All Forum Posts by: Account Closed

Back before Regan and the Neocons and Clinton and the "moderate" democrats, marginal tax rates were already well above 50% (as high as 94% in the 50s and 60s). These periods were the golden years of economic growth. Capital gains taxes have also been taxed as high as 40% in the past as well. Before the nonsense of trickle down economics was sold lock stock and barrel, it was expected that the wealthy would pay higher taxes and the economy did just fine. There is no data at all to suggest that high taxes are detrimental to growth. The caveat is that the tax revenue should be spent on projects that stimulate growth (like infrastructure) and not wasted on more useless bombs and corporate welfare. 

I would bet that the effect on the real estate market would be exactly ZERO. This is like the car companies whining about catalytic converters being made mandatory or any industry group bemoaning any change to regulation. None of the doomsday scenarios ever happen. People adjust to the new normal and move on. Just look at the post Covid world.

Seems to be local norms. In Indy, my sub 1K/month rentals dont come with appliances except for stove/oven. Renters there are used to hauling their own appliances from place to place. I was also surprised when I first bought those properties years ago but that's just how it is there. On the other hand in California with rents exceeding 3500/month I provide all appliances including Washer Dryer and maintain them all and replace when necessary.

Whoa there. There is a HUGE difference. Flippers have money to close the deal. Wholesalers do not.  Flippers are just the same as any other buyer. They make an offer, buy the house. What else gets done is not relevant. Wholesalers by and large misrepresent themselves as cash buyers and prey on unaware and low information sellers. Also, flippers often buy from banks or state agencies after the home has been foreclosed on. I am currently lending to flippers who source all their deals institutionally.  These institutions wouldn't give a "wholesaler" the time of day. Also all the numerous annoying calls and messages I get are never from legit flippers. But always from broke wholesalers.

You can be in the lending side in a passive way also. Lots of hard money funds paying out 10-12% passive income. Downsides of lending side is that its taxed as income not capital gains (not an issue in an IRA). Advantage is it pays relatively stable income. Syndications are better for tax purposes (depreciation, capital gains rates etc) but have less predictable cash flows and less liquidity in general.

Ditto. I get texts calls and emails day and night about my properties from "cash buyers" and their "partners". Wholesalers are the scummy bottom feeders of the real estate market.

I dont like either option. If I want a straight 10% return there are numerous debt offerings that get you there. You have priority over the equity stack and a secured asset. If underwritten properly then its the best way to get a fixed return. On the flip side, why would I give other investors priority in returns on the equity deal? Id rather take the good with the bad with all the other LPs. Also I dont want the GP to prioritize current income over value increase via property upgrades etc. So A and B class investors have different priorities. How does the GP decide? 

NO NO NO! Student loans are permanent and non dischargeable. They are also subsidized and backed by taxpayers so its fraud to use it for investing in real estate (or stocks or bitcoin or anything). Plus if you need student loans you have no income, no reserves and no experience. A disaster waiting to happen. Focus on your studies, get a good income going and then think about investing.

Isn't it simpler to get your own license and keep the 2.5% commission? Same math but much less complex to explain and then you are actually qualified to self represent.

Cash and Flow are appropriately both four letter words. And should be banished from any serious investors vocabulary. Im putting on my flame resistant armor now because this is BP heresy right?  But hear me out. 

The only time cash flow matters as an absolute is if you are living off the income and need to predict your budget. The rest of the time, see below.

As an investor (i.e someone with capital to invest) your job is to allocate your capital in the most efficient manner possible to attain risk adjusted returns according to your goals.

The problem with cash flow is that it is so easily manipulated and so hard to use as a comparative metric that its completely useless for evaluating investments. Increase downpayment, increase mortgage term, reduce interest or go to interest only loans, there are so many ways to manipulate the cash flow. That is why sophisticated and institutional investors (aka people with more money and better math skills, or better accountants) use IRR as a way to compare and evaluate investments.

This takes into account the total return over the period of the investment. It includes sum of cash flows, equity gain and time value of money to generate a real estimate of return. So even negative cash flow properties can have huge positive IRRs and high cash flows can have mediocre IRRs. And IRRs can be compared across investments. You can compare buying bonds or stocks or real estate with each other. And determine the best way to allocate your funds. 

Of course there is future gazing involved and assumptions in all of the above but at least you have numbers that may mean something! With is a lot better than  c-a-s-h  f-l-o-w