All Forum Posts by: Steven Eitreim

@Scott Jensen - If I liquidate the Roth portion, I will NOT have to pay taxes on that, since I've already paid those taxes. I will have to incur the 10% penalty, but again, I see that as the cost of getting access to the dollars and not being limited to keeping that strictly in a retirement account. I'd like to be living off the cash flow within a couple years. Like many within this forum, I believe that my tax rate will be higher in the future than they are right now (due to socialist-leaning policies and expectations of being a multi-trillionaire by 55 :) ), which is why I went with the Roth to begin with. I'll take my chances now with unrestricted access to my cash, and rely on the favorability of real-estate taxation to minimize my bill over time. Just my plan... it's certainly not right for everybody.

@Scott Jenson -- If you do a self-directed IRA and start taking distributions from the proceeds on that (ie, live on the cash flow from your properties), you all of the sudden turn those into taxable events as well, and destroy the benefits of a self-directed IRA. If you want to keep it solely in a retirement account, you should go for the QRP which allows you to leverage your investments (with mortgages) and not pay tax on the leveraged amount. And also, why wait 1-2 years and short the S&P 500 for a 15% pickup when I could invest that in real estate for an effective 20% annual return...

David. I'm going to be doing exactly that as soon as my current employment ends and I can get access to that cash. While this would give "financial advisors" heart palpitations, my logic is this (by the way, I manage a 1/2billion dollar division of a fortune 100 org). In the next year or two, the market will experience a necessary correction, and by avoiding that, I'll likely be ahead even after absorbing the 10% penalty for early withdrawal. Now at parity, can I outpace the typical 7-8% ROI I'd get from the market for the next 20 years by investing in real estate? If not, then I'm probably doing something wrong. I'm confident enough in my skills that I'm cashing in my entire 401K (Roth AND pre-tax), as I will likely do MUCH better over the long run with real estate. Good luck

If you're asking yourself if it's too rough and area, its probably too rough an area. Those same tenants may tear that place up, eating through your cash flow quickly. no one wants to run a slum. the only saving grace for me would be if the area has a chance of gentrifying in the near future... then it's worth snapping up.

I agree with Jay that you should just invest in more rentals. If prices are too high now, you could either hoard the cash and wait for blood in the streets during the next downturn, or dump that cash into your highest-cost (ie, interest rate) mortgage, and then pull a HELOC on that so you can deploy the cash when it IS affordable again. Paying off mortgages is just diluting your return on equity, however. Great for peace of mind, but not great for wealth-building

Worrying so much about having ample cash for the 2nd and 3rd property that I'm too picky about the first.  :)

what are you comfortable with and what are your goals?  If you won't be comfortable with being far away from your property, there's your answer.  If you're looking to flip, you can get very large profits in your area, but you'll be hardpressed to find cashflow.  Without sounding dismissive, there are a lot of other threads in BP that have similar questions, and you could read those responses for more perspective.  

good luck

what are you comfortable with and what are your goals?  If you won't be comfortable with being far away from your property, there's your answer.  If you're looking to flip, you can get very large profits in your area, but you'll be hardpressed to find cashflow.  Without sounding dismissive, there are a lot of other threads in BP that have similar questions, and you could read those responses for more perspective.  

good luck

NO.  A lease is a binding contract, and the owner has sacrificed a lot to own that property and maintain it.  If they won't take care of it or pay to live there, that deprives some other (more worthy) tenant from having a nice place to live.  

Welcome to BP, TJ.  You can also go on meetup.com and search for Minneapolis Real Estate, and you'll see a number of opportunities.  Find yourself a good househacking opportunity (even a 2-4 unit if you can) as a start... wish I had been smart enough to do that when I was younger.