All Forum Posts by: Josane Cumandala

Originally posted by @Tom V.:

@Josane Cumandala  What did you hold in your 401K account that produced such meager returns?  Who was the plan sponsor?  The 401K account itself is not an investment.  It is a kind of account (as in, a checking account, a savings account, a 401K account).  

Were you prohibited from moving your funds to a standard IRA where you could choose any listed equity product?

Was you employer matching any of your contributions?   I have never seen an employer offer an employee either to match contributions or pay the employee more.  It isn't as if employees get to choose in my experience.

 I am aware. I was invested in all solid low-cost Vanguard funds and yet the returns were garbage. I also have an account with Vanguard with after-tax money so I figured it had to be the 401k provider. I get a 4% match if I contribute 5% or more of my pay so yes the money adds up quickly but like I said this is a benefit that ultimately comes out of the money my company would otherwise spend on my salary, it's not free money. 

I prefer to have more control over my money. I am a saver and am consistently saving 20-25% of my pay in order to achieve my goal of investing in real estate. The tax benefits of doing that far outweigh the temporary benefit of the 401k so I'm taking the hit. If you have systems in place that deliver consistent cashflow I don't see why you need a 401k.

Not sure if I can roll it over to an IRA, probably can but I'm not interested in equities at this time. I mean, I'm on BP lol.

I personally stopped contributing to my 401k when I saw how badly it was performing despite the U.S being in a record bull market. Like I knew for a fact that the funds I was invested in were up because I also hold an S&P 500 Index Fund that I contribute to after-tax and the stock market has been overall up since I entered my company's 401k system. And yet somehow in a historic bull market my 401k was returning -2 to 0.5%. Like what?!

And I dug into it and the only explanation could be the hidden fees which my company and the 401k provider does a terrible job of explaining. The language is deliberately convoluted and tedious and to get the most specific information about fees I was told point blank that I had to call the 401k company. 

That to me, is ridiculous. And by the way it's not like employers are just giving away money with a 401k match. It's coming out of the money they would otherwise be able to pay you in your salary. 

The whole thing seems like a sham. The data is already coming out about what 401ks are doing. More people are declaring bankruptcy in retirement than ever before and this is only the beginning. I highly recommend Andy Tanner's book 401kaos for a more detailed explanation of what's happening.

 For now I choose to save after-tax money to deploy into real estate and other investments where I am an active participant. I realize not everyone is in my position to study investing in depth and take the steps I am taking, but I do not have much faith in the government solving the problem on a systemic level so I am taking control on the micro level of the one thing I can control which is myself. I'm young enough to figure things out and build a long career out of investing. I really do worry about my parents' retirement and I want to make sure I am able to help them out when the time comes if I have to. :/

Originally posted by @Ned Carey:

@Josane Cumandala you comment reminds me that the biggest proponents of affordable housing seem to be the first, to do things to drive up the cost of housing.

 Pretty much. Is it by accident or by design? *scratches chin* 

NYC real estate professional and resident here. I think there are a lot of reforms that make sense and the real estate market would remain pretty much as it is. The thing I dislike about this push for more rent control is that some of it is built on lies or at least misinformation.

Her website states: "Rents in New York City are increasing twice as fast as wages." This is FALSE. Rents have been falling in the city over at least the past year or so and in the years prior to that landlord concessions were at unprecedented highs (paying broker fees, months of free rent, Amazon giftcards etc.) as property owners and managers desperately tried to fill their units without dropping the price. That tactic has officially stopped working and now renters expect price cuts as well as concessions because there is so much competition in the marketplace. 

There's no way to impose enough rent control to house everyone. The only way to do that is to bring more units online and let the competition bring prices down to meet demand. Rents have flattened out in the city because wages aren't increasing and because especially in Brooklyn there is an excess of supply. That reality is bringing prices down, not rent control.

Congratulations! Keep pushing and never give up. :) 

Progress is addictive and with the "compound affect" the changes you are making now will only snowball into more success.

