All Forum Posts by: Teresia Sayler

Be careful on borrowing from your 401(k).  You will possibly pay interest on the loan.  You WILL use after tax $ to pay it back AND pay tax on it again when you're in retirement and withdraw it for use.  Double taxation, plus interest!  Might be better to take a hard money loan.

How wonderful your execution is happening!  Congrats.  I try to steer folks away from 401K loans if at all possible.  One, it delays growth on that portion all the longer and since you pay it back with after tax pay, you'll pay tax on it twice!  The second time is when you permanently take a withdrawal in retirement.  Let's say you are in the lowest tax bracket forever...  Hard money is not likely to exceed that %.

Thanks, just determining if this is a good way to go. Sounds like I will have to make the numbers work to make this worth it. Highest and best use of a HELOC on primary residence for Investments May rather be for just minimum down payment funding and get as much as you can into the rental first position mortgage as possible. More of a temporary tool since I won't be able to write off the interest most likely.

I understand with the new tax law that if you use a HELOC on your primary residence to purchase (possibly improve) investment/rental property, that the interest on that HELOC is deductible.

Will this interest be listed on the Rental property's Schedule E info (even though it is secured by your primary residence), or will it continue to be on the 1040 Sch A (Itemized deductions)?  If left on the Schedule A, will the total of this particular loan interest still need to contribute to exceeding the personal exemption (limits that have been raised) in order to be deducted?

I would first research the insurance costs of this type of operations, as I also agree it would be high risk.  Ask the referral LL that Nick sends you for further info.  I've considered going this route as well, so would be interested in what you find out!  

They will likely have many issues, legal, substance abuse past and possibly mental.  They may relapse, easily get in fights with other residents, bring in friends "temporarily", etc.  I love to help people too, but just cover yourself and the potential of others getting hurt, as well as property.

Keep us posted!

Visit where they live now and you'll see....