All Forum Posts by: Tushar P.

@Adam Steinberger did you meet the attorney already? How did it go?

Over the last 2 months I met up with an estate planning attorney and set up the estate plan. I created the following documents: revocable trust, last will, pour over will, power of attorney (medical, durable). For real estate, there was another document placing all the properties into the trust. For security accounts (holding stocks etc), all I need to do is to mention the revocable trust as the beneficiary.

Going forward, there will be no limitations on how I will invest or use my capital/assets. The whole point of the estate plan is asset protection - avoid probate, have clarity on who will get what, and have an executor (some relative, could be your sibling or spouse) who can make decisions for you if you go in coma.

Impressive set of assets though. Did you inherit or generate yourself?

@David Stelzer as @Account Closed said, something doesn't add up. You are making 1 MM$ per year and want to get into wholesaling and flipping? Really? I would expect someone earning that kind of money via a W2 job to be bright and capable of picking up real estate fundamentals in a matter of days - there is no rocket science or quantum mechanics going on in real estate that even someone on the dim side can't pick up. By the way, I saw your other post where you described how 20% IRR for a seven year hold leads to an equity multiple of less than 1. I would really like to know what kind of job pays such a salary - not because I earn half even though I can do middle-school math faster but because I'm truly intrigued. Is it a W2 job or some trust fund or some family business handed down over generations? Sorry for coming across like this but I may have similar reaction if Trump announces that he wants to run for the mayor of some town in Puerto Rico.

@Matt R. indeed a concentrated risk like a rental should be compared with a single stock - that would be apples to apples comparison on risk basis and real estate would seem like a poor strategy. Unles someone is close to retirement and doesn’t have a long time horizon. However, the op asked for comparing a concentrated risk like a rental with a diversified risk of owning s&p - perhaps because he is not thrilled about fixing toilets and expects more time for personal growth by investing passively in s&p that will provide similar/better return with zero effort.

@Taylor L. yes it is liquid, but I think those who treat it as liquid will struggle. The discipline required to treat the money in stock market as illiquid is not easy for most people, but that’s what allows those with long term view to make massive profits.

@James Hamling that’s the self-awareness I mentioned to the op. If someone can’t help but constantly look at what’s going on in the stock market then they will not be successful. Why convert a passive strategy into an active one? If someone has a lot of time for that then better to stick with triple-T (toilets, tenants, termites).

@Zuki Pingui I did not use a buyer’s agent to buy my primary house. But that’s because I had free access to a lawyer with specialization in real estate (40+ year experience). The lawyer prepared the contract, advised on negotiating what to add/remove from the contract, even did title/survey check. The sale price couldn’t be lowered by 3% (builders don’t want to reduce the price of a new construction house), but credit equivalent to that was negotiated, e.g. builder paying portion of the closing cost.

I think most buyers use an agent because they are not savvy or don’t have a lawyer. Even if I didn’t have the lawyer for free, I think the lawyer cost would have been less than the 3%  commission that the agent would have taken. Besides the fact that the lawyer had no conflict of interest, while the agent would be focusing on sale tactics.

I hope in future most of the construction will be via 3D printers and agent licenses will be displayed in museums. Hopefully the used car dealers will go extinct first, with others car manufacturers following the lead of Tesla.

@Nick Barlow Sure, it’s human psyche. It emanates from people getting into investments that they don’t understand. Because of such people, those who have found a way to handle volatility make massive profits 🤗

@Joe Splitrock yes there can be a technical correction (10% drop). Or it may keep going up with small dips. No one knows. One thing that is very certain is that it will be much higher in 25 years (op’s timeframe) - 10x or so with zero effort while he is busy earning his active income. Of course, that strategy will not work if the money invested is needed in the short term.

@Bruce Woodruff the op is asking about passive investment strategy, so that he is not bothered by maintenance etc. Otherwise everyone can claim infinite return from their active endeavors/jobs where they put time but no/little money.

@Taylor White if you have long time horizon then real estate would be a very conservative investment. It’s probably good for older people close to retirement. 
https://www.biggerpockets.com/...

Index funds go at least 10x every 30 years - you can look at more than 100 years of history. That will continue unless the US turns communist or adopts republican immigration policy to screw itself up - very low likelihood.

But index/stock return will not be linear. You will need the mindset to handle volatility. Most real estate investors neither understand stocks nor can they handle volatility. So you will need a lot of self-awareness to go that route.

You are on a forum that has heavy bias on real estate, so you already know what most of the feedback will be. Just analyze things in terms of what will work best for you. Good luck!

Hopefully it’s a big bank with deep pockets, and not some mon & pop from bigger pockets. My lender was Bank of America. They really suck - they can’t do anything right. But they had the lowest rates, and $7.5k rebate at closing.

I made it very clear to them even before closing that I was extremely unhappy. Asked them to cover the cost before the closing itself, which they declined.

You need to ask your cpa these questions. The total tax due also depends on your W2 income and other gains besides real estate,i.e the capital gains tax could be 20% and you may have dividend as well as capital gains from other assets. In 2018, I had sold a stock with 70k gains after holding it for a few years, and my total tax due was 26k. Of course, there were other factors causing the tax due to reach that number. My taxes were done by PwC with guaranteed compliance and no errors.

As for real estate, if the passive losses were previously used to offset passive gains, then on exit you will pay higher taxes (depreciation recapture is taxed at higher rate than long terms capital gains). This is the reason people do 1031X, because realizing the gains would mean paying more taxes than what was saved. Just remember that Uncle Sam is not your uncle - he is your daddy and he is going to win every time.

It had happened to me back in 2019, but the fine was much lower. I sent a demand letter via my lawyer to the lender - they realized what was going to happen to them so they refunded the fine that I payed at closing.

If the fine was caused by the lender delaying the process, then they should be paying for it. If you don’t have a lawyer, ask the lender to talk to their boss, or their boss’ boss. Ask them to cover the cost. But of course, if you say you have plenty of cash to cover for their incompetency, then it’s all good 😏

@Caio Ferreira Torres I hope your job is in the govt, where you can sit on your *** with no consequences for underperformance (that is what will happen when your focus is elsewhere). Maybe that’s the reason you don’t see any growth in focusing on your career and therefore seeking validation via real estate investing. I started with a 6 figure salary and doubled it in 6 years by focusing on my career, while the money dumped into 401k quadrupled with zero effort. Started investing in real estate 2 years ago, and am realizing now that real estate will never give the return that my career and stock investments will.

https://www.biggerpockets.com/...

But I may still put ~15% of my investments in real estate for the sake of diversification. You are here on a forum with big bias on real estate and still majority of the feedback is to utilize the benefits of 401k - doesn’t that tell you something? Your assumption is that it will be easy to find good deals and make profits, while your cash flow from your job will be secure. Good luck!