Investing 102

[Vegas69]

What do you guys think about converting my SEP IRA over to a direct type and investing in property. My ROI analysis on a single family has me realizing 20-25% on my initial investment in the first year and it increases as principal reduction increases. Of course rental amount decline will offset to some extent in the future.

How does the current stock market level compare to highs in history? Is the market to high for the economy?

[GregWeld]

Originally Posted by Vegas69

What do you guys think about converting my SEP IRA over to a direct type and investing in property. My ROI analysis on a single family has me realizing 20-25% on my initial investment in the first year and it increases as principal reduction increases. Of course rental amount decline will offset to some extent in the future.

How does the current stock market level compare to highs in history? Is the market to high for the economy?

#1 Todd -- talk with someone qualified to answer your question -- I'm almost positive that PROPERTY is not allowed in a SEP/IRA/401 investment vehicle.

I own part of an apartment building in GWEN'S IRA -- and only because it is a partnership and LLC... and it's been absolute HELL to have it in there. Most institutions won't hold "private paper".... and because it's not a qualified investment - we have to file income taxes on it every year - and the taxes have to be paid out of the IRA -- and try to get that done... it's just a total PITA. To the point that last tax filing season I had a discussion with my accountant about just "buying the investment outta there"! Turns out - that can't be done either...


RE: Market question


There is no way anyone can answer a question like that... it's just GUESSING. And or "market timing" - which doesn't work. The market - like housing - just goes up over TIME.... You'll never get in at the right time. The minute you're in the little man in wall street takes everything you bought straight down.

[96z28ss]

I finished in the green today also, not by much but green is green.

[clill]

Here is what happens when Greg Weld is in charge of the fireworks.

https://www.youtube.com/watch?v=lrPCE...e_gdata_player

[GregWeld]

Originally Posted by clill

Here is what happens when Greg Weld is in charge of the fireworks.

https://www.youtube.com/watch?v=lrPCE...e_gdata_player

Could that be the reason I'm retired?!?!?! One big OOPS.....

[Vegas69]

Originally Posted by GregWeld

#1 Todd -- talk with someone qualified to answer your question -- I'm almost positive that PROPERTY is not allowed in a SEP/IRA/401 investment vehicle.

I own part of an apartment building in GWEN'S IRA -- and only because it is a partnership and LLC... and it's been absolute HELL to have it in there. Most institutions won't hold "private paper".... and because it's not a qualified investment - we have to file income taxes on it every year - and the taxes have to be paid out of the IRA -- and try to get that done... it's just a total PITA. To the point that last tax filing season I had a discussion with my accountant about just "buying the investment outta there"! Turns out - that can't be done either...


RE: Market question


There is no way anyone can answer a question like that... it's just GUESSING. And or "market timing" - which doesn't work. The market - like housing - just goes up over TIME.... You'll never get in at the right time. The minute you're in the little man in wall street takes everything you bought straight down.

One of my best buddies is my advisor so he'll set me straight on the logistics. He'll tell me to leave it in there regardless. My thought is to use the money in a venue where I'm extremely experienced vs. a mutual fund that isn't performing, hasn't been performing, and I'm not sold will ever perform. Times change, the market has went up and down since I started investing, it's been a safe investment, not a retirement plan. Where else am I going to get 25% on my money? The compound effect hasn't come into play yet.

My only concern is putting to many eggs in one basket. I just consider low prices and low rates a genuine opportunity. I'm contracting a propert in a GOOD area of Vegas for 109,500. I can rent it for $1050 a month. The mortgage(PITI) is $612 a month. Cash flow $400 a month, principal reduction, and depreciation. Down the road I can realize the residual or 1031. The only fault I can find is if the **** really hits the fan.

[skatinjay27]

Originally Posted by Vegas69

I'm contracting a propert in a GOOD area of Vegas for 109,500. I can rent it for $1050 a month.

where is it ?
the shack im in now has me paying very close to that(well above market value), and the landlord wont budge...
plus i was too stupid and careless before the economy tanked so im stuck being a renter for now.

[Vegas69]

It's in Silverado Ranch. I won't accept that boat anchor for payment.

[skatinjay27]

you read my mind!

aww, im stuck staying in the north by the shop.

[GregWeld]

Originally Posted by Vegas69

One of my best buddies is my advisor so he'll set me straight on the logistics. He'll tell me to leave it in there regardless. My thought is to use the money in a venue where I'm extremely experienced vs. a mutual fund that isn't performing, hasn't been performing, and I'm not sold will ever perform. Times change, the market has went up and down since I started investing, it's been a safe investment, not a retirement plan. Where else am I going to get 25% on my money? The compound effect hasn't come into play yet.

My only concern is putting to many eggs in one basket. I just consider low prices and low rates a genuine opportunity. I'm contracting a propert in a GOOD area of Vegas for 109,500. I can rent it for $1050 a month. The mortgage(PITI) is $612 a month. Cash flow $400 a month, principal reduction, and depreciation. Down the road I can realize the residual or 1031. The only fault I can find is if the **** really hits the fan.

For you, Todd -- it might "pay" you to make a withdrawal of your SEP/IRA and just pay the taxes and penalty on it. I totally agree with you that with your knowledge and ability - you should be buying rentals.

You'll just have to come up with some extra "deductions" to cover the withdrawal to minimize the hit. No way around the 10% penalty - but that is nothing compared to the opportunity.

There are plenty of investor groups right now that are buying anything and everything they can steal. This is something you should maybe look into - where you're the managing partner and get 51% stake plus "fees" (5% annually) for finding - structuring - managing. The partners buy shares and it's their money that makes up the down stroke and fix up costs and fund the initial pot for repairs etc. Usually the ROI is 7% and their portion of the tax benefits of depreciation. You'd only be limited by how much skin you'd want to put in the game - and the guys I know that do this (we've been doing this since the early 80's - except it's large Class A apartment buildings not houses) won't invest with anyone that doesn't have significant skin in. But look at it this way -- instead of 30K down on one house -- if you have 10% in - you're partners would have 270K in -- so you could buy 10 houses instead of one.

If the shizzle hits the pan "that bad" we're all screwed regardless of the type of investments we have.

Property is an absolute steal right now. We'll likely never have the prices so low, and the financing at ridiculously low rates at the same time. Back the truck up and buy like a pig.

If interest rates weren't so low I'd finance the stuff for you... but the bank will give you cheaper money for a FAR longer term. I bought a building for my brother in law last year and gave him a 6% rate for 5 years with a balloon (that I'll just roll unless he wants out). But that is commercial property which carries higher rates. Rates are like 5.45% on a 3MM 30 year with a 80% LTV. I gave him a 100% plus the build out costs.... just like the old days!