All Forum Posts by: Kevin S.

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.

Thanks for your advice, Lee. Is the tax benefit and tax sheltering (i.e tax rules) different in a SDIRA account owned property vs property bought after cashing out the retirement account?

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Quote from @Jon Puente:

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.

Thanks Jon. Does NMLS ID belong to the agent or the lending company? I talked to an agent recently and after several communications back and forth I decided to look up the NMLS ID. Turns out there was no NMLS ID attached to his name. When questioned, he told me he works 'under' someone (another agent of the same lending company). He told me I will be receiving a link under that person's name to fill out the application. I assume that is normal? The company is legit and have offices in California and Indiana. The owner has NMLS in both states. I am sure if the lending company is big they have many agents working. Is every agent require to have NMLS ID?

Question is how do I know if the agent is not falsely representing a company before I turn over personal information to him. Thanks.

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Hello everyone. What's the vetting process when choosing your lender? Any investor here found your lender on BP? Any negative experience working with one on BP?

What should I be looking out for? Do you verify if the(lender or company) license is active or any complaints on the books? If so how?

Do you work with a 'someone' and follow him/her when they switch company? Do you stay with the original company?

How long should the company have been in the business? Any red flags to look for?

Any advantage for lender to be local?

Are there any one or two 'must ask' questions or 'must know' facts when choosing one?

Appreciate if you can share anything/everything. Thank you.

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Thanks for your input. I am leaning towards buy-and-hold. In my market, properties only cash flow with 20% down and more; some require even 30% to cash flow especially when using PM. Syndication is something I have no knowledge yet.

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Thanks.

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How do you know if that property will ever become valuable or stay at pennies level(where you bought it) indefinitely? Would that be investing or more like gambling? Do you have such ag investment? If so how do you choose your property?

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Quote from @David M.:

Quote from @Kevin S.:

You heard it right and thanks for your input for which I voted for you. I am 100% invested in stock market and zero in RE. What started this conversation was when I saw someone on Youtube say: If you stay in the market and plan to live on your retirement account (401K or otherwise) you will become 'poorer' every year as you draw down money into the sunset. Compared that with RE where your rent/cash flow only increase in time(technically into perpetuity) along with appreciation, leveraging(velocity of money), tax benefits, mortgage paydown etc. In other words you become 'richer' in time. Only caveat is beginning cash flow will be less in RE but will eventually catch up. And of course the passivity of stocks vs active involvement of RE, which can be negated by PM. So in search for that answer I came across BP and decided to put this question out there as members are RE investors (mostly) to hear from them vs CFP who may skew client's investment towards stock market rather than RE(for which I will have another question subsequently).

I have gotten so many valuable input from so many members for which I am thankful. Now, as you mentioned, how do I tell the sharks from those that are not! Hope to find that answer here too! Thanks everyone.

@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.

You make a valid point. Are you referencing the first wave of retirees' age to be in their 60s? Are you saying they should draw more money now so they don't have to take too much @ RMD? Or they should draw less now so they have more money later during RMD? Are you saying to put unused drawn money from 401k back in Roth as you go? Didn't get that part. Would appreciate if you can elaborate. Thanks.

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Thank you Elise, isn't that considered more like rolling the dice type of investment? For a land to be considered ag do we have to satisfy certain 'requirement(s)' such as keeping certain number of farm animal on that land at all times or having ag plants being grown on it? Or can it just sit empty? It may be just my misinformation.

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If common sense tells you to let tenant pay off the mortgage as you mentioned then why are you thinking of paying it off early? What is compelling you to think that?

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Quote from @Jay King:

Quote from @Elise Bickel Tauber:

Quote from @Kevin S.:

Quote from @Elise Bickel Tauber:

I would agree with what @Mike Klarman said. Western PA is a great area. I would say the best strategy would be to pick up single family homes in the $80-$120k range, put $30-$50k in, rent and re-finance. You can pretty quickly turn this into $10million in more of real estate. Between the steady cash flow and appreciation you would be set.

Thank you Elise. From what I hear isn't it better not to use money to rehab, instead buy properties that doesn't need reno/rehab and keep the money for down payment of another house instead? I stay away from contractors and rehab as I have zero knowledge in that department. But your idea definitely sounds tempting. You are a realtor in western Pa?

Yes I am. My husband and i are investors and we also own a real estate firm that specializes in helping out of state and out of country investors for buy and holds, brrrs, and flips.

What are your thoughts on low carrying cost ag exempt acreages?

Hi Jay. Do you mean agricultural acreages? If so, I have zero knowledge of such investments. I do have to admit I always wondered about it. There was one guy I knew who purchased 'land' (not sure if ag land) in middle of nowhere (I was told) in another state. That was 15 yrs ago and unfortunately he passed and I am not able to find out the end result. What happens if the place never develop and you cannot sell it either? Or it cannot be re-zoned? You have something I don't know? Thanks.

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All Forum Posts by: Kevin S.

Kevin S. has started 23 posts and replied 390 times.

Post: What to do with $1,000,000.00?

Post: Vetting a Lender. How do you do it?

Post: Vetting a Lender. How do you do it?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: What to do with $1,000,000.00?

Post: Paying off a property in 3 years?

Post: What to do with $1,000,000.00?