All Forum Posts by: Paul Brockmann

@Mark Freeman

Before you go into converting the garage into more rooms (Attached or unattached), you may be devaluing your home as a single family home.  Be careful of that.  Most families would like to have a garage and don't need 5 or 6 bedrooms.  You would shrink your pool of potential buyers to just investors.  I would just run the numbers on what that would cost you to convert to a livable space, what kind of income that change would bring in, and what happens to the overall market value (since your exit is in the short term).  

A LLC is a good way to go, even if you can't do a self-directed IRA LLC.

By creating a LLC, you and this partner of yours will have to get everything down on writing in the operating agreement. I and I'm sure others will say, put everything you can think of into this document. This will keep you and your partner fair and honest and should resolve most arguments.

Now, to get the down payment, loaning against your 401k could be risky.  I would see if there's another way to get that small sum of money.  

Buying and selling in within 5 years without making significant improvements probably won't get you significant returns.  Closing costs and taxes will eat those measly appreciation gains up.   I would make sure you can put down the possibility of holding the property as a rental after they graduate.  

i am getting ready to settle down soon and purchase my first property. I can easily qualify for a FHA loan and therefore would like to see if I can find up a duplex, triplex or a quadplex. Should wholesalers, special websites, or agents be the go-to for that?

Congrats on starting and good luck!

You know, I'm curious about the same thing.  I'm sure someone will post some wise words of wisdom shortly.  

I am not sure how if you can tolerate some risk (since your bank account has zero risk), but other simple ways to invest:

- Peer-to-peer lending, such as lendingclub.com, can help you generate a couple % higher than that bank account.  (~5-10% depending on how conservative you go).  You buy a portion of an individuals loan ($25 out of someone's $15,000 home improvement loan) and every month you get your portion of the payment received (***there is risk involved!***). Think micro hard money lending.  They have two lengths of loans at this time, 36months and 60months.  That is longer than you said, but they also have a trading exchange where you can buy out someone's portion at a discount/premium.  

- Index fund investing can be a "stress" free and hassle free way to get into the investing in the stock market.  Bogleheads.org is a forum filled with people that can help you and can guide you, for the short term (bond and Treasury funds) and long term (S&P 500 index funds, Total stock market funds, etc.).  The risk here is that the market might be down where you want to take out your money.  However, you could get the best returns here too.  The Bogleheads can definitely help you understand risk management and investing for the short term.   

- Rolling them into a CD's could be another good idea.  You could put the money you currently have saved up into a two year CD.  After 6 months, put the other money saved up into a 18 month CD.  After 12 months, put the next chunk of money saved up into a 12 month CD, and so on.  After two years, all of your CD will terminate (make sure they do not roll over into a new CD).  The potential downside is, if you find a deal or opportunity where you need the money, early withdrawal fees might eat it your gains.  

From what I know about self-directed IRAs (not much), you just have to find a custodian to manage the IRA for you. You can still find the same real estate deals as you would with your regular cash, but you have this custodian that is "directing" your IRA account funds for you.

I like that idea.  You could even have an incentive for deals, like $100 per completed deal.  The rest can be put into the capital reserves.  

This is interesting.  I think to get around some of the repayment issues would be to give them a 6-month (more or less) "grace" period that after work is complete, they have to sell the house or pay on the loan.  

My suggestion for you is to make a professional presentation for him. 

Layout the numbers.  Show him a couple opportunities of what you can do with that money.  Show that you are responsible and show that you have learned from your past mistakes. 

I would think that would help him grasp that you are ready for this again.  

In my state, it's a bit of a headache. a $500 headache for each LLC every year. It would depend on your property cashflow. If you have a large multi-unit that cash flows plenty each month, I would say do it.