Originally posted by @Brian Schmelzlen:

Originally posted by @Josane Cumandala:

Interesting. Following this thread to further my knowledge and plan my investing strategy. Thanks so much everyone for sharing! 

I can see how this hurts small landlords and turnkey investors. Does this apply for commercial real estate? By that I mean larger apartment buildings with 5+ units that have to get commercial mortgages? Or even things like self-storage, mobile home parks, etc.? Generally commercial buy and hold real estate is much more complex and often involves syndicating with many passive investors fronting the money. 

The same Section 162 standard applies to commercial real estate, but in my opinion it will be easier for commercial real estate to qualify as a trade or business.  It depends on the trade or business though since not all commercial is the same.

Self storage, for example, is pretty clearly a trade or business.

Owning a property that you rent through a triple net lease though seems to pretty clearly be an investment and not a business.

Larger apartment complexes and mobile homes parks would also have a fairly easy time qualifying as a trade or business because of the amount of continuous, systematic activity that is required to keep them operating.

However, the smaller you go the more questionable it becomes.  For a single family home, it is possible that your only activity would be to collect rent (and you might outsource that to a property manager).  Therefore, it looks like an investment and not a business.  However, the more units you have the more likely it is that there is continuous, systematic activity (and that indicates that it is a business).

Good to know Brian. Thank you! :)

Interesting. Following this thread to further my knowledge and plan my investing strategy. Thanks so much everyone for sharing! 

I can see how this hurts small landlords and turnkey investors. Does this apply for commercial real estate? By that I mean larger apartment buildings with 5+ units that have to get commercial mortgages? Or even things like self-storage, mobile home parks, etc.? Generally commercial buy and hold real estate is much more complex and often involves syndicating with many passive investors fronting the money. 

Originally posted by @Daniel D.:

@Josane Cumandala

Hey Josane, Yea tell me about it, the COL is so high it makes it difficult to find homes in ideal locations especially if you're doing it alone. My dream is to buy and hold multiple properties to generate passive income. I hear the success stories about people retiring at 40 traveling the world sipping margaritas enjoying life. I want that, the vacations the margaritas everything lol. I'm young so that's an advantage on my part. I definitely agree with the concept of investing in my education. I've been reading tons of books and watched most of the podcasts. But they're still a whole bunch of stuff i don't know. Honestly the reason why i'm taking the course is because of my girlfriend. We share the same interests, the only difference is unlike me she wants to become a real estate agent. So i figured whats the harm i'll take the class and i'll benefit by gaining direct access to the MLS. Having my real estate license would be a personal accomplishment for me because i'll know that i had a goal and i got something out of it. And i guess it would push me to continue to strive for more and further solidify that i'm on my way to my dream a step at a time.

I see. Well I'm glad that you have a partner who supports your endeavors and shares your goals of financial freedom! I will say this though as a former real estate salesperson...It's a full time job. Are you looking for an investment or a job? There is no MLS for NYC, Streeteasy is the name of the game and it's public-facing and free for users (not free for agents). For CT and NJ yeah it might help. But just know there are more liabilities for you if you engage with public as a real estate licensee. If you're good at it though and you can make it as an agent and investor the real estate professional designation is sweet for taxes. :)

Hey Kyle! I'm a residential real estate appraiser and aspiring investor in NYC. Always looking to network and help local investors and real estate professionals :) I would say invest in your education first which I applaud you for doing. Don't be in a rush to buy anything. Also if you're serious about wholesaling be sure to work with a CPA because each wholesale deal is a big tax event. I wish you the best on your investing journey! :)

Hey Daniel,

I feel your pain as a fellow NYC resident. If you absolutely must own your home right away as a young person probably you will have to look in the boonies or way out in the suburbs which may or may not be feasible with your current job. 

So what are your dreams? Getting a real estate license has nothing to do with being a real estate investor, but they can compliment one another well if you plan it out right. I hope you're also talking to a CPA. If you're also looking at residential mortgages on top of that my word of caution is just don't get bogged down in shiny object syndrome. Invest in your education first before you rush out and spend a lot of money on courses and and all of that because this city has a lot of needless distraction if you don't have focus. 

Good luck!