All Forum Posts by: William Joel Idleman

Jason, I'm a pro real estate investment advisor.  It's weird, I know.  Every other advisor I know tries to talk clients out of moving money out of the office.  I have clients ask me this question quite often.  The answer is it really depends on you and your goals.  I personally believe the best investment vehicle is real estate.  I advise some clients who have nothing in the stock market and all in real estate and vice versa.  So, I'll share with you highly general advice.

401k - take your match

ROTH - if you want max this out, go for it.  I like tax free returns, but I don't like the penalties that come with early withdrawals.  I also don't like that you can't loan against IRAs.

Property - You can eventually build tax free income with a hard asset, as you already know.  Throw everything else you have at this.  This is my number one choice and I advise clients to move on property more often than the other two.

Hey Clinton - I definitely recommend a solo 401k to clients over an IRA. There is much more flexibility with the solo 401k. I'm not a fan of putting real estate inside either of these products because you will not get to utilize depreciation inside a 401k or IRA.

Helen, I pay for financial planning software and offer it for free to anyone on this forum.  Please get the word out.  I pay the same rate no matter how many people use it!  I've sent you a message.  I can walk you through it over the phone if you need help.  It'll help you set goals, time horizons, and tell you down to the dollar how much you should save or invest every month.

Hey Nicholas, I spent the last two years in rural Kansas working about 400+ farm returns.  I'm pretty familiar with row cropping, cattle, horses, and anything else farm related.  I'd be happy to help.  I'll send you a message.

A couple things to consider.  

Gift tax - if you just give them the money, they may be subject to the gift tax for anything above $15k per person.  You can avoid this by offering the loan.

Loan interest #1 - You'll be required to pay taxes on the interest of the loan.  Not a big deal.  Just be aware that you're required to report it.

Loan interest #2 - You'll need to issue the loan at the market interest rate at that time.  If you give them a discounted interest rate, they will still be required to pay the taxes on the amount you discounted.  This is a range because interest rates are charged on credit worthiness.  Just stay away from an abnormally low interest rate and you should be fine.  If you go too low, you can peak the IRS interest in your finances.  

What are you going to do if they don't make a payment or pay consistently late?  I know it's your parents.  I'm sure they are wonderful people.  As an advisor I've see deal like this that had the best of intentions, ruin relationships.  If I were you, I'd have a very straight forward and blunt conversation about your expectations followed by a note that's been reviewed by a lawyer and includes the conditions, upon which you both agreed.  

I hope that last part didn't come across as condescending.  

Great job having the means to help your parents out even if it's temporary!  That's what it's all about!  

Hey Hunter, I help many clients with tax and financial planning.  I prefer to work with a wholistic picture of everything you're trying to do.  I don't focus on just advising, or tax planning/preparing.  I'm a real estate investor and do tax/financial planning for the realtors I've used. 

I help clients do this.  I'll send you a message.  I'm not sure why they are shutting off access to this, but we can find a solution.

Leah - what are your current hobbies?  How can you draw income from your hobbies?  For example, I'm a skydiver.  I'm about to get my coach rating.  Once I get my coach rating, I'll make about $7 a jump with a student.  That doesn't sound like much.  However, I'm currently paying $30 a jump.  As a coach I'll jump for free and make $7.  Right now, I spend about $300/month on jump tickets.  By October I'll spend $0 on jump tickets, and I'll make $70.  It doesn't sound like much but think about it.  I'm getting to spend the weekend doing something I love, and I've raised my income by $370/month.  Since I have a skydiving business (schedule C on my tax return) I can write off all of my expenses.  I wrote off my rig $4k, my A license $4k, my mileage to and from the dropzone, all my other gear $1k, and a camper for $15k that I pull around the states to different dropzones.  Any time I buy anything for skydiving it is now a business expense.  These losses went against my W2 income last year.  For example, let's say I made $100k last year.  With these losses I brought my taxable income by over $25k +mileage.  So my income was reduced to $75k.  I know it's a lot and I may not have been very clear in my writing.

Send me a message with your family hobbies and let's see if we can figure something out.

I don't personally believe the concept and model of Airbnb (like the concept of rideshare) will go anywhere. I don't personally invest in their stock or have clients investing in their stock for a few reasons. First, it's a low barrier to entry. Anyone who knows someone who can build infrastructure on AWS or Azure can recreate this same business idea. Second, companies that have a lower barrier to entry generally suffer from price compression due to competition. Although this is great for both the host and the customer, it's not great for the company. Over time I believe we will continue to see profits margins compressed. Third, I haven't seen Airbnb or VRBO do much in the way of creativity to drive additional streams of revenue. So no, I would not invest in the companies themselves. I would bet on myself first and buy an STR.

There are many aspects to this as everyone else has stated.  I coach clients through these decision-making processes all the time.  Each person is different.  I'll reach out to you directly because to give you any worthwhile advice, I'll need a lot more information.