All Forum Posts by: Jake Taylor

He's been making the same prediction for over a decade and I can only shake my head. People like him, Patrick Bet David, Peter Schiff, and a host of other people in the space have been "predicting" a crash for many years. I say this as a Kiyosaki fan that has read several of his books.

https://seekingalpha.com/artic...

"For seven years now Mr. Schiff has been proclaiming the American economy was on the verge of collapse, the dollar was going to have a massive decline, and that gold and other commodities were going to skyrocket. For most of those seven years he has been wrong. Gold has been down huge the last two years, the dollar has not lost value and the American economy is stronger, not weaker. Like others before him, Mr. Schiff keeps repeating the same talking points, in hopes that at some point he will be right."

I agree with the take on the broken clock theory with a lot of these guys. Kiyosaki is perhaps the most egregious you’ve listed. I’m not sure Bet David is worth listing because he’s more of an entertainment type YouTuber than a real investor. Schiff called the last housing crash and is probably correct on a fundamental level regarding the future of the dollar, but is he perhaps ignoring the near term power of the Fed, the US economy, and the dollar still being the world currency? At some point, fundamentals matter and spiraling debts with interest below the historical norms of 5-7% means massive bubbles have been created.

That being said, how’s Schiff’s take on crypto looking these days? From what I can see, crypto is in the toilet and we haven’t even started seeing the layoffs or recession most investment banks and economists are predicting for next year. Meanwhile gold and commodities are the best performing assets of this year.

It would seem the best approach would be to continue dollar cost averaging into 401k/IRA, maintain good cash yields through responsible and not over-leveraged REI, and then maybe have some PM/commodity backed hedging investments. I sleep pretty good at night with that approach, granted I’m definitely very cautious and am not going to leverage my way to some of the success and wealth the folks who’ve been guests on the BP show have done.

1 Vote

Dallas, Texas

Quote from @Zachary Thompson:

I'll be as short and to the point as possible. I'm purchasing a property subject to the existing mortgage. To do so I'm using a business line of credit to pay for everything from start to finish. For sake of simplicity, lets say purchase price shows $50k, (remember it's a sub to deal so that $50k mortgage isn't paid off yet) and I sell the property for $200k. That shows a $150k gross profit. However, I borrowed $100k from a business line of credit which I had to pay back after the sale plus pay off the $50k of the existing mortgage. Leaving a net profit of $50k. Which number will be considered for tax purposes in this situation? Gross or net profit?

P.S. I dont know if it matters but this transaction will be through my single member LLC

Almost always net, but some municipalities and states tax based on equity (franchise) or gross receipts (mostly gross).

0 Votes

Columbus, Ohio

Quote from @Michael Win:

If you are tight on money, have 1 M in equity the last thing you want to do is leverage that into a potential money pit especially if you are a newbie.

Whatever you do, DO NOT move forward. That is my advice. Imagine a worse case scenario, and see if you can stomach it.

Currently you have a close to paid off home with 1M equity. Even if you get into financially dire straights, you could sell and live off the 1M for probably 10 years giving you plenty of time to rent then decide what to do.

If you turn that 1M equity into an apt complex, what happens if you have a large unexpected repair/life hurdle and can't pay the mortgage?

You are in no position to take on such a large risk esp as a newbie. Be warned and don't let anyone tell you its a good idea.

This is the best answer posted yet. If you’re both a newbie AND in financial stress the absolute last thing you need to do is pursue this. You’ve got a lot of equity built into your home, so please don’t risk that for something you don’t have experience in. Real estate house hacking isn’t passive. You’ll need to be able to analyze the deal, run the numbers, treat it like a business and be able to contribute either bookkeeping or repair skills or both to limit expense.
BiggerPockets does a wonderful job preparing people for the real estate investing world, but that’s not a world for people outside of financially secure positions. Additionally credit markets are tightening and rates are skyrocketing so the last thing you or most people need is a risky HELOC.
From a general financial standpoint you need to secure your personal income and then pay down non-mortgage debt. Save enough to cover deductibles, plus 3-6 months living expenses. Contributing to a 401k/IRA (especially if you get a match) will net a higher and safer return than any newbie will ever get in real estate investing. Once you’re set personally and fully contributing to tax-preferred passive investments, then go after real estate. When you do decide on a deal-have enough cash flow to cover 6 months of expenses. This isn’t sexy, but you’ll be a millionaire much faster at far less risk. Check out the Money Guy podcast or similar podcasts for a good resource on getting your personal finances sorted out. Good luck!

