All Forum Posts by: Keith Gilbert

Any recommendations for a financial advisor? They don’t need to be local to me. My wife and I are mid 40s and save regularly but I want to know we are making wise decisions. We make in the mid 6 figures (W2 income). Advice we are looking for: - 401k, avoid 401k, or contribute what my employer matches - Ira’s - very knowledgeable in Real Estate strategies - minimize our taxes in Retirement - minimize our taxes now. - I’m not interested in anyone selling insurance - I know everyone says not to count on my pension, there is no guarantee, but if there was a measure of likelihood that a company would be able to honor their pension commitments then the conservative private company I work for would be rated the highest. - not really interested in savings advice on our 529 plan. - Nothing against Dave Ramsey, I really like most of his advice, but I think some of it is very basic and geared towards low income earners and people who have been very irresponsible with their money and are trying to dig out. - we have a about $70k to invest from our SDIRA, less if we convert a portion of that to a Roth. - we also will have about $250k to invest from the sale of our home. We are moving to AZ this summer.

IF we were to sell.  We would have about $350k to invest in another market.  We would also have another $60k to invest each year after maxing our all our tax deferred investments.

We've invested a portion of our SDIRA into an LLC that is purchasing and selling land. It is doing really well. We also have another $75k of the remaining SDIRA in Vanguard VTSAX. I was holding that money until we found a good way to put that into real estate. But investing SDIRA money into real estate seems difficult.

The majority seem to suggest selling our house and putting it into a multi-family property.  Any other strategies based on the additional amount we have to invest?  

Thanks for all the responses so far, this has been super helpful.

Originally posted by @Alan Grobmeier:

@Kyle Wells you would be lucky to buy 2 duplexes in AZ for $350k.  Prices here have SKYROCKETED.  Cap rates have been smashed as more and more money chase smaller returns.  :-(

Most renters are finding stuff unaffordable, just like the coasts.  The only difference is we don't have nice weather in the summer.  Unless you call 'nice & hot', nice.  ;-)

 Alan I couldn’t believe the rental prices in AZ right now.  My house is a few miles from the beach and completely remodeled with high end everything.  For that I can only rent for maybe $3,700.  What I would have to pay to get a comparable “nice” rental in Tempe or Chandler would be $3,000-3,500 and that is over 400 miles from the ocean.  It’s ridiculous.

I just finished talking to a real estate friend in my neighborhood.  She believes our house would rent for $3,500-3,700.  

We could refinance to a 30-year at 3.99% and pull out $160k. Our new mortgage would be $3,501 PITI.

I’m thinking it makes more sense to sell and invest in another market like @Account Closed is suggesting.  We make enough annually to be able to move back to CA if we ever choose to.  If we did move back it seems unlikely we’d move back to the same house.

@Alan Grobmeier and @Dylan Vargas thank you so much for your thoughts and wisdom!!

I look forward to sharing this info with my wife to see what she thinks.  

I’d be interested in understanding why paying off a rental in CA is a bad idea.

Alan I hear you about AZ.  All of our family is there and growing up the heat was all I knew.  Now we know what june gloom is and almost perfect weather year round.  Going back to the heat will be tough, but saving a couple grand a month in income tax will be nice.  We are moving back to help care for my father in-law and my son who will be going to ASU like his mom and I.  Thankfully my employer will let me work remotely.

Alan - are you saying my friend's analogy is wrong because if I were to buy my current CA house "today" using the hypothetical $350k the property tax on my property would be almost double the current amount of $6,800 per year?

Here is our exact situation. The house would likely sell for $850k, we owe $440k. We refinanced a couple years ago changing it to a 15 year note at 3% interest. Our PITI is $4,041 per month. We could rent the house for $3,400-$3,700 per month. So it seems the only way to make this thing cash flow would be to refinance the house again to a longer note. If we had to pay our CA mortgage and an AZ mortgage at the same time we could do that. However, I'm not sure about having so much riding on one single family residence. Maybe diversify that $350k a little more (multi family, notes, etc.)

Our income is high enough that we could completely pay for another house in AZ quickly without using any money from our CA house (as long as we keep the purchase price reasonable) 

Doug, thanks for mentioning the tax exemption for primary residences.  I just looked it up and we would qualify for that exemption.

There is always a possibility we may move back.  I will still be working in CA 4 days a month.  However all our family is in AZ and we will likely stay.  If we did move back we would probably move to Seal Beach.

We are moving from Long Beach, CA to Chandler, AZ.  We are trying to decide what to do with our current house.  

I asked a friend and he posed an interesting question.  Imagine you had $350k (which is the cash our equity in our home) would you use that money to invest in a single family home in Long Beach?  Our plan was to rent it out, but we have the house on a 3% 15-year note and it would only break even or be a slightly negative cash flow (not counting debt reduction or appreciation).  I don’t see our house appreciating much more given it’s one of the nicer houses in a very blue collar neighborhood.

Should we hold onto it?  I’ve always believed in never selling.  If we do sell it, how would you recommend investing the $350k.  We don’t need the money for our AZ house.  However if we did put it into our AZ house we would have an extra $4k per month to invest.

Great advice, I also live near Lakewood High.  If you're ever interested in getting coffee let me know.

thank you Bing!