All Forum Posts by: Account Closed

High-yield savings accounts are paying interest at a 1.75% rate now as the Federal Reserve raises interest rates. That's $4,375 a year of income on the $250,000 of principal that's guaranteed by the full faith and credit of the government (FDIC or NCUA insured). The principal is liquid and can be redeployed into something else at a moment's notice.

When I'm not sure what I want to do, I stay in safe cash and wait until I can figure things out. When I'm ready to move, at least I have the cash.

For me, realizing I had no viable future in Corporate America. That pushed me into my MidLife Crisis, which forced me to think different about my goals and my money. I still haven't done any direct rental property investing, although I looked into it quite a bit over the years. I found my calling with financial investments (securities, including those related to real estate).

Somehow I had the foresight to buy a home early in my corporate career ("buy the biggest house you can afford because housing prices will always go up, the balance on your mortgage will always go down, and your income will always go up"). I sold the home a few years ago for many times what I paid for it, but only because Silicon Valley took off in ways I could have never imagined at the time I bought it.

You actually learn more when you surround yourself with incorrect people. LOL

I've had to learn the hard way that being around the right people is critical to my success. Finding the right people can be a trial and error experience, but it's worth it in the end.

Perhaps I have the wrong idea about money, but I start with 2,000 calories a day, which is the amount of food I need to keep my metabolism going. From my agricultural roots, I think of planting seeds and eating the resulting vegetables and fruits (or killing and eating the animals that eat the vegetables and fruits). But I left the farm and worked in industry, where I earned money from my labor (time --> money) to buy the 2,000 calories a day.

I knew that if I saved a portion of my income and invested it in income-producing assets (money --> money), the day would come when the income from those investments would be enough to buy the 2,000 calories a day I need to stay alive (my parents were struggling farmers in what is today the Rust Belt and were always looking for innovative ways to survive financially). You try stuff and if it works, you go with it. You try stuff and if it fails (and aren't wiped out), you learn from your mistakes and try something different.

Now the question becomes the best ways for me to increase my passive incomes to create this income stream I need (the wellsprings of cash that outrun my growing expenses [healthcare in old age] and inflation). Many alternatives exist (interest from savings accounts and bonds, dividends from publicly-traded and privately-owned businesses, rents from real estate, royalties from intellectual property). They each have their advantages and risks (sustainability, return on initial investment). The approaches used to own income-producing assets also have tax implications and lawsuit exposure. Highly-paid specialists (lawyers, accountants, and so forth) know what the rules are and can help wealth builders achieve the goals they are trying to achieve.

For me, the bigger picture is paying for those 2,000 calories a day with the cash I earn passively whether I'm awake or asleep. Strategies to make this happen include selling or not selling, leveraging or not leveraging, and so forth. No one at the store has ever asked me which Cashflow Quadrant I'm in. They're happy to accept my cash (chip-and-PIN debit card, which means the cash exists and is not counterfeit) in exchange for whatever it is I want to buy.

P.S., In 2004, Dr. Tharp published his book Safe Strategies for Financial Freedom. He had some good ideas in the first part of the book that made me think. For example, if you own a boat, coin collection, and house, take a look at them and the alternatives. If you only use the boat infrequently, for example, perhaps it makes sense to sell the boat and invest the proceeds in income-producing assets. Then when you want to go out on the water, renting a boat might make better financial sense if it leaves you with more money than you had when owning the boat.

He also said if you balk at selling an asset, ask yourself why. At the time, the thought of selling my home seemed like heresy (I mean you just don't sell your home for something crass such as building your wealth). But I've come to realize the American Dream wears off after a few years and the hard realities of property management set in. The BRRRR strategy, in fact, depends on forced appreciation and regularly turning over your personal residence (for the tax benefits) as one of the strategies to build your wealth.

FYI -- When the apartment complex where I'm living in Florida changed hands earlier this year, the new landlord requires the tenants to have renters insurance throughout the term of the lease ($100K minimum coverage). My policy lists the landlord as an "Interested Party" and the landlord receives an email from the insurance company about my policy status.

When I first got the policy, the renters insurance company was surprised the previous landlord didn't require it. I got the policy because I wanted umbrella insurance, which requires both auto and homeowners (or renters) insurance. I'm a "between homeowner" renter right now who is outsourcing my property management responsibilities to someone else.

After I sold my home in San Jose, California a few years ago, the buyers didn't move in because they applied for a building permit to turn the place into a McMansion. The lawn got out of control and because the property owner information hadn't been updated in the city's database yet, San Jose sent me a letter after someone complained (forwarded to me by the Post Office).

The letter said I had so many days to remedy the situation and the city would send out an inspector to check. If the lawn was still overgrown, the letter cited the daily fine I would have to pay. I called the city to explain (I also let my realtor know as a courtesy so she could let the buyers' realtor know).

In extreme eyesore situations, government gets involved and code enforcement liens on the property can add up over time.

What I don't understand is why would anyone ever want to own swampland? LOL

Are you willing to settle for a facsimile?

Living Like the President in These White House Replicas

https://www.mansionglobal.com/articles/living-like-the-president-in-these-white-house-replicas-51831

When learning how to swim, some people say it's best to start at the shallow end of the pool, while others say it's best to start at the deep end of the pool. I'm a start-at-the-shallow-end-of-the-pool guy. Start small, take baby steps, toe dip, pilot trade, only use money I can afford to lose -- these are the rules I have in place to protect myself from myself.

As a former homeowner for 33 years (I was my own landlord and tenant), I can empathize with the landlords on BiggerPockets. From experience I know I don't have any rehabbing skills, nor would I want to be my own general contractor who manages the selecting and directing of the subcontractors to do the actual work. Mechanical skills and people skills are not my strengths.

Besides owning a home, I started out in real estate with publicly-traded funds and REITs. I'm now toe-dipping with illiquid crowdfund real estate. I doubt I'll ever own rental property directly, but I've also learned never to say never. The finance side of real estate and investing is where my strength lies.

Regardless of which end of the pool you choose, the only way to learn is to jump into the pool and either sink or swim. Others on BiggerPockets are in a better position to provide you with ideas on which projects might be best for you.

Looking back is easy because hindsight is always 20-20. In the most recent past, the Reg A+ REITs from Fundrise and RealtyMogul have had yields in the higher single digits, while according to Investopedia, ETF REITs have had yields in the lower single digits. Publicly-traded REITs are repriced constantly during market hours, while non-traded REITs have no secondary market (so pricing is based on net asset value, which doesn't change that often).

Foresight is a little harder. How will these various alternatives perform in the future? If I could read tomorrow's newspaper today, I would be able to answer that question (except that if I really could read tomorrow's newspaper today, no one is every going to know about my ability :-)).