New Guy Seeks Your Assessment Of His Situation
Hey all! Found this site a few hours ago and have been reading it since. I just would like comments on my situation RE wise and how you might proceed if you were handling my REI future.
I am 50, recently divorced, no kids.
I, along with others, purchase percentages of raw land. These purchases are made outright without loans. If I had to guess how much of my money is tied up in real estate I would have say over 99%.
I have a SDIRA with 2 properties inside. Both titled to the Custodian of my IRA.
1. The first property in the IRA is coming up for sale in a month($210K) and my choices are to a. sit on the money. b. re-invest in one or two other pieces of raw land. c. put the proceeds into an income producing property(8-10%/yr. joint tenancy thing with the income going back to the IRA) d. make some other type of investment within the IRA
2. The second property ($30K) in the IRA is waiting for a buyer.
3. I have another percentage of some raw land (outside the IRA) titled in my name which will sell in 3 months time and my choices are a. take the money ($110K)and diversify in some way. b. reinvest into one or more pieces of raw land. c. Possibly get into the income producing property mentioned before. d. Buy a 'vette and hit Vegas! (nevermind... I'm already here)
4. A fourth piece of raw land (outside the IRA) titled in the ex wifes and my name ($29K) that when it comes up for sale will be split with the ex wife. Same options with the proceeds as in 3. above.
5. The house. It's mine now. I'm in it, but to pay the ex I had to re-fi the house($344K debt/ $420K value). I'm in an option arm making interest only payments, so my ex can have her half of the equity now. Frankly, i don't like being $344000 in debt while making $45K/yr.
My goals at this time are to leave Las vegas and to return to Michigan.
What would you do? How do I get there from here?
Thanks and Happy New Year to all! 
Start by selling the house. If you have owned and occupied the house as your primary residence at least two years, then your sale profits are tax free up to $250K.
Move to MI and continue investing.
Thanks Kid for the advice. Somehow it all seems more complicated to me. Maybe it's just my point of view. Maybe it's as simple as it appears to you. I must admit I haven't been thinking clearly the last few months.
I would dearly love to just somehow turn all the above into some type of income, and build some small, but new place in the middle of some wooded land in MI, near what remains of my family... and disappear! For awhile anyways.
This site has given me a well of ideas for alternate sources of income when I come out of hiding in MI.
Any ideas from this brain pool about ways of structuring what I've listed above to get to the humble dreams I've listed in this post?
Thanks to all who have looked at my post, and thanks to any who would honor me with an answer.
Joe
I am not quite sure what problem you are asking us to help solve.
You have two properties inside an IRA and two investment properties outside an IRA, one of which you co-own with your former spouse. Your primary residence is carrying a pretty large mortgage loan but you also have equity in the property.
The problem, as I see it (in the absence of any other information), is your debt load. You don't say whether your former spouse is contributing to the mortgage payments, but a $45K salary does not seem sufficient to carry a $344K mortgage loan on your house as well as your other investment properties.
Your first action is to Sell the house, split the proceeds with your former spouse. If you have a source of income in MI, then move to MI if that is your wish.
My next concern with your investment approach is that you are only invested in vacant land. Unless your land is generating income, it is a liability. With your purchases financed, debt service and property taxes take money out of your pocket each month without producing any offsetting income.
Your next action step is to Sell the land that is not invested in your IRA. Start with the property you still own jointly with your former spouse. If you have significant equity in the property, sell the land in a 1031 tax-deferred exchange, then acquire income producing property to replace it. Repeat this process with the other property that you seem to already have earmarked for sale in three months (property #3). Exchange into income producing property.
Lastly, IRA investing is done with a long investment horizon. Confer with your IRA custodian about your options for the property held in the IRA. Since you are already 50, your investment horizon may not be long enough to realize any significant appreciation from undeveloped land. If the property is not generating income and appreciation is stagnant, it doesn't make much sense to hold a marginal asset in your IRA that is not increasing your retirement nest egg. Talk with your IRA custodian about selling the land then invest in assets that will generate income as well as appreciate.
Hi Kid,
Thanks for the input. I guess I didn't make myself clear in my first post. Allow me to try to clear things up a little.
All of the raw land is purchased without loans. I merely own a percentage of each piece of land. So, I am responsible for my share of the property taxes, and this year it will be a sizable bit of money. Because of the unusual nature of the Las vegas market raw land has incresed in value A LOT in the last several years. It has been a real good investment.
As I am only one of many owners of any particular piece of land, I can choose to be involved in any given purchase, but I only have a vote in the details of the selling.
We all pay a fee to one individual who has his finger on the pulse, so to speak, of progress in this valley. He sets up the deals. He gets paid for what he knows. He makes me money.
His pool of investors is getting older and he has recently been looking for income producing forms of RE investments so he can provide a steady retirement income for his investors. He has aproached me with one of these income producing investments. I don't know the details at this time, but I am assuming it would be something like this: A group of people would be purchasing outright, without a loan, a small strip mall or something. we would take, at his estimate 8 to 10% return per year paid monthly while holding this property as, I think, joint tenants.
Now, it's possible that I could create an income stream from the one property inside the SDIRA, for sure, and possibly from the property that is due to sell in March. If I could just get that money out of the SDIRA so I could live on it, it would be great.
I refinanced the house, so I could keep it and still pay the wife her half of the equity in the house and other settlements in the divorce proceedings. She gets a big $104K check out of the deal and no debt. I get to pay the interest on the loan so she can have her money. I can only hope house values stay the same or increase. The realtor fees when I sell will come out of my half of the equity. Hindsight is 20/20. I would have structured it differently if i could do it again.
Maybe this makes it clearer. TC
I reread your post and noticed that I may not have answered some of your questions. The house is now mine. Her name is off the title and the refi took her name off the loan. She makes no payments toward the mortgage. TC
I misunderstood your position. Still doesn't change my basic response. You wanted to move to MI anyway. Sell the house, just don't share the profits with your ex.
For the land that is not in the IRA: vacant land does not generate income, but does take money out of your pocket whenever property taxes are due. When you have the opportunity to cash out of the land deals, use 1031 exchanges to defer capital gains by acquiring replacement investment property that produces income. I only suggest you sell the land parcel you co-own with your former spouse to fully sever your relationship now. After you move, and time has passed, she may not want to cooperate in a sale.
For the property still in your IRA, the sale proceeds will be tax deferred anyway. I still see vacant land as a liability because it does not generate income. Appreciation is not guaranteed. When you have the opportunity, cash out then use the proceeds to reinvest within your IRA in income producing property.