[Kingside]

You might try David Branfman

http://branfman.com/

[Kingside]

Investing in real estate with a self directed IRA can make a lot of sense if 1) you buy the property cheap with no financing; 2) the property throws off a lot of net rental income; 3) it is not to much of a headache to manage; and 4) Your IRA is a Roth IRA so that the accumulated net rent and asset appreciation can ultimately be withdrawn, or reinvested and withdrawn, tax free.

[Kingside]

I do not claim to be an expert in IRAs, but my understanding is that what you suggest would be a prohibited transaction.

[Kingside]

True, but I would not say there is no benefit as you don’t pay any income taxes on your net rental income either, not even when you withdraw if it is a Roth IRA.

[Kingside]

There is a lot of variation on how custodians charge fees, so I would focus on this first in evaluating choosing a custodian for a self directed IRA.

This also means you need a more specific idea of what you intend your IRA to invest in.

I have a self directed IRA which invests in real estate, and for that I have gone with Equity Trust Company (which apparantly acquired Sterling). Equity Trust has an online no charge for ordinary course “bill pay” for paying regular property expenses which I find convenient. I am not aware of any other custodians who offer this. Other custodians will charge you for each check they write.

Their “Equity University” education program is mostly a sales pitch though which I find pretty worthless.

[Kingside]

[quote=geovil7]
With the new law, we’re told that we’re going to be dinged with a 1099 for a short sale or foreclosure after 12/31/12, so if we’re going to walk, we have to stop paying or organize a short sale soon.

[/quote]

There is a lot of misinformation out there about the 2007 Mortgage Forgiveness Debt Relief Act that is scheduled to expire at the end of this year. Some folks assume that they have to act to get relief before the act expires when they really don’t need to, and some folks assume they will get relief under the act when they won’t qualify. Certain parts of the real estate industry assume it applies to everyone when it does not.

For instance, cancellation of true non-recourse debt may be exempt from taxation without having to resort to the act at all. Cash out refinances where the cash was used for purposes other than improvement of the property may be a situation where little help will be provided by the act.

Start by reviewing IRS publication 4681:

http://www.irs.gov/pub/irs-pdf/p4681.pdf

and consult a knowledgeable tax professional. Don’t rely on what someone tells you about the act if they are not a tax professional.

[Kingside]

You might consider going down to the planning department, schmooze a little, and ask in a roundabout way, “what architects do you like working with?” They won’t specifically give you a recomendation, but if you can find a professional you know they like who will be doing a submission for you, that person can oftentimes work wonders if not get you loads of time to deal with the situation.

[Kingside]

I have filed judicial foreclosure complaints, but those were commercial properties and frequently involve appointment of a receiver to collect rents and manage the property pending the foreclosure. You almost never see judicial foreclosure actions by conventional lenders on owner occupied residential properties in California.

The judicial foreclosure process will take over a year if contested, and after the sale takes place pursuant to judicial order, The lender then has to petition the Court to try to get a deficiency judgment. As a trade off, the borrower then has a “right of redemption” for a year which means that the lender or purchaser at the sale can’t evict the borrower and can’t get clear title to the property during the period in which the borrower has the right to redeem the property back. Conventional lenders can’t really handle this so you just don’t see them pursuing judicial foreclosure

[Kingside]

[quote=CA renter}
Yep. Just spent at least an hour this past month fighting new fees at US Bank (former SDNB account got switched over when SDNB failed). They wanted $12.95/month for a checking account! Needless to say, I told her that we would be out of there in the blink of an eye if they tried to charge us to use our money. They reversed the charges, but we will be moving to a credit union after the 180 days are up (to avoid other fees to closing the account too soon!).[/quote]

I have a US Bank checking account too and what I found out through a helpful local branch rep was that if you open up a linked
savings account and schedule an automatic transfer from checking(I do $25 per month and then transfer it back) they will waive their checking account fee.

Also, if your savings account hits 1K they will send you a $50 visa card and if you maintain the 1K for a year, they send you another $50 visa card. I think it is called their START savings program.

So I am going to stick with US bank for at least another year or so.

I think the back offices of these banks are all pretty much the same. For me it all comes down to what the local branch folks can do for you.

[Kingside]

[quote=sdsurfer][quote=Kingside]I also live in Encinitas and have investment property in both Encinitas and Escondido.

I agree with the statement that Encinitas is easier to self manage than Escondido.

