All Forum Posts by: Josh Collins

Nice garage!  :0)  

Congrats.  I love how real estate can take so many forms.  It can work pretty quickly or it can work slowly depending on your goals.  I'm impressed.  Keep at it @Michael Beeman!

@Brian Eastman As you can see, im no expert in this.  However, this is the exact kind of discussion I was hoping for.   Thank you for your contribution.  

Most of the uses for an SDIRA surround an active business use for the funds.  You have to set up a C-Corp and invest your rolled over SDIRA funds into the C-Corp's private company stock.   Now you are a stock holder.  With that, you can still pay yourself a salary for running or working at that company that your SDIRA now holds as an investment.  So, to cut to the chase, you can make money (through W-2 income, not in the traditional passive income fashion that is associated with most RE) if it's a business expense.  

Now, onto real estate investing with those funds.  I think you could legitimately use your SDIRA to buy land and have someone plant trees and have them harvested every 10 years, you could invest in a syndication where someone else manages the properties, or you might be able to get away with buying a self-storage and getting paid a reasonable salary to run it.  So there are ways to make money from an SDIRA, but only investing in syndiations is truly passive, but you can't take a salary or get paid without a penalty until you are of retirement age.  I would say talk to your roll-over specialists, but you might be able to pay yourself for managing a real estate business (as previously mentioned, self-storage comes immediately to mind).  

For an example (not really real estate related but I'm hoping it helps a little), I was looking at buying a business with SDIRA by jumping through the necessary hoops ($5K and $130/mo maintenance fee).  Then I would work there and get paid a W-2 income.  Profits could then get rolled back into the business as seen fit.  However, once you've made a $1 in your business, your business is welcome to invest that dollar anyway it sees fit.  The term the specialist used was secondary investment.  So you're allowed to invest in passive investments with the income you've generated from the business.  I thought this was an interesting point.  I don't know if you can make income today with that passive investment or manage it yourself, (I'm guessing no and yes, respectively) with the secondary investment, but it's a question you could ask a specialist if you got to that point.  

I love this idea in that you find a good, cheap business that throws off cash and you use it to invest in real estate assets.  You pay yourself with the business and the real estate assets make you a bunch of money upon retirement and grow tax free until you retire.  It's like a 1031 without having to exchange.  

The experts out there are free to chastise or correct me as I think it's great to discuss options for this money if you're planning on quitting your day job prior to age 65 (or is it 67, or is it 67.5?  Whatever).  I recently quit my day job and honestly a 401k is doing me absolutely no good between now and 65/67/67.5!  ha!  So I'm exploring ways to make that money work harder for me and provide some sort of monthly income.

@James W. On smaller RE (1-4 family) I was specifically thinking about people turning california or florida rooms (covered porches where I'm from) into another bedroom and adding another bathroom to cheaply add rental value and equity.  Therefore turning a 2/1 into a 3/2, for example.  But like I said, it costs money upfront.  But I hear this tcan turn a non-cashflowing property into a cashflowing one depending on the market.  

@Will G. I'm going to beat my demographics drum here a little bit.  In the name of playing the devils advocate, I think the tight cap rates for multi are banking on future demand and therefore rising rents.  I think they are onto something.  Now with that said, would I get in at a 5 cap because I think rents are going to rise?  Nope.  

I agree with you that the fast money is following multi right now though.  That could mean trouble when their commercial loans reset in 5 yrs if rates are 2% higher.  But hopefully they'll have paid down some principal where they can at least refi without losing the property.  If not, maybe you'll be able to pick up some cheap multi 5 years from today!  If so, I just hope I have enough dry powder!  

@Will G.  I'll have to check that out, thanks for the info.  Good point on the debt load being deflationary.  If my research serves me correct, that's what's playing out in Japan.  

At the end of the day, it helps that we have our own currency....And a big military.  Although I'm not interested in using it.

@James W. You're post got me self-analyzing a bit.  To put my finger on it, what most investors are probably looking for (and by most, I mean the people in the middle of the spectrum) is something that cashflows pretty well (10%+) but also has upside.  I would think that is the Holy Grail, to be a bit cliche.  There is always the option of forced equity which helps with the appreciation side of things.  But I'm guessing a lot of forced equity projects cost money or come at the expense of cashflow.  

I read and listen to as much of this stuff as humanly possible but it always comes off as a doomsday scenario that someone is profiting on.  Schiff, Kiyosaki, and others were pounding there chest when the market corrected 5% at the beginning of 2016 saying, "see, I was right".  Since then, the market has gone up from 16,500 to 24,000.  I believe in demographics are destiny and I think that being in the rental market is a good bet.  I think it protects against deflation (people losing their houses and moving into rentals) and inflation.  The deflation is the bigger concern but I just think the world banks will pump money into the economy which will eventually result in inflation if anything.  

I used to believe that debt will finally become the US's undoing and bought a bunch of gold and silver.  Then I learned about Japan.  They're way above the US in the debt per GDP standings and they've been keeping it going for 20+ years now.  I just don't think there's any reason to think that we have any short-term problems to worry about (as far as apocalyptic tragedies go) here in the US.  I do realize that I'm going to be wrong...eventually.  But how long are you going to wait?

You have to realize that Kiyosaki (my onetime hero) and Schiff have become doomsdayers because it helps them sell books, which seems like their major income generator outside of RE (for Kiyosaki).  Kiyosaki went from education to a "sky-is-falling" table-pounder.   

My modern philosophy on this is that the world is changing faster than these guys can keep up and that scares them.  I'm trying to look for the opportunities out there.  Maybe your opportunity isn't buying houses if they're too expensive.  Maybe your opportunity should be property management for all the smart people who bought foreclosures in 2010 and can afford to sit back and let someone else do the dirty work.  

I struggle to see how housing, commercial, and industrial property (save for retail and office, naturally) are going to keep up to future needs.  The housing and RE starts over the past 10 years have been pathetic and demographics suggest that young and old are going to need housing.  I just don't see any way around this demographic issue.

I love the different perspectives on this.  I'm sure most people's idyllic scenario is probably somewhere in the middle here.  These are very valuable perspectives.  Thanks for the great post. 

Well, it looks like the Las Angeles area people were correct.  I have to say I'm surprised but the LA incentives were large and in charge.  I can't begin to describe how wrong I feel right now!  Lol.