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Old 03-26-2016, 12:22 AM   #161
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I think you should be able to transfer it into another similar account without penalty.

The number one thing, #1, regarding returns on investment vehicles is the fees/load they put on it. Use an index fund with the lowest expense ratio you can find. Paying someone to actively manage your money is good for them and bad for you. Unless, perhaps, you know the dudes making the nano-second trading decisions - then it might be profitable to get in on that. But for the rest of us mortals, keeping as much of their hand as possible out of our pie is the way to maximize returns to ourselves.
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Old 05-13-2016, 12:56 PM   #162
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Anyone here ever rented their property through a rental management agency? We're thinking about moving within the next 1-2 years, and I'm kicking around the idea of renting our current home through a management agency instead of selling. If the fees are on the high end (12% plus one month's rent) it would marginally beneficial. It would be more attractive if I found a good agency at the lower end of the typical fee structure (9-10%).
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Old 05-13-2016, 01:04 PM   #163
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Question about taking out a loan on a 401k for a down payment. Is this a reasonable thing to do? What are the pros/cons. I've been reading about it lately, but can't wrap my head around the whole paying back the interest to yourself.
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Old 05-13-2016, 01:22 PM   #164
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It's a pretty good idea if you absolutely need the money right now, and have the means to pay it back. I seem to remember reading something about a pretty strict schedule for payback, and if you don't, there are early withdrawal fees, which are killer. Seek the advice of the manager of the 401k. Places like Fidelity do have some good advisors to set you straight on all the regulations.

What you don't want to do is use that money for something like a car or boat. Then you're just hampering the growth of your retirement, because that money isn't growing in the account. But a house is (usually) a pretty good investment.
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Old 05-13-2016, 01:23 PM   #165
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Wouldn't recommend robbing your retirement for a down payment - not unless you've encountered a new and substantial increase to your income which will allow you to manage the finances easily, but which might take you a year to save up the 20% down for the jumbo loan and you simply don't want to wait. If you didn't have the down payment saved up in the first place, then how will you begin making monthly payments on the new home AND paying back the 401k loan afterwards while still making contributions to that 401k?

We've got a retirement fund that would easily allow us to make a down payment on a home in the price range that we are looking, but we're attempting to save up the money independent of the retirement account. I want a much nicer home than I currently have, but I'm not willing to sacrifice my retirement account and future payments into that account to do so. Ideally we'll have enough saved up that when we see our next substantial increase in income we'll be able to put our saved money in as the down payment and make monthly payments based on the increased income without taking anything away from our planned retirement contributions.
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Old 05-13-2016, 01:24 PM   #166
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Dammit, I asked a question first.
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Old 05-13-2016, 01:24 PM   #167
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Thats kind of what I thought. A house is usually a good source of capital (unless the market ***** itself again). I'm obviously also trying to save cash on the side, but with the way house prices are rising around here we are going to need a significant down payment to avoid shitty interest rates.

Substantial increase in income would be my gf getting a job that would close to double our current combined income (this is 3+ years out). So we would go from me being the only one who had extra money (she is an EMT and makes not much more than minimum wage currently).

Basically we would be able to afford twice the mortgage, but wouldn't have the downpayment right then.

mgeoffriau. Totally anecdotal, but my uncle rents a few houses through property management companies and has had a hell of a time finding one that works for him. From what I have heard of his troubles I would gladly pay a few percent more for a well reviewed agency that was known for good work.
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Old 05-13-2016, 01:44 PM   #168
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You are required to make it whole. The money should be (theoretically) earning interest while in your 401k. If you take money out then it has lost that opportunity for a period of time and should be restored or made whole when you pay it back. It also deters people from using it as an ATM.

I would never use or recommend using the funds in your 401k at any time other than in a dire emergency. Thew penalties are far too great if unforeseen circumstances prevent you from replacing the funds.

If you can't afford something wait and save up the money to buy it. It's the right way. People always did that before the selfish baby boomers came along who demanded things right now. And nowadays instant gratification is so perverse that people pat their foot and complain the microwave oven takes too long.

Pretend like the money isn't there.
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Old 05-13-2016, 01:46 PM   #169
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So you have to pay back the money you borrowed and some calculated interest that it would have made had you not taken it out?

Houses were also 10x cheaper before the selfish baby boomers came along and crashed the market
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Old 05-13-2016, 01:50 PM   #170
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Here is another angle that happened to me.

I had to take some money out of my 401k, as a loan, to pay for the divorce proceedings.

2 months later I was laid off with no way to pay it back. Got charged as income/early disbursement (which means all normal taxes + 10% early withdrawal fee that aren't taken out when doing a loan)..................my taxes this year cost $4500 between Fed and State............I do not have a 6 figure income.
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Old 05-13-2016, 01:52 PM   #171
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Yeah. Sounds like a decent amount of risk.

