Hmm, interesting point of view. While I agree with almost everything you say, I keep having this question in my head: Aren't you thinking short term? What do I mean by this? While I agree that house prices will go down, should I care much about my equity? All I need to do is to keep the houses rented for the next 5-7 years until we see prices going up again. Historically, with their ups and downs, house prices have always gone up. With that in mind, with a long term thinking, I don't think I will have any problems. Also, my goal is to, instead of buying more properties, to start paying off this existing properties one by one. While at first it's difficult, later one with the snow ball effect it will be much easier. If, for example, I have 10 properties that give me an average of 5k a month, and if I can pay them off in 5-7 years, I will have a cash flow of 15-20k a month only from these 10 properties. As for the passive part, I agree that having rentals is not at all passive, but it's nothing compared to working 9-5 for the rest of your life. I actually enjoy it that I only have to work a few hours a week to take care of these properties. Again, I agree with that you've shared because your return on investment with lending is way better than having the rentals, and it's way less active than dealing with tenants, however, Warren Buffets saying "buy till you die" has stuck in my mind and hasn't allowed me to take advantage of the current high prices where I could get the most of the equity as of today. Thank you for sharing your thoughts.
What about the taxes? Doesn’t selling your rental properties out right count as income that you will pay taxes on? Did investing it in private lending allow you to avoid the taxes from your additional income? Thank you
Good Stuff Jon. The market is definitely hyper local and in today's reality it's hyper-hyper local. You can have one neighborhood in a zip code with prices rising and another neighborhood in the same zip code with them falling. We won't be able to put a label on the markets until all houses are doing the same thing. Most people that own rentals don't do RETURN ON EQUITY math. When they buy they do RETURN ON INVESTMENT but usually that's it - so good on you for going there. That's why I added it to the One Sheet but then members complained because everyone's came out at 2-3% unless they owned businesses. Capital Gains taxes keep most away from selling but if you're a Real Estate professional you can hopefully buy stuff that offsets it with new depreciation etc. Going hard money not so much. Be careful about putting all your eggs in one basket now.
Hmm, interesting point of view. While I agree with almost everything you say, I keep having this question in my head: Aren't you thinking short term? What do I mean by this? While I agree that house prices will go down, should I care much about my equity? All I need to do is to keep the houses rented for the next 5-7 years until we see prices going up again. Historically, with their ups and downs, house prices have always gone up. With that in mind, with a long term thinking, I don't think I will have any problems. Also, my goal is to, instead of buying more properties, to start paying off this existing properties one by one. While at first it's difficult, later one with the snow ball effect it will be much easier. If, for example, I have 10 properties that give me an average of 5k a month, and if I can pay them off in 5-7 years, I will have a cash flow of 15-20k a month only from these 10 properties. As for the passive part, I agree that having rentals is not at all passive, but it's nothing compared to working 9-5 for the rest of your life. I actually enjoy it that I only have to work a few hours a week to take care of these properties. Again, I agree with that you've shared because your return on investment with lending is way better than having the rentals, and it's way less active than dealing with tenants, however, Warren Buffets saying "buy till you die" has stuck in my mind and hasn't allowed me to take advantage of the current high prices where I could get the most of the equity as of today. Thank you for sharing your thoughts.
What about the taxes? Doesn’t selling your rental properties out right count as income that you will pay taxes on? Did investing it in private lending allow you to avoid the taxes from your additional income? Thank you
Good Stuff Jon. The market is definitely hyper local and in today's reality it's hyper-hyper local. You can have one neighborhood in a zip code with prices rising and another neighborhood in the same zip code with them falling. We won't be able to put a label on the markets until all houses are doing the same thing. Most people that own rentals don't do RETURN ON EQUITY math. When they buy they do RETURN ON INVESTMENT but usually that's it - so good on you for going there. That's why I added it to the One Sheet but then members complained because everyone's came out at 2-3% unless they owned businesses. Capital Gains taxes keep most away from selling but if you're a Real Estate professional you can hopefully buy stuff that offsets it with new depreciation etc. Going hard money not so much. Be careful about putting all your eggs in one basket now.