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I know it's a strong primal urge for all doctors, but you must resist the temptation to make terrible investments. Just buy more index funds and enjoy the life of a non-landlord.
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Oct 1, 2018 21:34
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It may not be the best example but do consider that if our piss-baby president Donald J Trump had invested the money he received from daddy in a total market fund rather than real estate that he would have earned over 4x as much as he had via his real estate business. And that's considering that he ostensibly dedicated his professional life to it rather than having it as a secondary source of income.
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Oct 1, 2018 22:20
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There's also nothing wrong with investing in a taxable brokerage account. The taxes are really not very oppressive at all. LTCGs and qualified dividends get very favorable treatment. Don't do dumb investing just to avoid some taxes. Plus there's a ton of taxes and fees in real estate anyway.
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Oct 1, 2018 22:33
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Mu Zeta posted:The White Coat Investor guy says real estate plus a 70 hour job is really hard to do. But it's do-able. For what it's worth, a good property management company can take required interactions down to literally minutes a month, mostly spent going over records to review the expenditures. I spend more time on the tax complications of real estate than the direct management therof. It's a bitch to get everything closed and management fully set up though.
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Oct 1, 2018 22:38
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BMan posted:I know it's a strong primal urge for all doctors, but you must resist the temptation to make terrible investments. Just buy more index funds and enjoy the life of a non-landlord. This, a loving thousand times this.
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Oct 1, 2018 23:53
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Just buy a loving target date vanguard ETF with after tax money, you'll pay like 15% LTCG which is an unbelievably good deal!
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Oct 1, 2018 23:54
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EAT FASTER!!!!!! posted:Just buy a loving target date vanguard ETF with after tax money, you'll pay like 15% LTCG which is an unbelievably good deal! It's not sexy enough.
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Oct 2, 2018 00:46
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Real estate is tangible, so it can't just go *poof* like those numbers on the screen!!! (montage of buildings succumbing to natural disaster, warfare, economic decline, etc.)
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Oct 2, 2018 00:50
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I want to buy some buildings in Turkey. They can't steal it from me once I buy it right.
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Oct 2, 2018 00:56
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Mu Zeta posted:I want to buy some buildings in Turkey. They can't steal it from me once I buy it right. I would think in a hyper inflationary market that house prices would be high, since the existing loans to buy them are virtually free and everyone wants hard assets. My parents still have a condo on the Aegean, wonder what that’s worth.
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Oct 2, 2018 01:23
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Has anyone mentioned REITs? Because you can invest in real estate in a way that avoids all the maintenance, finding renters, dealing with property taxes, etc. etc. etc. and oh also diversifies you across lots of properties instead of concentrating in one, and also by the way you can invest a couple thousand dollars in REIT funds instead of needing hundreds of thousands of dollars, and oh plus it's liquid instead of horribly illiquid, and boy howdy are the transaction costs lower! Real estate is already indirectly a factor/component in the performance of index stock and bond funds, because business profitability is affected by rising or falling real estate, the overall market is reactive to housing prices, etc. etc. but if you are feeling underexposed to that segment, REITs offer a way to overweight it without needing to buy insurance to cover when your tenant sues you because a paving slab stuck up slightly and they tripped on it and broke their face.
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Oct 2, 2018 01:40
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Droo posted:Interactive Brokers has margin rates around 2.5-4%, which is less (and infinitely more flexible) than rental property mortgage rates. Equity margin is maxed at 100% (fed regulation). IB does have low rates, but that can go poof at any second. I can't say I know enough about futures margin level, but once you get to 5x margin you're flirting with a margin call at the slightest dip. Residency Evil posted:Is this actually true in all cases? Sure that's ideal, but I wonder if that's always the case between the mortgage, insurance, maintenance, taxes, etc. Not being able to cover that is the clearest sign to avoid the deal. Leperflesh posted:Has anyone mentioned REITs? Because you can invest in real estate in a way that avoids all the maintenance, finding renters, dealing with property taxes, etc. etc. etc. and oh also diversifies you across lots of properties instead of concentrating in one, and also by the way you can invest a couple thousand dollars in REIT funds instead of needing hundreds of thousands of dollars, and oh plus it's liquid instead of horribly illiquid, and boy howdy are the transaction costs lower! Not a fan of REITs. I deal with some, and they have been so flush with cash they are buying properties at extremely questionable valuations.
