Hello to all !!

[spideyrdpd]

Yes.  Something we can agree on.  Depending what state you live in and what is exempt from creditors in that state, it makes sense to build up equity in exempt assets and maximize your retirement plans. 

Its not about creditors its about the lawyers that chase people with deep pockets. About trying to not be a good target for the slip and fall guys.
If having a partner makes it even a little more difficult to get to property 2 and 3 I would be all for it.
I am all about layers of protection !

 

[Martha]

Its not about creditors its about the lawyers that chase people with deep pockets. About trying to not be a good target for the slip and fall guys.
If having a partner makes it even a little more difficult to get to property 2 and 3 I would be all for it.
I am all about layers of protection !

Well I am not going to agree with you and you aren't going to pay any attention to me, so let's call it quits.

 

[Enigma]

Hey Martha !

I am paying attention (and no I am not being sarcastic)

Learning more and more as I read and a couple of questions please.

I understand the payoff house part and the full funding of  401k/IRA  part. However, if I leave my debt with investment properties how will I have the cash flow to RE??

I had originally planned to have all business and personal assets. Everything: (cars, toys, the whole shootin' match paid off. The exception is the 260k debt which remain as investment debt.

Would a better strategy be to acquire more properties than originally planned and go into each property with say,,,,,a 50% cash stake. It would add a nice hedge to vacancies and spread risk as well.

I cant touch my 401k for another 20 years with the quirky exception of IRS code 72t but that seems cloudy at best getting "private letter ruling". Anyway I was counting on that as my second layer of protection so to speak. Almost like a built in inflation hedge that kicks in at 60.

My original plan was to have a long time husband/wife friends with almost identical goals be 50/50 joint tennants. I have found them to be top notch honest and ethical in the 15 years I have known them and our goals are scary similar. Now with my newfound knowledge we are going to our business attorney and getting LLC's for each of the properties.

We are about equally funded as far as real estate assets. However if we did go 50/50 on every thing at 50% cash down we would be approaching 5-6M in assets. Thats a scary large number.

Any $$$ that I did not use from income stream was going to take a MM fund to 100k then the balance laddered in CD's up to about 5yrs then mutual funds. Likely very low cost index type funds ie. Vanguard, etc.

Also I am a vanilla boring type guy (read, low risk). Family man, Wife, 2 kids, drive the speed limit, never had a ticket. The only time I have seen the inside of a courthouse is when I have been a juror. In my 39 years nobody has even so much as whispered to me that I had behaved irresponsibily. I am now assuming increasing risk with additonal properties but I have very capable council and will follow his direction on the correct amount of insurance to have for my financial situation.

Keep talking Martha, I am listening,

Thanks

 

[spideyrdpd]

Hi I agree I am learning more > was hoping Gumby would share more as well. Oh and I also agree on what your saying about backruptcy. Although theres gotta be a way around it. Since Trump end up better off after bankruptcy.

 

[Martha]

Hey Martha !

I am paying attention (and no I am not being sarcastic)

Learning more and more as I read and a couple of questions please.

I understand the payoff house part and the full funding of 401k/IRA part. However, if I leave my debt with investment properties how will I have the cash flow to RE??

I had originally planned to have all business and personal assets. Everything: (cars, toys, the whole shootin' match paid off. The exception is the 260k debt which remain as investment debt.

Would a better strategy be to acquire more properties than originally planned and go into each property with say,,,,,a 50% cash stake. It would add a nice hedge to vacancies and spread risk as well.

Especially if you are in a risky business it makes sense to pay off debt against exempt property first and maximize retirement plans. But if you need the cash flow from rental properties to live on, you need to pay that debt as well or sell the properties and invest the proceeds elsewehere. We used to own rental properties. We slowly paid down the debt on those properties. When the market felt right, we sold the properties. We didn't take out equity to buy more properties like a number of people do. However, I can understand the strategy of going into more properties, especially with the large amount of cash investment you suggest. A business question only you can answer. It's not like we don't use leverage. We are passive investers in several real estate investments that are leveraged and the leverage has been to our advantage.

