All Forum Posts by: Seth Hochberg

@Juan Deshon Thanks for the insight! I'm leaning towards keeping the money in the Roth. I guess I have to figure out where I can get private money from (I have a lead I need to follow up on).

@Stephen Predmore I just read your post - it's a good read! Also super surprising! I can't believe you found a 70k property in the Roland Park/Cold Spring area - I assumed that was "off-limits" because it was too expensive. I'm probably going to avoid the LLC route (likely stick with a simple umbrella policy). Can you explain why you're not able to refinance the property? Does that have to do with the fact that you took a loan against your 401? Why can't you refinance and pay off the 401k loan that day? Am I missing something?

Do you have the potential? Of course! Keep educating yourself and asking questions. I'm guessing there's a very large portion of BP who got interested in real estate, educated themselves, but in the end, never made the jump. I'm new as well, but I want this SO badly, and I know myself well enough to know that I'm going to make it work. 

If you have the attitude, "Can I do this?" that's the equivalent of going into the pool with one foot in and one foot on land. If you are not confident you can make this happen, you will 100% find a reason it doesn't work out. A lot of people say Brandon Turner (host of the podcast) is too "cheerleading". Too "high spirits". But he has a point! If you are not 100% sure in yourself that you'll make it happen, that will become your reality.

However, if you're just testing the waters, it's appropriate to be hesitant! Do some research, but if/when you decide to make it happen, abolish that mindset and convince yourself you're 100% going to make it happen.

Good luck.

Congratulations on making the jump into Real Estate. A lot of people will see that 450k with envy, most people are starting out with 20k and trying to stretch that as far as possible. With a lot of capital, you should easily be able to score a cash-flowing property as long as you do your due diligence. As the common phrase goes, "Cash is King" so if you make all-cash offers, you'll have the upper hand and be able to get better deals than other people who are financing. And then, you could recoup your capital by doing a cash-out refinance afterwards. BRRRR, is another possibility to look into. Just a thought, but take it with a grain of salt, as I am new as well and still learning!

@Su Lee

Is that the same thing as a self-directed IRA? I don't really understand either.

@Stephen Kehoe

Oh wow, I had briefly looked into this, but I thought you had to prove you were affected by the coronavirus. This is great! I have some homework to look into tonight. I'm thinking of leaving my Roth IRA as my emergency reserves, but I also have friends and family who could help out in a pinch.

And fully agreed about the odds/mathematical mind. If you google, "Should I withdraw from my retirement accounts early" everyone (rightfully so) says "NO!" There seems to be little content out there about withdrawing early to invest differently in Real Estate, but that's exactly why BP exists, right?

@Gayle Melnick

Appreciate the insight! Very validating =)

Oh! VA loans are 0% down, right? That's definitely the way to go. As long as you have some money in reserves, and the numbers make sense, you should be golden. Just keep educating yourself along the way. Good luck!

I'm new to the real estate game, and I'm making a hard pivot in my financial strategy on where to allocate my money. All my life, my financial aspirations have been to max out my retirement accounts, but now I am trying to access my capital to get into real estate. I need help deciding two separate issues. But first here is the financial situation:

I have my money in several "buckets":

1) Cash: 25k
2) Roth IRA: 50k
3) Trad IRA: 45k
4) Roth 401k: 20k
5) Trad 401k: 0

I'm looking to BRRRR in Baltimore and I'd like to get buy in cash, likely supplementing my funds with private lending. My two questions:

1) What's the best way to pull my money out of these accounts? This is my rough plan, but I'm asking for a second pair of eyes. First, reduce retirement contributions to just get the match. Second, I'm going to transfer all of my Traditional IRA money into my Traditional 401k fund. Then I will take two loans: one against my Trad 401k and one against my Roth 401k and continue to pay them back out of my paycheck over 5 years (I like this option because I'm paying myself back). I have a low cost of living, and have done the math that I would be able to do this. I can only take a loan of 50%. If/when I successfully BRRRR, I could pay off that loan, but if not, I would be able to pay off the loan from my paycheck, no problem.

2) Which leads me to my second question. I understand, this is a completely personal decision, but I'm curious what your thoughts on pulling money out of a Roth IRA is? I know I can safely, tax-free withdraw all my contributions (not earnings) in my Roth. Part of me wants to keep that money in, since I've worked hard to grow it to where it is today and let that money stay as my emergency/worst case scenario money. But another part of me realizes how nice it would be to have 35k extra dollars to play with. Curious on your opinions.

@Jeremy Torres-Jimenez

Welcome to the BiggerPockets community. If your plan is to buy a 4-plex and house hack, and you're barrier is gaining funds, I assume you're looking into an FHA loan. You would only need to cough up 3.5% down payment, if it's owner-occupied. I'd also recommend reading Brandon Turner's book: "The Book on No Money Down Real Estate Investing."

Also, I would not be investing in the stock market. The stock market is where you put your money if you don't need it in the next five years (3 years minimum). If you need the money in 6 months, you're just timing the market and a big drop might derail your whole plan (think value of your stocks go down 30%). We've been on an incredible Bull run since 2011, minus the drop that happened earlier this year - I wouldn't assume that's the direction we're heading in the future.

@Bob Ebaugh

That's totally fair. I used to live in Fells point, which was pretty cool. Upper Fells (south of Hopkins Medical) is up and coming, although, you could just as easily argue it already came lol.