How the hell are we supposed to retire?

A Potted Plant

Honorary Sod
Whether they "care about us" is irrelevant. It's like anything else (e.g. working on our bikes) - you can try to do it yourself, or you can pay an expert to do it. I choose the latter.

Statistically speaking I'm better off with an index over trying to find the lucky bastard who will beat it, and that why I'm going with tesla calls. Why can't I be the one having fun gambling my pesos away
 

Steve Vai

Endurance Guy: Tolerates most of us.
Statistically speaking I'm better off with an index over trying to find the lucky bastard who will beat it, and that why I'm going with tesla calls. Why can't I be the one having fun gambling my pesos away

You'll have more fun giving your money to a crackhead in Atlantic City, and have about the same odds. Actually, if you film it and start a monetized YouTube Channel, you'll come out ahead. Or, get a job in Finance so you're higher up in the Ponzi Scheme.
 

qclabrat

Well-Known Member
Sounds like you are on it. Def get the 401k aligned, cause free money.
Check the limits again, cause married yo! And shouldn't be a problem moving the money out -
is it also MAGI, not gross, so have to do your taxes early...

Don't hesitate to do post tax savings with divided reinvestment.
A smart person once told me that they wished they paid $1M a year in taxes....

Don't invest in real estate, unless you live in it, or want to do it professionally.

ps - get another wheelset and AXS...just like 'new bike' only more better.
Why the Debbie downer on property? Plans are to double down on rentals for the next ten years until I'm ready to retire then just manage them full time.
 

qclabrat

Well-Known Member
That is exactly what i'm saying.
so tell me what it was worth then, and what it is worth now - just so i have an idea.
were you going to live there, and rent out next door? Your wife is going to appreciate unclogging a toilet at 2am
when you aren't around.

then you are going to saddle your next generation with a two family home where they have to be the landlord?
maybe tie up $500k+ so they can make $4000/mo in rent - less fees/insurance/upkeep/pain in the ass renters/taxes
vs just having it in the bank throwing off dividends or growing with the market?

did it do better than tesla over the last 6 months? hell if you are going to speculate, may as well pick the winner
as the example.

remember - 5% dividend yield is easy to get. the money shows up monthly, you don't need to do a thing.
get yourself cash flow positive, and keep plowing it into investments.
Why you buying a rental with zero net cash flow? There are some towns you can still make money and why would you will off the property? Sell it and set sail despite the taxes. At the end of the day, your renters are contributing to your mortgage. We missed the boat in Brooklyn now that every crappyhole multifamily is over 1M and Summit, Westfield and any near train stations sell upwards of asking price. But getting close...
 

qclabrat

Well-Known Member
The problem comes down to the idea that you can't outsource give a shit. You can decide that finance is boring, complicated, rigged, and all of that is true. But then you pay some advisor 1% of your assets to manage your money. He puts you into a selection of products that also charge some percent. You assume he is giving a shit about your money. (By the way, he takes this 1% every year!) Consider this: If the advisor wants to double his money, he either has to double YOUR money, or find another you. So he is spending his time looking for another you, not watching after you. You assume you have outsourced give a shit. Like others here, I have tested and benchmarked advisors, and then fired them. I give more shits about my money than they do.
While doing finance right is complex and takes a lot of time, you can probably get to 90% right with very little effort. There are roboadvisors, retirement date funds that do asset allocation for you, Dividend reinvestment plans. Put the money in consistently, don't raid it, and you will get to 90% of perfect. I have a small group of friends where we have an informal investment club. We discuss:

What is your asset allocation, and why?
What percent pre-vs.-aft tax?
What are your Roth strategies? Your FICA strategies?
What Finance books are you reading?

There is a certain amount of peer-pressure habit reinforcement we supply each other by just having these discussions.

We learn about anything we give a shit about. Just look at the 27.5 discussion. We don't have to become finance experts, but we can learn enough finance to ace retirement. Your future self will thank you.
Best advice today
 

qclabrat

Well-Known Member
Gilead, Moderna and PFE.
Nope, our big buy was Quest, you can figure out the others
 

Patrick

Overthinking the draft from the basement already
Staff member
Why you buying a rental with zero net cash flow? There are some towns you can still make money and why would you will off the property? Sell it and set sail despite the taxes. At the end of the day, your renters are contributing to your mortgage. We missed the boat in Brooklyn now that every crappyhole multifamily is over 1M and Summit, Westfield and any near train stations sell upwards of asking price. But getting close...

so picking the right place and having the home appreciate faster than the mortgage interest builds up is a risk. Great if ya pick the right
area, with the current trend is towards "walking into a town" - convenient train station. Where is next? Plainfield? Most home prices are not going up a bunch,
because supply is high in most areas. there are always exceptions.

