All Forum Posts by: Frank Jiang

Here's your fundamental problem.  Your total amount repaid does NOT equal the future value.  The FV is the 1489.84 that you calculated.  You can get the same answer just growing 1000 @ 8% for 5 years [1000 * (1 + (8%/12)^60)].

The reason it's not equal to the 1,216.58 total payments is because a portion of this 1,216.58 is paid at an earlier point than your FV point (5 years in the future) and thus those payments are subject to Time Value of Money.  Basically, the first payment you make of 20.28 has to be grown @ 8 percent for the next 4 yr 11mo to tie back to your FV.

Make sense?

Wells Fargo is such a piece of **** bank.

Have you tried getting restitution from them?   

Because the goal of a real estate developer is to generate profit, not to facilitate someone else's needs.  Development has many fixed costs that are the same for luxury apartments vs affordable housing.  If your return is better for building luxury, why on earth would you build into a market with worse returns?

How can stocks, the dollar, and real estate all plummet in conjunction and all suddenly become worthless?

I'm asking this in broad economic terms.

If the dollar becomes worthless due to "unsustainability of our fiat system" and we enter into a hyperinflationary period, that would mean that physical assets real estate (and many stocks) would be among the only things that retains value.

If we have a real estate bust, then the dollar becomes more valuable in that the purchasing power of cash goes up.

Basically, these doomsayers always have some story to support things going to crap.  If you listen to the rationale behind why an individual piece may fall apart, you may find yourself nodding and going "yes, there is definitely risk there"

But the story never makes sense in the aggregate.

For me, either one would be fine.  Inflation?  Great!  I have fixed interest loans and hard assets under my name.  Real estate / stock crash?  Great!  I have some cash set aside just for the purpose of great buying opportunities.  Don't try to time the market or predict cycles.  Diversify, mitigate known risks, and position yourself for opportunities regardless of what direction the market goes.

Hi Roy,

We met back in January while you were interviewing at Mitchell International.

San Diego always feels like such a small town when I see this sort of thing.

@Valerie Mason

What interest rate do you have on the loan for the first rental?  If you have a lower rate than currently available, I would not recommend paying off the original loan.  I'd rather keep a good interest rate loan now because there is a high likelihood of rate rises in the coming years.

If the rate is slightly higher than you can currently get, you would pay down the loan and possibly HELOC the first house to help finance the purchase of the second.

The "tax benefits" of not paying a loan are illusionary.  Would you rather pay $100 and get $30 back or pay $50 and get $15 back?  Just because you get more back when you pay more interest doesn't make it a good deal.

Fire the agent.  Real estate agents have a vast spectrum of competency, meaning you're more likely than you'd think to get an incompetent representative.  If they are not meeting your needs, it's not like it will be difficult for you to find another one.

Sounds like a terrible idea to me. You're going to pull money out of a potentially appreciating asset and purchase an immediately depreciating liability? And pay interest on that liability to top it all off? Unless that car itself is somehow supporting a business which generates its own IRR, this plan in no way makes any sense.

Car loan is almost always going to be cheaper than a HELOC. We're talking about 2% vs 4.5% interest. The only difference is that amortization schedule increases your monthly payment. Even the tax side doesn't make sense. You're going to pay more in taxes so that you can get larger number back because 25% of 110 is higher than 25% of 100?

In my eyes, this is really simple:

How much money do YOU need so that you never have to worry about money again?

(Amount of money you SPEND per year divided by sustainable rate of return = your retirement number) i.e. you spend $50,000 per year @ 4% safe withdrawal rate = 50,000/0.04 = $2M <- Financial Freedom.

The goal isn't to beat some other investor, it's to reach a point that you have monetary security and the freedom to do what you truly want with life.  Also, as a finance professional, I can assure you that higher return is not necessarily better.  We live in a fairly efficient market and return = risk.  If someone is making 20% on a highly toxic asset and is bragging about it, that person is an idiot.  In my opinion, consistent rates of return > 10% on most unlevered products is usually not truly sustainable.

Best of luck.

Hello fellow San Diegan.

Think of it from the other direction and it will be clear.

"How does this individual make money?"

"Are the things they're saying to me based on incentive to make more money?"