All Forum Posts by: Steven W.

Thanks @Arlan Potter My friend is so risk adverse that I have a feeling that he'll just end up doing nothing, and regretting it later. Or he'll jump on the latest one year trend in the stock market and just plunk his money down there.

Steven

HI @Alex Heifetz I'm in a very similar boat that you are in--in fact, I'm planning on visiting a couple of cities in mid-January (Memphis, Birmingham, and Jacksonville, at least for now) to look at turn-key properties.

How about asking the turnkey company for contact info of investors who have bought with them, especially repeat customers? I offer my contact info, as I understand that they want to protect their client's privacy.

Steven

Thanks @Account Closed

Hi @John Yu I don't live in Denver, but own two properties in the Denver area and I am actively looking for more properties there. I agree with you that prices have moved well beyond both of your metrics. Since I own only SFRs, I'm curious how multi-unit buildings are doing.

I'm interested in keeping in the loop on these conversations.

Steven

HI everyone,

I've got a good friend from high school days (now 30 years ago, unfortunately, who is in a precarious financial situation. He wants financial advice--what would you tell him?

Here are the details:

He is 50, lives alone in a rent controlled apartment in Santa Monica, CA (three blocks from the beach, but who's envious?!) and has his own business, by which he barely makes a living. He owns no property, as he sat on the sidelines and watched as LA real estate got more and more out of his price range (at least in the desirable areas he wants to be in).

On the other hand, he has been frugal and is sitting on probably 150-200k in cash. In addition, he probably has another 150K that he has in equities that is part of his inheritance (his father passed away last year).

He has no meaningful retirement accounts, and given that he shows little income and doesn't own anything, my guess is that he wouldn't qualify for any traditional loan.

My thought would be that he could buy a turnkey property out of state in cash, and at least have some reoccurring cash flow.

But the great wisdom out there can surely come up with a plan better than that, can't you?

Thanks,

Steven

@Bill S. I think that the cash flow right now is providing us with cash reserves to shore up our other rental properties as needed. I have a HELOC open right now on my primary residence that I haven't used so far, but I planning on using some of that money for my next investments (along with selling some equities as needed).

I hadn't thought of paying down principal to allow for a larger HELOC in the future on this property. That's a pretty smart idea, thanks!

Steven

I had a great conversation with @Dmitriy Fomichenko from Sense Financial today about setting up a Solo 401k, so I can roll over my IRA into an account in which I can make investments in real estate. He did point out some potential disadvantages of purchasing RE through this account--no mortgage interest write off, no depreciation, higher interest rates, larger down payment--that of course I wouldn't suffer if I bought properties in my own name (instead of the 401k account).

That put a bit of a damper on the project, since it would be a lot easier for me to fund purchases with my IRA money (no limit on properties, no debt/income ratio issues, plenty of funds sitting around as someone who is 50 and has contributed regularly throughout the years). Given that I live in San Francisco and both my wife and I work, I was planning on buying turnkey properties out of state, as I have done in the past.

He didn't suggest not buying RE with the 401K at all--he just pointed out some of the shortcomings.

What do folks who have used Solo 401k and/or SD IRAs think? Has investing in RE been a good thing for you, or have you preferred to purchase notes and/or first trust deeds?

I avail myself to the wisdom of the BP masses.

Steven

Thanks @Kelly Sennholz . I'm almost positive that we'll keep it unless the expenses get out of hand and/or we have a horrible string of tenants. I'm thinking that perhaps the $1250 is a bit below market right now (it's on W. 10th just East of Sheridan, if that means anything), but the steady Section 8 payment (the current renter pays zilch) makes it worth it.

Steven

@Mike H. and @JT Spangler Thanks for the responses. I totally agree with your analysis Mike, that's why I'm more than happy to pay this out over 30 years. JT, I might look at a cash out refi at some point if I can't get a HELOC on it. I just opened a HELOC on my primary residence, so getting access to cash right now isn't the highest priority.

All very good food for thought.

Steven

Welcome to the forum, @Brian Armstrong Glad to see another SF investor out there. Look forward to meeting you at the next (or future) meet up!

Steven