Short term rentals might be even worse. Consider the clientele. Then throw in seasonal short term where the peak season has to carry the year.

I'll come at it one other way -
If it is such a viable investment strategy, then the prices would automatically adjust to reflect it (the price of the home rises because of the income it can produce)

more than likely it is going to be negative cash flow with some sort of backed-up loss because of depreciation.
Unless there is one making money, and one losing, the loss can't be taken because it is passive (unless you are in the business of real estate rentals,
and there are some new laws this year about taking some of the loss) The loss is taken against the gain when sold. note that paper loss does not make money.

too much stuff has to go right to make any real money for the effort.

Let's run a quick scenario -

purchase a $400k condo in surf city (consider this all in, ready to rent after you purchased at auction, and put in the time/$$ to get it ready)
you pull the equity out and have a $300k mortgage (cause of you had $400k laying around, it could have made you $24k in an income fund
yielding dividends at a preferred tax rate, and reinvested so doubling in 15 years (rule of 72) producing $50k/yr in dividends) - this is an income
fund, not a market fund (traditionally market does better)

The mortgage now looks like $5,000/month cause it isn't your primary home, so you couldn't get the better rate.
It is at the beach, and the insurance is $3,000/yr taxes $5,000, principal, interest. condo assoc fee. so $60k out per
year, for 15 years.

The main income time is 100 days, can you get $600/night clear after the rental co charge, cleaning and linen charge, electric (heat and/or a/c)?
maybe there are a few more nights around holidays, to add income, but it won't be close to that number. Then up-keep, increasing condo fees/taxes.
appreciation on the house, your time.

So it seems good right? You invested $80,000, managed cash flow as well as you could for 15 year, you now have a $500,000+ condo you hope,
and something that generates $60k/year in rental income. less ~$15k in expense. you are hoping you could step away at any time and
cash out somewhere between the $80k and $500k in equity, depending on how far in? see mortgage table for answer - too lazy to generate one.

but the $80k investment would have generated $350/mo, $300 post tax, reinvested. it would have doubled, the cash return would double+,
you had little risk, and didn't have take a chance to get to year 15 where the money really starts, and no unclogging toilets or fixing holes in the walls.

that was a lot. i'll check the math, see if i can turn it into graphs so easier to digest.
 

Fire Lord Jim

Well-Known Member
so picking the right place and having the home appreciate faster than the mortgage interest builds up is a risk. Great if ya pick the right
area, with the current trend is towards "walking into a town" - convenient train station. Where is next? Plainfield? Most home prices are not going up a bunch,
because supply is high in most areas. there are always exceptions.

Short term rentals might be even worse. Consider the clientele. Then throw in seasonal short term where the peak season has to carry the year.

I'll come at it one other way -
If it is such a viable investment strategy, then the prices would automatically adjust to reflect it (the price of the home rises because of the income it can produce)

more than likely it is going to be negative cash flow with some sort of backed-up loss because of depreciation.
Unless there is one making money, and one losing, the loss can't be taken because it is passive (unless you are in the business of real estate rentals,
and there are some new laws this year about taking some of the loss) The loss is taken against the gain when sold. note that paper loss does not make money.

too much stuff has to go right to make any real money for the effort.

Let's run a quick scenario -

purchase a $400k condo in surf city (consider this all in, ready to rent after you purchased at auction, and put in the time/$$ to get it ready)
you pull the equity out and have a $300k mortgage (cause of you had $400k laying around, it could have made you $24k in an income fund
yielding dividends at a preferred tax rate, and reinvested so doubling in 15 years (rule of 72) producing $50k/yr in dividends) - this is an income
fund, not a market fund (traditionally market does better)

The mortgage now looks like $5,000/month cause it isn't your primary home, so you couldn't get the better rate.
It is at the beach, and the insurance is $3,000/yr taxes $5,000, principal, interest. condo assoc fee. so $60k out per
year, for 15 years.

The main income time is 100 days, can you get $600/night clear after the rental co charge, cleaning and linen charge, electric (heat and/or a/c)?
maybe there are a few more nights around holidays, to add income, but it won't be close to that number. Then up-keep, increasing condo fees/taxes.
appreciation on the house, your time.

So it seems good right? You invested $80,000, managed cash flow as well as you could for 15 year, you now have a $500,000+ condo you hope,
and something that generates $60k/year in rental income. less ~$15k in expense. you are hoping you could step away at any time and
cash out somewhere between the $80k and $500k in equity, depending on how far in? see mortgage table for answer - too lazy to generate one.

but the $80k investment would have generated $350/mo, $300 post tax, reinvested. it would have doubled, the cash return would double+,
you had little risk, and didn't have take a chance to get to year 15 where the money really starts, and no unclogging toilets or fixing holes in the walls.

that was a lot. i'll check the math, see if i can turn it into graphs so easier to digest.
Picking the right rental at the right time is like picking AAPL or Bitcoin at the right time. I think the fair comparison, and easy to graph, is comparing apartment REITs to the Russell 1000.
 

stb222

Love Drunk
Jerk Squad
so picking the right place and having the home appreciate faster than the mortgage interest builds up is a risk. Great if ya pick the right
area, with the current trend is towards "walking into a town" - convenient train station. Where is next? Plainfield? Most home prices are not going up a bunch,
because supply is high in most areas. there are always exceptions.

