Toll Brothers CEO: Capping mortgage interest deduction would discourage home ownership from CNBC.

Curbed DC

DC ranks first with most home flips in the nation Curbed DC Out of every state and city in the nation, Washington, D.C., had the highest number of home flips in Q1 2017, according to real estate provider ATTOM Data Solutions. The Washington Post reported that Maryland ranked as having the fifth highest number …

“Out of every state and city in the nation, Washington, D.C., had the highest number of home flips in Q1 2017, according to real estate provider ATTOM Data Solutions. The Washington Post reported that Maryland ranked as having the fifth highest number of home flips in that time span with the majority of these flips in Prince George’s County.

In the District, home flips increased 10.7 percent quarter-over-quarter and 32 percent year-over-year. The only state to have a higher yearly increase than D.C. was Hawaii, which had a 36 percent jump. Maryland’s home flips grew 8.5 percent quarter-over-quarter.”

Re: Want to work or “Need” to work?

A recent conversation with a friend…..

“I’m just going to keep working. I enjoy traveling on vacations too much and if I retire now, those trips will have to stop. I just won’t be able to afford it.”

Let’s not get into the debate of how much you need to comfortably retire.

Everyone has their own personal situations, desires, and opinions when it comes to the “NUMBER.”

What’s your number? The number that lets you walk away and live life on your own terms? The number that lets you travel when you want, help other people when you see an opportunity, or just relax for a few months with friends at the location of your choice.

What I can tell you is this – at some point, you may want to stop “working” and either slow down or just change how you spend your days. Going to a “job” every day is only going to be satisfying for so long. At some point, we all develop a desire for more.

At some point, my friend is going to have to make a decision to either quit “working” and enjoy a different pace of life, or life will make the decision for them.

We all know of the outliers in society who come into work every day until they are in their 90’s.

In fact, the article posted on Bloomberg yesterday points out the number of people who intend on working LONG PAST 70!

Good for them.

It’s not for me though.

I made a decision a long time ago that real estate was going to be my career. But at some point, even my plan is to shut down the day to day operations and do more traveling with my family. More quality time.

Most people who know my story know that I don’t really trust the stock market. It just never made much sense to me. Give my hard earned money to someone else that runs a mutual fund, and hope that they pick a good company? Nah. Not for me either.

When we go into a property that needs to be repaired today, it’s pretty obvious at this point for everyone on my team. Buy a property, fix it up and sell it at a higher price. The difference in the purchase price and sale price (minus expenses) is our profit.

What I’m hoping to share with everyone at WREIA this month is your ability to use real estate to fund your retirement years. Do work today that pays off 5, 10 or even 20 years from now.

I’m not talking about rental property – although rentals are a great vehicle for income when done correctly.

I’m talking about using something called a Self Directed IRA to “do” real estate.

Our speaker at WREIA this month, Jack Kiley, is one of the countries top experts when it comes to using Self Directed IRA’s to fund real estate deals.

At the base of it, combining SDIRA’s and real estate is very simple. Use the tax benefits of a retirement account to shelter your flipping or rental profits from taxes until you retire.

Most people think it’s complicated by it’s really very simple.

Two people start with the same amount of capital. They both have 100k to invest.

Investor #1 decides to do real estate in the traditional sense and has come up with a 5-year plan.

Year 1 – he uses his 100k to do two deals. In both deals, he makes a total profit of 60k.

30% (maybe more) of that profit will go to pay federal and state and possibly local taxes. So in reality Investor #1 just made 18k less than he thought. He still has 42k in profit, and that’s great.

Let’s repeat the exact scenario for the next 4 years.

Year 2 – 60k profit. 18k taxes. 42k net profit.
Year 3 – 60k profit. 18k taxes. 42k net profit.
Year 4 – 60k profit. 18k taxes. 42k net profit.
Year 5 – 60k profit. 18k taxes. 42k net profit.

Over 5 years Investor #1 has accumulated 210k in net profit after paying almost 100k in various taxes. Total capital at year 5 is now just over 300k.

Let’s bring in Investor #2.

She decides to open a Self Directed IRA with retirement money from a previous career. She also has 100k. While she is still working today, she wants to fund her long term retirement plans with some extra income from flipping properties.

Five years from now she wants to retire and travel on her own terms. Instead of two or three weeks a year, she wants to spend a month or two on a Caribbean island and escape the DC winters – without thinking about work back home.

Here is her plan:

Investor #2 starts with the same 100k. She makes 60k a year flipping properties with a friend.

The difference is – she doesn’t have any money taken out for taxes. (As long as she sets up her accounts correctly and uses the right company to be a “custodian” of her funds.)

Year 1 – 60k profit.
Year 2 – 60k profit.
Year 3 – 60k profit.
Year 4 – 60k profit.
Year 5 – 60k profit.

At the end of 5 years. 300k extra is now sitting in her Self Directed IRA account to do with as she desires in her retirement. She is sitting on a total nest egg of 400k.

That is a 100k difference in just 5 years.

And let’s be honest with ourselves. If the money isn’t tucked away in a retirement account, are we just a little more likely to use it for day to day expenses? I know I am guilty of dipping into savings accounts from time to time. But I cannot “dip” into my Self Directed IRA accounts. (You can use SDIRA funds for certain emergencies, but let’s not get too technical in this very simplified example.)

Where this get’s really exciting is when you can switch from the active roles in the day to day renovation business and become more of a passive stakeholder. Let’s say you start to lend money at 8, 10 or even 12% on projects and now you don’t have to be there for the day to day hassles of flipping homes.

My role in the DC real estate investing community has brought me many fond memories.

But in my opinion, some of my best accomplishments are knowing that I’ve introduced and helped some families take the leap into the world of Self Directed IRA’s. They are going to have much more financial freedom in their retirement years because they put in a few years of hard work getting ready for that phase of their life.

So this month – LET’S GET TO WORK – it’s time to start planning for the future. It creeps up fast and the only way to get started – IS TO GET STARTED.

Jack will give you some pointers on what is best for all of us in certain situations. Someone in their 20’s or 30’s has a very different outlook than someone staring down their 50’s or 60’s or beyond.

I’m extending the invitation. Join Jack Kiley and dozens of other investors at our WREIA meeting this Monday, July 17th.

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Interested in a single night seat or a WREIA Membership?

Save a few dollars and reserve your seat early.

Tremendous Savings and Additional
“Members Only” Perks for WREIA Members

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FOCUS and make 2017 a great year for your business!

Let me know how I can help you,
John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder

P.S. Interested in a lender or construction partner for your project? We lend to and partner with people all over the DC area. Call the office and lets set up a time to talk through or walk through your project.