Originally Posted by Bugeater:
No mortgage and no dependents anymore means we're getting ****ing killed with income taxes. The Mrs is getting bought out of her pension soon, she just wants to dump it in her 401k, which already has a substantial amount of money in it. I was thinking maybe we should buy a rental house. Hell it probably wouldn't really make any money until we sold it, and it will likely lose money the first few years. Smart idea or not?
Buy a decent home in a good neighborhood in a good school district, and you won't lose any money. With a home like that, you can be picky about your tenants.
People who care enough to live in a house like that tend to take care of the property. People like nice things for their kids.
We have a couple of rental properties, and while we see them as investments, we also see them as an opportunity to provide nice homes to folks who, for whatever reason, may not have the desire or means to purchase a home. [Reply]
So here's a question. I got a spam email Monday night telling me that a certain company had developed a "miracle drug" and to "buy their stock immediately". This is obviously spam and, after searching around about the email and ticker symbol (and researching the company itself), it learned about "pump and dump" scams. My question is, if you are confident that you know of a pump and dump scam about to start, what is stopping you from jumping on the wagon with the scammers? You'd have to time your sell to beat theirs, but that's about it, right? I ended up buying 30 shares for fun and it went up almost 40% yesterday. [Reply]
Originally Posted by wutamess:
Is there a ticker? My daughter just gave me her $200 bday money to throw at something for her. would like to take a chance at that
BITCF is the ticker symbol. It's crashing today. If it's a real company with a future and not just a pump & dump, which I couldn't determine because of my limited crypto-currency knowledge, it might be a good time to take a flier. If not, which is a very real possibility, she might want to take that $200 to Vegas and put it on the Chiefs winning the next 5 consecutive Super Bowls. [Reply]
Originally Posted by kepp:
So here's a question. I got a spam email Monday night telling me that a certain company had developed a "miracle drug" and to "buy their stock immediately". This is obviously spam and, after searching around about the email and ticker symbol (and researching the company itself), it learned about "pump and dump" scams. My question is, if you are confident that you know of a pump and dump scam about to start, what is stopping you from jumping on the wagon with the scammers? You'd have to time your sell to beat theirs, but that's about it, right? I ended up buying 30 shares for fun and it went up almost 40% yesterday.
There's nothing stopping you aside from the fact that you can't really know if it's about to climb or if it's already climbed and about to crash. Like a lot of these "make 50% in a day" ideas in the last few pages of this thread, it's basically gambling. [Reply]
Originally Posted by Buehler445:
Home mortgage interest only affects you if you itemize, meaning your medical insurance, LTC Insurance and expenses (after they exempt 10% of your gross income. Why? Because they're dicks that's why), Real Estate and Personal Property tax, Sales tax or state income tax, home mortgage interest and contributions are more than your standard deduction, which is 12,600 for married filing joint. There are some other weird ass deductions like un-reimbursed employee expenses and shit, but there are limits on those.
Accordingly, only monies spent OVER 12,600 does you any good.
Where you're getting smoked is the extra exemption for 4050. Also, if you haven't filled out a new W-4 form and whatever Nebraska's witholding form is, do it now. You're probably underwithheld, which is why you're getting smoked on the taxes.
RE: Rental
Rentals CAN be a good deal if you manage them properly. First, they need to make you money or you just as well pay tax and go invest in retirement. Renting here is a FUCKING RACKET so everyone is doing it.
Basic management things, like bulletproof leases covering everything that can cost you piles of money, knowing the process for evicting motherfuckers, and knowing the rent market so as to NOT be the cheapest place to rent, as well as finding a house to buy that will net you a good return will be the difference between a sound investment and a fucking albatross that will make you want to pick a fight in a mexican bar just to end the agony.
As far as taxation, there are no withholdings, so make estimates, or at least save up whatever your tax bracket is for taxes. They're coming. There is no SE tax (which equates to both the employee and employer portions of social security and medicare, or to put a number on the fucking 15.3%) So that's a major benefit.
