All Forum Posts by: K S.

Ok I thought Bill meant 20k/year not per month which is more than enough to retire but to put things into perspective, accoridng to the historical S&P 500 calculator, I could have acheived the same results as Bill with just $1M invested 16 years ago. Pulling just 5%/year of the 5M today is around 20k/month (and would still increase in value). That would net me aproximately the same cashflow as Bill but for absolutely zero time in. Despite the nuiances, I prefer the latter which is why I'm stopping at 10 properties after this build and will sell off some in retirement as streamlining your life becomes more important. I don't find it "fun" as others say to rent out houses you've never seen and will never live or vacation in. I would get rid of the rest and convert them into a steady income streams. Diversification is better anyways and some investments like your 401k can't be taken in a lawsuit. 

I have plenty of colleagues that retired and soon to retire off their 401k and other market investments with millions at the same age as you guys but without the tenants, mortgages, lawsuites, maintenance, always searching, offering, closing and renovating, cpa headaches etc.

I like the idea of living off cashflow from free and clear properties or 120k/year with as few properties as possible. One of my free and clear condos alone cashflows as much as people with 12-24 financed properties. Why have a huge net worth in retirement when your cashflow is so little and you're not selling? To make your kids rich lol.

In my opinion Jack, I would pay off enough properties to cashflow enough to match or exceed your expenses and invest the rest in 401k, the S&P 500, Immediate Annuities, dividens or whatever. Too many mortgages into retirement means your multiplying your risk and headaches for what a tiny cashflow?. One poster just claimed 5 million in net worth generating only 20k net income into retirement. I would sell at that point and pay off the newer homes so I can cashflow from my equity instead of dying with debt.

Consider a SFH alone only lasts 50-100 years. My 40 year old SFH already had 30k-50k in renovation costs just to get the rents to market value because homes age. I purchased in 2006 but the home still returns the same despite the rents doubling due to the age, property taxes and maintenance. You'll also need to rotate all 24 properties at some point (27 years) in order to restart your depreciation. With changing times, you might find C neighborhoods become ghetto. No sense in rotating them for newer homes so I can die with a bunch of 30 year mortgages and little cashflow. Maybe this makes sense to those posters above but not for me.

Treat DST like the new timeshare lol. One would have to describe why it's safer than a CD, Bond, Annuity (which is federally insured) or just the S&P 500. They can't, which is why they just post a link and disappear.

Ok I thought Bill meant 20k/year not per month which is more than enough to retire but to put things into perspective, accoridng to the historical S&P 500 calculator, I could have acheived the same results as Bill with just $1M invested 16 years ago. Pulling just 5%/year of the 5M today is around 20k/month (and would still increase in value). That would net me aproximately the same cashflow as Bill but for absolutely zero time in. Despite the nuiances, I prefer the latter which is why I'm stopping at 10 properties after this build and will sell off some in retirement as streamlining your life becomes more important. I don't find it "fun" as others say to rent out houses you've never seen and will never live in which is why just owning your primary and vacation homes makes more sense in retirement. I would get rid of the rest and convert them into a steady income streams. Diversification is better anyways and some investments like your 401k can't be taken in a lawsuit. 

I know that this is a RE forum so theirs a bias against other investments but I have plenty of colleagues that retired and soon to retire off their 401k and other market investments with millions at the same age as you guys but without the tenants, mortgages, lawsuites, maintenance, always searching, offering, closing and renovating, cpa headaches etc. I'm just saying for people reading that are like me whose primary focus is on a real job, then you can acheive the same goals as the average RE investor by investing in the market. 

@K S.

$20k/mo far exceeds my expenses already. 

Thanks Jake&Bill,

Closing within the next month (TX). I think taxes are $63,000. Reinvesting in CA.
Federal Taxes at sale: = $50,000 + depreciation recapture of $13,000. 

That's 330k(sale price) -120k(cost basis) -30k(closing costs) = 180,000 x .28). Depreciation recapture is $13,000. That's 51,000 in depreciation deductions x.25%

I can't remember if the $25,000 in renovations to get the home sale ready could be deducted from the taxible income?

One more thing, last year my taxable income was $-8,000 (negative) but I think this year would be even more due to the renovation. Although I think I'm capped at some of the renovation expenses. I'd have to look at my tax book again to see if I can apply the $25,000 in renovation against the 50k in taxable appreciation and 13k in deprectiation recapture. I just don't know at this moment. Plus there's 6 months of vacancy loss as well.

Lastly, maybe I can purchase an E car for the $7500 rebate, and maybe dump some cash into a Roth (already maxing out my 401k). Not sure how else to eliminate whatever is left.

Looking for ways to turn this into non taxable cash or just purchase something to avoid taxes.

I'm on my second 1031 exch but later found out that I can't use the funds to improve on already purchased land so I'm a little stuck finding something to purchase to avoid the hit on taxes and at the same time assist with the build if possible. I could purchase a condo and pull cash out using a HELOC?

If there's nothing one can do, would you just buy more land in cash to build on later or a small shack in the mountains for a 2 ADU Duplex build. Any advice?