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04-10-2017, 02:02 PM | #45 | |
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You don't have to use "a guy". There are lots of property management companies. In NW, the rate is about $100/month. Last edited by backagain; 04-10-2017 at 02:27 PM.. |
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04-10-2017, 02:19 PM | #47 | |
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04-10-2017, 02:30 PM | #48 |
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It's very easy to know this with FIRECalc: just decide what lifestyle you want, and when you no longer want to need a paycheck. It's only 3 simple numbers to input. FIRECalc will tell you how much you need by what date - if you're not on track to hit that number then, no, you shouldn't be wasting your money on a luxury like a car.
Where people get tripped up is they think they won't mind working forever - and if you're like me, somewhat delusional about your future:"I'm awesome - things will always be great for me!" Now I'm jaded in my mid 40s and I've learned life isn't a meritocracy for if it were i'd be a king! A KING i tell you!!
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04-10-2017, 02:39 PM | #49 |
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slightly off topic (but at the same time, not) i can't seem to find sound advice on what to do with the equity i have in two properties. ideally, i'd like to grow them into more investment properties but don't know when is the right time and how to go about it - heloc vs. refi and pull out to reinvest vs. sell etc...
property #1, my home 30yr fixed mortgage $2800/mo @ 3.75% owe $440k, market value $670k property #2, 4 unit income property 30yr fixed mortgage, $3800/mo mortgage @2.75%, net $1100/mo after all bills paid owe $640k, market value $980k any advice from you smart money fellas? socal btw, pasadena home/rental property in inglewood (4 blocks south of new rams/chargers stadium) |
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04-10-2017, 03:05 PM | #50 |
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04-10-2017, 03:31 PM | #51 |
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There is a lot of great advice in this thread. It really emphasizes saving early, saving consistently, and setting a goal number for retirement. Though the methods will be different based on age groups as I doubt anyone under 40 can rely on soc. security or private pensions.
This is the type of information that should be mandatory starting in middle school (even elementary). Also people should realize by the variety of responses, there are many options to reach that goal. All investment vehicles have pluses and minuses, but understanding them as much as possible is key. People most often lose their shirt when they invest in things they don't understand or don't believe in. Invictus is correct about who you deal with. Financial planners who are also fiduciaries are mandated to work in your best interests. Furthermore fee only fiduciary financial planners aren't beholden to selling certain assets via commissions. This is the best way to find someone who is in your corner. Even with that, it doesn't mean they know what they're doing and you could still lose money. What I find sad is the lack of any real wage growth. It's very hard for most Americans to save in any reasonable way while still driving the consumer based economy that keeps the economy growing. That is the double edged sword. I remember after the financial crisis after the housing market collapsed the economy lagged because no one was spending. Everyone was just paying down debt. Bush had to give people money (stimulus) in an attempt to restart spending. Though the above is a macroeconomic problem and doesn't apply to an individuals situation.
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04-10-2017, 04:39 PM | #52 |
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I understand the rationale for borrowing at rates lower than what your bond portfolio pays out, freeing up capital to invest.
But...keep in mind that below-market interested rates are essentially subsidized. You are, in effect, paying points to get that rate. Those points come out of your purchase price. Meaning the dealer probably has room to move down in price if you pay cash. In fact, I've always tried to use that as leverage in my negotiations. But I have used non-mortgage debt as well when circumstances merit. For example, when we bought a Mazda 3 a couple of years ago, I borrowed about 60% of the purchase price and put my 20 year old daughter on the note as co-borrower. We paid it off after a year, and she got all the credit score points for having paid off a car loan. Well worth the interest we paid, especially since she plans to be a musician and will have, em, unpredictable income.
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04-10-2017, 04:54 PM | #53 | |
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04-10-2017, 05:00 PM | #54 |
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Great read and I might give up getting a new F80 afterall.
I am a little surprised only one person mentioned whole life insurance. Yes, it's not for everyone and it might perform no better than a bond. But the key is to use pay up additions to grow tax free and this can boost the cash value significantly in 10+ years time. I never analyze in details how much difference it would end up with compared to a bond fund, but just mentioning maybe someone finds it feasible. |
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04-10-2017, 05:23 PM | #55 | |
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Social security withholdings (doubled if you are a self employed idiot like me) may very well end up being nothing more than additional income tax paid over our lifetimes. Even if you get some payments, the chances are they will be much later in life after making many more contributions relative to benefits received than older generations. Combined with the extinction of pensions and lifetime employment (except maybe for government employees but even those have started to reform in many cases), the change in social security expectations should indicate we shouldn't be looking to those who already retired for advice because the formula has changed dramatically. Middle aged and younger need to be saving substantially more than Boomers and the generation before Boomers. Don't read that as being critical of older generations or blaming them in any way - just pointing out it will be different for Gen X/Y and those that follow.
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04-10-2017, 06:03 PM | #56 | |
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Balance is the key to everything. Enjoy life a little once in a long while (to reward yourself), but not to spend 90% of your income and save only 10% every month and found yourself in tough situation when things go south. Everyone has their own balance and there is no formula to this. I view real estate as a stable income in the long run. Looking back at the history, housing is always in the + decades after decades. This may not be true to all cities across the nation, but generally real estate is a very stable product in the long term. I am no expert and still figuring out what works and will work best for me. Money is never enough. |
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04-10-2017, 07:28 PM | #57 |
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Army, PhD, Post-Doc, college debt and under payed for first 6 years so very slow start and like many had minimal capacity to add much to savings (lack of compound kicked my butt for a long time ).
