All Forum Posts by: Stuart M.

You are asking information that does not exist.  Actual rents are not reported if it is a hot housing area, there is still some room for haggling. You must narrow your search to places you know.  Cap Rate is what professionals use.

In hot urban area like both coasts, it is less than 2%, middle west you are lucky to get 4-6% these days. Good luck.

I’ve always used the map tool on Craigslist. You can zero in on any neighborhood you want and see what the rents are.

@Matthew Zorn I think it's all about the tenant screening process at the end of the day. 

Let's not forget that these people are just people too looking for shelter for themselves and their family. Do we hear a ton of horror stories about Section 8? Absolutely, but are they great Section 8 tenants out there, of course. Realistically, this is the general rule for people around the world (good and bad).

So, vetting your tenants should lead you to secure a decent tenant. 

Hope this helps. Good luck. Thanks! - Ola 

Originally posted by @Bilal A.:

@Laith Ali I agree with you. Why most of my colleagues are OK with giving away half their hard earned sweat money (Spending endless hours away from their young families and giving up sleep) is beyond me! 

 Great thread.  Very relevant to me.  I too am a high W2 (and high K1) earner.  I am very grateful to be in this situation.  I  have been driving all of my friends and my accountant crazy by pestering them about how to reduce my taxable income in the coming years.  

I will be paying $30k more in taxes next year compared to the prior.  The 20% pass through deduction does not apply to my wife and me.

I too have maxed out our pension plans including a Defined Benefits program which allows me to put away more than 120k a year.

So far, I have been unsuccessful in finding a way to reduce my tax burden.

I am a newbie to real estate investing, sadly. But not for long. My wife is reluctantly willing to become a "real estate professional" after I have nagged her about it for a year. So my goal for 2018 is to buy either a small manageable Multi-family property or a few SFH's. I preference is to buy out of state because it is virtually impossible to buy anything around here in Orange County CA that will not be cash flow deep negative without putting down a boatload of money. It is just very difficult to be a "real estate professional" with only out of state properties ( I think?).

So I feel your pain.  Again.  I am very thankful to the good Lord for being in this position.  But I too am looking to make some strategic moves for 2018.

God Bless and Happy New Year!!

Yong

Don't forget a 529 educational plan for the kids. When the kids get jobs, you can start a Roth IRA for the kiddos and contribute a max of their earnings.

The ultimate answer is to vote for political candidates who believe in smaller government.

To the High W2 earning BP members out there, what strategies have you used to decrease your W2 taxable income? Depending on what state you earn your wages, income tax rates of 40-50% are unreasonable. Most of you likely don’t qualify as real estate professionals and won’t unless you quit or dramatically reduce your regular work hours so what tax planning strategies (particular to real estate investing) have you used besides taking depreciation and mortgage interest deductions? I realize that with enough properties, you can eventually replace your W2 with passive income and deduct losses against it. Do you massively leverage your high income to get loans and build your portfolio fast? Paying multiple three figures in taxes plus FICA is simply ridiculous. Thanks in advance!

You have to study the neighborhoods and areas you are interested in.

See what properties are selling for and what they are renting for.

Then just run the numbers and analyze the deals.

I think you'll quickly find that South Florida is not really a cash flow market though.

Price to rent ratios are horrible and properties sell quickly and at premiums!

@Stuart M. it's all about what your goals are. My goal is to retire in 5 years or less, and to achieve that goal, I need to acquire cash producing properties. If my goal were to increase my net worth and retire at 60, property 2 may be a better play. I live in the Philly suburbs, where property taxes kill cash flow to the tune of $500-$1000 per month, so I have decided to, coincidently, move my family to Florida, because I can better attain my goals. These are all things that you need to consider when figuring out your plan. Personally, I've decided to keep my plan and change my location, rather than keep my location and change my plan.

So when do you intend to sell propert # 2?  What if you are at the point of retirement, and need to cash out to get that equity, and it is 2008.....and now your property is NOT worth $905K, but rather $290K, and you are at a loss.

THEN what if NOT ONLY do you have no cash flow, but now it is NEGATIVE, because not only the RE sales market tanked, but also the rental market tanked, and you are paying OUT $1,250 per month just to hold on to the property that isn't worth the money you paid for it years ago?

Cash flow is important for many reasons.  However, it's required in order to bridge the gap between market waves.  When appreciation becomes depreciation, cash flow is what will get you through to make sure that your decision to sell is based on a favorable choice, not a requirement.

A smart investor will buy and sell in any market condition, but will shift to accommodate that condition.

I know it is easy to put pen and paper to calculate a perfect scenario.  However, there are alot of unknowns out there that make your calculations irrelevant.  I am a Realtor (since 1997) and a seasoned investor (since 2002) with a portfolio of properties, and I would take that $100K property over the other every day and twice on Sundays.

BTW, the"what if" example I gave you above....true story.  It happened.