All Forum Posts by: Troy DeLong

I've been self employed for a little over 3 months now and am looking to move my Vanguard 401k funds (formerly 'employer sponsored') into a Solo 401k account so I can use that money to invest in Real Estate. Is this possible to do without a 'Self-Directed Custodian Account'? (see below)

I've received free consultations from the following:
* Safeguard Advisors - $1375 setup fee, $125/yr (starting 2nd year)
* Discount Solo 401k - $575 setup fee, $125/yr (starting 2nd year)
* IRA Financial Group - $999 setup fee, $199/yr (starting 2nd year)

Has anyone worked with any of these companies and is the service worth the money? Is using a company like one of these the only way you can access your 401k money to invest in Real Estate, or is there a way you can spend the time to learn and do all the steps/paperwork yourself?

@Paul Kubin I second what Eric Lanphear mentioned about the BRRRR book by David Greene. It's a great 'Real World' manual when it comes to dealing with actual people and not just numbers on paper.

Although a Realtor won't be making much commission on a discounted 'Fixer Upper' property that most investors are looking for, there are many ways you can bring value to them. 

- Offer a 'fixed bonus' for each deal they bring you that you end up closing on (Ex: $500 bonus from you at closing)
- Refer them to anyone and everyone you know, both investors and non-investors (ie. Grandma, your mortgage lender, Uncle Joe, your co-worker, your rehab contractor, etc). Agents live off of referrals!
- Offer them a part of your monthly income on that property (ie. A partner in the deal). Kind of like a Property Manager at 5%-10% / month rental income, you could offer an agent a 1%-2% cut out of your monthly income (Rentals) or 2%-5% cut from your capital gain (Flips).   

These numbers are simply for example. You, as the investor, are responsible for getting as creative as possible to entice the local talent to want to be part or your 'Rockstar Team' and to bring you all the best deals. 

Plus, if you find a TRUE investor friendly Realtor, they probably already do this type of 'deal searching' on the regular for fun because they eat, sleep and breath this stuff! **cough cough** 

Hey Martha!

I'd recommend reaching out to Mid Michigan Title or Liberty Title to start. They would need a little more info on your QC situation to determine whether or not they can help, but both are around the Lansing, MI area and I've had great experiences with both. Hope this helps!

Mid Michigan Title [Holt, MI]
(517) 657-9555

Liberty Title [East Lansing, MI]
(517) 977-9509

@Jonatan Cris I think the term "Market Price" should be used instead of "Artificially Inflated Prices". All it takes is one person out of a group of 50 interested buyers to offer up 30% over market value of a house and close on that sale to screw up everyones CMA's, and I think we're seeing quite a few of those. I don't think we will see any artificial inflation for another year or two, assuming you are referring to all of the money being dumped into our economy through these stimulus packages. Your average person has seen very little of that money (One $1200 check per person and possibly some unemployment), but I agree that we could see a water'd down dollar in the near future that would push prices well past the usual 1%-2% per year inflation.

For what you're talking about, there may be too many factors in play here to say FOR SURE, but I think the top 3 from a Michigan/Midwest perspective are as follows:

1) Very low interest rates ($300,000 loan today has the same monthly payment as a $250,000 loan a year or two ago).
2) Appraisals ARE coming in at higher values. (The answer to this is "magic", I guess, but it's true. And if they come back under appraised, buyers are bringing the difference to the closing table).
3) People are spending WAY more time in their homes than they ever have. From having to add 8 hours a day of being in your house (Work from home) to having more dinner parties and friends/family over (All the bars/restaurants are closed), people are in search of a home that can now accommodate all of these things. HAVES: Small living rooms, cramped kitchens, no office space. WANTS: Large living room, wide open kitchen, secluded office space for work)

4) BONUS: People are leaving the City for the Suburbs and they're taking their city money with them. 

The numbers simply don't make sense right now for investors in general. Your having to compete with an influx of "Homeowners" (for SFR) who are willing to pay extra for the above listed items, which then pushes all the investors to pile up against each other in multi-family properties. Homeowners are not in it for monthly cashflow. They're in it to live/work and possibly raise a family. Not sure you're gonna beat them on price.

To answer your question of "What will happen when Covid finally ends and the market corrects itself and house prices drop"? Well, that's when you and all the other investors jump in and buy the properties at discounted prices!

This crazy world is wayyy more complex than these statements, so I'd just like to iterate that this is an opinion piece. Great discussions all!

@Bob Norton Got it. Thanks for the reply Bob! That's good to know. 

So I just have to purchase a property within a qualified opportunity zone and then, come tax season, I can write off that capital gains tax from my sold stocks? How do you go about proving that you put that money towards the opportunity zone purchase? 

@Simon W. - The basement is partially finished but would NOT be considered legal for a rental. 

@Theresa Harris - I would say the basement area in question would be around 1/4 of the total square footage of the house. So then, say my annual property taxes are $4000, I would be able to write off $1000 of that?   

Consider this a hypothetical situation. Say a family member (different last name) was to rent out a room in your basement for $500/month (Market value for similar would be around $700/month). Most people (homeowner) would just keep this off the books and it wouldn’t be a problem. But if someone (homeowner) wanted that $500/month to show up as ‘Income’ to better help them with getting loans for investment properties, what would be the best way to account for the $500/month? Would that be considered rental income and taxed at your regular income tax? Would you need to have an actual lease agreement in place? Should you put that rent money into a new/separate bank account? Would a lender even care about or consider that $500/month as income to better your chance of a loan? Thanks in advance!

Is there anyway you can defer paying capital gains tax on ETF’s if you put those proceeds into real estate? Anything similar to a 1031 Exchange (since ETF’s don’t qualify for the 1031)? Thanks in advance!

I'm wondering if there is a way you can avoid paying capital gains tax on stock market trades if you put that money into a real estate deal? Sort of like 1031 (Although 1031 explicitly says ETS/Stocks do not qualify for tax deferment). 

Thanks in advance!