All Forum Posts by: Karen Chenaille

@James Triano after reading all the insightful responses and thinking on it further I am going to proceed as your suggest :-)

Thanks for replying to my question!

Karen

Hey folks,

I have a commercial property for sale. I intend to 1031 the proceeds into other commercial properties or multi family rental units.  I am working w/ my realtor to identify several exchange candidates so that when the property sells, I have several good options on the table.  Can reno costs be rolled into  a 1031 exchange?

I know there was a post out here somewhere about valid 1031 costs...I can't find it so sorry in advance if this has already been answered.

Thanks in advance for the assistance!

Karen

@Matt B. Ugh! II took that loan before I came to my financial senses.  I agree, debt for depreciating assets is not good to have, which is why I really want it gone.  I am tying up serious money every month to pay for a depreciating asset. 

I will be going w/ the 6% 401K contribution...that way I free up some $$ each month for RE and get the company match.

Thanks for the advice and pointing out the double taxation on the 401K payback...that didn't even occur to me when I took the loan :-( #rookiemistake

@Thomas Rutkowski I did not realize that was possible with cash value permanent life insurance policies.  Is there a minimum value that must be in the account before you can borrow against it?

Thanks for the blog links!

Karen

@Sastry Srini Thanks for replying to my thread! I too dislike the double taxation on the 401K loan, but it was a means to an end and an  easy way to get access to cash.

I think I will pay off the bike loan just so I can have that money to put towards real estate down payments so I can get away from using the 401K. 

@Cory Binsfield...Thanks for taking the time to write back!

I looked at a HELOC. I live in an area where homes do not appreciate all that much. I owe $350K and it will only appraise at $500. Most banks insist on 80% equity in the property and then they will only do a HELOC against a portion of what remains after 80% LTV is met, so at the end of the day, I don't have much left over for a HELOC. Maybe $50K tops? Not sure it's worth the trouble. I'd be interested in your thoughts.

The bike loan is 2.5% interest, so it may not be worthwhile to pay it off...except it eats up quite a bit of post tax money that I could be setting aside to build up $$ for my next real estate down payment so I can get away from using my 401K.  That would be the real benefit of paying it down..to free up $$ spent on paying off depreciating assets.

I do have a self directed IRA and I agree w/ your self directed IRA comment. We own a construction business so using the self directed IRA takes all the cost savings we would realize from doing the work ourselves away because you cannot be personally involved in any way with the renovation AND we don't get access to the cash flow the propertie(s) would generate.

Hi!

I am looking at real estate investing to reduce my tax liability and generate passive income.  I have a 401K plan which I have been maxing out annually. My company matches 4% of the first 6% contributed. I have used the loan feature on my 401K to purchase my first investment property.  Due to the 401K plan rules, I only have access to about 26K more.  For my next move, I will need about $35K between repairs, closing costs and down payment.  

I also have about $20K left on a vehicle loan.

Should I keep maxing out my 401K to get the max tax savings against my day job income or should I cut back to 6% and use the extra cash to pay off the vehicle loan and bridge the funding gap on second property?

Thanks for reading this! 

I am sold on pro! Thanks for taking the time!

Hello! I have a convenience store for sale. I run an Air BnB out of my primary residence renting out 4/5 rooms. Therefore my primary residence is being used for a commercial venture. Would it be possible to use a 1031 exchange to use the proceeds from the store to pay off the mortgage on the primary residence?

I do the same exact thing with my last minute cancellations that come with possibly b.s excuses.