All Forum Posts by: Mike Knowles

I can't help with the logistics, but the math is easy.

$4k, with a $500 down payment over 30 months at $141.66 / month is 15.61% interest. I made a spreadsheet that will do these for you. Hopefully it's self-explanatory, but let me know if you get stuck.

http://www.mediafire.com/?7rezmais5tv5xed

I put an offer in on a SFR REO for $15k. Within a few hours, the bank countered at $35k. I upped my price to $20k right away...3 days later they came back at $30k, final offer.

My understanding of the delay is that the negotiator on the bank side needed approval to go lower. What are the odds this is really their final offer? If I came back at $28k, do you think they would take it? If they declined it, would I still have the option of buying at $30k?

The house has been on the market for almost a year. This is a cash offer.

Thanks for the commentary, everyone. I went through the police reports for the neighborhood over the past couple months and while it isn't somewhere I would want to live, the particular street this property is on seems to be more insulated. I'm concerned about finding a quality tenant, but think it will be worth the headache if the price is right.

I made an offer for $15k on Friday. The bank countered at $35 and I upped my price to $20. Will let you know how it goes.

Is this a Roth IRA?

If not, you'll be subject to UDFI (Unrelated Debt Financed Income)and pay taxes on a portion of your income. There are some good posts on here about the implications of that.

I'm sensing a trend here. Ha.

This would definitely be a Section 8 property. To be honest, I find that more appealing than the alternative as checks are deposited regularly into my account. Clearly, there are negatives there as well.

I have a property management co. lined up to handle the logistics. It's run by a guy that I trust (I used to work with him before he decided to pursue RE full time) and he has Section 8 experience. His contractors will also do the rehab work so I think I'm covered there.

This still leaves me with a nice property in a bad neighborhood and an uncertain exit strategy. Bah. I think I'll go drive the neighborhood again before I decide.

Thanks for your input.

I'm looking at a 2/1.1 SFH on the southside of Chicago. The neighborhood is a warzone, but this particular street seems better than average. It's close to a park, the train and a school. Both neighbors take care of their lawns/property and had decent cars parked in back.

I know the bank will sell for $35k and the property needs $4k worth of repairs. As a 2/1.1, it should rent for $900.

For another $6k, I can put a 3rd bedroom in the basement and turn the 0.1 bathroom into a full. Right now, there's a toilet and sink in a corner, but no walls/door, etc. A 3/2 in that neighborhood should rent for $1,100.

Any and all thoughts/comments are appreciated. I've spent a lot of time reading BP, but this would be my first deal so fire away.

Here's a lengthy article I saved from a few months ago discussing ROBS and IRS compliance. It was in a pension update from bna.com. May be useful for someone.

http://www.mediafire.com/?3sh4r019rcg3hp4

Apologies for the mediafire link. Not sure of a better way to share the file. (It's just a pdf)

I just set up an IRA LLC with checkbook control through Safeguard and have been very pleased. Fees were right at $2k (not including state LLC filing fee), but come with lifetime consulting. The fellow I've been dealing with, Brian Eastman, seems top notch. Knowledgeable and responsive thus far.

They use IRA Services as the custodian, which other folks have commented on already.

I would ignore the initial $35k payment and compare the $300k vs the Net Present Value of the financing payments you expect to receive. Discount the cashflows you would receive under the financing arrangement at whatever rate you believe you could invest $300k at right now and choose the option that leads you to the higher number.

Regardless of how your CF are structured (periodic, balloon, etc), I think 300k in hand right now will come out ahead.

Thanks, Kevin. That is hugely helpful.

I gravitated toward the Solo401k bc it appears to the most flexible and avoids the UDFI if leverage is used to purchase a property. Sounds like it's not going to work, however. C'est la vie.

I'm a little confused by your question. Is a "self directed solo 401k" different than a solo 401k? Google lead me to several places, all of which seem to have the same self-employment requirement.