All Forum Posts by: Patrick M.

@Account Closed I don't really comprehend your comparison to a train wreck? A market correction are not a train wreck.

And I am absolutely not here trying to convince you of anything. I simply asked you for a chart that everyone except you knows does not exist.

For anyone else, look at the down years, the recessions and corrections- they were preceded by awesome growth years and complete recovery and remarkable growth within 2 - 3 years! WOW.

So why does that matter? Well- as you get closer to your retirement you can shift some of your assets into less risk/ less growth funds... say enough for 4-5 years, so if there is a correction it doesn't even phase you. In fact you will likely dump some of your bonds and buy the fire sale equities.

What is our friend Mike going to do if the market drops or there is another "no rent" event? By golly he is going to take that big, unwieldy, illiquid asset and put it on the market. Hopefully he will get a decent price, because he has to pay the real estate agent, title company, attorney, recaptured depreciation and other taxes, and mortgage... but there will be blood in the water and he will have no 401k to lean on... so he will be like the thousands of other unfortunate landlords who this year had to unload their houses (if they could)... except they had the the benefit of a pandemic market.

I HIGHLY recommend these 2 books:

The Psychology of Money - Housel

The Simple Path to Wealth - Collins

They are very easy reads, very entertaining and you will learn a lot.

Personally I think if I went onto Boggleheads and asked 401k or REI? the thread would probably read like this in reverse. Everyone reading, get a copy of those books- you will love them, really!

The market will crash 30-60 percent in your 30-40 year investing period, maybe even 3 times. EMBRACE IT! Keep investing, you are getting equities on SALE! Reprogram your head... don't be a sheep! Pile in. 

Maybe Mike Hern can show us a graph where the S&P did not recover it's losses? Yeah I didn't think so... It comes back and it comes back with a VENGEANCE! It will drop, it may drop a lot, but those drops are only temporary, but it's climb is RELENTLESS!

"Oh, but what about if it takes years to rebound?" Then that is years of you buying stocks on sale!!! Don't be a sheep- reprogram your brain... do a brain hack, as the kids say. Those people who kept contributing through the aughts and financial crisis are millionaires- many several times over.

I LOVE MY REAL ESTATE INVESTMENTS. They are providing me with cash now- some of which helps me max my 401k, some that helps me invest in indexes and 529s. And yes, they will factor in, somehow, to my retirement- but I will be damned if I would forsake a VERY LIQUID vehicle for one that is ILLIQUID and subject to a growing, progressive attack.

Compounding interest is a gift from the gods... it pays off HUGE over time. Patience.

If you find the right RE investment, take a loan from yourself and pay yourself back interest.

I doubt they will show. They are saving their cash for the next deposit/1st months rent. Trust me- there are more lazy landlords out there then the good ones on here.

Check, ACH, Zelle

My tenants are young professionals, good for 2-3 years. With the way my market is going I welcome a move out! Even when it wasn't this red hot I welcomed it.

I don't understand this fear of turnover. I love it and I am always financially better for it.

I don't charge application fees. Never did- I am a small operation with 9 units. As someone on here correctly pointed out- tenants are less likely to raise a stink if they get turned down.

Some use apartments.com. In my market Zillow is the be all end all. I don't mind putting my units up on multiple listings for the exposure- but I direct everyone to Zillow now. Many have already paid a one time fee for background/credit checks that can be applied to multiple listings... works for me, my profit comes from rent.

@Ted Rud 

"4. Max out a Roth IRA if your income (MAGI - modified adjusted gross income) is less than $125,000 in 2021 (Single Filer). This may be contrary to what some others here believe, but I feel that have retirement savings in multiple forms come your retirement, will give you the best options for tax-advantageous withdrawal. Especially since no one will be able to predict what laws regarding to tax will be at that time."

Right on the money Ted. And see if your company offers a ROTH 401k, more and more are... and if not, try and get them to. $20,500 (2022) into a Roth every year to grow and be harvested tax free. Yes please! One thing I do know is that if the current congress acts on the tax brackets- they will go up. And if they don't, the current rates will sunset when the Tax act does. I am all in. I max mine out even though I am in a higher bracket.

Well as someone who does both, let me tell you- once you get some cash accumulating in that retirement account it is a beautiful thing! If I pulled my cash out when these other people did I guess I would be downplaying it too.

Learn the Rule of 72, set it (S&P/small cap) and forget it (unless for a loan to buy RE) When your in your 40's you'll have hundreds of thousands in there and that's when it really starts to snowball! When you look at that $750k and calculate on past average that it could be $1.5 million in less than 6 years! Only someone who stopped contributing would downplay that. Sure there will be drops- but it is a relentless, upward trajectory.

Oh but you have to pay taxes on it! uh, yeah... duh. Your going to be paying taxes on your real estate sale as well- but with one you have far better control of the spigot

Learn what an S&P/SC index fund is. Your money is not going to disappear because of some stock brokers! That is an asinine proposition. You have a slice of all of the best companies, and if they go sour, (GE, Sears) they get dropped from the index while others (Tesla, Moderna) get added.

Look at the graph of the S&P 500/SC- it drops occasionally but climbs relentlessly.

1. Do not forsake one for the other.

2. Always use one for the other. (Loan for RE and increased contribution after cash flow)

3. And do not be misled into thinking that RE is a passive investment! (If you are going to invest- cash flow. get paid for your work)

Good luck!

@James Somers remember to consider that the many, many, many people who "fail" in real estate do not come to a discussion board to discuss. So those of us who are bullish on RE have succeeded- but just like many small businesses, remember- we are the minority and over represented on BP.

1. Is this for "future you" or "current you"?

        If it is for future you- I say no way! And that is my experienced opinion. I would be a miserable person and crappy landlord if my RE was covering costs in the hopes of some great payday in the future. If you do it correctly it involves work and the more you work the more you are going to want to be paid today. But, I have found, that with the right properties, RE is an investment which can readily reward you proportionally to your work, today.

        With a W2 that is providing for a comfortable life there is, hands down, no better investment for "future you" than an index fund tied to the S&P/small cap or mix . It requires zero effort and contrary to what has been said- it will more than out  perform inflation and many RE appreciations when you factor in true costs. You will not have to buy it a new water heater. Go to court to get someone out of it. Pay very real, today dollars, taxes and quite frankly- work. 

        If this is for current you- Have at it! Get your company match and redirect the rest into a real cash flow producing property. It is a beautiful thing- really! 

Just remember- the 2 are mutually exclusive if you are doing one for current you and one for future you. And don't let anyone downplay or make you believe index fund investing/compounding interest is anything but a gift from the financial gods.

Sure, when I sell I stand to make a very significant profit... but that is future me... and as sad as it is to think, he may never exist. I would have stolen time away from my family and worked for a payday that I never saw... I make great money now and I am paid very well to be the best landlord my tenants will ever have.