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Hell yeah, you better believe there are brand new O's who use it to buy half of a real expensive Mustang or whatever and show up to officer school with it. Source: me (but not actually me, I just watched it happen). Just do what the rest of us do and use it to pay off higher interest debt, idiot.
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May 15, 2017 20:50
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BWM: Negative Income Rental Propertiesquote:Using a throwaway for obvious reasons. Disclaimer, my husband is a faithful, loving, handsome partner and amazing father, and he makes a ton of money in a stable career (as do I, this isn't a trophy wife situation). He generally is a good partner about sticking to a monthly budget and otherwise using our money sensibly. Which is why I'm still married to him despite what a total loving idiot he is about this one thing. (we've been married for 5 years if it's relevant)
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May 15, 2017 21:28
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For the sake of discussion, I'd like to take it as a given that I'm already correct and ew at talking to a financial advisor
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May 15, 2017 21:35
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"I agree with you, Mrs. Redditor. You should sell these condos immediately...and buy $400k worth of full life insurance!"
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May 15, 2017 21:39
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Did she really make a PowerPoint presentation about the condos being BWM?  Just raise the rent so you aren't losing money anymore, as long as The Rent Is Too Goddamn High guy isn't around then everybody will be happy except the renters.
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May 15, 2017 21:42
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monster on a stick posted:Just raise the rent so you aren't losing money anymore, as long as The Rent Is Too Goddamn High guy isn't around then everybody will be happy except the renters. and she and her spouse, come the revolution, when they are against the wall for being Bad Landlords
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May 15, 2017 21:45
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Just talked with my coworker about his friend who just signed on a 5br massive house. "But they were paying $2000 to rent a 4br house already so this is cheaper!" Okay whatever, this doesn't sound too bad, until friend says "I hope they have better luck this time." "What's that mean?" "They bought an even bigger house before and had it foreclosed on a year later" Oh.
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May 15, 2017 21:49
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monster on a stick posted:Did she really make a PowerPoint presentation about the condos being BWM? The whole post gave off a massive management consulting vibe from both of them.
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May 15, 2017 21:51
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KYOON GRIFFEY JR posted:The whole post gave off a massive management consulting vibe from both of them. The plus side is that we have some potential thread titles: BUY ALL THE REAL ESTATE EVERYWHERE FOREVER I gave him spreadsheets and powerpoints that went into great detail about why it was such a bad idea
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May 15, 2017 21:58
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negative $500 cash flow a month for two condos doesn't automatically mean it is a bad rental investment, it could easily be a 10 or 15 year mortgage booking a profit in equity accumulation and capital appreciation. If my wife was constantly badgering me about her designs on my premarital assets I would probably get defensive about it too 
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May 15, 2017 22:45
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BEHOLD: MY CAPE posted:negative $500 cash flow a month for two condos doesn't automatically mean it is a bad rental investment, it could easily be a 10 or 15 year mortgage booking a profit in equity accumulation and capital appreciation. If my wife was constantly badgering me about her designs on my premarital assets I would probably get defensive about it too This is bad. A negative cash flow of $500 - assuming both units are actually occupied - is terrible, actually. Sure, "the renters are paying in to my equity!" except with what is almost certainly a negative cap rate they probably aren't even going to beat inflation when all is said and done - a point the wife rather reasonably makes. And bad as it is this of course is assuming a 100% occupancy rate and no owner maintenance costs which is pure fantasy-land. The negative $500, from reading the post, is just from rents, not total cashflow. The latter is likely much worse. There's a difference between straight out losing money i.e. negative equity and losing the value of the money. The latter is the case here in all likelihood (hard to say without actually knowing the real numbers) and both are BWM.
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May 15, 2017 22:59
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mortgage interest deduction can only be claimed on two mortgages, right? so either their residence and one condo are eligible? and you're paying income tax on rent income, even if you pay more for the mortgage + property taxes than you actually earn?
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May 15, 2017 23:08
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ate all the Oreos posted:Just talked with my coworker about his friend who just signed on a 5br massive house. "But they were paying $2000 to rent a 4br house already so this is cheaper!" Okay whatever, this doesn't sound too bad, until friend says "I hope they have better luck this time." "What's that mean?" "They bought an even bigger house before and had it foreclosed on a year later" I'm laughing at "had it foreclosed" like oops it just happened, force of nature, no way to stop that!