I would not consider currently buying a SFR in Encinitas for investment based on current prices since they don’t really cash flow, even with the current record low rates.

I think it is a mistake to think in terms of only SFRs if part of your thinking is that you want to invest in a place that you yourself would consider living in. That is a false comfort zone. Also, if you are new and not sure you are comfortable being a landlord, going very low end might be less risk if you decide you don’t like being a landlord and want to bail. The lower end is a bit more liquid of a market.

So I would not only be looking at condos, but would be looking at 2-4 unit multifamily as well. There are a lot of older 2-4 multi=family properties in Escondido. They tend to cash flow much better than SFRs, if you can buy right.[/quote]
Thanks for the sound advice Kingside. Having done it in both areas would you say the peace of mind or closer to it is a good trade off for the additional cash flow from the Escondido properties? I just had a look and there actually are a couple triplexes out there in the 4s that would cash flow better, but they look pretty old. The ones I noticed were on the fruit streets (grape & orange) and appeared to cash flow pretty good from day one. Any experience in those areas yourself? Thank you![/quote]

My Encinitas investments were as a result of being a moveup buyer who did not sell my old properties. I still think this is a great way to go for first time investors in general.

My Escondido investments are a long complicated story which do not pertain to the average investor. I did pick up a triplex in Escondido earlier this year for under $200K. I tend not to look at triplexes priced in the 4’s, but that is just me.

For Encinitas, I manage them myself. For Escondido, I have a manager. What gives me peace of mind is buying at the right price from a cash flow perspective, not the location.

[Kingside]

[quote=sdsurfer][quote=Kingside]I also live in Encinitas and have investment property in both Encinitas and Escondido.

I agree with the statement that Encinitas is easier to self manage than Escondido.

I would not consider currently buying a SFR in Encinitas for investment based on current prices since they don’t really cash flow, even with the current record low rates.

I think it is a mistake to think in terms of only SFRs if part of your thinking is that you want to invest in a place that you yourself would consider living in. That is a false comfort zone. Also, if you are new and not sure you are comfortable being a landlord, going very low end might be less risk if you decide you don’t like being a landlord and want to bail. The lower end is a bit more liquid of a market.

So I would not only be looking at condos, but would be looking at 2-4 unit multifamily as well. There are a lot of older 2-4 multi=family properties in Escondido. They tend to cash flow much better than SFRs, if you can buy right.[/quote]
Thanks for the sound advice Kingside. Having done it in both areas would you say the peace of mind or closer to it is a good trade off for the additional cash flow from the Escondido properties? I just had a look and there actually are a couple triplexes out there in the 4s that would cash flow better, but they look pretty old. The ones I noticed were on the fruit streets (grape & orange) and appeared to cash flow pretty good from day one. Any experience in those areas yourself? Thank you![/quote]

My Encinitas investments were as a result of being a moveup buyer who did not sell my old properties. I still think this is a great way to go for first time investors in general.

My Escondido investments are a long complicated story which do not pertain to the average investor. I did pick up a triplex in Escondido earlier this year for under $200K. I tend not to look at triplexes priced in the 4’s, but that is just me.

For Encinitas, I manage them myself. For Escondido, I have a manager. What gives me peace of mind is buying at the right price from a cash flow perspective, not the location.

[Kingside]

[quote=sdsurfer][quote=Kingside]I also live in Encinitas and have investment property in both Encinitas and Escondido.

I agree with the statement that Encinitas is easier to self manage than Escondido.

I would not consider currently buying a SFR in Encinitas for investment based on current prices since they don’t really cash flow, even with the current record low rates.

I think it is a mistake to think in terms of only SFRs if part of your thinking is that you want to invest in a place that you yourself would consider living in. That is a false comfort zone. Also, if you are new and not sure you are comfortable being a landlord, going very low end might be less risk if you decide you don’t like being a landlord and want to bail. The lower end is a bit more liquid of a market.

So I would not only be looking at condos, but would be looking at 2-4 unit multifamily as well. There are a lot of older 2-4 multi=family properties in Escondido. They tend to cash flow much better than SFRs, if you can buy right.[/quote]
Thanks for the sound advice Kingside. Having done it in both areas would you say the peace of mind or closer to it is a good trade off for the additional cash flow from the Escondido properties? I just had a look and there actually are a couple triplexes out there in the 4s that would cash flow better, but they look pretty old. The ones I noticed were on the fruit streets (grape & orange) and appeared to cash flow pretty good from day one. Any experience in those areas yourself? Thank you![/quote]

My Encinitas investments were as a result of being a moveup buyer who did not sell my old properties. I still think this is a great way to go for first time investors in general.