0 Votes

Seattle, Washington

It’s true you can’t evict, but do you have an automatic renewal within her lease? If not, then how would her lack of an active lease prevent you from leasing the same apt to someone else? Is there any legal recourse she has since she’s not actively leasing from you? Not recommending this approach, but an unexpected roommate might get her moving if said roommate signs a legally binding lease. Seems as though there’s nothing in the legislation that commands continuation of leasing terms, which include the right to sole occupancy, and that this executive order is merely a protection against eviction.

0 Votes

Originally posted by @Dan H.:

Originally posted by @Jake Taylor:

Originally posted by @Joe Splitrock:

Originally posted by @Enyi Ajoku:

Originally posted by @Joe Splitrock:

Real estate has risk. Whether someone is on the BP podcast or any other podcast doesn't vouch for their credibility. Someone can say whatever they want. There is not a team fact checking. The best con artists in the world are the smoothest talkers.

People need to do due diligence. Step one is just Google their name. Look for references on past deals. Do a credit check to see if they have open collections or payment default. Secure the money against the property.

Also keep in mind that situations can change. People lose control of their business. It is not always that they plan to commit fraud on the front end. Incompetence is often the problem and results in the effect of you losing money. I have heard of people getting sucked into drugs or gambling and destroying a successful business. In other cases people scale too fast or get involved with the wrong people. The point is, there are lots of ways for things to go wrong.

This is why for most people, they are better off keeping money in index funds. Lower return, but also much lower risk.

Based on your comments you're saying that people need to do there due diligence but Bigger Pockets does not need to do its due diligence even though people listen to your podcasts and the likes for some sort of direction based on the now "acclaimed" notion that Bigger Pocket is an "acclaimed credible" resource for real estate investing.

What I am saying is people need to do their own due diligence and don't consider the fact that someone was on any podcast as an endorsement to do business with them. I would encourage people to use the information in BP podcasts as a way to learn how to do deals not who to do deals with.

I thought this was common sense, but when some people hear someone on a podcast or see them on a YouTube video, they blindly trust them. BiggerPockets has diversity of opinions on every matter real estate related. Guests have contradicted each other. Even the hosts have reversed opinion over time. There is no one right path. This site just presents different stories from different people. You have to understand that or you will make a big mistake blindly following whatever you hear.

Even if a podcast guest went through vigorous vetting, there is no guarantee that guest will be a good business partner tomorrow, next week or next year. Things change and people change.

Well said, Joe. I think the podcast is more of a platform and while I do think BP vetting podcasters is a good business practice, it’s still a free forum (caveat emptor).

My gripe with BP is that they downplay the risks of BRRRR method and reserves. Yes, I realize they advise to calculate carefully, perform due diligence, and then state the method has inherent risk, but this method is targeted for investors who don't have a lot of capital and likely have little RE knowledge and sophistication. Similarly, they mention to have six months of reserves, but hosted two podcast guests early this year who have been in RE only two years and have 20-40 properties. I don't see how those folks have six months of reserves on each property when they grew that aggressively. If I said handling rattlesnakes is dangerous, but then proceed to mention my success in doing so without getting bit and invite others who haven't been bit to attest each week to their success, have I proportionately explained the risks? I'm grateful to all BP has done, but the site and many of its adherents have come up in RE during a massive bull bubble. Now that we're starting to see huge defaults in leases held by CMBS and FHA's are 17% delinquent across the board as of July, I feel BP needs to focus more on the risks. I'm concerned a lot of folks might be holding under-reserved properties in an environment where the govt currently pays 25% of household income.

>see huge defaults in leases held by CMBS and FHA's are 17% delinquent across the board as of July

Can you post a source? This would be interesting.

Sure-

FHA data (WaPo article): https://www.google.com/amp/s/w...

CMBS Leasing Delinquencies: https://www.visualcapitalist.c...

There's several more articles from a variety of sources on CMBS delinquencies, which some have titled Big Short 2.0. Latest data suggests govt benefits have provided some buffer to CMBS rate as this declined in the latest data.

0 Votes

Originally posted by @Joe Splitrock:

Originally posted by @Enyi Ajoku:

Originally posted by @Joe Splitrock:

This is why for most people, they are better off keeping money in index funds. Lower return, but also much lower risk.

Even if a podcast guest went through vigorous vetting, there is no guarantee that guest will be a good business partner tomorrow, next week or next year. Things change and people change.

Well said, Joe. I think the podcast is more of a platform and while I do think BP vetting podcasters is a good business practice, it’s still a free forum (caveat emptor).

