All Forum Posts by: Tom Degroodt

Every thing you do needs to make money,  If the total focus of a plan is to shelter you from taxes it may be like throwing away the baby with the bath water.  That being said, asking questions and gaining some insight will allow you to ask better questions to an advisor.  Better questions = better answers.

Good Luck.

@Kyle J.  Thanks,  that helps a bunch.  I am sure my accountant would keep me straight, but no one likes those kind of surprises at the end of the year ;-)

@Ashish Acharya  I thought this was only true on a refi of your personal home.  If the home is a rental already, do you still need to trace what the funds were used for?  If a rental home is in distress and I buy it for cash, fix it up, force equity into it and re-fi it that should be a business loan where all interest is deductible.  Is that incorrect?

I had a mentor tell me one time to "just focus on what the next move is".  While we all need to do long range planning the rules for loans may change in 6 months, 6 years or tomorrow.  One thing I wish someone had told me the first year of investing was to not be so aggressive in my tax write offs. I was so excited being in RE Investing and starting the business that we aggressively wrote off everything we could.  We sheltered $25k in W-2 Income (which you can only do if your MAGI is under $100,000) by buying stuff for the business, doing repairs on our first rental, paying points at closing ETC...  Because of the loss the next loan we went for the bank added $2083/mo. to my debt to income (25k/12).  That effectively closed the bank for 12 months to us.

I say this, because we don't know what we don't know.  Your goal right now should be to get the place you are closing on in January closed, rented and stable.  Next would be to get into the next property while preserving as much of your capital as you can.  If you buy it, fix it up and Refi to get money out the bank may want to see a 6 month seasoning before making that loan.  If you can find a distressed seller that needs to sell and can get a place for 80-85 cents on the dollar and put 20% down in should cashflow like a monster.  

Thanks everyone for the info.  I certainly don't want to trigger anything with so.ething that is not allowed.  As I said we are doing investing with both our retirement account and outside of our retirement accounts.

If you are actively investing in RE and are loaning private money out of your SD 401K, Can your SD401K trust pay for you to attend a class?

The biggest issue I have had with a tenant in place is the security deposit.  If the previous landlord did not do a good job of documenting the move in checklist there is no way to determine ANY damage the tenant has caused.  Be sure to let the tenant know you will be inspecting the property and they need to let you know what is wrong with the unit so you can get a baseline.  Take copious pictures so you know what the place looked like when you took over. Any damage that is there you will be on the hook for until you set the baseline.

It is very frustrating when you know the hole in the wall was not there when you bought the place, but you are cutting them a full security deposit check refund, because they say the hole was there when they moved in....

Thanks,  I knew it would be too good to be "a strategy".

My wife and I have had a buy and hold for 4 years.  Between improving the property and appreciation we will have a large profit if we sell it.  The home is comparable to our current personal residence.  My question is, if we were to move to the buy and hold and live in it for 2 years, would that relieve us from all capitol gains on the property if we sold it after that?

@Dmitriy Fomichenko

As I understand it if you have been affected by Covid can you take a distribution from your company 401K and then roll that over to a self directed IRA? That would seed the SDIRA with more than the $6000 per year + avoid a taxable event.