All Forum Posts by: Sayli Mulay

OK, so I don't invest in any of those areas. But that strategy is interesting. And by interesting I mean... a bit strange.

Personally, I don't know a lot of young professionals that would want to rent by the room. I lived in a San Francisco for YEARS and we rented by the room, but didn't. Leases were done with one or two people, and it was essentially up to us to fill them when someone moved out. It was common to live with 3-5 other people, one person in the house is responsible for collecting rent from all the others and interfacing/paying the landlord.

It works fine in high-priced rental markets, but notice that's different than what you're doing. You're selecting each individual tenant. Do they even have a say in who their roommates are? In San Francisco the vetting process was done by the existing tenants and pretty rigorous and competitive. These are people you have to SHARE a HOME with. I would have zero interest in renting from you if I'm not having a significant part in choosing my roommates. No thanks!

So what's that leave you with? Folks that a) either don't care who their roommates are (I'd guess this is because they are the person nobody wants to live with), or b) people who have no other option (e.g. renting by the room is most economical, they don't make much, and this is what makes sense). 

So you'd have high turnover because nobody wants to live with the person nobody wants to live with, and/or difficulty collecting rent from those that have no other option because they are likely very low income. 

The markets you list are higher-end, more desirable areas. That equates to healthy rents. So you shouldn't have a problem there. If the numbers aren't working, it's because you aren't buying right. How are you sourcing your deals? What kinds of properties are you purchasing? If you feel comfortable, share one of your properties and the numbers and we'll help try and figure out where you're going wrong. 

Based on your numbers, if it were me, I'd pay down the loan for the lower rate. Keep in mind you don't pay tax on money you save so consider that aspect too...

Yes. You do need some reserves if you have rentals. You need to factor paying for insurance, taxes, etc as well. I pay these once per year via my IRA custodian writing a check. I always do have a couple grand sitting in cash to take care of this or anything else that comes up. I purchased turnkey rentals in my SDIRA so its pretty darn passive. You can pick up properties for example in Toledo for $50- $60k that spit out $800 per month. So my rental income along with some note funds @ 10% per month spit out a few grand every month so theres always money coming in to take care of maintenance issues in a rental. My property management company takes out minor expenses from the rent to cover the little things. If you purchase a rental I would just make sure all the major Capex items ie) roof, furnace, water heater, etc are newer so theres less of a chance that you need to worry about factoring in a big ticket item into your cash reserves.

@Sayli Mulay @Account Closed

Not everyone qualifies for a Solo 401(k), which requires some form of owner-only business creating earned income.

Passive income from rentals does not qualify one to sponsor a Solo 401(k).

An IRA can be configured to provide the same level of "checkbook control" as the Solo 401(k) with the creation of an IRA-owned LLC. An IRA is still required to be held by and reported on by a custodian, but the IRA makes one investment into a specially formed LLC entity. You as the IRA account holder can act as manager of the LLC and use the LLC to make all investment transactions. You do not need to have the custodian process investment transactions.

It is kind of like having a conventional IRA invest in a single fund, but you get to be the "fund manager". More importantly, this "fund" (the LLC) can invest in anything the IRS rules allow for and is not artificially limited by what the custodian's processing capacity is.