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All Forum Posts by: Daniel Murphy

Daniel Murphy has started 41 posts and replied 162 times.

Post: Cape Coral Investing in 2023

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129

We've had a 3/2 with a pool in CC for a little over a year now.  The area is definitely struggling since Ian.  Last year, every day in Feb, March & April was booked.  

This year we had 5 open nights in March & we had to discount a few because they were open so last minute.  We know a bunch of others with properties in the area & they are all in the same boat.  Much slower than last year.  

Post: Dormant 401k account with previous employer

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129

@Kalyan Kumar

As many have said, you would typically roll it into your own IRA. The pre-tax portion would go into a traditional IRA, and the Roth portion would go into a Roth IRA. Call the 800 number on your statement & ask them what their rollover process is. It will typically either be 1) they will accept your verbal instructions or 2), they will require paperwork.

You can then open an IRA & Roth at Fidelity, Vanguard, or wherever you choose & roll the accounts into it.

But... you want to first decide what you actually want to do with the money.  You're invested in VTIVX which carries a 0.08% investment fee. This is very low. Chances are, your 401k is not charging you any other (or many other) fees. This investment is low-cost and very well-diversified.  

If you are inclined to do something different, if you feel comfortable making hands-on investment decisions, then by all means, roll the 401k out into an IRA.

But, if you want to be passive & focus on other things you'd be perfectly fine to just leave it in the current 401k.  

Feel free to reach out if you have any questions or if this wasn't clear enough... 

Post: How do you invest for your children?

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129

While I have never read the IRS info regarding age, I've always been under the assumption that if you document properly, you can pay your kids.  Modeling etc. could qualify, I would just make sure to document everything to protect yourself. 

As far as how to save / invest.  I have 4 kids.  5, 15, 17 & 19.  I decided on a UGMA (uniform gifts to minors) account.  I decided on this because it's flexible.  We save in their account and have control over it.  Until they become the age of majority which you can typically elect to be either 18 or 21.  A key thing to understand is, at the age of majority you can no longer make any changes to the account. Only your child can.  

Also, at the age of majority the accounts becomes property of the child, so they could go blow it all on a car or something stupid.  The real key is... 

The child needs to know where the money is, and sign paperwork to change ownership.  So in my case, I have the accounts invested very aggressive while the kids are young.  As they get closer to the age of majority, I'll move it more diversified & conservative.  If it sits invested for a few years because my kids don't now where the money is held, it can stay invested as is for as long as you want. 

I hope that makes sense... Message me if you have any further questions. 

Post: Looking for hosts with properties in the Twin Cities MN

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129

Does anyone have properties in the Twin Cities of MN? I'd love to connect & ask some questions about your properties... 

Post: depreciation recapture / property transfer / divorce

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129

Hey all, we recently did a cost seg & bonus deprecation on our STR for about $180k worth of deprecation.

Well... it turns out married life may not be married life by the end of 2023.  
Can anyone point me to resources on how deprecation recapture would work if we had to sell the STR?

Or info on any effects of changing ownership of the STR from joint to individual in the case of a divorce?

Post: Company PTO/Sabbatical Cash Out Program

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129

@Jimmyhee Quach, I think you have the correct line of thinking on things.  In situations like this, there is rarely a "perfect" answer. I'm always a fan of, tell me all of the options. If I have all of the info needed, I can make a more informed decision.  

I'll throw in a few more points to ponder.  

1) if you did cash your PTO sooner rather than later, there's a chance you could get better return if you invested it.  This is not guaranteed, but the market is depressed, and there is a chance you could get a higher rate of return by investing it into a taxable account.  This is the known vs unknown variable. 

2) I would also consider how long it would take to deposit into your account.  If you have the flexibility to get paid out whenever you ask, within a reasonable amount of time (say 2 weeks), you could wait as long as possible. Assuming if you had an emergency, you could float it for 2 weeks on a credit card while you wait for your PTO payout. The advantage is you get to leave it for longer, waiting for your 8% raise. 

All of your reasoning makes sense. It's just a matter of making whatever decision works out best for your situation.  

Post: Taxes during retirement

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129
Quote from @Mary Jay:
Quote from @Daniel Murphy:

@Mary Jay, You're partially correct.  
Think of it this way.  Here's roughly how your taxes work.  
W2 income, Social security income, stock market income & other misc income is on the "first page" of your 1040. These are all "above the line" & flow into your Adjusted gross income.  
Your rental income is all calculated on a separate schedule, Schedule E most likely.  Easy math, you take in $50,000 of revenue from your rental. You subtract your expenses, mortgage interest, property taxes & depreciation from your income, and this is your net rental income.  For easy math, let's just say that's $25k.  

This $25k then goes back onto the first page of your 1040, "above the line".  

Again, over simplifying but let's say you have $100k of income from W2 work, & $25k net from your rental. You have $125k of total income.  
So, your rentals aren't taxed at 15%, nor is your regular income taxed at 30%.  

You then take this $125k & subtract your itemized or standard deduction.  Again, super oversimplify but let's say this is $25k to bring your taxable income back down to $100k.  This $100k is then run up the marginal tax brackets.  

Let's say you're married filing joinly.  Your first $20,550 is taxed at 10% = $2055

Your next $62,999 of income is taxed at 12% = $7559

Your next $16,450 of income is taxed at 22% = $3619 for a total tax of $13,233.  ($2055 + 7559 + 3619).  

