All Forum Posts by: Kevin S.

@Kevin S.

Deciding what to do with a significant sum of money, especially as someone approaches retirement, involves careful consideration of financial goals, risk tolerance, and lifestyle preferences. Here are a few options to weigh, along with their potential considerations:

1. Buy a Single Property with Cash:

Pros: Stable Cash Flow, Reduced Debt, Full ownership gives you control.

Cons: Illiquidity, Property Management, Concentration Risk

2. Use it for a Down Payment on a $4,000,000 Property:

Pros: Leverage, Diversification, Potential Appreciation

Cons: Larger Debt, Market Volatility, Higher Expenses

3. Leave it in S&P 500 ETF:

Pros: Liquidity, Diversification, Historical Returns

Cons: Market Volatility, Market Risk

Considerations:

Income Needs: Determine how each choice will fit into your projected income needs in retirement.

Determine your level of risk tolerance. Stocks and real estate have distinct risk profiles, so the choice you choose should be based on how comfortable you are with risk.

Diversification: Take into account how crucial it is for your entire portfolio to be diverse. Having a diverse portfolio of assets can aid in risk management.

To make decisions that are in line with your retirement goals and financial well-being, you must do extensive study, maybe with the help of financial specialists.

There are a lot of good responses. 

This is what I would do:

Buy as large a property as I can. A $4 million property is better than a $2 million property.

Why?

A $4 million property will give you a depreciation of $145,440. So any net income you make would be essentially tax-free. You become a real estate professional and you can carry over any losses to subsequent years. 

Let the property appreciate a bit and cash out whatever you can while ensuring that you have all the expenses met and you have some money to live on. Then you either buy other properties or put the extra money into other types of investment vehicles, such as S&P 500 or treasury bills or whatever.

Now, if the $1 million is in a retirement account then you move it into a self-directed IRA and let your IRA buy the property. Then you only worry about taxes on the money you withdraw from your IRA. You may also convert your regular IRA to a Roth IRA and never have to worry about paying taxes for the rest of your life. :)

Above are just some ideas. Talk to a real estate-savvy tax/legal professional before you make the moves. 

Hey Kevin, 

You want to look at reviews and reputation (just like buying any product or service). 

I would hope that they have an NMLS ID (otherwise they aren't a legitimate lender). 

You can stick with the individual LO when they make a move, if you like them, but are not obligated to. 

Does not matter about how long the company has been in business.  Wells Fargo has been in business forever and they are atrocious for mortgage lending (just an example).

Local lenders are great for information about the area, but doesn't really matter for rates/costs (the actual numbers). 

You are looking for transparency.  How willing are they to walk through different situations to help you save money?  After you talk to them, how good do you feel about working with them?  Trust your gut feeling!!  Numbers matter, but so does service and willingness to answer phone calls when you (the client) has questions. 

@Kevin S. I gotta speak up again.. You do realize that drawing down the 401k doesn't "make your poorer" each year, right? You get to keep the money. its still yours. You can keep investing it. Actually, now that the first wave of retirees are hitting, they are finally advising to manage the drawn down of the 401k/IRA accounts so the rmd when you hit 75 isn't so bad... Usually, that means using a Roth where are the fund are tax free for the rest of your life, and fully liquid.