All Forum Posts by: Scott Lewis

My dad used to tell me "luck is nothing more than preparation that met opportunity."

What a great post. Anyone with an employer match that is not grabbing that up is leaving cash on the table. You can bet your employer uses that money to calculate your total cost to the company, so you might as well take them up on it.

There is a mindset out there called "the power of and vs. the tyranny of or." Here's a link

https://bizcircle.att.com/articles/power-versus-tyranny/#fbid=ANKkm5yLkk4

I offer a very different take on how you can contribute to a tax sheltered employer sponsored account AND use that money for RE deals. Payam Dastmalchi touched briefly on it in his post and I'll expand.

Recently, I put together a smashing deal (165% COCR) and to fund my portion of it, I took a loan out of my TSP (my day job is a Fed.) While the project was progressing I made loan payments to myself (at 4% interest) and when the deal closed, I paid off the remaining balance of my loan, and because I was making payments the whole time, the amount required to pay off the loan was less than the starting balance, so I had a few extra dollars of cash in my pocket.

Did I lose out on the gains while my loan was out, yep, sure did. Where the gains even close to what I made on the RE deal, nope. Did I take advantage of my employer contributions, yep, did I increase my net worth both in the stock market and in real estate, yep.

You'll notice there are a lot of "ands" in my statement above.

Now I will caution everyone with this, there are some very specific nuances that you need to abide by if you want to use money tied up in your 401k/TSP for loan purposes and not run a foul of the IRS. Anyone intersted in the details of what I did, I would be more than happy to share. Just send me a message.

Hi Everyone,

My partners and I are located in Washington, DC. We've done one deal which we pulled out of an estate (and made a killing) now we're looking for our next deal.

What are some ways to identify, connect with, and vet wholesalers/bird doggers in our area?

Scott

Hi Ravi,

First congrats on the paying off the debt. Darn good feeling.

Your question has several nuances that you need to be aware off. At some point down the road after you and your brother-in-law are RE moguls, you'll want to make sure your assets are under some sort of corporate veil to protect your personal assets from a law suit.

Depending on the state, if you do not purchase the property will an LLC, you could be charged transfer and recordation taxes again when you transfer the real property to your LLC or S-Copr, C-Corp, whatever.

If you just incorporated, then your LLC has no track record, K-1s (LLC tax doc), etc to provide for a bank so you and your brother-in-law are going to have to personally guarantee the loan.

No big deal, just make sure your LLC is listed as the owner on the deed and you'll be fine. That way if a lawsuit comes in, then the LLC will be named as the defendant and not you. Just make sure you dont have too many assets in the LLC.

The loan doesnt matter so much as you'll probably be doing a cash out refi or refi'g into a 15yr at some point in time in the future, so at that point, if it makes sense, get a loan with the LLC's name on it.

Hope this helps.