All Forum Posts by: Paul Malandrinos

Thanks for all the input. Lesson learned: for the next property I will validate whether the higher financing costs inside the LLC are worth the benefit, and proceed from there.

Thank you John and David for your inputs. As I think you gathered, my unit is one in a building of several others. The lender deemed the master policy provided by the condo association to be sufficient for their purposes. My insurance policy, once established, will cover me/the LLC from the "studs in," loss of rents, etc.

I have an existing LLC that was used for a couple of fix and flips in the past. A week ago I closed on my first investment property. It's a single-family condo purchased by me the individual with conventional financing. I anticipate that it will be rented in a few weeks. I have not established an insurance policy - yet - to supplement the condo's master policy. Is there any specific value - or downside/risks - to deeding the property to the LLC? I assume that as long as the mortgage is kept current, the lender will not be an issue.

I sense that since I already have the LLC, why not move the property under the LLC's ownership...?  And if true, does it matter what order I do the following?  Establish insurance, rent, transfer to LLC, make first mortgage payment...?

Interested in thoughts on the following cash-flow related topics:

- I've developed a spreadsheet that calculates cash flow both before taking into account the depreciation tax benefit and after.  Do folks generally take into account estimated tax savings when calculating cash flow?  Or is cash flow strictly a function of monthly income minus monthly expenses, period?

- I'm thinking that I could tolerate less cash flow for 1-2 (?) years in anticipation of mortgage rates coming back down from 7-8% to the 5-6% range at some point.  Obviously the rub here is the expectation that at some point rates will drop.  Thoughts?

- Lastly, given current mortgage rates, are folks still generally targeting $100-200 per door?  Or has that target been temporarily lowered?

Thanks for all the input!  @Glenna Wood:  I think you touched upon what I meant by cumbersome with your reference to owning an active rental inside an SDIRA.  The funds in question are more than likely not sufficient to purchase a property outright.  My assumption is that they would fund the down payment only.  And then there's the fact that the Roth funds are split between my wife and me.  So in that case, the hypothetical property would have three owners: the two SDIRA's (contributing to the down payment) plus our existing LLC. I do see the value of an SDIRA owning a property outright, assuming there is a sufficient cushion to cover maintenance, taxes/expenses, capital repairs, etc.

@Brian Eastman - understood on the ROI concepts. A not insubstantial portion of the funds are sitting in a brokerage cash account at the moment. That's why the concept of withdrawing them and putting them to use as after-tax $ doesn't seem terribly detrimental. That portion of the funds is only earning the .5% (or whatever) return the cash account pays.

Great food for thought though, thanks again.

My wife and I had built up substantial Roth IRA accounts before our income excluded us from making further contributions. Those accounts have performed well over the years, but are susceptible to the usual ups and downs (I know, long term it is always up) of the stock market. Knowing that a) we do have the ability to withdraw contributions tax-free, and b) we have been keeping some "powder dry" lately due to general market conditions, what are the group's thoughts on withdrawing some/all of our contributions for REI use?

I understand that we'd lose the tax protection of the Roth accounts - and have investigated self-directed Roth IRA's, which seem to be overly cumbersome when used for property acquisition/ownership. The main reason I am asking is that the funds sitting in the Roth cash accounts are not working for us - particularly in this high inflation environment.