All Forum Posts by: Timothy Wright

I'm now inclined to agree. In any case, I think this conversation has gone about as far as it needs to go. Thanks for your advice, everyone 

Probably  the best piece of advice someone could give me is to start by renting a room in my house (I have two bedrooms that I don't use).   That would give me a taste of what it is like to rent to people, with little risk, and maybe greater profit. It would also increase the income I could declare in a loan application.  

Hi Upen Patel,

I don't believe I ever wrote that I would claim it as anything other than a rental investment. 

Hi Victor, I didn't realize there were so many penalties. It was explained to us that she can request the funds be taken out without the early penalty, but only the taxes.  Isn't there some condition under which she can withdraw the money without early penalty, like for getting a house when she has no where to live? Of course, now that I think about it, if that was the pretense for her getting the money out early free of penalty, then that could be what is wrong with this idea.  According to this idea, she would not be using the money to buy a house. She Would, be using most of it to pay for nursing school. Is that a valid reason to avioid the early-withdrawal penalty? We knew it will  be taxed, but I thought there were situations, such as buying a house, which allow one to withdraw the money without additional penalty. 

Regarding your point that she should keep it in her retirement, that would undoubtedly be true if she had enough money to get by without it.  If we are talking about what she Should have done, well, it would have made the most sense to stay with me until she was done with her nursing degree.  However, I guess that just wasn't an option for her, and I accept that. Oddly, it seems like we are better friends now than we were in our last year of marriage. lol

Thanks for all your feedback, everyone. Thats a lot to think about.  At this point, she hasn't even said Yes or No, and she is probably a month away from getting that settlement money. 

Thanks,

Tim

Thanks for responding. I understand your concern but the fact is, something like this seems like the only way I can save face and try to get something out of this.  I should have just agreed to give her money for school, and to help with her debt, but it wasn't necessary to give her enough to buy outright a house and pay the taxes.  Instead, our arrangement meant she could own a small house, have most of my retirement,  while I'm still paying the mortgage of my own home.  I don't have any malice towards her, but to be truthful, I have begun to feel  a little bitter. I think it became more acute when I realized that so much of what I had earned over 25 years, was now gone,  I'll be basically starting over.

I see this as the only way I can look at myself and not feel quite so duped. I would be trading retirement money for an investment opportunity.  Any money she gave me towards the down payment, and the house itself, would be mine. I could sell the house for half of what it is worth, pay the bank back, and walk away with thousands of dollars I would never have seen without such an arrangement.    

For example example, I was pre-approved a loan of $120K with a 40% down payment. Awful terms, but it's because my income is so low. If she only gave me $48K I would own a house valued at 120K, and I would owe the bank  $72K. When she leaves after a couple years, I sell the house for $80K and still come away with $8000 more than I would get if we do not make any sort of arrangement.  Moreover, my proposal has been 80,000. not $48,000. I don't know how I could lose.  

The way I see it this would be me taking advantage of her.  She will not find anything for 80K minus closing.  I would be taking advantage of that to get $80,000. But it would be in her interest too, because she will have a place to live rent free(for a short time), and more money short term to do some of the things she would like to do.  She would have a nicer place to host her son who is in Scotland, if he would come for a visit.  He would have a place waiting for him if he chose to come back to the U.S. and go to Eastern Mich University, or WCC.  When you look at it this way, the is potential for it to be a win - win - win arrangement.  We'll see

Hi BP, 

I recently got an idea, but I'm starting to doubt that it is feasible,  and it may not even be legal for all I know. I know BP has people of all backgrounds so I expect someone might be able to answer my question.  The situation is kind of complicated, but I'll do my best to explain it.

About three weeks ago I got a divorce. For the settlement, I transferred money from my retirement investments to her.  Our plan was that since she would be going to nursing school for the next two years, I would give her enough to help her do that and find a very cheap place to live. It was a pretty lopsided agreement, but I want her to have the resources to have a future.  

I recently had an idea that would be a win-win for us both.  Instead of her using the money allocated towards finding a very cheap housing situation, she could give me enough to make a sizable down payment on a loan to get a property that is nice enough for me to rent out when she leaves.  I would be able to get into real estate, and she could live in a decent place for a while. 

But is that even legal? Can she give me some money she received by cashing the retirement money I transferred to her? If that is legal, is there some way that I could use that money to secure a loan that I probably couldn't get without a 40% down payment on a 100K house for rent?  Would she have to be on the mortgage?  Her credit is really bad. Thats why we think that to get a loan, it would have to be through me.

Thanks,

Tim

Hi John Sanderson, I think you hit it on the head. I was just making a preliminary call, and incorrectly estimated about  3000-4000  in taxes. When I started looking at Zillow, I soon realized that in Ypsi Twp, they tend to be closer to $2000 for homes in the range of $100-150K. 

Hi Melissa, I'm in AA, very close to Ypsilanti Township.  We may be practically neighbors. 

:-)

Hi folks,

I'm Tim and am currently living in Ann Arbor, close to Ypsilanti. I'm looking to start investing in a house for rent in Ypsilanti Township. Ann arbor is too expensive and Ypsilanti taxes are high. I said "start" because I have no experience, only the interest to get started, and some cash resources.  Unfortunately, I don't know how to leverage the 28K I get as a gift every year into getting a loan. I feel kind of stuck which seems ridiculous because I could easily afford a good down payment on a 110-150 K home.  There are some options in that range that look like they would be good for renting out.  Maybe I can get some advice/guidance? 

Tim