Now you subtract any tax credits for your total tax.  
Assuming you have no credits, your total tax is $13,233.  If you take this divided by your total original income, ($125k / $13,233) & you're actually only paying a tax rate of roughly 9.5%.  Much different than the 15% or 30% mentioned earlier.  

 As you can see, it's pretty nuanced.  In my opinion, when people say "generally" anything about taxes, they are "generally wrong".  Feel free to reach out to me if you want any clarification. There's only so much depth you can go into in a forum post :) 


 Wow! Thank you so much! You took a complicated concept and explained it super well!!!

Will you please correct me if I am misunderstanding?

Me and my husband are hoping to make about 135K per year from rentals.

Lets say, for simplicity, that 35K goes on expenses, mortgage interests, property taxes, etc and I am left with 100K income from rentals (In your example it was 100K income from W2 and rentals, but in my example its 100K only from rentals)

So, do I understand correctly (and this is a copy from your post above):

Since I am married and  filing jointly. My first $20,550 is taxed at 10% = $2055

My next $62,999 of income is taxed at 12% = $7559

My next $16,450 of income is taxed at 22% = $3619 for a total tax of $13,233. ($2055 + 7559 + 3619).


Assuming I have no credits, my total tax is $13,233. If I take this divided by your total original income, ($125k / $13,233) & I am actually only paying a tax rate of roughly 9.5%. 

Is it correct?


 You're 95% there.  You just forgot to subtract your standard deduction of $27,700.

So 100k income minus $27,700 is $72,300 taxable income. 

So your first $20,550 would be at 10% = $2,055

Your next $51,750 (72,300 - 20550) is taxed at 12% = $6,210. 

Total tax of $8,265. So your effective tax (tax owed divided by total income) rate would be even less.  

Post: What value do you get from your Financial Advisor?

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129

As a financial planner myself, I enjoy these conversations. Hopefully, this is helpful for some of you to know.  The industry is changing... 

The most common complaint I hear when someone talks about working with a planner is, "performance." It was mentioned multiple times in this thread. The truth is, if you think hiring a financial planner will get your portfolio better performance, you are measuring the incorrect expectation. In the past, when markets were less efficient, investment picking had value. 

Now, the research widely points to index funds being the best performing funds over time. So hiring an advisor, paying their fee & expecting equal or greater investment performance will likely not happen. You buying 100 shares of SPY vs your planner buying 100 shares of SPY will result in lower net performance because of the advisors costs. 

The good news is that the industry is realizing this & shifting more toward financial planning & comprehensive advice.  

Think of the amount of knowledge you learn from your various internet or youtube gurus.  Your rental guru. Airbnb guru. Investment guru. Mortgage guru. Business Planning guru. Real Estate Law guru etc.  

A good, experienced financial planner with knowledge of your financial "pain point" should have a broad and fairly deep understanding of all of these various gurus.  Add to that knowledge, years of experience actually doing the work with their clients at scale.  This has incredible value.

Think of it as, hiring the youtuber who made a video about 1031 exchanges vs. an actual professional who has processed countless 1031 exchanges. 

The financial industry has been shifting towards this advice-focused approach in recent years. There are a number of studies showing that there is plenty of Alpha (added value) to the client by working with an advice-focused planner. This (I hope) is where your expectations should be tied to. 

Go have a good conversation with one of your gurus. At the end of the conversation hopefully, you feel smarter, and more confident about your financial decisions than you did before the conversation. 

^^^^This is what your relationship with a good financial planner should look like^^^^

Post: Are you PM's having yourselves named as "additional insured" on policies?

Daniel MurphyPosted
  • Financial Advisor
  • Saint Paul, MN
  • Posts 170
  • Votes 129

General question... When you manage a property for someone, do you require to be named as an "additional insured" on your clients property insurance or umbrella policies? 
Why, or why not? 

Hmm, I really love this question & whole concept.  Here is the Airbnb TOS regarding our memberships.

17. Member Accounts. You must register an account to access and use many features of the Airbnb Platform. Registration is only permitted for legal entities, partnerships and natural persons who are 18 years or older. You represent and warrant that you are not a person or entity barred from using the Airbnb Platform under the laws of the United States, your place of residence, or any other applicable jurisdiction. You must provide accurate, current, and complete information during registration and keep your account information up-to-date. You may not register more than one account or transfer your account to someone else. "

I am no lawyer, but terms of service are occasionally challenged & found insufficient.  
My line of thinking is, Airbnb allows "Legal Entities", IE a multi member business. 

Businesses often times have multiple officers.  Multiple members who could be the person in charge of the Airbnb profile. Meaning Airbnb theoretically couldn't delete your account because a new member was in charge of the account.  And since a business can be sold, the new member of the new owners could then theoretically be the manager of the Airbnb account.  All still within the legal entity.
With this line of thinking, I could see a case where you could transfer the ownership.  

You'd definitely want to run this past an attorney. If you call Airbnb, you'll never actually get an answer you could trust on this.  I think you'd have to read their TOS, make your interpretation, run it past an attorney & then give it a try! 

I also really like the idea of building a brand that you could sell. It would be different financing but I'm sure banks could get it done.  Real Estate plus the business would be a stronger package, sold as a business vs. just the real estate. You'd hopefully get a higher EBITA multiple too.  


Let the nay sayers nay... It's a good idea. Outside of the box & could prove to be lucrative.  I think this is a rabbit trail definitely worth following.