Using 401k money?? - Posted by DDD(AL)

Real Estate Investing Mobile Homes & Mobile Home Parks
1

Posted by MARK K on October 09, 2003 at 07:07:26:

I agree with the doc. I took 5k from my 401k to start in real estate and I was also determined not to fail because my father had and still has a sfh where he was doing ok. I would use enough to do 1 or 2 deals with 1k in reserves and that should be all you need. I am starting with this myself and I am only going to use about $3500 untill I see where it goes even though I am optomistic. Best of luck drop me a line if you want to chat off line.

all the best
Mark

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Using 401k money?? - Posted by DDD(AL)

Posted by DDD(AL) on October 08, 2003 at 20:43:06:

Hello all,
I’m just reading DOW now even though I’ve had it for several months. I’ve been watching this board for about 6 months or more. My origianl intent was to find a MH for myself first then try some Lonnie Deals but that focus has changed.
My problem is the company I’ve worked for the last 12 years laid me off 2 months ago. Now they are closing the plant. I had written a long detailed description of my situation but decided to shorten it. I’m 47 and a single male so no mate to help out. I don’t see me ever getting anywhere working for someone else.
I’m trying to decide whether to try to start doing Lonnie Deals while still semi unemployed (I can find work at a low payscale and may use the time to learn the basic’s of some trades like carpet,flooring,bricklaying and some others I would like to know at a basic level). I could also take a job with a former employer
which is almost acceptable but with no time for deals.
I have a 401k with about 80k and a retirement plan with a cash value of about 8k. I also have a trust fund worth about 8k but don’t want to tap it until I can show some good returns. There could be more money availible there than I’ll ever need but I would have to show super profits first to overcome serious bias among my family againist MH. My credit union has about 1,400 left and unemployment is $200 a week (I’m bored stiff and can’t take much more doing nothing). Only serious debt is a 1,300 Credit card bill which I was about to pay off when this hit, just making the minimum now,and about 700-800 in rent,utilities on a month to month lease. I just saw Lonnie’s post to Anneise today and I am looking into an RV. I had already considered it as a way to own an RV but wasn’t aware of the full potential.

My question is should I tap the 401k and/or the retirement fund to do deals? What I’ve seen on self directed IRA’s doesn’t look like I can use it for any current income. I can move from Birmingham,Al to Maryland for a job I can save at least 40k at over 2 yrs and do some deals there at the same time. Would it be better to do that than use the 401k?
If I did tap the 401k I would aim to just do 3 to 6 deals off it and after I had a living and money to continue dealing coming in I might convert some deals to a self directed IRA and do deals inside it to build wealth tax differed.

I left out some major details to keep down the length of this post and because I decided it was best
not to bias the answers I might recieve.
Thanks to all the posters who spend thier time to mentor us newbies

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If i was in your shoes… - Posted by Briton (IN)

Posted by Briton (IN) on October 09, 2003 at 01:22:10:

DDD,
If i was your shoes, i would take that other job with a past employer, get a MH and land the cheap way, and live there. Take about half the retirement money and buy a park, get that paid off in 15 years using OPM, and have a nice steady income for the rest of your life. Few worries, little stress, lifetime of income. Lonnie says it best “Parks are the closest thing to a gold mind I can find!” I dont want to tell you to get into something that you cannot handle MAKE SURE your ready for whatever you do! Thats just what i would do, Briton (IN)
PS I am about to spend my little $8,000 401K on my next investment. Why not? 401K’s make such bad returns. That 8,000$ can be a downpayment on a property that will give me a check or two every month for the rest of my life! Now the hard part i just need to decide what to invest it in…Good luck

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No, No, Not on your life. - Posted by Dr. Craig Whisler CA NV

Posted by Dr. Craig Whisler CA NV on October 08, 2003 at 23:12:16:

DDD, this is a highly personal decision, but I don’t think it would be a good idea to place your retirementment funds a risk in this manner.

Many people who start out with the best of intentions, fail to follow through and actually succeed at the mobile home business. Like many business plans, it sounds so simple but most people just don’t make it. When they fail or give up they just disappear from this board and we never hear from them again. Those who post regularily here are the remaining top 5%-10%, in my opinion.

Would you risk your life’s savings (for retirement) if you were in Las Vegas spinning the wheel, if you thought had a 90% chance of going home broke?

You DON’T stand a 90% chance of going broke doing Lonnie deals but I still maintain that only 5%-10% of the starters ever reach the finish line, of their first completed deal.

I’ve often said that nearly anyone can succeed in this business with enough effort but I am a realist and recognize that probably a good 90% + of the beginners just don’t make it. I would advise that you be VERY conservative with your 401k retirement account. Don’t use it to experiment in a new venture to see if you can make it work or not.

It would be better for you to take another job, especially if you can find enough spare time to still do mobile home deals. Support yourself from your earnings and most important of all, support your first 3-4 deals from your earnings too. Do NOT borrow money for your deals until you have done 3-4 successfully first. Once you have proven you can do it then I think it might be OK to borrow a little money, but still don’t risk most of your retirement nest egg. I agree that you probably should get rid of the credit card debt before you do anything. Keep your card though and keep your credit as good as you can. If you need money for a deal it woud be 100 times better to get it on an unsecured credit card than to withdraw it from your 401k. If heaven forbid, things should get hairy, your 401k will be exempt from creditor attachment.

RV living might be ideal for you, not being married. You will be able to move around easily to find a good job and you will also be free to move to greener pastures searching for Mobile home deals. And you sure can’t beat $30 per month for rent and utilities.

Regards, doc

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Re: No, No, Not on your life. - Posted by EB

Posted by EB on October 09, 2003 at 09:24:58:

I agree with Doc. My husband and I invest in both mobile homes and SFHs. I, however, still hold a full-time job…it gives us health insurance, which we sorely need, plus I make a very nice income. I increase the percentage to my 401k every quarter, looking to max it every year as soon as possible. Yes, we make money on the homes, but this is another avenue to “not have all your eggs in one basket”. My husband looks for and closes the deals, both buying and selling. We did it part-time for a few years, until we felt comfortable with full-time investing. Good luck, but to begin with I would take one of those jobs until you have your feet firmly under you!