All Forum Posts by: Dennis Cosgrave

When I reached 10 properties, it just became too much to manage so I sold them all and used the proceeds to buy a couple of large apartment buildings. They had live-in managers who dealt with the day to day stuff, which made my life a lot easier. 

The best thing you can do is lead by example. Follow your own path and if and when you are successful, the results will speak for themselves. Kudos to you for not blindly following THEIR example. I discovered a long time ago that you can lead a horse to water but you cannot make him drink. People only change when they want to. 

Christopher Liu, I was in Manilla for 3 months in 2018. I was totally amazed at the level of new construction that was going on. I am curious to know if that level of construction is continuing and who is buying all those condos. Secondly, about 30% of the Philippine economy is from people working outside of the Philippines primarily in Middle East hotels and cruise ships. Surely, with the current lock downs in effect, the effect on the Philippine economy has to be significant. 

Given the history you describe, your parents do not seem to be that responsible. First, you stated they filed Chapter 13 in 2008. That should have dropped off their credit report by now. I would first start with cleaning up their credit scores. Second, given the current environment, I would be more inclined to get rid of the tenants, do the renovations that would add more value to the property than what it costs to add and then sell it. I would secure a loan myself, and register it as a second mortgage on the property. When the property is sold, your loan is paid out and your parents get the profit. 

Don't get hung up on closing statements. As James Mc Ree pointed out, follow your own bookkeeping. The only thing you need the closing statements for is to pull out the costs that were attributed to you, and add them to your income statement. You are trying to compare apples to oranges. This is the same as trying to compare a bank statement to an income statement. They will never be the same, especially with real estate. For example, you have non-cash expenses like amortisation and depreciation that you will never see on a bank statement. 

I am wondering why you are even looking at commercial real estate, given the current environment. WFH is reducing demand for office space, hotels are on the brink of major default because of the COVID scare, and retail is going down the drain. What is your investment strategy?

This is why I hate condos and HOA's. You always get some ego tripping commando who wants to make your life a living hell.

Jon Schwartz, my accountant taught me a long time ago, the point is not how much money you earn, but how you structure your income. A large percentage of people with a net worth in excess of $30 million have structured their incomes so that they pay as little tax as possible. Much of their income is funneled through offshore corporations and much of their assets are held in corporations in other countries. What the government fails to appreciate is that when they start imposing more taxes, the wealthy just fine-tune their structures. If that doesn't do the job, they will just move to a more tax-friendly jurisdiction. The government collects much less tax revenue than they had planned on. Then the floor gets lowered to $20 million, and the rate goes up to 0.7%. Do you see how this ends? You might want some redistribution of wealth but until there is a one-world government with identical tax policies worldwide, that is just not going to happen. 

Aaron F, this is my biggest concern. I did a little bit of research on the history of wealth taxes. France is the classic example. Hollande introduced a wealth tax of 1.4% on all assets over 800,000 euros. Macron abolished the tax in 2017. What was the impact? 10,000 of France's richest citizens moved out of the country. For every euro the government collected in wealth tax, they lost 2 euros in income tax. 

This is onerous for California. The top 1% currently pay 46% of all the taxes while the top 5% of earners pay more than 65% of all the taxes. If a large percentage of those people choose to move, California will have an even larger revenue shortfall. That means taxes will be raised on everyone else. 

It all sounds great on paper, but in reality, capital always moves to where it is treated best.

I also did some research on the constitutionality of a wealth tax, and there is wide disagreement among constitutional lawyers. We all have to wait and see how the Supreme Court will rule, which it eventually will.

In the meantime, if California actually passes this tax bill, Illinois, New Jersey, New York, and Connecticut will likely follow suit. The short to medium term consequence will be a seismic shift in demographics in the country. 

AB 2088 establishes a first-in-the-nation net worth tax, setting a 0.4% tax rate on all net worth above $30 million. If successful, Illinois, New York, New Jersey and Connecticut are likely to follow suit. How will this tax effect you and what, if anything, will you do in response?