All Forum Posts by: Bryan Wilson

Excellent to hear!

@James Carlson unfortunately, I no longer have the flyer.  This was a few weeks ago.  I was incorrect in thinking it was a business license it is a sales tax license that is required.  You have to collect and pay appropriate sales tax fees and list that license number in your AirBNB listing.  You'll have to collect sales (2.5%) and lodging tax (2%) for any stay under 30 days.  Although I believe AirBNB might be collecting and passing this through now.  

Looking at the city website doesn't seem to mention primary residence, but seems like it is still a gray area. https://coloradosprings.gov/planning/page/dab-405-short-term-rentals

@James Carlson I just received a mailing flyer in the mail from a Colorado Springs attorney office detailing AirBNB law in Colorado Springs.  It stated that Personal Residence was all you could rent out on AirBNB for Co. Springs as well.  I'm no legal expert though and it was just a flyer, but I have been reading a lot on the local push from the hotel associations to strictly enforce the AirBNB law.  It states that you require a business license number as well which has to be on your posting.  If you do not comply it is a $100 fine each time, but may escalate with each additional fine.  

Not trying to point out the obvious and I'm sure you are well aware, but a lot of property management companies will want to know if you are properly insured so make sure to have this in place to start.  

As far as marketing.  Door to Door hangers could be beneficial.  

I know this may come off as a broken record, but $560/month truck payment is not the way to financial freedom.  That is the first thing you have to address.  Whether you are more aggressive and pay it off sooner by making additional principal payments or selling it I'd focus on it first.  Save the down payment while you are at it s well.  Then reconsider your real estate approach after you have cleared up the 21% of debt to income you have right now going into the truck.  

I'm not being rude, but in my experience it has been much easier for me to contact my lenders and say all I have is mortgages on properties for debt than to add in additional debts to the equation.  

 This is a key as well.  I can borrow from my employer Roth 401k with my employer @5% and payment terms between 0-360 paychecks.  We also vest at 100% immediately.  I know not everyone has this setup, but to me I'd rather get the company match have it invested in the markets with risk management in place to protect the capital and still have access to utilize the funds up to $50,000 to invest in real estate when the time is right as well.  

Yeah, but the model flips if the return from the markets is higher than real estate.  So you can make the argument for each side.  And in the case of markets outperforming real estate long term for a specific period of time you initial investment would grow much larger.  I suppose it all depends on a bet on which market you believe will outpace the other.  

2,000 @8% for 25 years is $13,697

1,000 @5% for 25 years is $3,386

I just think that if you are going into either with conviction you have to trust that your due diligence is going to prove itself out over 25 years.  I understand real estate returns over 25 years have out performed markets typically.  

According to Forbes:

Over a 25 year period the S$P 500 returned 1000% from 1980 to 2004

Real Estate returned 247% on increased home prices over the same period as a national average.  

That is $22,000 vs $3,470 on each initial investment.

It is just too hard to compare the two and I think being in both has its advantages.  

I think what you are leaving out though is that the initial $2,000 will have $2,000 added each year compounding at 5%.  You are not left with just the initial amount.  

So you have $2,000 adding $2,000 annually earning 5% over 25 years bringing in $102,227 

Or 

$1,000 adding $1,000 towards real estate annually earning 8% over 25 years bringing in $79,954 

In order for the $1,000 going into real estate to outperform you will need to increase your rate of return.  Which is quite possible, but to assume a 401k will only grow at 5% over 25 years is probably a low assumption as well, therefore your real estate rate of return would have to be even higher.  

Not saying it won't work and end up being the better investment.

I don't know if you track your own investments over time, but I've been keeping my own spreadsheet for years and compare my retirement accounts against my 401k match my money has increased 230% over 2 years.  I believe there is still a place for the 401k match and it is dangerous to tell people to pass this up to speculate in real estate.   With that said I do not follow the companies model portfolio recommendations and I invest after researching their offerings to attempt to maximize my returns.  

You may be able to find enough real estate deals to blow that away, but the simplicity of an employer match would outweigh the complexity involved in finding those deals in my opinion.  I still invest in real estate as well, but feel that you can achieve a balance between the two if you invest up to the company match and use the rest of your funds for real estate.  I've gone with the "All-In" approach and found I don't really have the stomach for it so I sacrifice 5% of my annual income every year for a company match and budget off the other 95% to allow myself to find real estate deals.  

That article seems to focus more on people not saving enough for retirement not that your 401k match isn't sufficient enough to support your retirement.  

The trickiest part I've had with HELOC's is whether a lender will allow you to use the funds for a downpayment. I had many phone calls end with "No" and recently found someone who told me it isn't an issue at all for them to allow HELOC downpayments.

From a tax standpoint although I'm an accountant I don't specialize in tax you would need to have enough mortgage interest to deduct on your Schedule A in order for it to be helpful.  HELOC interest is tax deductible along with Mortgage interest, but that property may not have enough interest combined with a HELOC's interest to allow you to claim it over your standard deduction amounts.  

I love the HELOC approach because I don't have to change my mortgage terms and I don't have to pay any closing costs or roll into the loan. I took out my HELOC and the bank covered all processing costs so I basically got a 10 year draw period with 15 year amortization at 5% for no cost to me up front.

I don't think either is a bad approach, but one seems like it is simpler.