All Forum Posts by: Anil Shah

A lot of great answers already. Here is my 2 cents.

1. As others mentioned, if na investment makes sense only from tax perspective, you should not be investing.

2. Main tax advantage of real estate is depreciation. So you most likely won't pay any tax on cashflow. There will be depreciation recapture when you sell but it's like you are borrowing interest free from Uncle Sam. That matters. 

3. Leverage - someone mentioned Real Estate doesn't beat stock market returns and while that might be true in absolute terms, it's definitely beat the market when you consider leverage. With 5X leverage, a 4% long term appreciation becomes a 20% annual returns. This is the key to wealth building. 

If you are having trouble finding a duplex, is house hacking an option? If you buy 2-3 bedrooms house, you have have up to 2 friends. A lot of my friends started RE investing that way. There is the inconvenience factor but it might be cheaper for you and your friends as well.

It doesn't seem worth it. First, are you taking withdrawal from 401K or loan? 401K loan is capped at 50K and with withdrawal, you have 10% penalty and tax implications. Selling your stocks also has tax implications and margin is only 50% as you mentioned, that too depending on your stock profile. The tax rate difference from from long term to short term alone won't make it worthwhile in my opinion- add the 401K withdrawal penalty on top. YMMV

Hey Lauren, I read you wanted to retire in NC - great choice as I believe it will also fit nicely with your plan of owing turnkey SF rental property. I live in Raleigh and the area is booming and I see bright future ahead. I have 4 properties here and we just added 2 more just in the last 2-3 months as the math made sense. I also sold a few turnkey SF investment properties to my out of state buyers that cashflows from day 1 which is much harder to find these days. We got good deals in the outskirts of Raleigh. Although i am not close to retirement as you are, it seems our plan is similar, 

It's unfortunate Raleigh-Durham didn't make your cut of 13 cities but Charlotte is definitely the city to choose in NC if your want the city feel. If you are in tech, I feel like Raleigh-Durham has better opportunities than Charlotte though. But your can't go wrong with either. Good luck with your move and if Raleigh-Durham makes the cut, let me know. 

It might be the case that he thinks your are a dreamer and not a doer. And it's a big investment you are making- so if things go wrong, that will affect your finances significantly. So it's right for him to be wary.

Going into flipping home as your first real estate investment might not be the best move, esp if you are both coming from W2 background. I am not saying it cannot be done but it might be difficult and is definitely more risky. It takes double the money and triple the time than you initially planned for. Why not start with a small turnkey rental property and test the water?

Just remember that it would be a very slow process. Assuming that your interest rate is low, you are not increasing cashflow by a much by paying it off- you still have property tax, insurance and maintenance. But it also depends on your risk tolerance- if you have a decent safety net, you can leverage yourself a bit. Else your method is good. 

It's an excellent rate for today. Lenders are offering primary buyers that rate and you are getting it with 20 down (not even 25 which gets you the best investment rate). 

You mentioned Midwest is what the research is pointing but I believe that is half the story. It's definitely easier to find a cash flowing property in Midwest but I am of the opinion that cashflow in real estate keeps you in the game but appreciation is where you build wealth. Midwest doesn't provide that much of an appreciation opportunity (there are exceptions). Look for a city in state that is growing rapidly - appreciation comes with that. It's might be the case that it's hard to find cashflowinf properties, especially with 7% interest, in a fast growing cities. 
I am a Realtor and real estate investor in Raleigh, NC and I just bought 2 cash flowing properties in the outskirts- it's a new construction homes with builder special financing of 5%. Raleigh, and NC in general has big appreciation opportunity as it was the second state for most inflow of people in 2024. We have milder climate, excellent economic opportunities, and decent governance. I would definitely recommend you to consider it in your search.