All Forum Posts by: Tom V.

@Bernard Reisz  Bernard - I do see your pricing ($750 per year, $150 annual maintenance) for a solo 401K checkbook plan.  Thanks for sharing the link, and I know BP has rules against self-promotion so I understand that you are reluctant to push your services quite so directly. 

Your point about operating business costs is fair.  Google pays its employees, so if I buy Google stock I don't keep all of their sales revenue, I'm entitled only to a share of the earnings.  I think a lot of Bigger Pockets people make money based on doing property improvement and management work themselves.  One can't legally do this for an investment with self-directed retirement funds with preferential tax treatment.   Investors HAVE to add a layer of operating expenses vs. self-managed property investment.  

@Steve B.  You don’t appear to understand some basic distinctions between employer managed pension funds and employee-selected 401k funds.

Guys like Bernard email you documents and wish you luck in running your plan.

My opinion, by the way, is informed by having had a Self Directed 401K.   My provider sent me a boilerplate form, had me sign reams of liability releases, and then billed my for a little under per year for the privilege of having received the forms they sent me.   I just checked their web site and now they charge $1000 for setup and $200 for annual maintenance fees.   This was the provider I used.  https://www.sensefinancial.com/solo401k/solo-401k-...

If you sign up for one of these, you'll receive a boilerplate form that Bernard's company or someone like him will have had approved by the IRS.  https://www.irs.gov/retirement-plans/types-of-pre-...  

You'll get billed annually and beyond the initial set-up, they really won't add any value to your business. It's your self directed money after all. They will just continue to clip you for a maintenance fee. Stick with one of the big brokerage houses if you want efficiency. I cancelled my SD 401K and I am in the process of cancelling another expensive SDIRA/Checkbook LLC I have.

If you have magical access to cash flowing passive real estate where you do not actively participate and can get over the extra fee hurdles these Self-Directed plans impose, god bless you.  There is no free lunch.  

Okay @Bernard Reisz.  Why don't you publish your fees on your web site?   As a fee .02 means 2%.   Very expensive actively-managed funds average 1%.  On top of that, the requirements of self-directed tax advantaged accounts require that holders remain passive, not active participants.  So if I buy a cash-flowing property with my SD401K I should have a property manager and hire out all of the work performed on the asset.   Property management can vary from 4-7% of revenue, so again, to do it right, I will pay way more in fees with an SDIRA than I would with a Wall Street 401K of stocks and funds.   Unless one is willing to play in gray areas of taxation treatment, I find the notion of buying cash-flowing real estate with any SD retirement money to be a very expensive proposition.  

"What has transpired within the many areas of the "Wall Street" financial services industry, in general, and company 401(k)s, in particular - is an incredible travesty."  Baloney.   401K's invested in Wall Street assets are the greatest means of wealth accumulation for the vast majority of Americans who become millionaires.  Of bad things that happen on Wall Street, 401K's are not the right place to look.  Anyone telling you otherwise has an agenda. 

For anyone who is unsure, I can guarantee that a self-directed 401K/IRA plan used to purchase real estate assets, coordinated by a guy like @Bernard Reisz will have management fees and costs vastly higher on a % of assets basis than any 401K plan investing in securities.  No offense, Bernard, and if you think I am incorrect, please give me an example of your most fee-efficient customer who has the lowest total fees as a percentage of assets invested.  

The level of scrutiny applied to public security 401K's make them, as an investment vehicle, far safer for the average investor than any self-directed boilerplate scheme you will find touted here on BP.  

Look at Stock and Bond returns over the past 10 years and ask yourself if having an equity portfolio would have been a bad outcome?  Way less work than real estate.

Do you know what happened to this kind of trade in the last downturn?  This is like buying a junk bond with borrowed money except you have a legal obligation to spend money on the house to keep it habitable.  I suggest you try landlording closer to home for your first investment.  Or buy securities.

Seems like a lot of baloney for $1000 per year.

RIF is a real estate closed end fund that trades for 80 cents on the dollar of real estate equities it holds and pays an 8% dividend.  It is truly passive, cash flows like a midwestern ghetto house and never forgets to pay rent or lets its pit bull go to the bathroom in your living room.  

What are your rents?