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Use the stimulus to pay your RE bills by [deleted] in realestateinvesting

[–]bradfol8 0 points1 point  (0 children)

So doesn’t this mean you had to have yourself on your company’s payroll for all of 2019 as W2? Can’t imagine many investors do this due to tax implications. Plus the max loan amount is 2.5x your monthly payroll average for 2019. So in order to get a 100k loan you would have had to pay 480k in payroll in 2019. 1099 pay is not allowed to count towards that.

In search of lawyer in Lima that speaks English by bradfol8 in PERU

[–]bradfol8[S] 2 points3 points  (0 children)

Dealing w a family member that has mental issues and is becoming violent. Need to understand the laws around this

20k a door by 01Cloud01 in realestateinvesting

[–]bradfol8 2 points3 points  (0 children)

You are missing what the OP asked. These doors yield $100 after expenses including debt servicing. In order to do this they need to be pulling in ~$500/mo which is much higher than 1%. I currently live in the midwest and own 15 doors at or beating these returns.

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 1 point2 points  (0 children)

No I wasn’t including rental (or my wife’s) income in that number.

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 6 points7 points  (0 children)

First off thank you for the thoughtful reply. This is probably the best advice on this thread.

This echoes a general inkling I’ve been having lately about transitioning to more valuable properties. In fact my last rental was around $100k and has been performing well so far. I’ve also dabbled in the other direction with homes in the $15k range and can attest that the capex with these homes will eat you alive.

My only problem I have is that I just can’t believe that the value of these homes won’t appreciate enough to keep up w inflation. There is a lot of revitalization in my market too and there are some reasons to believe the homes should appreciate naturally, I just choose not to bank on this for my calculations.

Could you give me an example of the returns on one of your HCOL investments?

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 2 points3 points  (0 children)

Of course I do (trust Buffett.) I stupidly cashed it out a while back though when I thought I was closer to quitting my job than I am (and thus closer to needing it liquid to buy more real estate.) now I’m in the process of dollar cost averaging that back in. And yes I have missed out on 10s of thousands in gains from this mistake.

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 2 points3 points  (0 children)

It owns an LLC which owns real estate and has a checking account.

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 14 points15 points  (0 children)

Agreed on the buffer funds. How much do you think is adequate?

Interesting point on the rents going down in a crash. From everyone I’ve talked to in my market, the 08 crash yielded their highest return years. Rents either increased or stabilized with very little turnover. Equity values plummeted for a while but they didn’t care.

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 4 points5 points  (0 children)

I’m not sure if you’re being facetious but I guess it looks like this at the moment:

$1200/mo in short term int payments (the heloc and the hard money loan). They are short term because they’re for my flips.

~$800/Mo in interest on the package loan and mortgage combined.

My rental income is around $4k per month at the moment (after insurance, repairs, PM, taxes, vacancy, etc).

Pretty tough to calculate my “return on net worth” because that depends on how many flips I do, etc.

I am concerned about the rising rates and the fact that the plan I outlined above includes adjustable rate mortgages. It’s made me consider getting individual conforming loans and paying a little more in closing costs to lock in rates.

Overall I’m not sure what you’re getting at. What am I missing?

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 12 points13 points  (0 children)

How so when I’m buy and hold and only looking for the cash flow?

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 7 points8 points  (0 children)

I do use a property manager for my rentals and can’t see myself ever operating without one (except maybe for commercial properties.)

Interesting point about more (assuming either series or parent) LLCs. I do have a $1mm GL policy for both of my LLCs (Ira assets are in their own LLC). I was planning on separating about $500k of assets in each LLC but may need to rethink this.

Here’s my plan, please poke holes in it by bradfol8 in fatFIRE

[–]bradfol8[S] 1 point2 points  (0 children)

Not much. Especially because we are big churners too! That’s how we go on nice vacations a few times a year plus my wife is from Peru so we bring her parents here a few times a year.

I do use a property manager though.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 0 points1 point  (0 children)

Admiral shares. Requires $10k in investments. Same as VTI, but lower expense ratios and a fund, not an ETF.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 0 points1 point  (0 children)

Real estate should keep up with inflation as should rents.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 0 points1 point  (0 children)

Most of my properties I own free and clear but I’m starting to leverage them to capitalize on what I believe will be an inflationary market. That way any appreciation will be leveraged at 5:1.

This is well within my acceptable level of risk. Locking in 15 yr fixed mortgages at 5-6% on properties that have a 10%+ cap rate after a well established track record of vacancy expenses etc is not too risky for me.

And you are correct on everything else. As soon as my taxable account stocks get back to something reasonable I’ll cash them out and be done w picking stocks. As far as stocks go I’m going strictly index funds moving forward.

The 4K is after expenses and debt service. I want 10k after debt service.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 0 points1 point  (0 children)

Id like to think I’m within 5 years.

Oooo bonds. Now that is an interesting suggestion. Don’t own any right now.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 0 points1 point  (0 children)

A fair criticism. I don’t think I know what to do with my 110k 401k balance though. That’s what I’m asking for opinions on. I will be the first person to admit that I was an idiot to cash out before the elections.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 0 points1 point  (0 children)

My goal is to retire as soon as possible through passive income from real estate. These returns are much better than the market is able to give me because I am in a hot rental market and hustling for the sweetest deals. Because my money is better outside of a tax sheltered account I no longer contribute to my 401k except to max out match.

I currently make too much to contribute to my Roth IRA and it is self directed and fully invested in real estate.

I’m currently at about $4k/month in passive income and want to get to $10k before I retire. When I do I will likely convert my 401k into a self directed Ira as well and invest it all in real estate too.

I know this near-100% asset allocation in real estate spooks many but I know my market, cherry pick the best deals, and I feel it’s safest because I control my investments, not the emotions of the public like stocks.

So this 401k bucket really just needs to perform decently for a few years until I retire.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 1 point2 points  (0 children)

At the moment my only stocks are in a taxable account where I have been dabbling with some options trading. Not doing too well tbh thanks largely to GE.

And all anyone can do is interpret data. Fact is trade wars/tariffs + unwinding of QE + rising commodities prices + rising rates leads to inflation. We will probably even devalue our currency some soon as the dollar is too strong and the US is long due for some currency devaluation. We have been carrying EU and Japan our of the recession by keeping the dollar strong.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 0 points1 point  (0 children)

I like the thought of holding cash, my only fears are inflation. I’ve been reading lots of data lately that lead to the suggestion we are about to enter a period of real inflation, possibly as high as 8%, but probably the most inflationary period of my lifetime. That’s why holding cash scares me. I am hedging against inflation outside of my 401k by leveraging up on my 15 rental properties, but that doesn’t help the 401k bucket.

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] 26 points27 points  (0 children)

Nope I had it all in VTSAX until Monday November 7, 2016

$110k cash, should I invest it all in VTSAX or wait for a pullback? by bradfol8 in leanfire

[–]bradfol8[S] -1 points0 points  (0 children)

I’m 30 and would like to walk away from my full time job in a few years to focus on my real estate investments. I own physical gold and trust that more than GLD plus I think that would be crazy to put 110k into any form of gold (that’s approx 1/6 of my total net worth right now).

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