Trump Not Happy, Declares to End Relations with Traditional American Allies. (1 Viewer)

[Isaac]

Buy rental properties.

Rich doesn't really mean anything. You already are rich. A financial goal is to own property that provide you with revenue that you can live on.

Done. I have to keep convincing my wife not to sell it though, temptation is constant

 

[Thales750]

Everyone else would include me too, so no. You sure know how to sink to the lowest levels.

The lowest level is believing Trump and Company have any clue how to "fix" the economy. Inflation was in decline. Now, we'll see.
Loosing friends around the world, giving up good will to the Chinese, and oh yeah, the economy.

I don't want him to fail, but he seems to only have one agenda... catering to his base. You should hear all his worshipers claiming victory over the "woke lib-tards" concerning this rename the Gulf thing.

Most people down here call it the Gulf. or the Ocean.

 

[Pat Hartman]

with their blue hair on fire.

My rep is the one with the purple hair and silly blue glasses. She's also older than dirt and has needed to be gone from the House for years. I have never voted for her.

 

[Pat Hartman]

That is a 3000 billion dollar a year question. If Trump really was interested in the American people he would be doing that instead of renaming International Waters, and slashing a few billion dollars from the Fed payrolls. Not to mention firing people that are directly in positions of national security, or safety over our airports.

Lies, lies, and more lies. Check your facts and stop simply repeating the left's party line. Your hypocrisy is astounding.

Also, check to see what RFK Jr is doing in his new job. Trump has tried very hard to put the right people in place to fix all the problems he sees and the left (and Right) has been fighting and practicing delaying tactics because they don't want these things to be fixed. If they wanted them fixed, most have been in Congress for years and have had ample opportunities but never lifted a finger. Right now the DOGE team is making a lot of noise with their discoveries, especially at the SSA (processing retirements on paper and from the bottom of a mine shaft is pretty unbelievable) and USAID. We've also had interesting finds at the EPA by Lee Zeldin.

And the Dems have taken to the streets with silly old chants and songs in favor of NOT finding the waste, fraud, and abuse. They would like to pillory the DOGE team due to their findings being so damaging to the Congressional gravy train. Apparently some at least are using these NGO's to funnel funds to themselves and their families. How many members of Congress is DOGE going to find at the end of the money laundering scheme that splits up all the grant money and attempts to hide its path through multiple NGO's so Congress can never find out how their grant money is being spent? Boy, are the Dems on the wrong side of this fight. Hopefully many will simply die on this hill they are trying to defend for nefarious reasons.

 

[Pat Hartman]

Done. I have to keep convincing my wife not to sell it though, temptation is constant

At some point you take what you have and trade up. Look into an exchange so you can postpone the Capital Gains tax until you sell your last property.

Also, even though it sounds counter intuitive, you actually want mortgages on your income properties. Why? Leverage. The mortgage allows you to multiply the income you control with the money you have invested. If you have no mortgage, it takes you (depending on where you live) $300,000 to control $36,000 of gross income but with a mortgage, you only need $90,000 to generate the same income stream. Then you take the other $210,000 and buy two more properties, EACH generating $36,000!!!. That is more than enough money to pay the monthly payment and end up with extra income on a percentage basis. Just don't over mortgage and don't take balloon mortgages. Somehow, they always come due in a down market and the bank may ask for more cash to give you a new mortgage.

PM me if any of you want an analysis of an income producing property you are looking at. I'll need income/expense details and don't ever buy on the RE agent's pro forma numbers. Insist on actuals. Pro forma is just best case pie in the sky. You are not likely to ever achieve the numbers. Ask yourself, if the seller could get such a return, why would he be selling?

 

[Isaac]

Thanks Pat, I'll have to study the middle part of your post more to be sure I understand it.
Oh, we are in a great situation with our rental property. The mortgage is only $1400/mo, the property is worth $460k, and we owe about $240 on it. The 'temptation' I refer to is to just sell it and grab the equity cash. But I'd much rather that someone pay rental money into my 'savings account' (so to speak) every month for the next 20 years - and never let that property go. (it rents for $2400/mo).

 

[Pat Hartman]

The 'temptation' I refer to is to just sell it and grab the equity cash.

Only sell if you are going to leverage up.

EVERY rental property MUST provide positive cash flow + from day 1. If it isn't paying it's nut, it is an expense and not an asset. Appreciation and depreciation are real but neither puts food on the table.

 

[Isaac]

See now I am not sure about that, here is the way I was thinking of it. Like my brother told me "that's pretty cool that your rental makes $1000/mo profit", but I told him honestly? - I would be doing this even if it turned zero profit. Why because even if all it paid was the $1400 mortgage, this means that for the next 20 years, someone is PAYING into MY savings account $1400. and when I'm 65 it will be a paid off, half million dollar asset - even if the rent was never more than the mortgage, someone still paid $336,000 by the time I'm 65 in pure equity. I do not need it to either be profitable nor appreciate - just the third of a million paid into my equity would have satisfied me.
So that's kind of my thinking on it and combine that with the fact that I'm pretty bad with certain other investment instruments - just a mix of emotionalism, impulse, fear and risky behavior - real estate is really the sweet spot for me personally as it's NOT easy to unload or withdraw from on impulse

 

[Pat Hartman]

The reason why your income property needs to earn more is so you have a cushion at the end of the year. What happens if you lose your tenant and it takes you 3 months to find one you are willing to rent to? You're negative for the year. That is not an asset. It is a liability. You are fooling yourself if you think otherwise. You need to factor in the current cost of the money you are paying out vs the future value. It is also why single family houses are the most risky of all rental options. You have one tenant. If you lose them, you probably end up negative for the year. I could never get my husband to go along with my investment plan. He kept seeing himself having to play plumber in the middle of the night and never understood the concept of investing as a business so I took a different tact and used "my own money" to make high interest loans to flippers. The going rate at the time was 12% plus a 3% discount. So the investor borrowed 10,000 but got 7, 000 and paid interest on 10,000 with pretty short terms. Usually 4-5 months with one extension. Usually no monthly payments. Note was due at the end of the term. I never loaned money unless the investor had skin in the game (except for one time - that could have been a disaster as things developed but I got all my money back + the interest due and she came out with 0 but it was her own fault for being stupid. If she had come to me when the problem occurred, she could have walked away with $80,000 all profit). I always insisted on being the second mortgage which is important if things go south.

