All Forum Posts by: Ray White

You mentioned making $550,000 - but how much is your savings rate?

Your income will qualify you to get mortgages.
The only question now is whether you will have the down payments to get the mortgage.

As important as taxes are, you likely don't need 'more money'.
Are you looking for free time?

Then structure the purchase of your investments in a way where you or your spouse can retire.
You might be able to buy 1-2 properties every year and maybe after 7-8 years have enough properties to replace one spouse or both spouses income.

With that said, income from rentals are going to be better than other income types since the cash-flow will be shielded by depreciation.

 Hey Ray, 

If you like to work on rentals then STR strategy could be perfect for you. A lot of our clients that do it are more interested in the returns and less interested in the work itself. This causes them to be walking a tight line following the minimum requirements for the short-term rental loophole. For someone like yourself, you would likely have no problem meeting the requirements and likely exceed them with no stress of being audited.

I'm going to give you some answers you may not like, and hopefully some that will help.  

Sell your condo. $300/mo in cash flow on $350K in equity means you are getting only a 1% return on your equity. (And that assumes your HOA is very well run and you are not surprised by any special assessments.) I have invested in several syndications in the past 12 months that are kicking off a 5% cash on cash return on my investment. I regularly see single family houses that kick off 20% cash on cash returns. Also because your LTV is low, you have a relatively small amount of depreciation write-off to help with your taxes. Imagine how much better it would be to put $5K every month in your pocket (tax free) instead of $300. This investment is giving you TERRIBLE returns.

If working remotely, could you sell your home and move to another state?  That would save you a ton on income taxes. It would also free up a lot of capital for other activities.  What if you took $500K and bought a really nice home elsewhere and took $500K and invested it.  That $500K could easily kick out another $5K in tax-free income per month.

Combing the above two paragraphs $10K per month in tax-free income is the equivalent of $200K in W2 (highly-taxed) income.

Mixing vacation dreams and investing usually sub-optimizes both. What if the better investment deal was in Atlanta?  Long ago we decided to focus our investing on getting great returns. We can afford to vacation wherever we want. Please rethink your focus on buying near Disney just because it is near Disney.

I congratulate you for being a high income professional. If you had low income and low net worth, I would say it makes a lot of sense for you to take on a lot of handyman jobs on your property. Is cleaning up garbage, scrubbing toilets, fixing broken sinks, carpentry or any of those the highest & best use of your time? I suspect you would go much further, faster, if you take on the tasks that add the greatest value. What if you got more education, attended a mastermind, or focused on meeting with brokers or networking with successful investors. Those all probably have a higher ROI for you.

If you really want to get to financial freedom, keep building your passive income streams.  Once your income stream exceeds the after-tax income of the lowest-paid spouse, consider having them focus on just investing so they can become a real estate professional.  That unlocks more tax benefits than you can imagine.  My wife and I currently make more money than we did in our corporate careers but (legally) have not paid any federal income tax in several years.  Go look at your latest tax return and see how much you gave away to both federal and state governments. By doing those things incentivized in the US tax code, it is possible to keep all your income, and that is life-changing.

Making the right choices, you could be financially free in less than 5 years, but you are not headed that direction.