All Forum Posts by: Lane Kawaoka

I agree with Aaron. 

On another note when using gifts make sure you ask you lender to ask their underwriter what the rule of the quarter is with gifts. The lender will tell you what you want to hear and most times they don't know these nuances. As a non owner occupied loan you are not allowed to have your downpayment a gift. You can sharpshoot by getting the gift money in your account 3-6 months before you apply because they may not go that far in your bank statements... but check with the professionals.

Conventional wisdom says that you should not pilgrimage your retirement fund. However most people 1) get money and blow it on silly things as soon as they get it and 2) don't invest in real estate.

I would say go for it. Calculate your returns and evaluate the 2 scenarios. I think you will find that doing what you are going to do will make out better even with the IRA tax shelter perks just make sure you are disciplined with putting your profits back into investing.

Typically folks will use these 3 rungs of how good your investment is.

1) If its cashflowing

2) If you are cashflowing with 50% expenses rule

3) If you are cashflowing at least 200 dollars/month with 50% expenses rule

I think your current situation is very bad and not a prudent use of leverage and you money. Calculate your ROI and you money is extremely lazy making single digits returns. I would sell (cash in the crazy appreciation) and re-leverage into prudent 80% LTV rentals. I'm selling my Seattle rentals to 1) take the money off the table and 2) put into rentals that a better rent to value ratio.

Don't do it... have some honor... JK if that is your advantage that @brandon turner talks about all the time then so be it.

Does age matter?

IMHO no. As long as the HVAC, roof, plumbing, electrical, and other big things are taken care of then it should not matter. Keep in mind there are local/regional quirks such as in a certain area a certain range 1974-1978 homes were built with some sub par material/etc. Talk to your realtor or other people to learn about those but you might just end up in analysis by paralysis if you are in the weeds at that point.

In fact because most people think age is an issue shoulden't you be getting a better price? It comes down to your goals... are you buying for cashflow or to sell in a few years? 

This is a bit of a misleading stat in Seattle. I think the official DOM is around a month. But if you are pricing it fairly and it is move in ready it should be gone in 1.5 weeks or less. Because of the low inventory there are a lot of legacy listings where people are listing crap at "make me move prices" with out any real need to really want to sell.

Some new ideas and to expand on some mentioned:

1) Instead of a 401k loan just withdraw it and take the 10% penalty. Some people might say this is crazy but work your numbers and it could be an option.

2) Heloc

3) Find others who are willing to lend at a preferred rate 5-10%. People would kill to just do a little better than the measly1% in a bank or risky stocks.

4) Partner on deals. Have the other person put up 50-100% of the down payment you bring in the know how. About a million ways to structure this one. This leads you down the road to big things. However if you can handle you portfolio you might as we help others.

I'm just looking at it from a sunk cost/ROI prospective... If I have to take a 10% penalty to acquire a property that makes a conservative 25% ROI/year then whats the issue. I respectively request some feedback in other than "my idea sucks".

I've done the loan - been there done that - plus I am still with the original employer so I can't just move it into a SD401k. I disagree that the 10% penalty is huge - if half of the money was employee matched contributions then it was free money anyway - plus if you are making 20-35% roi then it was a good trade. @alexander a hit it right on the head you need to look at it at the sunk cost perspective

@Che Chiu Wong  @Charlie DiLisio @Scott Dixon

Thanks for the feedback. I cannot do a loan since I already have one and maxed out on that plus I am still with the original employer. I disagree that the 10% penalty is huge - if half of the money was employee matched contributions then it was free money anyway.  Look it at the sunk cost perspective???