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Oct 2, 2018 03:22
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crazypeltast52 posted:Unless you are buying a trophy class AA 500+ unit building in the best markets of NYC or SF, no apartment investor can get financing without property NOI covering all of that plus some kind of cushion. Yea, short of this guy being some big swinging dick (in which case he isn't asking us), he's gonna need to debt service at a minimum of 1.20:1, based on NOI. And he'll be capped at probably no more than ~85% LTV. The debt service piece is probably the hardest. With rates running like 5.50% - 7% for NOOCRE (in my market, which may not resemble yours, and for people the Bank doesn't know/don't have a ton of cash on deposit) and a shorter 25 year amortization this can get difficult. Let's say you want to buy a property for $700,000 all-in (loan fees, closing costs, appraisal, everything). You put down $200,000, leaving a $500,000 1st DOT. $500,000 at 6.50% over a 25 year amortization is $3,376/month or $40,512/year. Your NOI will need to be at least $4,051/month or $48,614/year. (120% of your required P&I payments) Note however that your NOI will necessarily be lower than your gross rents. NOI is gross rents minus operating expenses (property taxes, maintenance, vacancy expenses, etc). The good news is that your lender will take your net income and add back interest expense, depreciation and amortization to get your NOI. For the sake of argument, we'll assume your Op. Ex. is about 20% of your gross rents. This means that you need gross rents of $5,064/month or $60,768/year. That gross rent figure btw, will earn you about $8,102/year before income taxes, or about 4% on your invested money in year 1. For an illiquid asset that you owe money on. That same $200,000 in the S&P 500 from Jan 2 2018 to today would be up 8%, in only 75% of that time. I dunno, do what you want, but working in the field all day long has sated any interest I may have ever had in accumulating a real estate portfolio. Of course I work with a guy who is all about it, and has a bunch of rentals and is working on building a like 6-8 unit apartment, so maybe I'm an idiot.
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Oct 2, 2018 04:23
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If real estate is so bad, who are the people actually buying property
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Oct 2, 2018 05:20
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I don't have any interest in being a landlord or a real estate developer, but I can see why being in real estate could be fun. It's a lot of dealmaking and seeing a property get built or renovated must be pretty gratifying. It's like real life Lego, but you're also dealing with politicians, unions, and tenants.
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Oct 2, 2018 05:26
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Methanar posted:If real estate is so bad, who are the people actually buying property people who can buy the building outright for cash people with tens of millions of dollars who need to find new places to put it people speculating on appreciation of the property in a hot market, rather than looking for rental income the growing class of wealthy Chinese, who are desperate to get their cash out of their own country, and for whom many other forms of foreign investment are too difficult/impossible to access REITs lots of people who are bad at math
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Oct 2, 2018 05:50
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1031 exchange money where they need to buy something or pay an ungodly amount of taxes
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Oct 2, 2018 06:31
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People who end conversations with, "I mean, who doesn't pay their mortgage?"
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Oct 2, 2018 06:41
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Methanar posted:If real estate is so bad, who are the people actually buying property There are lots of opportunity in this world to make money filling all sorts of niches and real estate is no exception. The question isn't about whether it can make money but where your priorities lie. If you're looking to invest some money and get returns without having to put a lot of work in yourself then you should plan accordingly. To be able to get real estate investments into a profitable state can take considerable amounts of time and money, so it is best for people who have a passion with the business itself and their desire to engage in it transcends monetary profit. These people exist in plentiful numbers. So we can see why it doesn't align with the priority of "invest money perhaps at greater risk but without much effort" which is the scenario under consideration.
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Oct 2, 2018 07:37
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tumblr hype man posted:Yea, short of this guy being some big swinging dick (in which case he isn't asking us), he's gonna need to debt service at a minimum of 1.20:1, based on NOI. And he'll be capped at probably no more than ~85% LTV. The debt service piece is probably the hardest. With rates running like 5.50% - 7% for NOOCRE (in my market, which may not resemble yours, and for people the Bank doesn't know/don't have a ton of cash on deposit) and a shorter 25 year amortization this can get difficult. Thanks man, this was super helpful. On another topic: how does a backdoor Roth work when we're married? My Vanguard account is currently in my name only. Do I put the full 11k in under my name, or should I open a second roth for her and split it in two? Does this matter if we're married filing jointly versus separately?
