All Forum Posts by: Jim Goebel

Hi everyone.  Thanks in advance for any help/advice.

I'm posting to crowd source this.  I emailed our usual attorney for closings, to ask about this.  She said it isn't in her wheelhouse and passed on helping.  Here's the skinny:

We have a house purchased for $15k in my self directed IRA. Custodian is out of Austin TX area.

Another asset is owned in this same self directed IRA and clears about $1000/mo in cash flow.

Total funds to work with now in that account are in the $20-25k which is CLOSE but I'm not certain is enough to finish this project. It's in Des Moines IA. I'm evaluating either partnering, finishing the project with funds present in my self directed IRA, or taking a distribution on the asset and moving it out of the IRA world. I'd like to partner with my wife as she left work and has $70-75k that's in cash and ready to deploy as self Directed IRA funds, too.

For folks that have done this, are there attorneys that specialize in this? Is there any way to do this now with the asset already purchased (I'm reading no after some googling). If there are attorneys that help with this, what does this look like: an LLC with an operating agreement, that then purchases the asset?

Is this a specialized area of legal practice?  What do fees typically look like for this?  Can we get something set up that can work for future purchases or are there going to be fees/setup for each transaction?

If there are any folks here on the BP forums that specialize in this arena, please let me know.

Gotcha, that's helpful.  I'll explore some of these things.  One is rented currently but her communication has been challenging, so we'll probably just wait til lease is up in June and then list it vacant.  The other higher value house is vacant.

Hopefully our primary agent doesn't take it personally if I'm open I'm exploring other avenues to list, too.

I seem to remember some states brokers and lobbying efforts making FSBO a lot less possible/friendly, and I can't remember how Iowa falls because we haven't listed something here that way before.

@Jay Hinrichs

Jay what's your take on the flat fee stuff or FSBO, for someone like me? - ie: investor, we're already used to some of the basics of these transactions, can take good pictures, etc. We're also not going to get beat up by buyers agents because we're going to be listing the properties as rentals, too as a hedge against not getting the price that we want.

Hi everyone.  Wanting to not hijack the other thread about RE agents - we are going to be looking at selling 2x houses, one of which is an under-performing $100-150/mo cash flow house that we think we have something like $50-85k equity, the other is a house that we think is worth $165-185k in a regular market that we own outright.

We have been working with an agent for awhile, as investors.  He's been responsive, been transparent for the most part, and some other intangibles.  We'd like to reward the effort of all the low dollar transactions on the buy side --- HOWEVER...  in my first conversation with him he suggested mentally budgeting 9% of the sale price for commissions and other costs from the seller side?  Seems CRAZY!

I like FSBO; it worked well for me. I'm wondering for you agents and folks out there, can you give me some perspective? 9% just sounds like a ton of money right off the top, and I'm struggling to see the value there.

Please give me some perspective here. Although I'd like to reward this agent, I'm thinking more about the FSBO or flat fee stuff, at this point. We had talked about my wife getting her license but that timing and goal is now on hold.

@Ben McMahon

Ben I wouldn't assume that you're in the minority.  There's a lot of brokers and agents both on BP here, but elsewhere that will be very vocal about their value proposition.  There's also a lot of others out there that are perhaps more dubious but may think they have something to lose by going against what is being played up as 'the flow,' but I'm not so sure it is 'flowing' in that direction.  I personally would love to see numbers.  Our current situation is that we love our primary agent and he has built trust - however, that said, there are definitely structural limitations and shortcomings to to RE broker/agent delivery model, and if nothing else, especially for larger transactions, the typical commission structure can be very costly.

In our market we seem to have a billboard competition going. There's flat fee brokerages, and some FSBO type offerings out there, and there's the NAR's attempts to build the 'Realtors' brand. I'm trying to keep an open mind, however I had a very fine/good experience with the one FSBO transaction I had, too.

I'm a fan of FSBO and would encourage more to do it, honestly.

@Ross Bauer

Agree completely on the licensed trades cost stuff.  It hurts sometimes to deal with them, but we've made it over the hump to where now when we're taking on major work/value add, even with those costs built in, we're able to do some cool stuff.  Andrew Carnegie when asked about inspections and such, fully embraced them.  In his view, it was free quality control and a way to market / build his brand.  He did pretty well, so I'd invite you to change your perspective on the oversight as you grow.

