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All Forum Posts by: Phil Clark

Phil Clark has started 8 posts and replied 41 times.

Post: 401K - Should it stay or should it go now... ?

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19
Quote from @Michael Garrett:

Evening, Fellow BP'ers:

First let me start by admitting that I recently listened to the most recent podcast with Kyosaki's CPA followed by Kyosaki's episode 500.  Where basically in the first 10 minutes he poo poos on 401K's, living debt free and his "friend" Dave Ramsey.  I loved every minute of it because I tend to agree wholeheartedly.  


A brief history: Found BP about 4 years ago; listened to many many podcasts. I was ready, wife was not. Also had lots of college loan debt. Refinanced house and paid off school loan. Kept working on wife and convinced her that all we need to do is pull the trigger. That was three weeks ago. I pulled a 50K loan form my 401K, and we're under contract on a duplex in Troy, NY!! Whaaaat!!? (numbers attached) Very excited. Not a perfect clean BRRRR but I am in the game! Now I have the taste. Ready for more! Heres the questions:


1)  Should I cash out my 401K?  Roughly 230K, might clear about 140/150.  

2)  Anyone have some experience either doing this or secondhand knowledge? 

3)  What would you do?

Thought process is that this place should make $600/month cash flow.  I pull out the 401K and buy two or three more places this year instead of one more.  Or one bigger place with more upside.  Perhaps get up to 2000/month by end of year.  Wash rinse repeat next year and be at 4000 or 5000/month next year and so on and so on.  Pay tax now and start making some real money instead of waiting another 30 years to get my $3000/month from 401K.  Therefore by end of year two we are pulling in $4000/month plus my salary which would go up about $200/month since I'm not contributing to 401K anymore.  This would also allow my wife to quit her day job and focus on her contracting work a few weekends a month and focus more on our real estate biz if she wants to take a more active roll.  


Would love to hear what everyone has to say.  I know this is a hot topic.  


Oh... the 50K 401K loan is going to cost $800/mo for the next 5 years (I know, I know, negative cash flow but we can easily budget it out between my wife's and my income).  Plan to refinance in 6 months and probably pull 25K out of this deal to reinvest elsewhere.  

Check with an expert, but . . . 

My understanding is you can move it to a self-directed IRA, so no tax hit for a deduction. 

Direct the IRA to purchase the house as an asset. 

There are fees and rules, etc, but this could be an option for you.

Post: 401k Loan as downpayment

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19
Quote from @Greg Scott:

Totally Incorrect.

If you take money out of a 401k, you are taxed for taking the money out.  Whatever profits you make on the property will be taxed according to the tax laws and your personal situation.

If you rollover you 401k monies to a self-directed IRA, you can defer taxes on the gains of the property until you take the money out, at which time it is taxed at ordinary income. You may also be subject to UBIT taxes if you have purchased with any debt.

+1 for what Greg said. Move the funds into a self directed IRA or just take the tax hit and move on. 

Best answer is talk with an expert (CPA, tax attorney, etc.) before you make any financial or tax decision. 

Post: To LLC or NOT to LLC?

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19
Quote from @Justin R.:

If you have the assets worth protecting, or a litigious career, then yes. The vast majority of the population spends way too much time worrying about asset protection though when they don't even have the assets to protect; their energy should be used on finding deals.

I am not an attorney, but spent countless hours studying prior to making my asset protection selection. Here are my findings.

1. Do the right thing. Don't be negligent or provide an unsafe situation.

2. Have proper insurance

3. Get an umbrella policy

4. Have some debt on your property

5. If you meet all of these and have assets to protect, then look into an LLC or trust (recommended for CA residents not wanting to pay the $800 annual filing fee PER LLC.) My recommendation is finding an attorney you like and follow their recommendation for your personal situation.

Best of luck!

Justin,

Thank you. Starting into this you hear so much information from people making six figures a month that it's easy to get caught up in things well above my current altitude. 

I am liking the Trust concept and will be researching them. What 'flavor' do you recommend?

Thank you again.

Post: To LLC or NOT to LLC?

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19

Investors, I am in a quandary. There is a lot of conflicting information and strategies on finance and entities and pass throughs and holding companies that I am getting more confused that educated. 

I reside in California, however my investments will be our of market simply for price of entry reasons. It is critical for me to have asset protection in place, and I wanted to ask you all:

"If you had to (got to) do it again from the beginning, how would you set up your structure?"

After reading and listening it seems having some version of an LLC for each property created in the same state as the property, then they all flow into a top level Holding Company.

So, what would you do?

Post: Out of Market Investing: Looking at Lubbock

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19

Realtor turned rookie investor looking for our of market cities to investing as California is just too high a price of entry. I have some solid support structure in Lubbock, TX and in a cursory review of the prices it seems very doable. Before I begin investing my time I thought it best to touch base with a 'Smarter Than Me' person. 

Who knows the market? Advice? 

Post: Advice on how to stucture a deal

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19
Quote from @Jake Wiley:
Quote from @Andrew Postell:

@Dario Cruz if the seller has agreed to sell the property for $20k less than what he owes I would suggest closing on this deal asap. I would NOT suggest taking on seller financing and allowing the seller to keep that extra $20k in place. Remember, that comes out of your pocket now if it's financed "subject to". A standard Hard Money Loan (HML) should lend you 70% or 75% of the ARV so make sure you are prequalified beforehand to know how much money out of pocket you will need on this deal. Hope all of this makes sense.

Agreed - try not to ever add complications to a deal if you can help it!   Also, a lesson learned the hard way is to keep your mouth closed once a seller has agreed to terms, because if you seed them with the idea there may be other options they may get stuck wanting to explore them.    

Good luck!   
This! My dad always said once you get a yes, shut the hell up. You can screw up a deal very quickly trying to be nice or trying to be too clever or . . . 

Buy it. Buy it now. 

Post: Text messaging app to use with tenant communication

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19
+1 on Google voice. I have a local number that I can route to various real numbers, can get text messages, phone calls, and all separate from my personal cell.

I use a personal account because it does what I need and I like to make the free services work as much as I can and only put out $$ when it it necessary. 

Post: Rehab Cost Calculator (work in progress)

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19
Checking it out now. Could work really well. 

Post: How to Calculate ARV?

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19

@Charles Johnson short version is look at all 'similar' properties sold. This is also the hard part depending on your property.

Working with. Local realtor is always my best advice as they have tools and knowledge that will make short work of your valuation.

Post: First Investment Rental Property

Phil ClarkPosted
  • Real Estate Agent
  • Vacaville, CA
  • Posts 45
  • Votes 19

@Mariah Jo you will need to adjust your expectations and goals of your total property purchase price is $270k.

LA and most of California is out for that price unless you decide to carry a mortgage.

Best suggestions would be east coast, or more likely Midwest.