Short term rentals might be even worse. Consider the clientele. Then throw in seasonal short term where the peak season has to carry the year.

I'll come at it one other way -
If it is such a viable investment strategy, then the prices would automatically adjust to reflect it (the price of the home rises because of the income it can produce)

more than likely it is going to be negative cash flow with some sort of backed-up loss because of depreciation.
Unless there is one making money, and one losing, the loss can't be taken because it is passive (unless you are in the business of real estate rentals,
and there are some new laws this year about taking some of the loss) The loss is taken against the gain when sold. note that paper loss does not make money.

too much stuff has to go right to make any real money for the effort.

Let's run a quick scenario -

purchase a $400k condo in surf city (consider this all in, ready to rent after you purchased at auction, and put in the time/$$ to get it ready)
you pull the equity out and have a $300k mortgage (cause of you had $400k laying around, it could have made you $24k in an income fund
yielding dividends at a preferred tax rate, and reinvested so doubling in 15 years (rule of 72) producing $50k/yr in dividends) - this is an income
fund, not a market fund (traditionally market does better)

The mortgage now looks like $5,000/month cause it isn't your primary home, so you couldn't get the better rate.
It is at the beach, and the insurance is $3,000/yr taxes $5,000, principal, interest. condo assoc fee. so $60k out per
year, for 15 years.

The main income time is 100 days, can you get $600/night clear after the rental co charge, cleaning and linen charge, electric (heat and/or a/c)?
maybe there are a few more nights around holidays, to add income, but it won't be close to that number. Then up-keep, increasing condo fees/taxes.
appreciation on the house, your time.

So it seems good right? You invested $80,000, managed cash flow as well as you could for 15 year, you now have a $500,000+ condo you hope,
and something that generates $60k/year in rental income. less ~$15k in expense. you are hoping you could step away at any time and
cash out somewhere between the $80k and $500k in equity, depending on how far in? see mortgage table for answer - too lazy to generate one.

but the $80k investment would have generated $350/mo, $300 post tax, reinvested. it would have doubled, the cash return would double+,
you had little risk, and didn't have take a chance to get to year 15 where the money really starts, and no unclogging toilets or fixing holes in the walls.

that was a lot. i'll check the math, see if i can turn it into graphs so easier to digest.
1583628116999.gifif your case study is correct, no one would make any money off of real estate
 

THATmanMANNY

Well-Known Member
source.gif
 

Patrick

Overthinking the draft from the basement already
Staff member
View attachment 121086if your case study is correct, no one would make any money off of real estate

not true - it just doesn't justify the return in the short run for someone not in the business, or will be getting a mortgage to round-out the investment.

condos in clinton go for $150k, rent for $1,600/mo - tax $150/mo, monthly fee, $335.
+ insurance (say $60/mo ?). So if you have $150k hanging around, you could make $1,000/mo not counting your time. not bad as long as it doesn't go vacant, or non-pay (wait for that one - they get to live there 3 months while you go to court to get them out)

That $150k would make $750/mo in an income fund, and the money would be liquid.

is $250/mo worth the time and risk? If you have a portfolio of real estate rental holdings and do it as a living, probably yes. One-off to create a long-term asset? meh
 

w_b

Well-Known Member
This just in- I dollar cost averaged into my funds and made like 7% on the buy compared to yesterday. Pffffft.

When I got married, my bride and I both had homes. I rented mine out for awhile, and it wasn't all that. Thanks Iris, you flappin crackhead loser-lying no-good who.
Close call with her, but I made it out, sold the house and put it all into equity REITs. Now I let the professionals manage my real estate and they drop big dividends on me, sometimes monthly. No calls at 2AM that the garage door opener is busted, or the hot water heater exploded and flooded the basement. Or the police had to take out your tenant who OD'd.

Since then I have bought 2 new vehicles, cash, and gutted and remodeled our kitchen, and still have more than the original sum from the house; still in equity REITs.

This works for me.
 

THATmanMANNY

Well-Known Member
Yea, I agree you can't time it but I didn't want to enter like last month. That much I did know!
I haven't looked at my portfolios for two weeks. I know it's down like a mother fucker. I probably couldn't stomach it then my mental and physical will be compromised then I will definitely get Covid19.

This is going to take a few years to recover.
 
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