All Forum Posts by: Byron Valles

 Glad to hear you found what you were looking for, Benjamin. I worked at Fidelity Investments some years ago and met some bright people there. 

Happy New Year! 

Hey Benjamin, 

The difference between the target date fund and the other index funds like VIIX is all about Asset Allocation or where the dollars are invested. 

Starting with the VIIX,  the objective of the fund is to track the performance of the Standard & Poor’s 500 Index, which measures the investment return of large-capitalization stocks. In simpler terms, the fund's dollars will be invested in large domestic companies like the ones you mentioned (Google, Amazon, etc. ) It's worth noting that by definition this fund does not include smaller or international companies or any type of bonds. 

The objective of target date funds on the other hand is to periodically trim the asset allocation towards a more conservative stance. Here's a basic example of how that might look like:

a 2040 target date fund today may look like this:

50%: Total domestic companies including large, mid, and small

30% International companies

16% Domestic bonds 

4% International bonds 

Then, as time goes on the fund manager will periodically trim from the more historically risky asset classes like domestic and international stocks and into more historically conservative asset classes like bonds. The idea behind the trim is that for most people it's prudent to invest in more income-generating assets like bonds (vs capital growth type of assets like stocks) as they get closer to retirement. Therefore that same fund in 10 years could look like this:

45%: Total domestic companies including large, mid, and small

15% International companies

30% Domestic bonds

10% International bonds

Target date funds are often used by the "set and forget" type of folks. 

I hope this helps! 

Byron

 Hi Valerie, 

from what you wrote it sounds like there is a lot of upside to keeping the home in the form of appreciation. Is the $100/month cash flow taking into account other operating expenses and things like vacancy, capital expenditures, etc? 

As exciting as the appreciation may sound, I do agree that you should have appropriate emergency savings funds to cover the unexpected. I know that building an emergency savings fund when you are on a tight budget can be difficult. Here are a couple of creative ways you may find helpful: 

- Temporarily suspending retirement plan contributions until you meet your emergency fund target. 

- Removing your escrow account (assuming you have one) I thought of this since you mentioned having significant equity in your home and the fact that most mortgage servicing companies keep a reserve balance in your escrow account. If you do this, please remember to account for your home insurance and taxes in your budget. 

- Have a family budget weekend where you take the time to document and analyze exactly where your money goes. Then prioritize the expenses that are necessary and important to you. Eliminate those that are not. 

- Tax planning - if you normally get a tax return at the end of the year, this could mean that you are over-withholding from your paychecks. You can check and adjust this as necessary. If you aren't comfortable doing this yourself, think about hiring a professional like a CPA or Financial Planner. 

- visit missingmoney.com  this is a national directory to find any unclaimed property! I've done this for myself, family members and clients and every single person I've helped has found money that they've left behind. Some small amounts but others higher amounts. 

I can think of a couple of other creative strategies but I will leave it at that since this is getting long. 

Best of luck! 

Byron

 Apologies I just saw this. I need to be better at checking Biggerpockets. My case is a little different than yours since mine was just a duplex and one of the units already had a laundry room. If I was in your shoes I would probably figure out how to fairly compensate the one unit feeding the laundry room. Maybe a monthly credit. 

These aren't great photos but that wall you see behind the washer and dryer is the one with the water and sewage lines. 

Hi Gabriel, 

I had the same issue in one of my properties. What I did was have my handyman build a very simple shed outside connected to one of the existing property walls. Behind the wall we chose were water lines that he took to make connections for the washer and dryer. Ran power to the shed from a nearby subpanel. 

hope this helps. 

You're a good friend. I'd like to add a credit score hack to help your friend get back to a position where they could refi. 

From what I read it sounds like you have great credit. You can add your friend as an authorized user on one of your credit cards (just probably don't give them the card). All of your great information (length of credit, on-time payment history, loan/balance ratio, etc) would reflect in your friend's credit score right away. This is by far the fastest way to help someone with limited income raise their credit score. 

I did this with my mother this year. Without going into much detail, her credit score was awful and by simply adding her as an authorized user on one of my oldest and higher credit limit CCs, her score jumped by about 60 points in a week allowing her to get financing to purchase her first home. 

Best of luck!

Very well put, @Dan H.! I must have one of the few cases in CA you wrote about. I converted a detached 450sqft garage into a studio in the East Bay Area for around $90K. We finished it in March of this year and the appraisal came back showing a $140K bump from the purchase price in Dec 2021. 

The two important factors I kept in mind while deciding to go through this ADU process were 1. ADUs are still relatively new and it seems that no two appraisers agree on how to evaluate them 2. Rental demand and rates are so strong in the Bay Area that even with little to no forced equity, the ADU cost would be offset in 3-4 years by rental income.

@Jake DeBoer I'm testing it out for personal use but we have been looking to switch our planning software. We currently use eMoney which is great but can get expensive as our firm grows and can a lot of times be too complicated for most clients.