However made some critical career moves to leverage income and saved like a maniac rest of career to date (over last 17 years) along lines of GrussGott's strategy and now in a pretty good position with a plan to retire in 4 years at age 58 - a goal at least! I am curious (and yes can research on net) as to what the target range is in total savings/retirement funds for people here at or about to retire - or even what your calculated/perceived goal would be? Maybe better to ask this in an anonymous poll - I ask as many of the estimations here speak only to assumed annual spending needs but don't necessarily account for major life events such as critical illness or long term care needs etc. so a buffer is a needed consideration along with other choices in calculating your goal. Care to share?
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04-11-2017, 12:10 AM | #59 | |
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Basically your money would have been better spent leveraging on a flip than a rental over the past 3-4 years. That is because, while the rental prices have gone up significantly, they are being dwarfed by the values of the homes prices. If you are looking leveraging your current holdings to acquire more long term investment properties, now is not the time to do it, imho. I am concerned the market is peaking and we are looking at a period of relative stagnation in the real estate market, due to incoming instability and the spread of income discrepancy, as well as the inability of our government to, well, govern. Real estate values could regress to the mean, or as it is already happening in higher end markets, start to go down as the avg list days are going up. Consider that the upper real estate markets are slowing dramatically due to China govt policy changes as well as new curbs on visas and immigration crackdowns, and you could soon see that the movement of money reflecting the instability, and having negative rippling effects in areas that have experienced high growth in the last 5 years.
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04-11-2017, 12:22 AM | #60 | |
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What would this person do in this case? He is still netting $1100/mo holding onto his 2nd property. But you are saying that the market will stagnate. Does that mean that that rent rates will go down and he/she might have to lower the rent? Do you think housing prices will stagnate or drop in the next few years? Would it be worth it for this person to sell now while we are at a peak, or wait it out and hope the rent will still put them in the green? It feels like you are saying he/she should sell it now.
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04-11-2017, 12:55 AM | #61 | |
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Assuming all other things remain constant, rental rates should continue to steadily rise in most areas that did not overbuild multi-unit apartments or have too many investor held properties (ahem nyc, central london). More people are renting longer and delaying buying due to reasons I have listed previously. The problem is buying a long term rental properties right now (socal) you have negative cap rates because values of property have dwarfed values in rent. example: in 2011 one property i bought for 235k rented for 1800/month, now it is 435k and rents for 2,100 a month. compare the slope of the value of the holding vs the increase in rent, if you were to buy now your cap rate would be negative. The good news for me is that BOTH my property appreciated and my rent increased thereby allowing me to gain in both cases. Whether a person decides to sell now at the "peak" depends on where they are at their financial road. if you have equity in your property, you can leverage it to buy other properties- but then you also multiplied your risk as well. You certainly don't want to leverage yourself at a "peak" market. And I certainly should not be telling anyone to sell or buy anything without knowing more about their finances and their financial plans or goals, much less do so on a car forum
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04-11-2017, 02:37 AM | #62 | ||
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04-11-2017, 03:03 AM | #63 |
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+1 on Real Estate, REITs, 401K (in my case SEP-IRA), smart biz ventures... these are all good options. Just learn to diversify.... know when to get in and get out... I have investments on all these plus more. I started putting my earned money to work at the age of 25 (in all of the above). Drove the same car for over 16yrs until it completely broke down a couple of years ago. At 45, im finally enjoying some passive income from 5 properties, and a couple of bizs I built...
My bizs pays for my M ( my company car ). Im in position where I can retire very very comfortably before im 50 if I ever choose to. Concentrate on asset building stuff while you are young. So first step....leave this forum now!
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04-11-2017, 03:08 AM | #64 | |
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with all the information available online these days, you can learn a lot by keeping track of home values for years- once you start getting really familiar with the homes in your area, make sure you save individual homes in files (like personnel files) on your computer and keep track of them through the years, seeing how they hold up with economic changes and demographic changes. an example of what I mean, while in college I started researching rental properties and started looking at different areas in costa mesa, even going out with agents and seeing listings i could not afford. one of the things i learned is to look at cap rates and figuring out how to judge when a property is going to be profitable renting out. Realize that cap rates published by the agent or the owner of the property are usually bs. You need to be able to determine it on your own. if you are doing it right, you will see patterns and reasons why values go up, or why certain areas are hit worse then others, you are able make judgments when the time is right to make your own moves. Real estate requires a lot of money, so you need to live below your means and amass a pool. You can also find other ways to finance like family or friends, partners, etc.
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04-11-2017, 08:28 AM | #65 |
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Some good info in here. Making me feel a bit guilty about having an M4 right now instead of using that money to invest... My wife and I have just now gotten to a place where we are looking to invest and I have no clue where to start. I already do 12% to 401k + company 6% match and we have a 6 month savings cushion. We're thinking of starting to put into an IRA starting this month (around $500/month).
I would love to put more towards the mortgage/student loans every month, but it seems smarter to get money into accounts that will earn compounded interest as early as possible (IRA?). I've ordered a few books to read over the next couple of weeks and I just finished Financial Peace University (pretty good info, didn't agree with everything though). Don't want to jump into anything too soon until I do some more research, but downgrading the M4 to something like a GTI to have an extra $500/month to play with seems like it might be the smarter move. Thanks for all the great posts so far!
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04-11-2017, 10:33 AM | #66 | |
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