I cant touch my 401k for another 20 years with the quirky exception of IRS code 72t but that seems cloudy at best getting "private letter ruling". Anyway I was counting on that as my second layer of protection so to speak. Almost like a built in inflation hedge that kicks in at 60.

You can roll over the 401k into an IRA when you leave work and then do 72t distributions. No letter ruling necessary.

 

[Gumby]

..

 

[spideyrdpd]

Hi gumby
Thanks for the article. Is this it ?
http://www.post-gazette.com/pg/06198/706475-68.stm

They have a link that goes to this site which discusses the single member llc.
http://www.assetprotectionbook.com/singlememberllc.htm
Which discusses my issue of not having the charging order.
Otherwise it does discuss the other points we have both agreed on

 

[Gumby]

..

 

[spideyrdpd]

Thanks Gumby
I was curious so I checked Oregons homestead laws. If I read it right it only protects the first 33k ? Doesnt seem like much protection . It may have been an older number ?

Hi Engima
I have partnered with people. I dont think I would put all my eggs in with any one person. I have been burnt a few times.Plus then who really decides what happens. It might be nice to do some cross over stuff. So maybe you do something where your a 20% partner in something he does and vs a versa.

Heres another forum where you could possibly post your question
and a discussion on asset protection and single member llc's
http://www.assetprotectioncorp.com/cgi-bin/ultimatebb.cgi?ubb=get_topic;f=1;t=000361
It also discusses equity stripping. Which again wasnt my thoughts as much as just not putting as much down. Interestingly the idea of an annuity came up since they have asset protection. Ken lay had put some of his bucks in one and they say it will not be accesible to the civil suits.

 

[Brat]

It also discusses equity stripping. Which again wasnt my thoughts as much as just not putting as much down. Interestingly the idea of an annuity came up since they have asset protection. Ken lay had put some of his bucks in one and they say it will not be accesible to the civil suits.

I think annuities are thought of as retirement programs. Martha would know the ins and outs of that exemption.

 

[Martha]

Thanks Gumby
I was curious so I checked Oregons homestead laws. If I read it right it only protects the first 33k ? Doesnt seem like much protection . It may have been an older number ?

Here is a link to Oregon's exemptions: http://www.totalbankruptcy.com/state_exemptions_oregon.htm

It looks like Oregon has increased its homestead exemption for marrieds to $39,600. Not very generous.

Interestingly the idea of an annuity came up since they have asset protection. Ken lay had put some of his bucks in one and they say it will not be accesible to the civil suits.

How much protection an annuity has is dependent on state law. For example, if you look at the Oregon exemptions, it looks like you can protect a maximum distribution from an annuity of $500 per month. Other states like Wisconsin treat annuities like retirement plans and give broad protection. Other states have no protection for annuities.

 

[Enigma]

Martha,

Thanks for keeping this thread alive. Good stuff! After reading the links supplied it looks like only 30k is safe in your "homestead".

So I started thinking about another method. Maybe still payoff "homestead" which will reduce the amount of monthly expenses you have.

Now, that "payoff" money would have otherwise went to buy more investment properties. I now need less monthly cash flow so I dont need as many properties. Would you say I am slightly reducing my risk by having less properties? Keeping in mind that I would also still personally be on my best behavior for personal actions and have the proper amount of insurance in place.

 

[Enigma]

Topic: Paying off your primary residense with 1031 money.

How do you do it??

 

[Martha]

Topic: Paying off your primary residense with 1031 money.

How do you do it??

You can't. You can only do a 1031 exchange into like kind property held for business or investment. You could do a 1031 of real property held for investment into a single family home held for investment. Rent it out "for a while" and later turn it into your home.

You will have to pay taxes when the home is sold on the depreciation you used over the years.