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May 15, 2017 23:10
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Cap rates are typically unlevered figures, so you usually only see them in really weird situations like affordable deals near the end of the 30 year compliance period. They haven't indicated if they are taking taxes into account, it could be cash flow negative on its own, but give them additional paper losses like depreciation to reduce their tax bill at thier presumably high marginal rate, but if she is spreadsheeting that hard, they are probably accounting for that. Still bad, potentially less bad, although they aren't in an income tax state so the marginal tax shields are less valuable. Edit: They could form LLCs to hold the condos and still be able to deduct interest/depreciate the properties.
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May 15, 2017 23:10
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Can you offset your renting losses against other income or does the US tax system have safeguards against endeavors that won't turn a profit? (In Germany the chief example is lawyers buying horses and trying to claim they have a real horse farm to get their hobby indirectly subsidized by the state.)
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May 15, 2017 23:13
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Ixian posted:This is bad. A negative cash flow of $500 - assuming both units are actually occupied - is terrible, actually. Sure, "the renters are paying in to my equity!" except with what is almost certainly a negative cap rate they probably aren't even going to beat inflation when all is said and done - a point the wife rather reasonably makes. And bad as it is this of course is assuming a 100% occupancy rate and no owner maintenance costs which is pure fantasy-land. The negative $500, from reading the post, is just from rents, not total cashflow. The latter is likely much worse. You literally cannot evaluate the investment (i.e. calculate the cap rate) without knowing the terms of the loan and seeing the payment breakdown. Yes all things being equal obviously a positive cash flow rental is preferable to a negative cash flow rental but it is possible for a negative cash flow rental to produce a superior profit compared to a positive cash flow rental if the negative cash flow is due to a higher mortgage payment that costs less interest and accumulates more equity. Whether any investor can tolerate the negative cash flow is another question and obviously many small and accidental landlords cannot. It's absolutely possible that this is a sincerely bad and mismanaged rental investment - but you just don't know. All you know is that two condos are net negative $500 cash flow per month and an unhappy wife thinks the equity in the properties should be elsewhere.
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May 15, 2017 23:18
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Uterine Lineup posted:BWM: Negative Income Rental Properties Link?
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May 15, 2017 23:18
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Randler posted:Can you offset your renting losses against other income or does the US tax system have safeguards against endeavors that won't turn a profit? Emphatically. The US tax system loves giving paper losses to real estate, which can flow through to owners to offset earned income. It is why doctors and dentists make so many silly investments, because they have the high marginal tax rates to see significant tax bill reductions. It used to be a lot worse, but there is still a lot that can be done to have even cash flow positive properties have negative taxable income.
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May 15, 2017 23:20
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Randler posted:Can you offset your renting losses against other income or does the US tax system have safeguards against endeavors that won't turn a profit? The IRS considers renting to be a "passive" activity so generally speaking, no. There are some exceptions: if you have a low MAGI, or if you are treated as a real estate pro with active interests in many properties, or have other passive income offsets - none of which would seem to apply to this couple. As for forming LLCs to hold the properties, that generally doesn't work for tax purposes for this couple for the same reasons. If running rental properties was all they did and they had a big portfolio, probably, but owning two condos isn't going to count. Also the lienholders, assuming there are any, probably would look askance at forming an LLC to hold the property.
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May 15, 2017 23:20
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Randler posted:Can you offset your renting losses against other income or does the US tax system have safeguards against endeavors that won't turn a profit? Yes but there are limitations both directly with dollar limits on passive activity losses and indirectly through the Alternative Minimum Tax system. Also the way taxable rental income is calculated includes equity paid down on the mortgage even if it isn't seen directly as net cash received. There are also bona fide business versus hobby tests for the same reasons you have described.
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May 15, 2017 23:21
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BEHOLD: MY CAPE posted:You literally cannot evaluate the investment (i.e. calculate the cap rate) without knowing the terms of the loan and seeing the payment breakdown. Yes all things being equal obviously a positive cash flow rental is preferable to a negative cash flow rental but it is possible for a negative cash flow rental to produce a superior profit compared to a positive cash flow rental if the negative cash flow is due to a higher mortgage payment that costs less interest and accumulates more equity. Whether any investor can tolerate the negative cash flow is another question and obviously many small and accidental landlords cannot. It's absolutely possible that this is a sincerely bad and mismanaged rental investment - but you just don't know. All you know is that two condos are net negative $500 cash flow per month and an unhappy wife thinks the equity in the properties should be elsewhere. Fair enough and I said as much  Going off appearances though, this looks like a bad rental investment. Who knows.
