All Forum Posts by: David Yee

Quote from @Denver McClure:

Hi @David Yee. I would consider your capital gains tax rate (long/short), your current tax bracket, and account type when determining if you should sell your ETFs for a rental property. You should absolutely calculate your tax exposure into the cost of the property when analyzing the purchase and consider that a financing cost. If you are investing out of a taxable brokerage account, then I would recommend utilizing a Margin Loan to avoid selling off your ETFs and instead just borrow against your portfolio. Just do your research on which brokerage provides the best rates and LTV. Feel free to PM me if you have questions.

1.  Loss harvesting or low tax positions first

2. As the post above notes setup separate accounts and use for collateral.  We usually move our cash equivalent positions to cd’s with the bank.  This will also get you about 1% point less on the loan.  If stock make sure you don’t get caught with a market decrease now or at refi time.

3. If you do sell positions don't time. Just sell them and sit on cash equivalent positions. Then move into your REI. Take this issue off the table and focus on the REI.

4. Don't worry about anything and just liquidate your stock positions. Look up posts on this. Basically the power of leveraging versus the tax loss of your stock positions. Also as noted in a post above if you're hungry and have a plan go all in on REI. If your developing or value adding you should make your tax position back on your first deal.

Tomorrow will be bidding on some land at an auction  Our top bid price will be to accomplish an 100% return in 2 years with about a 10% improvement cost.

None of the above is financial advice.  Just avenues.  

Take a piece of dirt and add value.

Quote from @Denver McClure:

Hi @David Yee. I would consider your capital gains tax rate (long/short), your current tax bracket, and account type when determining if you should sell your ETFs for a rental property. You should absolutely calculate your tax exposure into the cost of the property when analyzing the purchase and consider that a financing cost. If you are investing out of a taxable brokerage account, then I would recommend utilizing a Margin Loan to avoid selling off your ETFs and instead just borrow against your portfolio. Just do your research on which brokerage provides the best rates and LTV. Feel free to PM me if you have questions.

Quote from @Account Closed:

Quote from @David Yee:

Hello! I am currently 33 years old and most of my investments are in the S&P 500 as well as other index funds. I am considering selling some of my stock (between $50k and $100k) to put a down payment on a rental property. I already have a mortgage on the house that I live in.

What do I need to consider when determining whether I should sell stock to make a down payment on an investment property? Thank you! 

You already know the myriad of problems with being in the stock market or you wouldn't be looking at real estate. It can crash and crash hard.

That being said, I don't think the stock market requires much active involvement. There also isn't cap ex (fixing thinigs that break or wear out) and you don't have to deal with tenants, toilets and trash. You don't have to do evictions or deal with vacancies. 

You do get a temendous amount of leverage, cash flow, tax write offs, a tangible asset and more.

But, to make money in real estate without the tenants, toilets and trash, you become a lender. And your 401(k) or IRA can do the lending.

DM me if you want more information.

We had/have a huge problem with the stock market. With the Fed having a desk in Chicago in the same building as the options house I see it as a completely rigged game. Some entity (s) has the ability for AI computers to hammer prices up, or down and that entity has enough liquidity to move markets enough to trigger stop orders on us consumer investors. While big players can also effect the housing market and real estate I think the pool is too big for them to move SFH prices efficiently. If you are 50% leveraged in your income producing RE portfolio, my theory is that you are 100% hedged to what inflation will do.

Here is my math. If you need $10,000 a month to live on and $5,000 a month comes from your portfolio cashflow, and it is 50% leveraged, your numbers should look something like this.  monthly rental gross = $18,000.  monthly expenses before debt = $7,000, debt $6,000 , cashflow $5,000.  If inflation and rents are close to equal and both go up 5% -  monthly rent = $18,900. monthly expenses before debt = $7,350, debt $6,000 , cashflow $5,550.  So your personal budget = $5,000 from other income + $5,550 from cashflow.  You are now making $10,550, so you purchasing power went up 5.5% with a 5% inflation across the board.  As you own more of your portfolio and get less leveraged, inflation will take a bigger % of a bite from you.