All Forum Posts by: Zach Adams

Mark Gallagher thanks. So look for For Sale by Owner for seller financing opps?

What has been your experience with residential RE agents in regards to investors and non-conventional financing methods? Mostly seller financing, as this is what I'm interested in down the road. To me seller financing seems like one of the best ways to accumulate SFRs. Are RE agents motivated to find and close Seller financing deals versus conventional bank deals? Is their commission less? How do you work agents into these deals? Where do RE agents fall on your lead generation list when you're maxed out on conv bank financing (I think 4)? Just trying to learn more about where RE agents fall in my lead generation techniques. Currently have 1 SFR and closing on my second April 30th, both conventional bank financing. Thanks Zach

Rob Beland sounds right to me. $25k up to $100k in active income and $15k for greater.

1- get working on your money source I.e lender. They're going to need lots of information from you. 2. Do you have an agent? Mine has a closing firm he uses but make sure. If not, line that up. 3. Get an inspection. 4. Home insurance if lender doesn't provide in house. 5. Watch your due diligence time period and be ready to negotiate if need be. 6. Lender should setup appraisal but follow up. There are so many other things depending on the type of property and the specific details of your deal, but those are broad strokes. Good luck! Zach

Kevin Polite thanks. I'm going with Liberty Mutual and going to look at switching my car over if it makes sense. I get a $120 deduction if my premium for car stays the same. Does having more properties insured and rented help getting better rates? This is my second. Zach

Originally posted by @David Krulac:

@Zach Adams

Unless it is a Roth component 401K in which case it can be withdrawn without any Federal tax due.

And you can buy real estate with a Roth 401 K just like a Roth IRA and shelter all income both rental and capital gains from Federal taxes forever.

I didn't know that David. Thanks. Wish mine had been a Roth 401k or that I was educated earlier about REI and taxes. Oh well, better late than never!

Zach

Originally posted by @John Marion:

Hi Zach. I would definitely shop around. Several of my out of state clients who own investment property here in the Atlanta area getting decent insurance quotes from a local company. Let me know if you would like their contact info. 

Thanks John. I shopped around (via recommendation from PM/Agent) and got a $740 policy. High deductible, but I'm ok with that. Like I said, my other SFR is $720. It's amazing the difference from one ins broker to the next! Thanks for the feedback

Zach

Hi all- Working on my second deal here and under contract. My other SFR in Marietta 3/2 1955 ranch has an annual premium of $720. The house I'm under contract is a 3/2 1977 split level in Woodstock and I just got a quote for $1265! Definitely hurts my initial cash flow calcs. Getting another quote right now. What's comparable in the area? Any feedback would be appreciated. Thanks Zach

Originally posted by @Benjamin Thompson:

I understand the mindset of "telling yourself your going to work till 65" if you match your companies 401k, however am I wrong in thinking that even if you cash it out early and pay the 10% penalty and taxes, even not taking compound interest into consideration you are still well ahead? Half of the money was "free" to begin with and even at the highest tax bracket WITH the 10% penalty you will still get more than 50% back.  Add that to compound interest not only on your money, but the "free" money that was in the account for the time you were with the company and it seems like a no brainer...  

Is my thinking off on this?

 I'm not a tax accountant, but your 401k is taxable income so for example if you make $60k/year and cash out a $100k 401k, the IRS Says "WOW you made $160k last year.  Let's tax you at THAT bracket".  Of course, there is a point of income when the tax breaks start occurring, but for most we're not in it.  What I found when I took out my 401k was that 10% was just beginning...

Good questions and something that I wish had been proposed to me years ago.  After years of investing in a 401k, I can say that today I am not putting any money in one.  Here's a quick synopsis of what happened for me.  I contributed almost 10% for 6-7 years at the advice of a random person (yikes!).  I didn't even know what funds, all I selected was Aggressive.  I took a couple of loans against it to try and start a business, which failed. 

Then in 2012 I cashed out a $90k 401k. I paid taxes out the wazoo (very weird tax year for me). I couldn't find anyone to tell me this was a good idea. It's working for me and I'll tell you why. I was underwater on my house in Atlanta (took am 80/20 loan in 2005 and 20%PMI hadn't gotten anywhere) and was trying to move out of state. I refinanced and paid $30k from the 401k to pay off the 20% PMI loan and get out from under the house. Got a new 3.75% rate on conventional 30yr, hired a property manager, and the property is now an asset. This started me on my path to REI.

At this point, I don't contribute to a 401k. I don't like being tied to equities that god knows what will look like in 30 years. Yes it's free money I'm leaving on the table, but right now it's about cash flow. I have a plan to purchase 1 SFR a year and I need everything bit of liquidity I can get. This is my plan and I expect a few paid off SFRs in 30 years to be a very good retirement.

I like control of my future and REI is the preferred vehicle for me! But if I were to invest, it'd be the bare minimum to get company match.

Best of luck!

Zach