The tax code used to be more favorable to the casual investor and you could offset ordinary income with investment loses, dollar for dollar. So under those rules, a small actual loss could be offset by a fake loss in depreciation over the short term and you could turn the loss into a small profit. Can't do that any more so losses for most people (not Trump) are not useful because you get to use them up at the rate of $3,000 per year (I think). Trump had some huge losses from I think the Atlantic City casino that went belly up. It reduced his ordinary income tax to 0 for years but that is only because RE investing was his primary business. If it weren't he'd be sucking wind at $3,000 per year like the rest of us.

 

[Isaac]

The reason why your income property needs to earn more is so you have a cushion at the end of the year. What happens if you lose your tenant and it takes you 3 months to find one you are willing to rent to? You're negative for the year. That is not an asset. It is a liability. You are fooling yourself if you think otherwise. You need to factor in the current cost of the money you are paying out vs the future value. It is also why single family houses are the most risky of all rental options. You have one tenant. If you lose them, you probably end up negative for the year. I could never get my husband to go along with my investment plan. He kept seeing himself having to play plumber in the middle of the night and never understood the concept of investing as a business so I took a different tact and used "my own money" to make high interest loans to flippers. The going rate at the time was 12% plus a 3% discount. So the investor borrowed 10,000 but got 7, 000 and paid interest on 10,000 with pretty short terms. Usually 4-5 months with one extension. Usually no monthly payments. Note was due at the end of the term. I never loaned money unless the investor had skin in the game (except for one time - that could have been a disaster as things developed but I got all my money back + the interest due and she came out with 0 but it was her own fault for being stupid. If she had come to me when the problem occurred, she could have walked away with $80,000 all profit). I always insisted on being the second mortgage which is important if things go south.

The tax code used to be more favorable to the casual investor and you could offset ordinary income with investment loses, dollar for dollar. So under those rules, a small actual loss could be offset by a fake loss in depreciation over the short term and you could turn the loss into a small profit. Can't do that any more so losses for most people (not Trump) are not useful because you get to use them up at the rate of $3,000 per year (I think). Trump had some huge losses from I think the Atlantic City casino that went belly up. It reduced his ordinary income tax to 0 for years but that is only because RE investing was his primary business. If it weren't he'd be sucking wind at $3,000 per year like the rest of us.

Certainly it's ideal to have a cushion, but regardless, every time the mortgage gets paid either by me or by his rental payment, it's money in my savings account because of the equity. I'm lucky to have a large cushion, but I'd do it even if all I did was break even. My goal isn't monthly income, it's to increase my equity/pay off the house for free - i.e. someone else is paying it off for me.

It's also ideal to never have the house vacant, but even if it is, I need to remember I'm gaining equity in the home no matter who's paying it. Real estate is a good investment fit for my personality. I learned early on when Robinhood first came out that your personality is important to decide which 'game' to play. Not everyone is cut out for stocks no matter how much you try to learn, your natural fears and joys will sometimes take precedence over the best decision

 

[Pat Hartman]

You aren't making anywhere near your potential because you are not looking at this like a business but then it's not my loss and you are taking unnecessary risks. Owing investment property is a risk. You start by being in a position to be sued. If your properties are not in individual LLC's, your personal home and other properties are on the line also. At a minimum, get yourself a 5 million dollar umbrella policy. Umbrella policies aren't that expensive. If you'd like an analysis of your property I'm happy to do it. Send me a PM and I'll tell you what I need for numbers and I'll send you a report in a day or so.

I have investment accounts and they make my stomach sick when they rise or fall for stupid reasons. I have no control which is why I pushed my husband as hard as I could but the man was as stubborn as they come. It took years for me to get him to agree to let me raise his billing rate. He liked it low because he loved his client and never wanted to leave. He had an employee mentality. I was always the risk taker.

Here's a sample. The numbers are very old.

 

[Pat Hartman]

Here's a new duplex in Phoenix. It was the first one I saw. I recorded income only for the 2/2 assuming the kid could live in the 1/1. It needs at least 10% down. I doubt the bank would approve 5%. The kid's cost would be ~ $1300 per month for the 1/1. Probably similar to what a nice rental would be. For small properties like this, banks will usually consider the rental income when determining if you qualify for a loan. I don't know what the taxes and insurance are in Phoenix so I guessed. The property is new so it should go a few years without needing maintenance and the kid would have to take care of any external work like raking the gravel and blowing the astroturf. But I also added a small capital account to start now putting away money for a new roof or water heater down the line. There are other cheaper options but I don't know the neighborhoods so I don't know where you would be happy with your kid living.

I think it's over priced but new builds are rarely negotiable.

 

[Pat Hartman]

It makes a small positive cash flow if you enter rent for both units which is probably what the bank would expect.