All Forum Posts by: John-David Herlihy

I am not an expert, but this is what I would do.

Use your cash for 20% down on a property with Hard Money and then refinance after the rehab to cash out and carry on to the next deal. I would also use a mix of Hard Money and Cash to finance the rehab portion. You can layout the cash for portions old construction and be reimbursed by the hard money loan.

This should minimize the amount of cash in the deal and enable one long term mortgage at the end that takes all your cash back out. Meanwhile you can use the remainder of your cash to finance multiple other deals.

For a Hard Money loan you will only pay about $750 per month for each $100,000, so if you are not n the project for too long and the forced appreciation is decent, the extra carrying costs shouldn't be to bad compared to the overall deal.

Having an LLC will also protect personal assets from financial liabilities (e.g., business losses and foreclosure), as well as, accidents?

This is similar to what I have found and my path forward in REI. Note in my case all of my former IRAs and 401ks are able to roll into the new C Corp 401k, and subsequently the company itself.

Perhaps if you had put as much effort into assisting him with doing things correctly, rather than immediately calling him a fraud and dishonest, this could have had a more positive outcome. The original poster was clear from the start that there wasn't no signed contract Andy he wasn't looking for options for a path forward. From my read of the thread he did not put this under contract first and the try to figure I think out. Jen found a motivated seller, couldn't get the cash to close, so rather the new putting it up undercontract found a cash buyer that wasn't willing to make the deal and put it under contract. I do not pretend to know RE law or texas law specifically, but find it a stretch to call the man's ethics into account without other evidence. I also am really curious if getting paid a finder's fee is really a commission. Where I am from finder's fees are not uncommon.

If you are self-employed already, depending on your investment plans, I would recommend looking into self-directed IRAs, Solo401ks, and ROBS (Roll-Over Business Start-ups). 

If you plan to keep all the money in the retirement plan, then a SD-IRA or Solo401k may fit your needs. If you want to create a business and get paid on an ongoing basis for your investments, a ROBS could be the answer. I am personally getting my business started through a ROBS so I can eventually draw a paycheck and realize my independence from the corporate world. Contact me if you have questions on my process and thinking.

With the ROBS I describe above there is no tax or penalty on the 401k funds. Your 401k Just invests in your new C Corp. As you draw a salary you can then actually (and it is advised to) pay into the C Corp’s 401k which can be invested in a normal diversified portfolio.

As a family looking for our financial independence and to be able to earn a long-term salary, the ROBS is the best method I have found to legally gain access to my retirement funds without paying tax or penalty and be able to get paid from the earnings. With a Self-Directed IRA I don't believe you can earn or use the money other than investments.

I should state I am not a lawyer or CPA, just going through this process myself.

Jia Liu, if you are looking to become self-employed and be able to eventually draw an income from the comepany, you should look into a ROBS (Roll Over Business Start-up). With this you create a C Corp and create a 401k for your new corporation. You can then roll-over the balance of your former employer's 401k into the new corporations 401k. The new 401k can invest in the C Corp and you have those funds in the new corporation. You can also take a loan from the new 401k if needed.

I am going through this now. Let me know if you want more details.