All Forum Posts by: Joseph Delia

Great thread!  I've often thought there ought to be a niche community within BP for the "high paying non-RE job" demographic.  The number of replies to this thread proves there are a lot of us.

My solution to your problem is not a direct answer but it is effective, if it's possible for you.  Change from a W2 to a 1099 earner if possible (or leverage your wife's new real estate business in similar fashion).  By doing the same job as a consultant there are a ton of opex and capex tax breaks (which are even better if you don't have an office space and thus have to setup a home office).  One of my favorites is that I get to write off 14% of any remodeling I do to my home (the percentage of my home that my home office takes up)....and of course, I can write off 100% of anything I do to my home office itself (new double pane insulated windows and automatic blinds, for example).  All legit, thus no audit fear.
 

For retirement, the Personal Defined Benefit is much better than even the SEP, if you are a bit older (thus the actuarial math is phenomenal), with steady high cash flow.  I've turned down multiple HR recruiters who think they "get 1099 consultants", by trying to beat out what they think I contribute to SEP.  Also, I just like my job ;-).

There are other breaks, but you get the picture.  It took me too long in life to realize that W2 income really is "wage slave" income.  Not only does your company control you but the IRS uses W2's to keep you inline.  Running your own business (even doing the exact same job!) is the way to go if your client/company will allow it.

P.S.  The latest tax bill does absolutely ZERO for HIGH INCOME pass throughs and also for service based pass throughs.  That's a red herring.

LOL, nothing like starting the New Year by lobbing a hand grenade topic into the forums ;-).

I personally wouldn't do it, but then I have sufficient cash flow (and equity on existing properties against which I can secure loans) that I don't need to do it.

If I was younger (less than 35), then I probably would borrow against my 401k if I saw the right house and REALLY believed in that local market and that specific property.  Like REALLY believed in them.

I didn't do quite what you are proposing, but I'm in a similar circumstance and came up with a different solution in a different expensive, growing city.  Many of the same issues apply.

I bought a home as a "personal residence" in a Seattle suburb.  It had a floor-plan that I liked which allowed me to close-off the walkout basement and create a separate unit.  I got a permit for it (an Accessory Dwelling Unit, required in Bellevue, WA) and I live in that unit (when I am in town).  I then rent out the rest of the house to a nice family (the home is in a great school district so is relatively easy to rent).  One could do this with any home that has a Mother-In-Law suite/unit like capability.

To answer your two non-geographic specific questions:

- HOA's are all over the map with regards to what they will allow you to do. Read the HOA covenants and if you think you're good to go, also ask if anything is being currently being discussed (to change the covenants). But as others have said, a lot of the larger high rise type condos have blocked out short term rentals. I own a condo too, and as a condo owner, I totally understand and generally agree with this "short term rental blocking" policy.

- Financing for "potential rental income" is not something banks look at (in my experience).  Even when they run the numbers on current rentals you already have in place, they typically want 2+ years of rental income before they will incorporate that into you income.

This is a common way of stating things that actually builds a misconception that small businesses are better for (or bigger drivers of) the economy than large corporations.  Economic theory (I'm no teacher) says this is not true.  Large companies, in particular those that drive strong international trade, lift all boats.  Many, many, many small businesses could not exist at all if it were not for the large companies they operate alongside.  For example, what good is a bunch of dry cleaners in a town where the company with the well paid suit wearers just went out of business.  Etc. Etc.

Corollary:  If you want to start a small business, you're more likely to be successful if you put it in a corporate boomtown (unless you're some sort of Etsy type or something).

The roommate model is extremely easy to execute in Puget Sound.  Lots and lots of folks group live as they are working hard while building cash nests.  Tech and retail workers in particular.  I guess check CraigsList for a sense of availability and pricing by region.  Real estate (both rental and buying) opens up a lot in the spring though, so don't necessarily be dissuaded by what you see in November/December. 

Hello Shawn!

As a University of Illinois grad school alumni (mid 90's), I feel obligated to reply, even though I'm not sure how much I can help.  For background, I'm a military brat who went to high school in Ohio (another Big Ten state!), college in New England, grad school in Illinois, and have lived professionally in New York City, Seattle, California and a couple of other places (e.g., China).  The last 14 years or so I've been Seattle based (I still travel a ton).

Culturally speaking, Seattle is what I have for years called "the Midwest on the West Coast".  No offense, but I didn't always mean that as a compliment.  I usually meant it to imply "nice to your face, but passive aggressive behind your back".  This instantiates itself at work (in my field anyway) at people being nice in a meeting and telling you they are going to do something, but then they ignore you after the meeting is over.  I personally prefer the NYC "tell it like it is style".  In NYC, people will tell you to your face in a meeting, "I'm not going to do that.  I don't have time and it's a waste." I just love that directness :-)

That being said, the city has a ton of "immigrants" this last decade (and by using the word immigrants, I mean that to apply equally to "out of staters" as "internationals").  All in all, it makes for a great multi-cultural city(i.e., it is becoming more and more like NYC and SF every year, and to me that is a GOOD thing).

Economically speaking the numbers you threw out are indeed going to make it a bit tough (on the East Side of Lake Washington at least, where I live and invest).  Is the source of your income all rental income?  Or is it professional income of some sort that may increase by moving to Puget Sound?  My hunch is that going South towards the airport (Renton, Kent) or North (Lynnwood and above) would be best bets.  Pay attention too to the future ST3 (light rail) plans as that will give you a sense of where mass transit is going in (i.e., areas that will grow over the coming decades).  Of course, every developer in the COUNTRY is also well aware of Seattle's light rail investments and thus they are buying up and developing properties around those future stations/routes.

Feel free to privately message me if you have any questions.

P.S.  I still miss Papa Del's pizza and I sometimes feel like making the 2 hour drive from Chicago to Champaign every time I fly through.  I never do though.

Interested as well.  Although I own property downtown, I prefer not to deal with the traffic. Eastside would be my vote.  If it must be downtown, then weekends with no game day traffic.

It's only advised if you want to have a chance of your offer getting accepted ;-).

But obviously, that means you want to feel confident that you can deal with any problem that is likely to arise.  One gets pretty good at "self inspecting" too.  I recommend a book like "The Confident House Hunter", written by an inspector here in Puget Sound actually.  You start to realize you can figure a lot out on your own during a walk through, in case you have to move fast (which is more often than not).

Also,  waiving the financial contingency is pretty much the norm in the hyper competitive local markets.  As I just advised a friend of mine, "Waiving the financial contingency doesn't mean you can't have a loan (a common misconception)...it means you have to either a) have the cash if the loan doesn't come through in time and/or b) be prepared to lose earnest money if your bank doesn't execute."

Has absolutely nothing to do with Seattle minimim wage laws.  I'm amazed at the number of folks from elsewhere in the country hoping and praying those laws are hurting our fair city.  False hopes.

Has everything to do with low supply (and inane immigration policies) and huge well paid demand (lots and lots and lots of well paid corporate workers who have disposable income but not time...time is more valuable than cash).  Also, Puget Sound weather means vegetation grows like crazy relative to dryer climates like SD, for example.

This.

More specifically:

- Real estate and the power of leverage

- Dismissing either stocks or real estate outright is a mistake (i.e., you don't and probably shouldn't "pick a side" in this discussion).