum Posts by: Jeff Tipton

Bumping this older thread as it has a lot of great info. We are watching the markets to see what STR prices do with the COVID stuff and shutdowns. We travel to PF every year at Christmas and love the area, so a cabin that returns 2% or more would be great. Any guesstimates on prices in the area over the next 6 months? We are also looking to purchase a condo in the PCB area if the prices come down. I know there will be deals out there from people that are over-leveraged and have to have the rental income, so we are not in any hurry, just wait and see mode. All input would be appreciated, and I hope everyone here stays fully booked and cash flowing.

We pulled $100k from our $401k this past week, and Fidelity had the money into our checking account in 2 days.

Saving the 10% penalty was a big deciding factor, as that was $10k that we would have lost had it not been for the Cares Act.

We have 3 years to pay it back and not owe any taxes, and can also defer the taxes over a 3 year period.

With this money, we are waiting to see what the real estate markets do. If prices drop as some are speculating, we will scoop up more rentals at discounted prices, increasing our cash flow and also getting the appreciation when the markets go back up. If they don't, there are still deals out there, you just have to work harder to find them.

In theory, our ROI can be significantly higher than leaving it in our 401k, which we didn't gut, just took out the max of $100k. We can buy 5 properties at $100k with 20% down, have a positive cash flow of $1,500 per month, do velocity banking and have these properties paid for within 4 years, and then have $6k-$7k+ in monthly cash flow. In the meantime, we get to use the depreciation of the rental properties to mitigate our tax burden over the next 3 years. Hopefully the real estate markets return to their glory days of the last few years, and we would have $1,000,000 in assets.

Everyone's scenario and life circumstances are different, so do your own due diligence to see if taking advantage of the Cares Act makes sense for you, as you possibly can lose out on the stock market fully recovering, and the benefits of compounding interest. There is no 100% correct cookie cutter answer for everyone, regardless of my opinion or anyone else's, so look at all aspects of what you are doing and the consequences. I did, many times over, and this is the decision we made.

Best of luck to all, and stay safe in your investments and health.