All Forum Posts by: Sean T.

@Tucker Cummings, yes, you are reading it correctly.  It will typically show as a negative cash balance on your account but otherwise nothing changes.  Also, if you don't pay into the line you will see the margin loan grow but typically you can "fall behind" the 50% limit. 

You didn't ask this and it is not towards you but I thought I would share something else here as well.  If someone is reading this and thinking, this is a great way to avoid bank financing, please keep in mind this is really best for seasoned and well balanced investors.  If you do not have the ability to use a standard bank loan approach to real estate investing I urge you to continue saving, learning, and building credit.  The last thing I want is to see folks with small balances in their portfolios to run out and borrow against a volatile asset class.  Think of this as another arrow in the quill but best served as a way to access cash quick.  

Hey @Tucker Cummings, first and foremost, I am not a licensed advisor or attorney so please always double check and understand I am just giving my perspective!  I have learned to say this with certain questions!

I use margin borrowing all the time and 401K loans when I was starting out.

Typically, 401K loans do take your money out of the market AND you pay interest to yourself.  This is typical but you might be set up differently.  You can usually borrow up to 50% or 50K in the form of a fixed term loan.

Stock margin loans are like a line of credit against your assets.  You remain in control of the underlying assets and will pay interest(often high) back to the brokerage.  You can borrow "around 50%" in theory but many individual stocks will have different margins requirements which may affect your total borrowing ability.

I like to leverage my margin and then use my dividend payers to pay it down over time(plus what I pay into it).  You can also treat margin as a tax write off, again check with a qualified professional here. 

This is the 30K foot view.

All the above said, you can lose a lot of value long term from your 401K by pulling money out.  The risk of margin is a sudden draw down in the market can cause a margin call.  This is very bad.  I'm saying it again, very bad.  Your losses can be amplified very quickly.

Whatever you choose, make sure you see the downside risk very clearly and hedge against it.

Hope this helped as a step one.

Hey @Adam Levine, I noticed you seem to respond to posts on NRIA, do you do placements for them?  It appears you are operating a fund of funds, unless I am reading wrong. 

Just curious if you are a representative for NRIA or not. 

Thanks, appreciate the insights.  

@Craig Eby Jr Welcome!

I remember the days of walking around the house with my father as well. 

Good luck in the journey!

@Kuriakos Mellos Hey, I just, 3 weeks ago, refinanced out of a partial seller finance on a property. 

Real numbers- 5 year balloon, 4%, 30yr amort. 

I don't typically look for full seller financing, I will often ask for 10-20% as a way to sweeten the deal if I want to pay less but ultimately still get them a bonus return.

My opinion is that many folks come at sellers with bad plays.  I don't mean you here, I assume many will read your post.  When an investor asks for a seller to hold debt it is easy to think it is just like a bank.  They have to do work, file taxes, work with an attorney, file the paper work, etc.  Make it sweeter for them and leverage it for yourself.  I usually will ask for 2 of 3 things up front and let them negotiate on the third, rate - balloon term - amortization.  

@Pat Jackson what a great share!  Thanks for posting!

Hey @Stephen Solano sorry to hear you are having this issue!

@Theresa Harris beat me to it!  I always ask for feedback and leave a form in the kitchen for this very reason(my PMs do this for me).  The beauty of this, besides the feedback in general, is that you can follow up with one of those qualified viewers and often times find a way to make it work.

@Dan Weber great write up, thank you! 

I have never been one to be concerned too much with these things.  I find water often finds it's level and so do these types of issues. 

Again, thanks for posting!

@Mark Baldwin Just some perspective after many years in the game.  Anything can be fixed, repaired, renegotiated, and so on.  However, a bad deal is a bad deal.

I have never regretted walking from a bad deal or any deal frankly. 

You didn't list your purchase price here so I don't know your numbers but I would need to be getting an insane deal to take on the above issues.  Few things are as much a marathon as investing in real assets.  Don't get one or two opinions, get a few more bids. 

Good luck either way!

Great advice above from @Blaine Alger and @Jason Bott.

I will comment on the pricing. With commercial multifamily(like this one) make sure you understand the math, Cap Rate, NOI, etc. Appraisal or not, owner financing or not, make sure the price makes sense based on what other similar properties are going for. It is important to be disciplined because this is part of the "bit off too much" that can bite back.

The appraisal is one thing but the current rents and area cap rates are what you should focus on before agreeing to any pricing.  You could approach a lender for the primary loan, have owner financing for a piece of it, and leverage your savings as well.  My point being, there are many ways to think about this.

All that said, @Roger Park,congrats on taking the steps either way!