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All Forum Posts by: Steve Smith

Steve Smith has started 11 posts and replied 203 times.

Post: How do you travel around?

Steve Smith#3 Managing Your Property ContributorPosted
  • Posts 206
  • Votes 163

How do you travel? For trips less than 200 miles or so, seems like most people just drive. The airlines suck and the hassle has led a lot of us to just buy our own planes or charter a plane (MUCH easier travel).

But owning your own plane can get pricey and looking into  chartering with Net Jets or comparable operations. They can provide a LOT of travel just for the cost of our pilot and insurance with our own plane, regardless of the other expenses. Anyone with experience in the jet charter companies? Goods and bads.

Stay with the SFH locally, do NOT go out of state and do NOT do multi.

Think about selling your worst and replacing them with better houses, perhaps 1031 to push the taxes out a bit. If you don't have a Roth, get one and get some dollars in it to invest in SFH options, teaming with a good friend investor where you can help them, they help you. I like the 3 down to double your portfolio, but only if the bulk are GOOD houses. Be sure to ask the seller for a option to "move" the mortgage for future expansion, and the option to release a house or two you wish to sell.

If you're still working W2 jobs, you might start thinking about retiring early (especially if you don't like work) and spending more time developing your rental portfolio. About 10 free and clear homes will pretty much replace an "average" W2 income job. 

You have some great options.

Excellent strategy! Be sure the LLC is properly set up, and there's a thought to NOT be the managing member, but be able to control things.

A trust expert would most likely help.

but, sounds like the trust already passes the income thru to the bene, who pays (may pay) the taxes. Why would the trust pay tax on the purchase of a property?

I'm sure you'll get a lot of answers on this but it depends on your risk tolerance and thresholds. If you just had averages losses over time, you'd be ahead without insurance.

Can you recover from a loss, and would one loss wipe out a lot of your portfolio? If you had one building and lost it, it could be a huge loss. If you had 100 buildings and lost 1, probably no big deal and the savings in premiums would likely pay for it.

I know several investors "medium sized" with 20 to 30 units that self insure all of them. Some of their properties are waterfront, with premiums in the 5% of value range (or more), which makes sense to self insure. I know a few that don't even have liability. They are personally "disconnected" and their property manager is "broke". Their cash flow is substantially better.

Worth thinking about.

There's a lot of merit to that song and dance, but requires skill in buying SFHs below market often with seller financing to get good terms and skill in management. However, it's probably the safest real estate investment out there. You say it's not your kind of music, but with your current portfolio, you're all ready there. I'd bet you didn't get those properties paid for free and clear when you bought them, unless someone gave you a wad of money. Some debt would shelter a lot of income, give you appreciation, and the tenants would pay off your mortgages. 

It may not be worth the hassle of creating a "job" for yourself to contribute to your IRA, but the number could easily favor that hassle. Philip has some good thoughts on that.

If your IRA is not a self directed Roth, convert it to one, and you can do that over 2 years or more to minimize taxes. Get up to speed on using your Roth to control real estate with leases and options and you can easily double the worth of your Roth every few years to provide for tax free retirement income. A lot of the Roth custodians have good and free educational info on creating wealth in your Roth. Also seek out some of the good investor gurus that know how to do this.

Lots of good ideas.

Real estate is the BEST way to wealth, bar none. Learn it, buy SFHs for long term rentals. NO DUPLEXES, too much work (need to spend time with the kids). Get a self directed Roth IRA and convert your current IRA into that. The Roth will be your retirement. Use it to control real estate with leases and options. You'll need friends in the business to help with that (experienced investors only). You'll need a LOT of education on real estate investing. But only from those that have done it and still teach it. Don't take courses from Kids under 50 years old, you want the experienced ones only and expect to pay in the $600 range for a weekend course.

Quote from @David Charles Edwards:

Here are some additional details and note.  I'm 55, wife is 50, we are 100% debt free.  We net $80k from rentals.  We both have 40 credits towards SS although my wife has a couple zeros in her calculations.  $300k in IRAs.

We could divert $15k of our passive income to self employeed property management and pay the 15.3%.   This would be credited to my wifes SS to fill in her zeros and increase her SS benefit.  Then we would just turn around and contribute the $15k to our IRAs.  

As a side note, we have considered selling a few of these properties which would incur recapture and capital gains. The IRA contributions would help reduce our AGI thus allowing more "headroom" for captial gains at the 0% rate.

Anyway, my accountant thinks it isn't really worth the hassle and paperwork and that we should focus more our life goals than jumping through these hoops for a few grand in "possible" savings.


 First of all, you're too young to be free and clear (unless you've met your financial retirement goals. You need more debt. Buy more leveraged properties and/or put some debt on your current properties. Enough to give you a few year of close to no taxes with paper losses, and then have a "bad year" and roll your ira into a self directed Roth. Work that to control real estate for future profits to reinvest within the Roth until you've met your goals. And use your rental income to pay down your new debt over time. SS is a very small part of retirement income. You should have all the money you'll ever need in perhaps 10 years or so and tax free income from the roth.

Good info, but there's an argument to NOT own real estate In your sdira... too much risk. Much easier to just control it with leases and options and reap the benefits of rental income and appreciation easier.

Also, while Equity Trust may have some good info, be very cautious of who you choose for a custodian. Some have some questionable history with doing things wrong, costing some investors thousands.

Post: Trust to kids and friends

Steve Smith#3 Managing Your Property ContributorPosted
  • Posts 206
  • Votes 163

What is the best way to list your kid (friend) on the trust documents so they get the property (I currently have them as successor beneficiaries).

Is there any advantage of putting them as Trustee?