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Not happy

Discussion in 'Off-Topic Chat' started by mitchntx, Oct 18, 2013.

  1. mitchntx

    mitchntx Sarcasm Sensei TGT Supporter

    Jan 15, 2012
    SW of FW
    I'm not happy with what my retirement accounts are doing. I'm considering a change.

    I am considering taking out a large chunk of my deferred retirement and buying a parcel of land and building a barndeminium on it, all paid for in cash, free and clear.

    My current mortgage is the only real bill I have other than normal living expanses.

    Once the new place is established, I'll put the mortgaged place on the market. I have well over 50% equity and could walk away today with $60-70K in my pocket that I could invest in the new place.

    Before I pull the trigger, I know I need to discuss with a tax pro and figure out the best plan for taxes and penalties and eventually capital gains taxes.

    My fear is in 10 years not having anything.

  2. Vaquero

    Vaquero Pre-ban Staff Member Admin

    Apr 4, 2011
    Out West
  3. txbikerman

    txbikerman TGT Addict

    Jul 10, 2013
    sounds like a good plan
  4. Shuutr

    Shuutr Active Member

    May 29, 2012
    I'm in a career with an anticipated surplus if professionals in a few years. This may be a wise plan for me.
  5. Younggun

    Younggun Doer of Deeds TGT Supporter Admin

    Jul 31, 2011
    hill co.
    Make sure you take the steps needed for AG exemption. If possible, by property already exempt as it is much easier to keep it that way than to apply for a piece if property that was not exempt in the past.
  6. Leper

    Leper Active Member

    Sep 28, 2008
    Your plan may have an exception for a home purchase. Most plans will allow you to take a loan against them for up to 50%. That may be a better way . If you can take the loan and have money to make the payments back until got sell your house. Therebwould be no tax penalty on the money. Sell the current house and repay the loan in full or not. We are in very uncertain times right now and everything I am seeing tells me that 2014 will be worse than 2008. Capital gains tax rulesbhave changed since I last had to deal with them. The old ones had an exemption if you had lived in the house for a certain number of years. Don't know anymore. Sales tax may be an issue now also. Another thing you may look into is about applying money from the sale of the old, directly to the new.

    Typing on phone suck
  7. mitchntx

    mitchntx Sarcasm Sensei TGT Supporter

    Jan 15, 2012
    SW of FW
    Excellent info ... A couple details I didn't mention and got me to thinking about this ...

    Unimproved land purchase is not easy if you have no veteran benefits available.
    The few places I shopped found 30% down and a 6% rate not uncommon.

    Even 5% rate, over a 20 year mortgage, I'd pay $40K in interest.
    Taking $200K from my deferred retirement will mean about $35-38K in taxes and penalties.
    So its a wash and still have a single mortgage payment with a realistic plan of eliminating that.

    I have a small portion of my retirement in a 401K and a loan from it could get enough for a down payment on a parcel, but leave me then with 3 notes ... original mortgage, 401K loan and new mortgage. Land rich and cash poor. I don't want to be in a fire sale situation.

    Ideally, I would like to find 25 acres with an establish home.
    The established home gets me a grandfathered water well and septic system.
    Big ticket items to get new well and septic established.

    Definitely need coaching on capital gains changes. It's been a while (25 years) since I've dealt with it.
  8. TheDan

    TheDan 4th Best Member TGT Supporter

    Nov 11, 2008
    Austin - Rockdale
    "barndeminium"... Never heard that before; I like it :cool:

    I've never been able to get a warm-fuzzy feeling about dumping money into retirement accounts. You never really know what the market is going to do and they tend to nickle and dime you with management fees. Investing in real property is never a bad idea as long as you don't buy something stupid like ocean front property in Arizona.
  9. jasont

    jasont Active Member

    Jul 17, 2008
    Capital Farm Credit

    They're by far the best lender I've ever dealt with and specialize in unimproved rural properties. Last year I think I paid 20% down and 4.7% interest rate, more than 1% less than any bank offered. On top of that they pay dividends every year which is approximately 1% so the rate is more like 3.7% after paying that. With Ag (wildlife) exemption I pay $40 in property taxes a year. If you can't swing the 20% down payment and have the equity in your main house get a HELOC on it, use it for down payment and to build barndeminium. Best way I've found if you're just borrowing for a short time.

    My retirement accounts have been doing a lot better than 3.7% interest so I wouldn't borrow against them, in fact I just got my statement yesterday they did 8% in just the last quarter, averaging about 15% a year since I started 8 years ago. I don't know how that compares against others but considering how the markets have been I'm pretty happy with how they've taken care of my money.
  10. mitchntx

    mitchntx Sarcasm Sensei TGT Supporter

    Jan 15, 2012
    SW of FW
    I would love 8% net in this climate.

    I've been given a couple names of ag specific lenders. I will them to the list.

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