All Forum Posts by: Pat L.

I don't do conventional rentals only LTO, but I love the low end market.
here's one example ....
We paid cash for a nondescript VA foreclosure (duplex) for $14,500 spent $4,200 on low end rehab (bathrooms/kitchens stripped to the studs). (You would be amazed at what people will live in).
Sold it LTO for $38,500 @ 14% over 13 years with $3,500 option money down
(calculate that return). The duplex unit income accelerates the pay off. They get to see full equity home ownership in 10-13 yrs not 25-30yrs.
They also pay an annual adjusting escrow/mo to cover taxes, insurance utilities etc. He has 3 years left of the 13yrs & we are already looking for another deal for him to get into.
The entire time he has been his own (very tough) landlord & maintenance guy & direct deposits faithfully every month.

He was originally living in a trailer park paying $475/mo lot rent & a $600/mo loan on a barely liveable single-wide. Initially he balked at my % rate but when I showed him what he would pay just in lot fees over the same period of time he signed on.
I find the same thing for those just subsisting on a minimum wage & paying rent. You can get them into low end duplex ownership for less than rent along with some added income. It's a great concept & over the last 25 years that we have been doing it very few default.

P.J.
I have a guy I use that does all my renovations. He works on anything held in the 401K(s) & I just 'advise' but I pay for all work/materials from the 401K.

As per my recent IRS Audit I did show that the properties were purchased & renovated using an arms length 1099 contractor. Because I personally did not do any work or receive any financial (management) consideration, it passed scrutiny.
I hold title in the name of the 401K (with high liability insurance) until the place is sold, not in an LLC per se. However, for those I buy as an LTO (for a pre-approved buyer), title is held in an LLC with funding from the 401K.

So from my experience you can purchase property and title it in the name of an entity and fund it with (in your case) an SDIRA as long as you (or immediate family etc) do not own the property before hand.
Be careful in your closing documents (HUD) that you do not show any form of management fee/financial consideration to yourself or non arms length entity etc. The para legal inadvertently did have my usual admin fee recorded on one & we had to retract it. (The IRS Auditor did randomly review several of my closing documents & the fees etc paid out).
Keep very good records.....
good luck

I struggled through Mech Eng with a minor in EE.
Then ended up in drive control automation & traveled the world on contract jobs.
But that minor in EE saved me a lot of $$$ when renovating homes esp splitting the services for myself & others.
If you're serious about RE investment an engineering background will save you a fortune & give you valuable insight into structural re-design (assuming you take some design courses) when you blow out the walls etc of an older home or add a room above an attached garage etc.
It's a great discipline & you will never regret finishing.

My wife & I are self employed so after a significant amount of research we went the 401K(solo) route about 7 years ago.
No guardianship, total (our own bank) checkbook control, no third party involvement OR fees etc.
We purchase properties on the fly, fast closings & do not need to have anything approved by a 3rd party.
We generally do LTO or just sell after rehab to buyers we already have lined up.
We adhere strictly to arms length/no hint of a prohibited xaction rules.
It's a great concept & returns using the LTO concept are phenomenal.......we just had a couple walk away from 4 years of LTO payments (& $20,000 of renovations @ their expense) on a SFH.
The week they gave us notice we already had a new couple sign up & move in without any downtime.

Back in the '90's we bought a new pair of Ropers for our Florida home. They ran for 12 years & still worked fine when we sold it.
Meanwhile we have been through a lot of high end stuff in our homes & the poor quality is frustrating. Now every time I rehab a home I switch out all the appliances from our home to the rehabs.
I just gave my daughter a new Bosch dishwasher & moved her 4 yr old '$1300 Electrolux nightmare' to the rehab.

If its an undermount sink its going to be tough, as you may need to remove the sink. Then depending on how it looks you may need to replace it with a regular drop sink to prevent another issue.
Ours was NOT an undermount so we just used a grinding wheel to open the crack & then filled it with the epoxy colored to that of the granite.

You need to ensure the granite is well supported under the area of the stress crack to prevent it happening again. On a new install I use 1/4 plywood glued to the granite to help support the exposed weaker areas. But if its a tight fit I find light gauge steel plate epoxied to the underside is even more effective.
Also if there is a 'sinkerator' attached to the sink the vibration could be an issue so the extra support is a wise move.
good luck

Why would you take down perfectly good fire proofing (sarcasm)

The only reason I could think of would be to insulate from the outside ??
Two of our SFH had it. One I just covered it with vinyl & it sold fast. But it was 2x6 construction & well insulated when built.
The other I sold then took back Deed In Lieu of.
But they had completely removed it replacing it with vinyl & a lot of insulation (2x4 construction).

absolutely !!!
I have a picture I keep of 4 local kids who hit a tractor trailer head-on in one of our make of SUV's they all walked away.
All of our kids drive full frame SUV's & we paid cash but maint is minimal on them.
We own 3 ourselves, 2 are fully deductible, both were 179 deductions.
One has 200,000 hard business miles on it, it gets 18mpg but I have only done preventative maint, brakes tires & (3) $89 back door latches!!!
But I am now considering leasing, we no longer do the mileage, it's deductible & the cost is definitely not an issue.

WOW $$$$$

Our 'new guy' does my wife's S-Corp payroll etc for $21 a month, big reduction from Paychex. We had always done our own books but we are going to get the new guy to do it as it's getting to be too time consuming. The cost initially quoted was no more than$75 a month.

The tax returns etc he did for all corps & family members were so reasonable I can't remember the costs. But combined the cost didn't exceed the 'previous accountants' cost of doing one S-Corp return that was 5 months late, with the extension charged to us.

The amazing thing is the 'previous accountant' charges seminar fees for idiots to listen to her tax advice, but she couldn't get her staff of 9 data entry people to get it right ever !!! & in a face to face meeting kept denying our 179 write-offs that were absolutely valid.
She lasted that one year but had come highly recommended by other RE Investors & was NOT taking on more clients as she was too busy????.
Needless to say in 30 years we have been through a lot of accountants, bank managers & attorney's.

Retired from 9-5 at an early age I always did my own books & did the tax returns for all LLC's etc.
However, after THAT 3 day IRS audit, I somewhat survived, the wife insists I go to her accountant from now on to relieve her stress.

Doing your books monthly gives you a wake up call to financial issues that many let slide & I personally want to stay in tune with the intricacies of RE investment tax issues. The offshore ones are even more challenging !!!

I have had a number people ask me to 'show them the ropes'
So when we started to gut the current SFH I sent out invites to those who had also bought into very expensive 'Gurology'.
So far no takers????? Yet the guy doing my reno work has accumulated 7 great properties from me over the last 5 yesrs
& after rehabbing sold some for over 100% return.
But everytime the Guru followers see a 'deal' they want my advice????