All Forum Posts by: William Joel Idleman

I've had my life insurance license.  I've considered this concept.  I personally decided that I'd rather use real estate as my bank than a cash value insurance policy.  I've seen the most basic to the "fanciest" insurance policies pitched to me by wholesalers from multiple insurance companies.  Cash value insurance policies pay the highest commissions of an type of policy next to maybe an annuity.  Life insurance is necessary but I do not view it as an investment vehicle.  I've never sold a single cash value insurance policy or annuity even though they pay higher commissions.  I'm in the business of making my clients wealthy, not the insurance companies.  

Pay off the credit cards immediately. They are a weight around your neck. You may have to wait a while to buy your next property but that credit card debt can sink you. I wouldn't move into other properties with massive credit card debt. I wouldn't use credit cards at all because that type of leverage exponentially increases your risk level and puts you in the exact situation you are facing. You started with a dream and now you're living with a high stress situation. I understand that you had the buildings required more cash than you thought, and that's okay. I wouldn't keep moving forward with a plan of putting them on credit cards. Do you have a 401k or IRA available?

If you're account is tax favored (Roth or Traditional IRA) then I would go with mutual funds. A core fund I really like is the Growth Fund of American by Capital Group. Last time I checked it was an average return of around 13.50% since its inception in 1973. I personally pick old mutual funds that have been around for a few pull backs in the stock market. In a non tax favored account, I don't mind dividend paying stocks but you'll need to be prepared to pay taxes on the dividends you receive. If you want to avoid paying taxes then you'll go with growth stocks. For my real estate clients, I don't invest their funds in any real estate investment vehicles for the obvious reason of diversification. However, your investment strategy can't be answered in a single post on a forum. As an advisor I have to know your; goals, risk tolerance, family's needs, outside investments, what you expect your money to do for you, when you want to retire, income, age, and the list goes on. All of that is necessary so I can give sound, individualized advice that meets your specific needs and accomplishes your goals.

If you are still a single member LLC you will just file a schedule C with your personal tax return. You won't need to file separately for the business.

I've worked for a CPA the past two years getting my hours in to complete my CPA.  I decided to go independent this year and set up my own tax shop.  I haven't completed my CPA yet but have the credit hours necessary to sit for the exam and I'm studying for it currently.  Depending on how complicated your situation is I may or may not be able to help.  My reputation is worth more than the dollar so I have no issue referring out if I'm in over my head.  

That being said, good things aren't cheap and cheap things aren't good. I'm a huge fan of Tom Wheelright. He's one of the biggest reasons I got in the tax game. He's definitely the best in my opinion. Like others on this thread I'm very curious to hear about the ROI someone has had while working with him.

 @Alex Pino is right. It doesn't raise your interest rate. However, the VA loan has a funding fee that rolled into the loan. Generally, you can roll the funding fee and closing costs into the loan and you will truly pay $0 down. Just know that you will most likely start upside down in your loan.

 That's a great question and best to be answered by a loan officer.  I can tell you what I would personally like to do but you're right.  You need to do what will position you best for acquiring the property which may be a combination of both like you mentioned.  I'm sorry I can't be of more help but if I gave any more advice it would be inaccurate at best.

 2008 was the housing crisis and the stock market dropped 40%.  They lost 40% but at least still had 60% should they have needed it.  If that makes sense.

We will have to respectively agree to disagree on this one. I started helping people with financial coaching at the beginning of 2008 during my undergrad. The liquidity in retirement accounts was absolutely necessary to stop some of them from losing their homes and way of life. If they had their IRA tied up in real estate, they would have lost everything through foreclosure or short sale. The ability to liquidate stock, even though it dipped almost 40% kept a roof over their head and food on the table for their families and saved their credit score. I've had clients who suffered from massive medical bills and were only able to stay afloat because we were able to access liquid retirement funds. It's terrible and I hate that it happens, but it does. Perhaps you have millions sitting in your IRA and can withstand another financial crisis or major medical issues (I pray you never face either) should we face one, but the greater majority of Americans don't. 1 in 4 people will face a major medical set back. When I work with a client, we work from worst case scenario to best case scenario and do our best to make sure we have the ability to pay bills and take care of families. We place their money within their appetite for risk tolerance. For 99% of my clients, this means access to cash quickly, and sometimes within 7 days. Thanks for your input!

You have to figure out what level of risk you are willing to take to get the results you want.  First, you need to figure out what your goal is for that property after PA school is complete.  Real estate generally goes up but she could be graduating in a down year and you're stuck holding it.  

Private loans may not offer an extended payment period.  However, it's still worth asking.  I'll tell you what I did because I'm in the same boat as you.

I had cash available to pay down my students loans by about 10% but not pay them off (90k).  I extended them out using income based repayment.  Yes, I'm a financial planner.  Yes, it's dumb to have that much in student loans without a better major.  No, no one gave me any guidance along the way so I made dumb choices as a kid.  I digress.  It wasn't going to change my lifestyle or lower my payment.  Student loans just feel like a weight around our necks and they really can destroy one's ability to dream about the future.  If I paid them off as quickly as I could it would take me at least 5 years.  I don't mind delayed gratification but I'd like to live life along the way.  So I moved my money into real estate.  

I bought a small property for 150k that cash flows $200/month and the loan gets amortized at about $200/month the first year.  My student loan payment is $400.  I'm already used to paying it so I just keep paying it and I put the $200 in a separate account to help with maintenance and the next deal.  This is a risk I'm comfortable with taking.

In 5 years at 6% appreciation (which I think is conservative but we will see) the property will be worth almost $190k.  The mortgage will be paid down to about $137k.  That will pay about $53,000 toward my student loans (not including taxes if I sold).  I will most likely try to do a cash out refi at that point.  So now I'm looking to purchase my second property and repeat this strategy every year.  It's not flashy.  It's not crazy profits.  It's conservative but once again that's the level of risk I'm willing to take right now.  

If you can find a multi family that can do the same for you and you're okay with the risk then get after it.  If you're not okay with the risk then you should probably rent or find a different strategy.