We are looking for property > everything. If we like the property we are both ok living in a single wide. Upside to this is we will both be really happy where we live. Downside is it is harder to get a loan on a shitty house that costs a lot (because of the property). Because of this we will probably need a full 20%+ downpayment. Guess I will just need to be saving longer/harder.
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Old 05-13-2016, 02:00 PM   #172
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Quote:
Originally Posted by mgeoffriau View Post
Dammit, I asked a question first.
Would you prefer an answer with no experience/knowledge of the subject? I can usually B.S. with the best, but in this case I'd be flying blind. Bad information is worse than no information.
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Old 05-13-2016, 02:11 PM   #173
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Quote:
Originally Posted by rleete View Post
Would you prefer an answer with no experience/knowledge of the subject? I can usually B.S. with the best, but in this case I'd be flying blind. Bad information is worse than no information.
I mostly just want someone to very confidently tell me that it's not worth the hassle, so that I can stop considering it.
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Old 05-13-2016, 02:22 PM   #174
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Quote:
Originally Posted by mgeoffriau View Post
Anyone here ever rented their property through a rental management agency? We're thinking about moving within the next 1-2 years, and I'm kicking around the idea of renting our current home through a management agency instead of selling. If the fees are on the high end (12% plus one month's rent) it would marginally beneficial. It would be more attractive if I found a good agency at the lower end of the typical fee structure (9-10%).
How far away from the house are you moving? How much equity do you have in it? I have never rented out any properties, but my parents have a few times, due to being Army and moving every 2 years. They always used a property management company and have usually been happy with them. One thing they did when the houses were near military bases were to make sure they only rented to military members. This made it much easier to sort out riffraff. A management company should do a decently good job of finding good tenant's, but it only takes one bad tenant to ruin the investment. Also you need to check with your mortgage company and verify that you are allowed to rent out the house, changing it to a rental can change the type of loan you need on it. Also can you cover a few months of mortgage payments if you don't have tenants in the house? I guess what I am trying to say is unless you are planning on keeping the house long term, you will probably be better off selling it when you move then holding for a few more years.
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Old 05-13-2016, 03:31 PM   #175
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Quote:
Originally Posted by mgeoffriau View Post
I mostly just want someone to very confidently tell me that it's not worth the hassle, so that I can stop considering it.
My wife and I own property back in NH that we rent on a short term basis (vacation rentals). The fee is pretty high as a % of the gross but not being there makes it a necessity to have some sort of representative. We look at it as a business and it more than pays for itself but we haven't had major repair expenses either.

1. You need to make sure the tenant is viable (credit checks + references).
2. You need to predict your maintenance costs fairly well and cover for them in your rent (after fees).
3. You need to have a good relationship with various repair types (plumber, heat/ac, electrician, handyman type) for those "oh ****" calls you will get when your 900 miles away and it's a Sunday...
4. Most agencies have either a relationship with a repair service (kickbacks) or a "division" that will handle repairs. Watch out, they will charge you dearly for anything.

From my personal experience, the maintenance aspect is what can quickly kill any net revenue.

Not sure if that helps you or not.
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Old 05-13-2016, 03:36 PM   #176
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It does help. Mostly I just needed a reality check about how easy it seemed to be.

At this point I think it makes more sense to sell and transfer that equity into the primary residence.
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Old 05-13-2016, 03:59 PM   #177
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Quote:
Originally Posted by mgeoffriau View Post
It does help. Mostly I just needed a reality check about how easy it seemed to be.

At this point I think it makes more sense to sell and transfer that equity into the primary residence.
Agreed.

My dad decided to cut me a break on the rent at his other place vs full price for normal renters because he knows he won't have to worry about anything.
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Old 05-13-2016, 04:23 PM   #178
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Quote:
Originally Posted by z31maniac View Post
Agreed.

My dad decided to cut me a break on the rent at his other place vs full price for normal renters because he knows he won't have to worry about anything.
I can't over emphasis the impact of "ah ****" maintenance issues on your sanity when you're 900 miles away and know how to fix things but can't... Disposal broke, call a plumber. No hot water, call a plumber. Tree falls over in a storm, call a tree service. Sounds like your dad is a smart guy...
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Old 06-23-2016, 11:58 AM   #179
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Let's talk tax withholdings...

So getting a tax return at the end of the tax season is giving the government an interest free loan....
The safest way to set your withholding is to get as close to a $0 tax return or taxes owed at the end of the year.
The best way would be to withhold no taxes and save them in an savings account that will generate interest and have it set aside for tax season??

If that is the case, how many people use that approach? If you do, how do you properly set your allowances and withholding so that no taxes are removed from your pay check?

And where do you typically save the taxes that you set aside (I was thinking of putting it in a Betterment account ETF (0.25% management fee with about 80% bonds, 20% stocks).
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Old 06-23-2016, 12:00 PM   #180
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If you are able to do that (an employee likely can't), then you'll need to make quarterly payments to the IRS. The gubmnt' wants their money NOOOOWWWW!!!
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