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May 15, 2017 23:22
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BEHOLD: MY CAPE posted:You literally cannot evaluate the investment (i.e. calculate the cap rate) without knowing the terms of the loan and seeing the payment breakdown. Yes all things being equal obviously a positive cash flow rental is preferable to a negative cash flow rental but it is possible for a negative cash flow rental to produce a superior profit compared to a positive cash flow rental if the negative cash flow is due to a higher mortgage payment that costs less interest and accumulates more equity. Whether any investor can tolerate the negative cash flow is another question and obviously many small and accidental landlords cannot. It's absolutely possible that this is a sincerely bad and mismanaged rental investment - but you just don't know. All you know is that two condos are net negative $500 cash flow per month and an unhappy wife thinks the equity in the properties should be elsewhere. If you are managing 2 rental properties adequately and are building significant equity but still have a negative cashflow , then I hope the plan is either rapid free-and-clear on one of the properties and create a debt snowball, or a cash out refinance into a longer term that gets him to neutral /slightly positive while allowing for a buffer or buying (smarter) properties to offset the losses. If he's just looking for appreciation, then he's speculating. There's also the liquidity loss for the whole time the process is net negative; hell without the property hassle and $500 per month in hand he could just invest in REITs or wait 10 months to put 5K into crowdfunding. Obviously if they can eat that much loss every month then they make enough so it's a small issue, but there's no real estate investor post 2007 that would look at that and say "wow look at that savvy move!"
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May 15, 2017 23:58
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H110Hawk posted:Link? https://www.reddit.com/r/relationships/comments/6bbuyh/i_33_f_am_really_struggling_with_my_husbands_45m/ The OP deleted it right after I opened it so I caught the text.
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May 16, 2017 02:25
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The husband's other family is probably renting one of the condos. GWM as one wife is helping subsidize his other one.
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May 16, 2017 02:38
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Leon Trotsky 2012 posted:We had an "Employee Appreciation Day" last week. It is for employees at a government agency, so all funds have to be raised from the employees themselves; no public money or office money for anything. Leon how do you constantly come up with the best BWM stories
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May 16, 2017 03:26
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pig slut lisa posted:Leon how do you constantly come up with the best BWM stories The answer is in the question Leon Trotsky 2012 posted:employees at a government agency
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May 16, 2017 03:29
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that's a pretty funny story but i don't really see the bwm side of it
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May 16, 2017 03:46
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Zo posted:that's a pretty funny story but i don't really see the bwm side of it Jose for working unpaid overtime in a position that entitles him to that pay, and the manager for pulling that in that environment and the resulting impact on the division budget (dunno if 'bad with employer budget' qualifies as 'bad with money' in this thread).
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May 16, 2017 04:00
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balancedbias posted:If you are managing 2 rental properties adequately and are building significant equity but still have a negative cashflow , then I hope the plan is either rapid free-and-clear on one of the properties and create a debt snowball, or a cash out refinance into a longer term that gets him to neutral /slightly positive while allowing for a buffer or buying (smarter) properties to offset the losses. If he's just looking for appreciation, then he's speculating. There's also the liquidity loss for the whole time the process is net negative; hell without the property hassle and $500 per month in hand he could just invest in REITs or wait 10 months to put 5K into crowdfunding. Yeah obviously he could be working to put himself in a better overall investment position but I see significant reasons not to just oblige the wife OP and sell the properties: 1) taxable event resulting in capital gains tax and depreciation recapture 2) expense and hassle of selling tenant occupied properties, hefty agent commissions plus the potential for lost rent 3) converting a premarital asset to a comingled martial asset in a marriage where they are apparently already fighting about money Further I can see how it might be hard to use your $400k equity to augment your position with better cash flowing properties if your wife is already up your rear end about the two you own. So who really knows I guess.