Show a profit. Don't take a loss over and over or you'll get audited. On that note, save receipts. KEEP TRACK OF EVERYTHING. Every tool you buy to fix something, every mile you drive for any business regarding the rental (Keep a log, the money is good enough it is worth your time) It's a good idea to have a separate checking account for the rental and ONLY for the rental so it is easy to keep straight. Just record it as owner's draw if you pull money out for personal.
Don't pay yourself a wage, (essentially charging yourself SE), but make sure it is paying your time or you need to get rid of it.
And what nobody will say out loud is it is a good place to commit tax fraud. If you need a new door handle at the house - deduct it on the rental. You can do that with small stuff, but putting a 50,000 kitchen in your house won't fly. But tools you need for other stuff can be deducted over the rental. Supplies for the house, vacuum cleaners, light bulbs, whatever. It can be done. If you're comfortable with it. Some guys are, some aren't. Just make damn sure you have a receipt and a justification if you get called on it.
Rentals have to be depreciated (which is taking a portion of the cost as expense for the year). I can't remember the treatment, but it is quite a while. So what that does, is when you sell it, the basis in the sale is less whatever you depreciated. And sale price-basis=gain (taxable income but IIRC it is limited at 20%)
Say you bought it for 10,000, depreciated 2,000 and sold it for 10,000. Since you depreciated 2,000, you got a break of 2,000 on taxes, so now you get to pay the taxes. Boom. You owe $400 tax. And the numbers get pretty serious as they get big, so gain can change the game pretty significantly so if you sell something, hang onto the cash until your taxes are filed.
On the depreciation note, it is kind of a cash flow crunch because you spend ALL the money up front and only get the tax break spread over however many years. If you have the money saved up now, it shouldn't be a big deal because you've already paid the tax on it. But it can throw a wrench in things if you spend all your cash or borrow money to do it.
If you borrow money, the principle is not deductible, but interest is. So factor that into your cashflow. Some people get a mortgage on their primary residence to buy the rental. If you're itemizing without home mortgage interest and will be for perpetuity, that's fine. If you don't itemize, then you can't deduct the interest. And typically home mortgages are better rates, but you'll have to do the math on the tax impact of the interest vs rate savings.
Good luck man. Some guys love rentals, some guys hate them.
If you have any specific questions, feel free to shoot me a smoke.
Yep, getting past that $12,600 mark is the problem. I'm hoping a rental could help with that. And as far as the fraud part...let's just say I have experience with that from when I was running my painting business. :-)
Originally Posted by Buehler445:
Oh, and congratulations on paying off your house. That's a huge deal. I'm jealous.
We caught a huge break that unfortunately involved the death of family member. But yeah, it's nice, and it opens the door to a lot of other possibilities for us. Right now we're basically just blowing the extra money, we need to be more smart with it. [Reply]
Originally Posted by Fat Elvis:
Buy a decent home in a good neighborhood in a good school district, and you won't lose any money. With a home like that, you can be picky about your tenants.
People who care enough to live in a house like that tend to take care of the property. People like nice things for their kids.
We have a couple of rental properties, and while we see them as investments, we also see them as an opportunity to provide nice homes to folks who, for whatever reason, may not have the desire or means to purchase a home.
We have the Air Force base in Bellevue that is a gold mine for rentals, but unfortunately it's not close enough in proximity to where we live to be practical. We do live in a very desirable part of town so I don't think finding a decent renter will be an issue, however we are going to pay a lot more for the house initially. I really don't care about making money month to month, I'm just thinking it would be nice to have it to sell eventually to pad our retirement. [Reply]
Originally Posted by Bugeater:
We already own one home free and clear, so we're already ahead. I'd just like to find some tax breaks, and her answer is to put more money in the 401k. Guess I'd like to diversify a bit from that, and maybe even claim some losses for a few years. I have no idea how that works. Suppose I need to talk to an accountant.
Reach out to Hog Farmer on this too, I think. I believe he did some very smart things in building a rental portfolio. [Reply]
Originally Posted by Iowanian:
I think I'm going to expand my portfolio a little in a different direction.
I invest, but don't do individual stocks, just funds.
My latest bad idea is I'm going against what I've always said and buying a couple of rental properties.
Ditto. Hog Farmer probably has good advice for you. [Reply]
Originally Posted by lewdog:
Your best best would be to start a Roth IRA for your child if they are of "age" to have some earned income. Here's the lose definition of earned income from the IRS.
