All Forum Posts by: Michael Masters

@Vincent Salviano I have nothing to add on this particular property, but when I don’t know a neighborhood/street I do a “virtual” driveby. I use googlemaps and go up and down the street and neighboring streets. Someone mentioned a nearby college. “Walk” to the college with streetview in google and see what the walk would look like for a student. Having said that, I stick pretty close to areas I know, venturing maybe a little out if something looks particularly good (aesthically and financially). Also, be careful posting the exact address of properties you like, who knows who may be lurking on these boards looking to scoop a property out from you. I guess not a real concern for properties on Loopnet but if you find something more off-market.

My personal decision process makes 15-year mortgage very unlikely:

@Jason L. Be aware that your comparison is not quite apples to apples. The 650/month you pay is interest only. On the new loan, interest is $814/month, the $1000 includes paydown on principle. So you’re building equity at $186/month, which you should include as profit.

Originally posted by @Mary Browder:

@Jeff Greenberg

 I'm sorry you had to learn the hard way about insurance being useless for asset protection. I feel like I say some version of the sentence "Insurance is not a substitute for asset protection" about eight times daily.

 It's not that insurance doesn't cover this, it's that he went to the wrong insurer.  Like I said in my prior post, get the insurer details for the year the shooting occurred.

In my mind, this is another example of how forming a company DOESN'T protect you and only makes it so you take on prior year liabilities.  If this property was bought as an individual and not bought as a company then there would be no transfer of old liabilities.

Originally posted by @Jeff Greenberg:

So the LLC that owns one of the property's that I control, along with my current PM, was named in a lawsuit. It seems that a guest of one of the tenants was shot while attending a party. It seems that it is being inferred that by buying the property, not only did I buy the asset, but also the liability.

If you purchased the entity with all its assets and liabilities, then you therefore purchased the historical insurance coverage as well.  I would go back to the seller and ask who the insurance carrier was in that particular year.  It is this insurer who should be covering this claim.

If the seller won't cooperate, use you attorney to get the policy info.

Originally posted by @Bryan Clement:

 Any response to my real comment, which was that your argument for why 401k's are dead only applies to active mutual funds and not passive mutual funds?

I'm not saying 401k's are the best investment for everyone, but certainly saying they are not viable and should be considered dead is a drastic overstatement.

The way I look at it, RE is 181% of my net worth.  But that's because I use leverage so my net worth is less than my real estate holdings.

If I net out loans from my real estate holdings, then my breakout is as follows:

77% Real Estate

20% Stocks/Stock Funds

2% Cash

1% Other

@Bryan Clement This arguement about size hurting returns only applies to “active” funds. Passive index funds by definition perform at the index return no matter the size. Active funds have underperformed since the crash in ‘08, I wouldn’t invest in these active funds until they prove themselves again. Active funds are also the ones with high fees. I also agree with Warren Buffett on many things. He recently said he would instruct his wife to invest almost entirely in an S&P index when he dies.

Originally posted by @Steve B.:

@Tom V. I’m not arguing against 401k’s as an investment vehicle.   I’m pointing out a major, growing problem with 401k plans, specifically ridiculous and rising “management fees” for a captive financial product.

Rising fees?  Where are you getting this info?  From what I read fees have been decreasing due to complaints:

https://www.cnbc.com/2018/05/09/401k-fees-are-falling-due-to-lawsuits-over-charges.html

Some employers are obviously getting it wrong as that article shows.  However, for me personally I'm in a low-cost index fund for my 401k which charges 0.04%.  That's $40 for every $100,000 invested, doesn't seem high to me.  Most people just need to spend 30 minutes researching funds rather than just randomly picking.

I've also moved jobs and transferred my old 401k to an IRA. With this, I can move it around and take advantage of broker bonuses like those shown at this website:

http://www.hustlermoneyblog.com/best-brokerage-bonuses/

Let's say I currently have an IRA with $250,000 in low cost fund charging 0.04% (available with S&P500 trackers VOO or IVV). I pay $100 in fees every year but offset it with a $600 bonus for moving to a new broker. I'm actually getting paid $500 for them to hold my investments.

Nope, those fees aren't not too excessive for me.