All Forum Posts by: John Bell

@Tamara Deering

Thank you for taking the time to show me an example. Looks like I wouldn't have to spend every penny in my IRA on that one deal like paying cash but comes at a cost. I assume if the repairs go over the construction escrow that comes out my pocket.

@Brenda Logan

I'm only regurgitating what I read and my bank said about using a specific type of funds to do a specific type of investing. Your situation and goals are likely different. What you mentioned would work but I don't think I'd be able to get all my invested funds back out of the deal which is ideal in the BRRRR method. I don't wanna wait a year or two to save money for my next deal. I wanna reuse the same funds over and over. Looks are deceiving haha. I'm 37 and I would love to retire by 55 or at least quit my day job and run just my side businesses. Thanks for the advice. I'm hoping to get something going fairly soon. Dm sent

@Robin Frazier

Hi Robin. I'm very close to you. I'm off of 3180. I was hoping to find a Baytown meet up. Guess you saved me the time of looking. Which meet ups do you attend?

@Tamara Deering

Thanks for the reply. Are you saying I could get a 70% LTV non recourse (no personal guarantee) commercial loan for my SDIRA after the the rehab or getting a 70% loan to value for the original purchase and the SDIRA coming up with the rest of the acquisition cost? My plan is to pay cash up front, rehab, then refinance to pull the money out and use it again for another purchase.

@Brenda Logan

Thanks for the welcome! I'm happy to see someone local on here. You're further along then I am. Congrats on the progress that you've made. Getting started seems like the hardest part. I would love to ask you questions and get some input from you if you're willing to share. 

The MLS prices do seem high and don't work out on the BP calculator very well. That's one reason I'm thinking a rehab project would be the best bang for the buck. I've been interested in Galveston as well. There are some cheap properties down there. So cheap it made me worried that I'm missing something.

The idea behind self directed IRA is that it is tax differed until I retire. In order to maintain the tax differed status I can not mix personal funds in any way. This includes giving a personal guarantee (recourse) on a loan. Without the personal guarantee the lenders I have found will only go up to 60% LTV because they can not go after my personal assets if I default. On top of that the SDIRA owns a LLC company that makes the purchase and conventional loans on residential properties is difficult to put in a LLC. This is what my bank is telling me.I still need to dig deeper because just because they say no doesn't mean it's impossible. I can take an early distribution but I have to pay income tax and a 10% penalty.

thanks!

Hi BP community, my name is John Bell. I live just east of Baytown, TX and I'm fairly new to real estate investing. I've thought about REI in the past but was on the fence until I read David Greene's book " Buy, Rehab, Rent, Refinance, Repeat". The idea of making your money work hard for you instead of the other way around peaked my interest. Now I'm reading as much as I can as fast as I can and working my way through the pod cast and webinars.

I've worked as certified marine chemist for 11 years now and I own a couple of small pet related  businesses. One is a mobile grooming service that runs two vans with my wife as a pet groomer in one and an employee in the other. The second business is a small pet supply store that I opened last March. I did the rehab on the store myself (took 6 months) so I have some experience with plumbing, flooring, electrical, framing, and taping & floating. I also rehabbed our old office which needed walls, hot water heater, shower, and flooring. 

At the moment I'm a bit cash poor but I have decided to move my SEP IRA ($163k invested in stocks) to a checkbook self directed IRA at Broad Financial. The problem I'm running into so far is that the non-recourse loans will at most give a 60% LTV. So I'm not positive that the BRRRR method will be effective enough under a SDIRA. I'm hoping the differed taxes will make up for the low LTV.

My short term goals are to learn as much as possible, evaluate 2-5 homes a day, and meet some local talent. Within the next year I wanna buy at least one single family home in either the barber's hill school district area (expensive area making a great deal hard to find) or in Baytown in the 77521 zip code near the new mall development. (Zillow claims values in this area have gone up 3.5% in the last 12 months and 7.1% is expected next year). I'm hoping to find something in the $60k  to $100k range with some rehab needed. 

My only experience with owning real estate (besides the two homes I've bought to live in) is my Mom's house. She defaulted on her loan and was gonna be kicked out with my younger brother and sister so I paid the remainder of her loan, put the house in my name, and charged her the same rent she was use to. Unfortunately she only made 5 payments and I carried the expenses (taxes) for 5 years. I finally got a cash offer that allowed me to break even and the rest I gave to her to find another property.  What do you do kick out your own mom? So lesson one don't rent to family. I'm open to thoughts and ideas. I'm very excited to open a new chapter in my life. 

John Bell