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May 16, 2017 04:12
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pig slut lisa posted:Leon how do you constantly come up with the best BWM stories Something similar happened to my department. 1st shift started at 6:30am every day, but a policy change on January 1st entitled us to a differential for our entire shift if we worked before 7am. They figured this out sometime in mid-February so the whole NOC got a 10% bonus for hours worked along with an immediate schedule change. No biggie, although I liked getting to work at 6:30 and leaving at 3:30. The real BWM was getting busted by the BSA a year later when a fired co-worker reported the fact that none of the Windows or Office software in our wholly owned subsidiary of a major telecommunications company was licensed. I think they let them off without a fine, but they had to purchase a whole lot of licenses and they probably didn't get a volume discount.
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May 16, 2017 04:55
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Krispy Kareem posted:I think they let them off without charging for each component of microsoft office, a way worse fate. GWM: narcing to the BSA for that payday.
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May 16, 2017 06:12
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Eat less avocados on toast and don't buy four coffees a day says a super wealthy fucker who got 34k from his grandparents to start a gym 20 years ago:quote:He started out by taking over a lease on a suburban gym as a 19-year-old, using $34,000 given to him by his grandfather. He sold the business a year later to a competitor and went into property development, riding the boom in Melbourne and Brisbane. It's kinda interesting to see someone around my age give similar terrible advice to people a lot older than us. For those that don't know, Brisbane, Sydney and Melbourne went through an awesome housing boom, that as far as I know hasn't stopped. If you got in at the start, you get a massive boost up. Of course going from humble beginnings to being worth half a billion takes work and dedication but blaming eating out as the sole reason you haven;t bought a home is delusional. Suspicious Lump fucked around with this message at 06:33 on May 16, 2017 |
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May 16, 2017 06:30
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Suspicious Lump posted:Eat less avocados on toast and don't buy four coffees a day says a super wealthy fucker who got 34k from his grandparents to start a gym 20 years ago: uhh nowhere did he say or imply that eating out is the sole reason of anything, did you even read the article? and he's completely right that lots of people are bad with money blowing it on stupid poo poo, hence why we have this thread
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May 16, 2017 06:48
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Suspicious Lump posted:Eat less avocados on toast and don't buy four coffees a day says a super wealthy fucker who got 34k from his grandparents to start a gym 20 years ago: Maybe but he says: quote:“They want to eat out every day, they want to travel to Europe every year. This generation is watching the Kardashians and thinking that’s normal. Thinking that owning a Bentley is normal, that owning a BMW is normal." How accurate that is I'm not sure, but it reminds me a lot of The Millionaire Next Door which helped deflate a lot of superstitions about how millionaires lived (TLDR most of them lived like middle class people.) Depending on where you live and who you work with, you can have some pretty unreasonable expectations about how society expects you to live, one that encourages you being BWM, which is why it's so common to read about people buying too much house, cars worth more than their annual salary, and other stupid poo poo. I liked how he said Syndey was too expensive for him. He's worth a half-billion and he says "yeah that city is loving overpriced and I'm not buying there." It's not like he can't afford it. Syndey sounds a lot like Vancouver which is stupid expensive now and people just keep buying.
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May 16, 2017 06:58
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$20 brunch, 52 weeks a year is $1040. A 2br condo in my area is ~$600,000. Only 120 years away from getting a place not counting inflation! Cut out those daily coffees and we're down to 60 years! I get what he's saying but survivorship bias and whatnot has to count as well. Pointing out small budget leaks is certainly not where I'd start when looking at the lack of affordable housing for an entire generation. VVV: that's not what I said you dolt Blinkman987 fucked around with this message at 07:04 on May 16, 2017 |
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May 16, 2017 07:01
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traveling to Europe every year, buying BMWs - "a small leak in budget" you heard it here folks!
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May 16, 2017 07:03
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Zo posted:traveling to Europe every year, buying BMWs - "a small leak in budget" Depends on relativity, the budget could be $100,000,000,000 US a year.
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May 16, 2017 07:06
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Sic Semper Goon posted:Depends on relativity, the budget could be $100,000,000,000 US a year. true, but then they would be able to (barely) buy a house in Sydney with that kind of budget!
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May 16, 2017 07:07
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Zo posted:true, but then they would be able to (barely) buy a house in Sydney with that kind of budget! In the minute between you posting that and my response, the average house price in Sydney increased by 20%.
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May 16, 2017 07:11
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Zo posted:uhh nowhere did he say or imply that eating out is the sole reason of anything, did you even read the article?
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May 16, 2017 08:12
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