All Forum Posts by: Lane Kawaoka

Go ahead and PM me your email or phone. I'm take the lead on per-qualifying this group. I want it to be worth everyone's time with a focus to the meetup. It might take me a week to get back to everyone and coordinate cause the day job but it will happen.

Looking at the REIA options in Seattle there are a lot of good options however they are primary focused on Wholesalers and Flipping which is not true Real Estate Investing but a RE Business. In my opinion Wholesalers and Flipping is a full time job to do it right and is not passive.

Is there anyone out there who would like to get together and discuss passive investing/buy hold? I am NOT a marketer who will refer you to another local market specialist in Memphis/KC/Etc, I just want to get like minded investors together. Possible discussion topics:

-Lending/Financing

-Legal Structuring

-Macro Portfolio building

-Local Investing/Out of State Turn Key products

There are books and a plethora of blogs/forum on the Micro aspects of Real Estate however these Macro topics are better to discuss in person. Yes... this message is going out to you all REI BP Lurkers who are Passive investors on the forums so feel free to PM me to express your interest.

I think every one is being very Micro and should be thinking Macro. Yes when the google bus stops sparked controversy when they spiked home values in the immediate area but these are rare cases and often EXAGGERATED BY THE MEDIA and LAY PERSON CONVERSATION TOPICS.

Instead of making a steady state linear function think of it in terms of big ticket items:

Heating unit $3000 (Every 10-15 years)

Plumbing $2000 (Every 20 years)

Roof $5000 (Every 10 years)

Carpet 2k every 5 years

....

*my lifecycles and dollar estimates are wrong but this is simply a lifecycle cost analysis

non-liquid 401k/roth ira accounts can be used at 60-75% cash reserves. If you had 100k in your 401k account the bank may consider 75% of it as cash reserves to put into your lending profile.

That's a really innovative idea.

Legal issues/insurance came to mind. If someone is willing to pay money to store items in there then someone will be willing to break in. At that point who is liable? Might not be for everyone.

I had a large out door closet that I rented out for 40 dollars a month which was cheaper to the alternative at the local storage place for 80 plus a minimum 6 month stay etc. In hind sight it might have not been worth it since I was taking a risk due to fire or shady things happening. 

Who the heck rents a random shed in some other guys yard... sketchy folks do.

Questions to ask when interviewing:

1) Do you own and MFH or SFHs - they will know what a real deal is.

2) Do you do property management - they will know what expenses are typical for a class of rentals first hand and can help you fill out your proforma.

Don't fall for someone who is just looking to get you into any property because its a "deal". They need to explain the numbers and remember they get paid when you buy so protect yourself.

I am a proponent for withdrawing your 401K. Here are my reasons:

1) Compare the ROI of you money even after penalties and taxes paid today. Run the numbers. In a decade you will be much better off. Utilize leverage and you 2x-3x your ROI. Also run the numbers with the stock market at 8%/year and your Real Estate portfolio at 10-25%.

2) The tax shelter aspect is good however you will have to pay taxes at some point. Really the 10% penalty is the only difference and this is quickly over come (2-7 years as mentioned in #1).

3) By having your money in a 401k you have it locked until you are old and at the mercy of the government who sets that age when you can touch it. Last time I checked many people were planning on retiring much earlier. Also I am speculating but I am sure that the government with engineer someway to get at people's retirement accounts.

4) If you are applying for loans you will need to boast your cash reserves since this is usually the limiting factor. Retirement accounts are seen as semi-liquid therefore you can only count it at 50-80% during underwriting.

5) Did I mention that 401k investment options suck and there are hidden fees in there.

6) The 2008 pullback was 7 years ago and market cycles typically are 8-12 years. My opinion as of 8/2015 is that the stock market (the world's ponzi scheme) has had some great gains over the past few years and statistics say a correction is coming. I am not a finance major but the stock index seems artificially inflated by an ok economy based on fictitious unemployment and inflation numbers and artificially held low interest rates. I don't know how the election or global instability play a role. Stocks/Mutual Funds are dictated by the stock price as a relationship or equation between the (1) company's strength/outlook and (2) the street's expectation. What makes you think your know (1) or (2) better than all the insiders trading on the floor? It is a 2 factor equation and per our teachings in algebra those equations are unsolvable.

Other notes:

-Bonehead alert: if your are going to withdraw money from your 401k please do not buy a boat, car, vacation, or any of the sort.

-The RothIRA is a good option because you can play that game where you can withdraw contributions at any time (not gains).

I've got a duplex in West Seattle that is  might that would be good for house hacking. PM me for details... don't want to get in trouble from the BP police but would be glad to let you know what to expect in for rent to value ratio in the Greater Seattle Area.

I've never done it before but for a starting point figure out what the investor's minimum rate of return (how it compares to a bank, CD, or stocks). Say its 5-10% annual rate of return, backwards engineer the equity split or preferred rate of return.