All Forum Posts by: Ron Burmeister

@Account Closed You asked:

However - and please correct me if I am wrong - any gains realized [In a Robs Company]  should be paid back to the 401(k) plan. Is here a way to extract the cash out of the company and take the distribution, pay the income taxes BUT avoid the 10% excise tax?

In a ROBS setup you can pay yourself a salary.  Any gains will be taxed within the corporation.  The only time money goes back to the 401k is when you have a stock buy back or distribution.

There are differences to what you can and cannot do within a ROBS structure as opposed to a Self Directed IRA. ROBS does not work well for long term holds and a Self Directed IRA does not work well for flips.

There is no tax or penalty moving the money from your existing 401K to the ROBS 401K provided you do a custodian to custodian transfer. If you are currently employed with the employer that has your 401k then your employer will have to let you transfer the funds out of their account.  Most employers will not allow this.

P.S. Not an Attorney or Accountant. Not offering legal or tax advice.

@Jeremy Pollock 

I would suggest you get each tenant to complete an estoppel letter.  This letter will indicate if there is a lease and what the terms of the lease are.  

If they indicate they are under a current lease then have them provide you a copy of the lease.  If they can produce the lease then you have to abide by it until it expires. If they cannot provide a copy, I would try and enter into a new lease with them and make a statement in the new lease that the new  lease supersedes any other lease.  Otherwise, call your attorney.

If they state the lease has expired, treat them as you would a month-to-month tenant.  If they say there was a security deposit then you will have to deal with that.  You will probably end up being responsible for the deposits.  Check with your attorney.

Hope this helps

@Richard Chagnon

I use both a ROBS 401K and a Self Directed IRA. In order to determine which product to use, you need to know what type of investing your are going to do.

I use the ROBS for flipping and the SDIRA for private lending and buy and holds.

With a ROBS 401K you can operate a business, such a flipping houses, and pay yourself a salary.  There are yearly expenses of about $2000 to maintain the company.  This is not a good setup if you want to buy and hold.

With a Self-Directed IRA you cannot operate a business. The activity needs to be passive in nature, such as rental properties, private lending, tax liens ect. It is difficult to flip houses under this setup because the IRS views flipping as a business. However, it is possible to flip about 3 houses per year, provided that is not all you are doing. (Check with an accountant or attorney on this).

Hope this helps and good luck!

I have used Unity Cabinet & Granite in Fairfield. Best prices I have found so far.  Do not use their Florence, Ky location. Customer service is atrocious.    

http://unitycabinetgranite.com/

Also, try Granite World.  They have a new location opening at 1450 Dixie Hwy, Park Hills, Ky.  

http://www.graniteworldnky.com/

Check with your accountant, but UBIT does not apply to a ROBS setup. If you were doing a self directed IRA then UBIT would apply.

You will need a real estate attorney to draw up the trust document for you. You will need to provide them with the name of the Trust, who the trustee will be, can be you, and who the beneficiary will be.  If you will need a bank account for the trust, you will need to apply for an EIN number and provide your bank with a copy of the trust.  The whole thing cost me a couple hundred dollars.  

Try Tania Burmeister with HUFF Commercial Group.  She specializes in commercial property only, no residential. 

@Ho Nguyen

I cannot speak to the pros or cons of out-of-state property management.  However, you do not need a Kentucky real estate license to manage property you own in Kentucky.  

My opinion, not legal advice.

I have heard of situations where the bank representative was involved in a car accident on the way to the Master Commissioner sale and there was no prior bid filed.  Whether the bank representative shows or not the property is sold to the highest bidder.  I believe two things could happen in Kentucky:

1) The Master Commissioner sale is not final for 10 days.  In which time a motion to vacate can be filed with the court.  It will be up to the Judge to nullify the sale or not.  The Judge is not required to nullify the sale.

2) If the property is sold for less than 2/3 the appraised value then the original owner has redemption rights for 6 months following the auction.  Within this time period, the original owner may pay the sales price plus some small fees and obtain title to the property. The winning bidder will be reimbursed their bid amount.  Once the redemption period is over, the original owner has no claim. Also, the original owner can sell their rights to redemption.

I would suggest trying a local bank:

Central Bank - Dennis Barnes

Republic Bank - David Schneider or Tom Tilmes

Forcht Bank - Joe Walters

Good Luck!