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Oct 2, 2018 14:00
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Residency Evil posted:Thanks man, this was super helpful. IRAs are individual accounts, hence the "I", so you and your wife can each have a maximum of $5.5k.
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Oct 2, 2018 14:07
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Residency Evil posted:Thanks man, this was super helpful. Im fairly sure you need a second Vanguard account just for her. You can’t have an IRA in her name on your Vanguard account. At least that’s what we’ve done.
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Oct 2, 2018 14:10
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Velius posted:Im fairly sure you need a second Vanguard account just for her. You can’t have an IRA in her name on your Vanguard account. At least that’s what we’ve done. Yeah this is what we did too. We just set up the permissions afterwards so either of us can see the others accounts (and act on them for contributions, etc) without logging in and out all the time.
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Oct 2, 2018 14:25
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Residency Evil posted:Thanks man, this was super helpful. No problem, that comparison is a little apples to oranges since I'm comparing cash flow from a rental to equity appreciation in the S&P. But hopefully it gives people an idea of what they're getting in to.
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Oct 2, 2018 14:34
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Methanar posted:If real estate is so bad, who are the people actually buying property Money laundering
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Oct 3, 2018 12:11
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If you get a good long term low maintenance renter, it’s a pretty easy gig. Then you brag about it to all your friends and they want in on the sweet easy money. (Alternately, you brag about how easy it is to be a section 8 slumlord. “I paid 50k for the property and the government guarantees I get the rent!))
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Oct 3, 2018 12:48
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https://www.govtrack.us/congress/votes/115-2018/h411 Bill passed the house with the USA account in it. It's basically a Roth with no early withdrawal penalty and a $2,500 limit. Canada supposedly has something similar.
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Oct 4, 2018 04:25
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Called a TFSA, if for some reason you want to compare.
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Oct 4, 2018 04:37
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Did my wife and I just gain another $5,000 in tax-advantaged savings space with the creation of these USAs? What else happens before these things are available?
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Oct 4, 2018 05:03
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I think it has to pass in the senate and then trump has to approve it. Senators cum long and hard over more tax space so they'll probably approve it.
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Oct 4, 2018 05:07
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I mean, there has to be something bullshit and lovely in this bill but aside from that assumption I can't see anything wrong with this part.
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Oct 4, 2018 05:10
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It will probably harm abortion rights in some way but it's not too bad
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Oct 4, 2018 05:12
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Explain?
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Oct 4, 2018 05:19
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Harry posted:the USA account Can I deposit into it from any ATM machine?  
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Oct 4, 2018 05:22
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It encourages you to start a 529 plan before the baby is born. It's not too bad but it's leaves a bad taste in my mouth.
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Oct 4, 2018 05:22
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Is there something out there that allows me to plug in the funds and based on that gives me percentage of what I'm invested in? I know I can probably do this manually, but it's a pain if I'm looking at a bunch.
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Oct 4, 2018 08:35
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obi_ant posted:Is there something out there that allows me to plug in the funds and based on that gives me percentage of what I'm invested in? I know I can probably do this manually, but it's a pain if I'm looking at a bunch. Personal capital.
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Oct 4, 2018 12:30
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obi_ant posted:Is there something out there that allows me to plug in the funds and based on that gives me percentage of what I'm invested in? I know I can probably do this manually, but it's a pain if I'm looking at a bunch. At least my Vanguard and Fidelity accounts have a breakdown of asset classes
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Oct 4, 2018 12:45
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Mu Zeta posted:I think it has to pass in the senate and then trump has to approve it. Senators cum long and hard over more tax space so they'll probably approve it. Kinda surprised they'd even get out of bed for 2.5k. unless it's got some provision where your can backdoor a lifetime's earnings into it...
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Oct 4, 2018 12:56
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Bhodi posted:Kinda surprised they'd even get out of bed for 2.5k. unless it's got some provision where your can backdoor a lifetime's earnings into it...
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Oct 4, 2018 14:49
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