It’s up to you (or the child) to document that she had income earned from work. The money can’t be an allowance or a gift. (You can find more about the IRS’s definition here). It’s up to the account custodian to document the service rendered, when it was done, and the payment. It also has to be a reasonable rate. You can’t pay $1,000 for a night of babysitting.
She got close to $300 for her 13th. So I told her maybe we should invest it? She took the bait and said sure.
She's only 13 and it was a gift so she wouldn't qualify. Was thinking about opening up a brokerage account in her name and letting her play with it on her own. [Reply]
Originally Posted by wutamess:
She got close to $300 for her 13th. So I told her maybe we should invest it? She took the bait and said sure.
She's only 13 and it was a gift so she wouldn't qualify. Was thinking about opening up a brokerage account in her name and letting her play with it on her own.
That's a terrible idea and sets a very bad early example about "investing." And no offense, but seeing this post and some of your others, makes me think you don't know a ton about investing.
Investing for most of your money should be about long term gains, not short financial success (which many times leads to total loses). "Playing around" with a brokerage account could lead to a few wrong clicks and that $200 invested could turn into owing thousands of dollars. If you don't understand this concept, than a brokerage account is also not for you.
I would suggest taking that birthday money and putting it into a savings account, teaching the lesson of rainy day fund or saving up for something in the future. If you allow your daughter to do jobs around the house, start paying her small amounts and documenting it. Once she reaches a certain amount, opening up a Roth IRA would be the best investment option you could give her long term. This is what my parents did for me when I turned 15 and had a summer job.
I am totally against teaching individual stock buying as a get rich quick scheme. If I lost all the money in my brokerage account, I'd be fine. It's play money for me and most should treat it as such. I pump my 401k and Roth IRA for retirement, and so should most people. [Reply]
Originally Posted by lewdog:
That's a terrible idea and sets a very bad early example about "investing." And no offense, but seeing this post and some of your others, makes me think you don't know a ton about investing.
Investing for most of your money should be about long term gains, not short financial success (which many times leads to total loses). "Playing around" with a brokerage account could lead to a few wrong clicks and that $200 invested could turn into owing thousands of dollars. If you don't understand this concept, than a brokerage account is also not for you.
I would suggest taking that birthday money and putting it into a savings account, teaching the lesson of rainy day fund or saving up for something in the future. If you allow your daughter to do jobs around the house, start paying her small amounts and documenting it. Once she reaches a certain amount, opening up a Roth IRA would be the best investment option you could give her long term. This is what my parents did for me when I turned 15 and had a summer job.
I am totally against teaching individual stock buying as a get rich quick scheme. If I lost all the money in my brokerage account, I'd be fine. It's play money for me and most should treat it as such. I pump my 401k and Roth IRA for retirement, and so should most people.
I'm a novice investor. I admit. However, what have I said (or done) that makes you think I know little about investing? I have a 401K and Roth IRA both stocked with multiple high performing index, ETF and mutual funds for long term growth. I also have a play account I use for "gambling" money with the stock market.
Anyhow... Maybe I used a wrong buzz word or something. A regular brokerage account in her name cannot play the options market. So in that case... she will learn about investing and I"ll see what she can do and she will either fail or succeed but it'll be her choice.
Originally Posted by wutamess:
I'm a novice investor. I admit. However, what have I said (or done) that makes you think I know little about investing? I have a 401K and Roth IRA both stocked with multiple high performing index, ETF and mutual funds for long term growth. I also have a play account I use for "gambling" money with the stock market.
Anyhow... Maybe I used a wrong buzz word or something. A regular brokerage account in her name cannot play the options market. So in that case... she will learn about investing and I"ll see what she can do and she will either fail or succeed but it'll be her choice.
Thanks for your input.
Yeah, it's really does just depend on the core purpose. If you want her to "have investments," safe funds are the way to go. If you want it to be a learning experience, throw it in a brokerage account and have her pick a couple of stocks for companies she likes and see how it goes. Even if she loses most of it, it'll be a good lesson that will pay off down the road. [Reply]
