All Forum Posts by: Tim Porsche

@Frank Chin Thanks for your reply! That is what I initially thought at first too. The part that confuses me, is if the deductions are split 50-50 between the part that you own and the part that is rented out, then why is it only letting me deduct $4,700 when I have about $14,000 in total deductions between repairs\upgrades on rented unit, and the loan interest, property taxes, and insurance? I would of thought I could deduct the total repairs\upgrades for the small unit and then half of the mortgage interest, property taxes, insurance, etc. That's what is confusing me right now. 

Hi All, I'm not sure if this is the right place to ask or not, but if anyone could shed any light on an issue I'm having while doing my tax returns for 2017 I'd greatly appreciate it. So the issue is, I have a duplex I purchased in March of 2017, and I was living in one of the units for the year. The unit I did NOT live in but rented out, I had about $11,000 worth of upgrades and deductions on. 

Now the problem is, when I'm doing by taxes with Turbotax, I put in all the $11,000 worth of repair and upgrade deductions, PLUS the interest, property tax, and insurance deductions, but Turbotax is only showing that I have about $4,700 worth of deductions for this property. Does anyone have any idea why that might be? I do have two other rental properties, which are both fully rented out and have been for over a year. For those properties I was able to deduct everything.

Any feedback or insight would be greatly appreciated. Thanks!

@Account Closed Good question, I'm not sure if they include transaction costs or not. I would assume you would use an ETF or some sort of mutual fund to invest in a broad commodity although I have not done this before. Another thing I've come to see will eat into the returns of the All Weather portfolio are the tax implications of rebalancing the portfolio every year. 

I'm leaning more towards just putting the money in good index funds that track the market as a whole now, due to the reasons mentioned above. I'll most likely make the stock purchases incrementally over time instead of all at once.

Thanks for all the great responses everyone! Lot's of good advice, especially about investing in yourself and education.

Just curious have any of you heard of Ray Dalio's "All Weather Plan"? If so what are your thoughts on it? I bought Tony Robbin's book, "Money, Master the Game" recently and am reading through it. One of the plans he really touts is the All Weather plan...which basically is putting your investment money in these proportions:

30% Stock Market Index Fund

40% in Long-term U.S. Treasury Bonds

15% in Intermediate-Term U.S. Treasury Bonds

7.50% in Gold

7.50% in broad Commodity basket

Apparently over the last 80 years if you analyze the data, this investment strategy would have only lost you money 4 separate years, and the WORST loss you would have seen was 4%...one of the "lose years" was really break even almost, with something like 0.003% of a loss. Over time is has averaged just under 10% returns year after year. This is assuming you rebalance the portfolio at least once a year though to keep the same percentages invested. 

The returns seem similar to what you would get with just dumping all your money into an Index fund, but with much less volatility...I'm really considering doing this with the inheritance money. Still want to do some more research before I make a final decision though. What I like about it is, if the stock market is going to have major correction sometime in the near future, this strategy *should* really limit your downside and prevent you losing a ton of money. 

Lots of good advice has already been posted, but here's another option for you to think about.

Instead of quitting your full time W2 job completely, why not slowly phase out of it and gradually cut back on your hours? Figure out how much you make each day, and multiply it by 4. When you hit that amount in rental income, work 1 day less per week until you've replaced all your job income. 

Let's assume working 4 days a month you bring in $600. So, for every $600 passive rental income you add, cut one day off your work week. You are bringing in $600\month in positive cash flow now, so you should be able to safely cut back to working 4 days a week and be fine. 

Then spend that extra day each week you have now and weekends working to build your real estate business. When you've generated $1,200\month in rental income, cut back to working 3 days per week...and so on. 

One caveat, this will obviously require your current workplace being agreeable to you working less, or else finding another job to replace it that is part time. You'll also want to calculate how much your benefits are worth at your job and take that into consideration when determining how much rental income you need to replace it. 

Best of luck. 

Like the title says I'm just curious to see what you all are investing in other than real estate (if anything) for 2018. I have a few rental properties already, all doing well, but I am about to inherit some money and am thinking it would be smart to use that to diversify into something other than real estate. The two main vehicles I have been thinking about are...

1. Putting it into an index fund that tracks the market as a whole.

2. Putting it into a good, well established REIT fund like Vanguard's.

The hesitation I have with the above, however, is that real estate is as we all know very high right now and we all know the old mantra, buy low, sell high. I also have the same concern with putting it into the stock market at this time. 

I realized both the REITs and stocks could keep going up and up for another several years...but the opposite is also possible. I know if I keep it invested long term...15+ years...it is almost guaranteed to increase in value even if it crashes in the short term. However, I'd prefer to avoid that dive in value if possible. 

So, back to my original question. What are you all investing in now other than real estate? Any feedback is much appreciated :) 

Just to update everyone, I ended up going with the other applicant instead due to the fact that they met all my qualification criteria including having excellent credit, 3x the rent in verifiable income, and good landlord references. Once I looked over his application and verified everything it became a no brainer. Thanks for your feedback, stories and suggestions everyone, it is much appreciated. Gave me lots of food for thought going forward :)

Yeah it's slim pickings right now in this area. Former tenant picked the absolute worst time of year to leave haha. Still, I'm getting 1-3 leads per day on average. Most don't pass my pre-qualification questions though, or don't respond at all. I've had about 50 leads over the past two weeks which have led to 10 scheduled showings, with 6 actually showing up and 3 submitting applications. 

Wow! Lots of responses here. Thank you everyone for your input. Those of you on the Yes and those on the No side both make valid arguments. I do have another application that I need to pursue yet that looks better. This person has an income of $2,100, so he's right on that 3x the rent line. He lists an extra $1,000 yearly income for what it's worth from coaching tennis at a school, so there's that too. His credit is excellent, has a steady job, nonsmoker, no pets, and gave me some past landlord references. So I'm going to pursue that now...check the landlord references today and verify employment, and then check to see if he's still interested. If he is I'll ask him to complete the credit\background checks and take it from there. 

If he's not interested or things don't pan out with him, I'm still considering this lady. Honestly she doesn't seem to fit the profile of an irresponsible person, but someone who has gone through some hard times with the divorce. A close relative of mine is going through something similar now, and has no money because of the divorce, but was otherwise very responsible financially, so I can emphasize with her situation. If she can give me her last 60 days of bank records and everything checks out, plus I can confirm with her lawyer that the $1,000\month alimony has a very high likelyhood of happening, I may accept her contingent on getting a 2X security deposit. I would not accept a years worth of rent in advance, for the legal reasons stated by many others here. Oddly enough I think I have better protection for myself only accepting the 1st month's rent and 2x security deposit, and starting month to month, than accepting a year's worth of rent. If things go sideways, I can always give 30 days notice. Of course there's a risk of property damage happening that the security deposit won't cover, but honestly there's nothing to indicate that she would be hard on the property. For what it's worth, I looked online at the house she is selling with her (former) husband and that is closing on 12/29, and it looks spotless from all the pictures. It's a pretty big 4 bed\2 bath house, going for around $400,000. 

Thanks everyone, appreciate all the feedback! It seems like most of you are fairly evenly split between yes and no. For those of you saying no would you consider agreeing to the following with this applicant? 

1. Sign a 10 month lease, ask 10 months rent in advance by certified bank check.

2. Require 2X security deposit instead of the regular 1X. 

After the 10 months are over, it would just go to month to month. If she would end up not paying at that time, I could simply give 30 days notice and end the lease. Good idea? Yay or nay? 

@Stephen E.

@Account Closed