Pending Home Sales Down 10.6% in February
invite response
2021 Mar 31, 9:29am 3,974 views 86 comments
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85
MMR
2021 Apr 4, 11:34pm
WookieMan says
this is exactly true; the investing has to be an active effort; some people may not want to do this. There is risk but can build wealth in 1/3 the time that one could otherwise do with stocks into a retirement fund. 10 years vs 30 years to be financially independent.
The problem (or distinction) is in defining real estate activity in an acquired property as a business activity vs an investment is a critical one. Uninformed passive investing doesn't produce any meaningful tax benefits. The value of real estate activity is in reaping the tax benefits; this is ideally a husband wife job. One person earns and the other person shelters the earnings with specific activities as defined by the internal revenue code Section 469.
RE professional implies an actual business, i.e a non-passive activity (not an investment, per se) vs an accredited or sophisticated investor. One can use non-cash losses(depreciation/cost-segregation) and deduct against W-2 income and the other two investors cannot. Over time one could be paying zero in income taxes.
Use RE professional status to build up the wealth and when you no longer need to claim status in long run, start doing 1031s into NNN properties to avoid paying depreciation recapture or larger apartment buildings with fully dedicated property management services.
Having said that, even with 8-10 units, as part of an ongoing business concern, your time is valuable and as such, it is more cost effective to have property managers when running a non-passive business concern (RE professional), as opposed to being a sophisticated or accredited, but ultimately passive investor.
Unless it's your job/business,
this is exactly true; the investing has to be an active effort; some people may not want to do this. There is risk but can build wealth in 1/3 the time that one could otherwise do with stocks into a retirement fund. 10 years vs 30 years to be financially independent.
The problem (or distinction) is in defining real estate activity in an acquired property as a business activity vs an investment is a critical one. Uninformed passive investing doesn't produce any meaningful tax benefits. The value of real estate activity is in reaping the tax benefits; this is ideally a husband wife job. One person earns and the other person shelters the earnings with specific activities as defined by the internal revenue code Section 469.
RE professional implies an actual business, i.e a non-passive activity (not an investment, per se) vs an accredited or sophisticated investor. One can use non-cash losses(depreciation/cost-segregation) and deduct against W-2 income and the other two investors cannot. Over time one could be paying zero in income taxes.
Use RE professional status to build up the wealth and when you no longer need to claim status in long run, start doing 1031s into NNN properties to avoid paying depreciation recapture or larger apartment buildings with fully dedicated property management services.
Having said that, even with 8-10 units, as part of an ongoing business concern, your time is valuable and as such, it is more cost effective to have property managers when running a non-passive business concern (RE professional), as opposed to being a sophisticated or accredited, but ultimately passive investor.
86
WookieMan
2021 Apr 5, 9:08am
WookieMan
2021 Apr 5, 9:08am
MMR says
And this is why I pay people to do it for me. I work less than 20 hours a week on average. Same for the wife. I don't want to spend my time researching the market to invest or working on a property. I want to travel and spend time with my kids. It's also nice having others kiss your ass, take you out to dinner or a beer because you pay them a little bit of money.
I'm on a trajectory to retire at 50 and being able to pull $150k/yr out of retirement funds until 90 if SS is still around with a paid off house. Time is money is the way I look at it. And even if you spend time finding the best investments, it doesn't mean they'll work out and the time was a waste. You can also make huge life changing mistakes on an investment. I've already learned from mine in RE.
I'm in the top 3% overall and inside the 1% for my age. None of it given to us either outside of having decent parents (most important) and a decent education. Every path is different. Mine has worked out very well. The only thing that would risk my future at this point is going gambling on some investment that I don't have full knowledge of. So I'll keep paying people and enjoy life instead of having to wait to enjoy it when I'm old and weak at 65-70.
People need to spend time with the ultra wealthy. Most of them literally do nothing besides call the people they're paying while they're doing their own hobbies and spending time with family/friends. Sometimes it's okay to pay other people to make your own money. And don't take this as bragging. I'm just legit explaining my mindset and how you can get there without having to grind your whole life. You will grind at the beginning for sure, but eventually you have to pay people or taxes. It's inevitable.
My own father had $8-10M in assets at 50. He ran from taxes and got burned by the housing bust. Live frugally and invest and forget has worked wonders for me. He would have been better paying the taxes and just throwing the gains into index funds. Probably would have been $15-20M by now. And again, everyone has their own path, so I'm not knocking what anyone else does. Mine has worked.
this is exactly true; the investing has to be an active effort; some people may not want to do this. There is risk but can build wealth in 1/3 the time that one could otherwise do with stocks into a retirement fund. 10 years vs 30 years to be financially independent.
And this is why I pay people to do it for me. I work less than 20 hours a week on average. Same for the wife. I don't want to spend my time researching the market to invest or working on a property. I want to travel and spend time with my kids. It's also nice having others kiss your ass, take you out to dinner or a beer because you pay them a little bit of money.
I'm on a trajectory to retire at 50 and being able to pull $150k/yr out of retirement funds until 90 if SS is still around with a paid off house. Time is money is the way I look at it. And even if you spend time finding the best investments, it doesn't mean they'll work out and the time was a waste. You can also make huge life changing mistakes on an investment. I've already learned from mine in RE.
I'm in the top 3% overall and inside the 1% for my age. None of it given to us either outside of having decent parents (most important) and a decent education. Every path is different. Mine has worked out very well. The only thing that would risk my future at this point is going gambling on some investment that I don't have full knowledge of. So I'll keep paying people and enjoy life instead of having to wait to enjoy it when I'm old and weak at 65-70.
People need to spend time with the ultra wealthy. Most of them literally do nothing besides call the people they're paying while they're doing their own hobbies and spending time with family/friends. Sometimes it's okay to pay other people to make your own money. And don't take this as bragging. I'm just legit explaining my mindset and how you can get there without having to grind your whole life. You will grind at the beginning for sure, but eventually you have to pay people or taxes. It's inevitable.
My own father had $8-10M in assets at 50. He ran from taxes and got burned by the housing bust. Live frugally and invest and forget has worked wonders for me. He would have been better paying the taxes and just throwing the gains into index funds. Probably would have been $15-20M by now. And again, everyone has their own path, so I'm not knocking what anyone else does. Mine has worked.
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