@Ross Bauer

Hi Ross I think I've gotten some of your mailers!

I've heard DSM referred to as the 'black hole' and that's where we primarily operate.  The main issue I have with 'mid market' surrounding cities, and I won't name them specifically, is that there's not the depth of the market to support top of market rents.  Or maybe put a different way, the spread of doing really quality work doesn't pay off nearly as much, as compared to a larger metro such as Des Moines.  I'm not comparing Des Moines to NYC but although you see much higher rents in NYC, you have pockets that are multiple times the average.  In some of the towns that have been thrown out above, you often have only a $100 spread in the rents for a nice vs. dumpy place with the same measurable features, such as SQ FT, bedrooms, etc.

What this pushes landlords in these areas to do is focus on doors/volume, instead of focusing on the things that really build value.

The lack of regulatory oversight, I get - as a business owner.  However, in many cases this oversight brings with it more consistency and keeping the housing stock up, over time - which is one thing that drives appreciation.  It doesn't always work that way, but a lot of folks that are either intimidated or value the lack of oversight from a business perspective, are not adequately appreciating what they are 'giving up' by not having this.

Hi!

This question is for folks keeping up with the upcoming stimulus.  It sounds like the IRS is administering sending funds for folks, at that $1200 / person + $500 per kid/dependent.  The trick is we haven't filed our 2019 taxes yet, and we had Sarah born 4/30/2019.  I'm wondering if anyone knows how we can ensure the IRS has records of our newest addition so we don't get left out of that other $500.  Maybe there's a form?  Maybe they have it covered if they're working with the Social Security administration, etc.?

Thanks in advance.

@Connor Dunham

American is up to their nose in debt.  They already have negative shareholders equity, and only had ~400mil cash on hand at end of 2019.  Lots of long term liabilities there; I'm unsure if American even makes it out of this alive.  Who knows.

American has 21.4bil of long term debt as of end of 2019, compared to literally negative equity. 400mil cash

Delta has 8.9bil of long term debt as of end of 2019, compared to 15.3bil shareholders equity, ~2.7bil cash

Alaska has 1.26bil of long term debt as of end of 2019, compared to 4.3bil shareholders equity, ~1.5bil cash

I'd think a lot of those planes in inventory (the bulk of the long term debt) will need to get written down as they're a lot less valuable and will depreciate faster when they are sitting in a hanger not making money.  So, the equity numbers above are too high given the state of things.  Timing of something like 88 new plane purchases for Delta was unfortunate as it was last year and increased their debt burden substantially.

The airlines that can adjust their cost structure rapidly and don't have that long term debt are by far in the best position.  I'm unsure of impact of grant for equity which is the bulk of the form of bailout money, it seems.  I'd think the US govt taking an equity position would prop stock price substantially even if just by adjusting trading volume down.  I'm new to this stuff, though.

I've been looking into the airline industry a lot recently as we put some money into Delta Airlines (DAL).  It is one of the airlines that's in a 'stronger' position to weather this, but the strongest one (balance sheet, cash on hand, and most importantly, a lack of long term debt liabilities, leases etc. allows to ramp down their cost structure pretty fluidly) - is Alaska Airlines.  Of course, there's some exposure there potentially with having their main hub in Seattle.  But, the terms of the bailout as it sits should work fine to allow for the strong airlines to ride through this.

Interestingly, Berkshire has stakes in lots of airlines and I don't suspect anyone could have seen this coming, but they have a stake in American Airlines, and I'd suspect long term that AA is in trouble - they have tons of debt and a lot of that debt they cannot ramp down in terms of their cost structure, so they are going to hemorrhaging cash.

We just put a little money into Delta in the low 20s and I wish we had put more.  I'm still buying, though.

I'm also looking heavily at the electrical utility sector because a lot of those companies are at a 30%+ discount now, and they pay healthy dividends.  I don't see the revenue impact being anywhere close to the price discount now, and utilities have this weird public bargain in which they have little/no risk, because they go in front of a public utility commission every so often, and if they are in a pickle with their revenue vs their costs, the utility commission evaluates their rate case, and just increases rates to cover their costs.  Kind of a little/no downside risk situation there...  Unless of course there's chaos and substations are getting attacked, etc.