All Forum Posts by: Account Closed

Most of your rental income would be tax deferred due to depreciation benefits. For a typical leveraged investment you would have little tax liability. Same with cash flow from syndications that pass on tax benefits on your K1, until they sell. Most syndications cannot 1031 at the end so you do get that tax bill in 3-5 year or upon exit. The rentals continue to get depreciation for 27.5 years.

I listed on Zillow which also offers the same service of credit and background checks. They also do rent collection but I haven't used them for that.

You are missing the point. I am saying that value of a home is not relevant, your equity is. If I own 20K if Amazon stock I can't say I own 1T in value. If you sell a home for 100K and buy 5 houses with 20K down you have not changed anything on your balance sheet. Its just basic accounting principles. Net worth is asset - liability. Now I do concede you control higher value assets but you can buy stocks on margin with the same effect or better yet buy options. Im not debating REI vs stocks. I am arguing against the incessant drumbeat towards more debt forever. You can use debt as a tool to grow wealth but at one point you have to deleverage.

Both have a place in a balanced portfolio. REI is cheaper to leverage (you can buy stocks on margin too), REI is easier to pull an income stream out of than dividend stocks, REI comes with tax advantages of depreciation.

Stocks are very liquid (REI is very illiquid). Stocks are more volatile which can be good or bad. Far more people invest in stocks and the market is perfectly efficient and Wall Street is hard to beat at its own game. RE is very inefficient and its possible to find a niche where you are better than most.

Real Estate is tangible (at least when you directly own a property). Stocks are not. 

In the end you can have both in your portfolio as many investors do. Its not a religion. You can have more than one!

I bought $20,000 of AMZN. AMZN is worth $1Trillion. My value in Amazon is _________ (you fill in the blank). 

Agree with all except the above para. Tenants are hard on properties. While you may not hit large Capex items on a newly rehabbed home you'd be surprised how smaller repairs can add up. And then there are surprises like sewer lines that need to be replaced ($5K) which is never part of any rehab. Count on repaints, carpets, window replacements, door replacements etc etc etc no matter how nice the property was when you bought it.

Maybe Joe needs a refresher in basic math. If you sell a property for $100K and buy 5 properties with 20K each down your "value" is still 100K. Actually even less because of transaction costs but lets ignore that. Your cash flow doesn't go up by 5. Depending on the rental values, mortgage rates etc it MAY go up a tad but maybe not. To assume you magically create 5X value and 5X cash flow by simply borrowing money is ridiculous.

What do you want to scale and why? Do you want boasting rights to claim some arbitrary number of doors? Or do you want a predictable income stream that you can safely retire on? Do you want the stress of never ending mortgage payments, letters from the bank, demands for insurance proof etc etc the rest of your life? Or do you want autopilot checks coming in with minimal bills to pay? If you want the former follow the Refi till you die crowd but if you want the latter you are on the right path already.

Well, technically yes. You can refi out the equity and spend the money to buy food. The other advantage of SFH over apartments is liquidity. Its usually much easier to sell a SFH than an apartment. Also if you have a portfolio of say SFH you can sell them individually to raise cash if you need. Your apartment is all or nothing. You cant just sell 5 units out of your complex cause you need the cash.

It depends on what price you buy at. I have 75% + appreciation over 5-6 years on C Class homes. And not just on paper, actually sold a few at those prices. I define class by rent, which is market specific. In Indy and probably other midwest cities between 700-1K is what Id call C. Above that is B and below that is D. That is for SFRs. Of course in the Bay Area 2K may still be a C property.