All Forum Posts by: Susan Maneck

I don't think there is any problem with your mortgage per se as long as when you took out the mortgage you intended it to be owner occupied. Problem arise if you buy a owner occupied from either HUD, Fannie Mae or Freddie Mac. I think you have to live in those properties at least a year before you can rent or sale it.

I might add, I'll probably use the real estate agent that I bought most of my property from in the first place. Her husband does most of my handyman work anyhow. 

I'm thinking I may well hire a property manager before the next time I go on a long vacation. I'm able to see that repairs get done when I do that, but the rents almost never get paid one time, and at least one tenant picks that time not to pay at all. 

Congratulations Jordan! Too many young people who want to get rich fast pick the wrong way of doing it. Believe me, the way you're doing is what will put you ahead and keep you ahead. The sad thing is that all the young people who are doing it the wrong way could easily put their  'street smarts' to good, honest business use. There's a book you should read called "How the Poor can save Capitalism." 

I'm glad you are planning to move into rehabbing property. As you do, think about your workers. Pay them fairly and educate them as to how to handle their own finances and make wise investments to increase their wealth. I endeavor to do this with all my workers and even with my tenants. Pay it Forward and help your community. Capitalism and service are not mutually exclusive. 

P.S. Don't spend your money on a fancy car, save it for your next house.

 I find by the time the seller pays their share of that years taxes, it pretty much covers the closing costs, at least if you are paying cash, like I do. 

Exactly. Taking loans from a 401K is usually not a smart idea because if you lose your job you also have to pay off the debt immediately. But who fires themselves? I have a regular salaried job but I do a little consulting on the side, maybe only 5K worth a year. However, that entitled me to a i401K and once I established it, I rolled my IRAs into it. That is how I was able to loan myself the money (with interest, of course.) Normally a 401K has to be repaid within 5 years, but if it is for the purchase of a house you can amortize over 15 years. I'm finding my solo401K is much less of a headache than my mother's self-directed IRA (which I talked to her into buying so she could invest in real estate as well.)

 The house was purchased with a loan from my i401K. Unlike my rental property it is not within the i401K. You are allowed to borrow up to 50% of your 401K to a maximum of 50K. Regular loans must be repaid in 5 years, but if the money is used to buy your primary residence the loan can be amortized over 15 years. Normally the money would probably be used as  down-payment but in my case, I could buy the whole house.  

I meant to say I'm adverse to high interest rates. The highest interest I currently pay on anything is the 4.5% I pay on the mortgage of what used to be my primary residence. 

I started using a solo401K through your firm after I bought my second rental property, primarily because I no longer had other funds to invest and I'm adverse  The house I sent you a picture of, which is where I currently live I bought with a i401K loan, which as you know doesn't have the same drawbacks as borrowing from a regular 401K, i.e. I can't lose my job had have to repay a big loan at the same time. I borrowed the entire 30K from my solo401K, amortized it over 15 years which gives me payments of slightly over $200 a month. Not bad for a 1700 square foot rehabbed house with ceramic tile flooring, new cabinets, etc. I rented out my old house for $875.  I bought a second house, about 1600 square feet which is owned inside my 401K. It came complete with a two-car garage. I paid 30K for it as well and it rents for $850. Mind you, houses in this neighborhood were selling for more than 100K before the housing crash. I just bought another house last month, again inside my i401K, for $16K. Paid about 4K to fix it up which included installing central heat, along with duct work, since it originally had a floor heater. I didn't put in AC since the house came with a number of window units. It is 1000 square feet, 2 bdrm 1 ba and rents for $700.  It is in a different neighborhood, however, and it would take another Hurricane Katrina to drive its value over 40K. It is a nice little pig, though. 

All of my houses are on 1/4 acre lots. 

 okay, you are doing much better than me when it comes to insurance. All my houses are in MS and my insurance costs between 500-700 a year. I need to talk to your insurer.