My Escondido investments are a long complicated story which do not pertain to the average investor. I did pick up a triplex in Escondido earlier this year for under $200K. I tend not to look at triplexes priced in the 4’s, but that is just me.

For Encinitas, I manage them myself. For Escondido, I have a manager. What gives me peace of mind is buying at the right price from a cash flow perspective, not the location.

[Kingside]

[quote=sdsurfer][quote=Kingside]I also live in Encinitas and have investment property in both Encinitas and Escondido.

I agree with the statement that Encinitas is easier to self manage than Escondido.

I would not consider currently buying a SFR in Encinitas for investment based on current prices since they don’t really cash flow, even with the current record low rates.

I think it is a mistake to think in terms of only SFRs if part of your thinking is that you want to invest in a place that you yourself would consider living in. That is a false comfort zone. Also, if you are new and not sure you are comfortable being a landlord, going very low end might be less risk if you decide you don’t like being a landlord and want to bail. The lower end is a bit more liquid of a market.

So I would not only be looking at condos, but would be looking at 2-4 unit multifamily as well. There are a lot of older 2-4 multi=family properties in Escondido. They tend to cash flow much better than SFRs, if you can buy right.[/quote]
Thanks for the sound advice Kingside. Having done it in both areas would you say the peace of mind or closer to it is a good trade off for the additional cash flow from the Escondido properties? I just had a look and there actually are a couple triplexes out there in the 4s that would cash flow better, but they look pretty old. The ones I noticed were on the fruit streets (grape & orange) and appeared to cash flow pretty good from day one. Any experience in those areas yourself? Thank you![/quote]

My Encinitas investments were as a result of being a moveup buyer who did not sell my old properties. I still think this is a great way to go for first time investors in general.

My Escondido investments are a long complicated story which do not pertain to the average investor. I did pick up a triplex in Escondido earlier this year for under $200K. I tend not to look at triplexes priced in the 4’s, but that is just me.

For Encinitas, I manage them myself. For Escondido, I have a manager. What gives me peace of mind is buying at the right price from a cash flow perspective, not the location.

[Kingside]

[quote=sdsurfer][quote=Kingside]I also live in Encinitas and have investment property in both Encinitas and Escondido.

I agree with the statement that Encinitas is easier to self manage than Escondido.

I would not consider currently buying a SFR in Encinitas for investment based on current prices since they don’t really cash flow, even with the current record low rates.

I think it is a mistake to think in terms of only SFRs if part of your thinking is that you want to invest in a place that you yourself would consider living in. That is a false comfort zone. Also, if you are new and not sure you are comfortable being a landlord, going very low end might be less risk if you decide you don’t like being a landlord and want to bail. The lower end is a bit more liquid of a market.

So I would not only be looking at condos, but would be looking at 2-4 unit multifamily as well. There are a lot of older 2-4 multi=family properties in Escondido. They tend to cash flow much better than SFRs, if you can buy right.[/quote]
Thanks for the sound advice Kingside. Having done it in both areas would you say the peace of mind or closer to it is a good trade off for the additional cash flow from the Escondido properties? I just had a look and there actually are a couple triplexes out there in the 4s that would cash flow better, but they look pretty old. The ones I noticed were on the fruit streets (grape & orange) and appeared to cash flow pretty good from day one. Any experience in those areas yourself? Thank you![/quote]

My Encinitas investments were as a result of being a moveup buyer who did not sell my old properties. I still think this is a great way to go for first time investors in general.

My Escondido investments are a long complicated story which do not pertain to the average investor. I did pick up a triplex in Escondido earlier this year for under $200K. I tend not to look at triplexes priced in the 4’s, but that is just me.

For Encinitas, I manage them myself. For Escondido, I have a manager. What gives me peace of mind is buying at the right price from a cash flow perspective, not the location.

[Kingside]

[quote=sdrealtor]For the record, Kingside is long time local Real Estate attorney and very credible in these matters. BG not so much.[/quote]

Michael T. Pines was a long time local Real Estate attorney who filed Bankruptcy, was arrested, and lost his law license.

So the fact that I am a real estate attorney probably means that one should run for the hills in terms of anything I say resembling investment advice.

[Author]

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