7 Votes

Originally posted by @Joe Cassandra:

Originally posted by @Jake Taylor:

Originally posted by @Joe Cassandra:

All wealth in America is tied to business ownership.

WaPo reports black entrepreneurs have harder times getting financing (so they have to use cash)

Barrons reports minorities have a harder time raising money from VCs

Property values rise where businesses flourish.

1.) Nothing would move the needle unless the wealth gap in all of America closes. It's pretty much impossible to change not only the stats on black wealth, but most of America. That doesn't happen unless massive generational wealth is taken away. Sam Walton built WalMart. His grandkids and great-grand kids should not be born billionaires. Give them a few millions for their name, the rest needs to be reinvested in new businesses in areas that need it.

2.) More funding available to black-owned businesses. They should be able to pay their employees with cash and a LOC like most businesses. They then can pay more and more. That money then trickles into the community who can then spend at other stores.

With interest rates and cash flowing from the Fed, everyone should be speedily approved to grow their business.

----

A byproduct of this is younger black children will see more black-owned entrepreneurs (that aren't sports or music stars).

Joe-would you please expand upon the logical reasoning behind the taking of generational wealth of others (or any level of wealth for that matter)? Specifically, you stated above that people shouldn’t be born billionaires and they should have all but a few million taken. Is the logic that this action would be moral or at a level or greater morality than allowing the Waltons to possess their inheritance? Linguistically speaking, your verbiage implies using force (if you meant voluntarily given, my error). How is taking by force moral, whether instituted by majority vote or otherwise?

It's called an inheritance tax dude. Calm down.

For people who are valued over $100 million, it makes sense to break up that wealth especially if the people receiving it have not done anything to earn it.

The point is, African Americans have zero chance of ever moving up if the wealth gap stays so wide right now. (and it's only getting wider with the pandemic and bailouts)

If money stays in the hands of a select few and it's simply passed down (to people who did not build it aka the Walton grandchildren), then the gap will never fill.

Pretty much impossible.

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I'm a capitalist aka if you work hard and build a business, you should prosper. Best place to do that is in America.

But wealth in the hands of a few and it staying in the hands of the few for decades to come isn't capitalism...it turns into a nanny state where no one wins.

Thanks for the reply Joe. What you’re describing is beyond the scope of this country’s inheritance tax (I’m a tax specializing CPA) and more akin to an extreme version of the wealth tax recently implemented in France. With regard to wealth accumulation preventing wealth generation, this is demonstrably false in that wealth generation isn’t a zero sum game. If your theory is correct, the wealth accumulation of the Walton Family, Bill Gates, Warren Buffet, and others of the 2000’s and prior would have prevented the eclipsing of Bezos, Zuckerberg, Musk, and others. On a level of materiality more familiar with us regular Joe’s, the oligopolistic wealth of any of the folks mentioned above hasn’t prevented Brandon Turner, David Green, or any of the posters here from building their own generational wealth through investment property. In looping back to the morality argument of wealth taking that went unaddressed, if billionaires should only be permitted a few million, why should any landlord be permitted a home beyond their current residence? If your argument is the former is moral and not the latter, then you’re merely speaking in terms of scale and not the principle of recognition of property rights. I see that you’re stating your adherence to capitalism, but I fail to see how taking from others is capitalistic. Indeed, if the desire to avoid a nanny state is real, is taking wealth by govt not at or above the level of a nanny state, where property rights aren’t universal but subject to the whims of others?

2 Votes

Originally posted by @Joe Cassandra:

All wealth in America is tied to business ownership.

WaPo reports black entrepreneurs have harder times getting financing (so they have to use cash)

Barrons reports minorities have a harder time raising money from VCs

Property values rise where businesses flourish.

With interest rates and cash flowing from the Fed, everyone should be speedily approved to grow their business.

----

A byproduct of this is younger black children will see more black-owned entrepreneurs (that aren't sports or music stars).

4 Votes

All Forum Posts by: Jake Taylor

Jake Taylor has started 0 posts and replied 8 times.

Post: Housing crash deniers ???

Post: Is gross profit or net profit considered for taxes?

Post: Selling home to purchase apartment complex

Post: Eviction versus non-renewal

Post: Beware of Mr. Joseph England, Podcast speaker #206!!!

Post: Beware of Mr. Joseph England, Podcast speaker #206!!!

Post: Addressing Racial Disparity in Home Ownership/ Wealth?

Post: Addressing Racial Disparity in Home Ownership/ Wealth?