Rent out house or just sell and cash out?
- Thread starter Dubbington
- Start date
wazzuFreddo
WuTang is 4 the children
Housing prices are at all time highs while ~20% of all mortgages as well as renters behind on payments.
At some point the normal foreclosure/eviction cycle is going to start again and we will see downward pressure on real estate prices.
At least that is my opinion.
At some point the normal foreclosure/eviction cycle is going to start again and we will see downward pressure on real estate prices.
At least that is my opinion.
Slow Goat
Fun Junkie
And when (not If) mortgage interest rates rise, expect the hot market and inflated values to end as affordability is impacted.
ctwo
Merely Rhetorical
Isn't that tax evasion?
https://www.irs.gov/newsroom/know-the-tax-facts-about-renting-out-residential-property
scootergmc
old and slow
Not single-fund, you can't be that lazy. No such thing as easy money, you have to do your research and be active with your money. Just like old '60s broken jalopy you find in garages. It's depreciating asset, get rid of it and it's much more useful as cash. Same thing with anywhere you park your money. Key is education and learning new strategies that fit modern market.
Investment mentality of masses is still stuck in '60s. Regulatory-changes in 1986 provides A LOT more flexibility and opens up HUGE opportunities in new and novel strategies. Look at both sides of GME/AMC debacle and you'll see awesome new weapons being deployed that simply wasn't possible in the '60s.
Anyway, I must be getting old as I'm pushing conservative strategies with tax-benefits. Never would've even looked at those years ago. Ok, so roth-IRA is nice. Using CAN-SLIM method from O'neil @ IBD, you can do quite well. I started roth-IRA last year since I was maxed-out in roth-401k. I'm up about +93% for 2020. Most people's magical 10% done in single day.
Adding some contributions for 2021, lowers it to +65%, and I still have 11-months to go.
Since you quoted the three of us who spend some time in the investment thread, I think you were misunderstanding. We're all well aware of what the/our funds are doing. I think blankpage was just poking the bear- and you are old with your $7k contributions. :laughing
DannoXYZ
Well-known member
I think we're all on same page. Just saying that "investing" in house really isn't comparable to other investments. Having long-term debt really strangles your opportunities.
Tax-deferment really should never be consideration with investments. I'd rather pay 28% on 100% gain any time, than trying to save couple dollars on taxes for a 20% gain. Just catching up now that I'm geezer.
Here's how I was able to open my Porsche Tuning shop way back when in Santa Barbara.
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Eldritch
is insensitive
I think we're all on same page. Just saying that "investing" in house really isn't comparable to other investments. Having long-term debt really strangles your opportunities.
Tax-deferment really should never be consideration with investments. I'd rather pay 28% on 100% gain any time, than trying to save couple dollars on taxes for a 20% gain. Just catching up now that I'm geezer.
Here's how I was able to open my Porsche Tuning shop way back when in Santa Barbara.
Nice, what did that look like in 2002?
I lost my ass. That was a rough break in my early 20's. :laughing
Killroy1999
Well-known member
From your link, see Ordinary and necessary expenses, improvements, depreciation. :teeth
Killroy1999
Well-known member
Don't fully agree. Leverage. Avoiding taxes is a good thing and so is cashflow.
Eldritch
is insensitive
Yeah, I have to agree. The general rule for us is to never leave a cash flowing property without debt. You manage your DCR, refi as planned, and keep as much money flowing though the property as possible.
GAJ
Well-known member
Gifts are entirely legal.
What they choose to do with it is up to them.
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2018, 2019, 2020 and 2021, the is $15,000.
DannoXYZ
Well-known member
I got stopped out at 80%. Rolled $180K into shop. Great first 5-years, never earned so much money in my life, made those investments look like peanuts!!! Raced Porsches and went to all rallies and parties!!! Then last 5-years, never lost so much money in my life!!!
When I started, I just missed '87 crash and hadn't learned how to trade falling markets. Now I'm ready for next crash...
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DannoXYZ
Well-known member
It comes down to net cash-flow:
1. pay 28% on $200k/yr = $144k net
2. pay 14% on $50k/yr = $43k net
I'd take #1 any day, even if taxes are higher. A lot of people miss out on great opportunities because they worry about taxes. Or don't have cash on-hand. It's fine to own house, just don't pay more than rent to taxes & banker. I actually bought my house.. with cash. That $500-600K I would've paid to bank in 30-yrs has gone into provide much better lifestyle for me and my family. Like when I got into racing, I went all out. Did 42-trackdays and 4 race-weekends my 1st season. Could've done whole season if I had started earlier than May.
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Joshman
-
Coincidently, I recently asked myself the opposite. Do I sell my rental home and cash out, or keep renting it?
I decided that I needed to sell it (after renting it painlessly for 6 years).
Here was my reasoning:
1) Rents are falling
2) Many cities are considering sweeping rent control, and I hear murmurs that something may get proposed at the state level. Getting locked into a low rent rate, and increased property taxes, risked creating a net loss of income
3) Sale prices are high
I'm currently of the opinion that individual landlords will soon be a thing of the past in CA, favoring larger companies who can offset the taxes and financial risks. But that's just me
I decided that I needed to sell it (after renting it painlessly for 6 years).
Here was my reasoning:
1) Rents are falling
2) Many cities are considering sweeping rent control, and I hear murmurs that something may get proposed at the state level. Getting locked into a low rent rate, and increased property taxes, risked creating a net loss of income
3) Sale prices are high
I'm currently of the opinion that individual landlords will soon be a thing of the past in CA, favoring larger companies who can offset the taxes and financial risks. But that's just me
Eldritch
is insensitive
Nice, I worked in tech as a kid and had a decent amount of stock that got burned to the ground when the .Bomb dropped. Cut it loose for tenths of a cent on the dollar before my shares were destroyed by the companies I was into folded completely. I didn't get back into the market until after the great recession.
DannoXYZ
Well-known member
yeah, that was my 1st experience with market and it was wild and awesome ride! Many of my friends moved back up here and were working in DotCom start-ups in S.F. Top-floor/top-shelf everything, limos to lunch, endless parties. Unfortunately many of them took +50% of their salaries as stock-options and when company went belly-up... >Pfffft<...
Definitely mental blow, took me some time to get back. Worked on cultivating dry mercenary mind-set. Started with basic cash & stocks, and worked my way back into more complicated multi-sided options & futures positions. Was actually relief and took away so much stress to make it not mean anything.
Killroy1999
Well-known member
Whatever is good for your net worth, cash flow, risk, life. That's fine. Businesses like race shops and rental property have tax advantages.
FYI, we have a tiered income tax system, so if my understanding is correct:
So, if your federal taxable income for 2020 is $200K, then you only pay...
32% on your income from $163,301 to $200K....
24% on your income from $85,526 to $163,300....
22% ...
DannoXYZ
Well-known member
Those numbers I used are on top of whatever incomes are underneath. Capital gains are taxed differently than income. Tax brackets change even more if you trade incorporated.
When you get into options and futures, there are incredible maneuvers that lowers tax payments tremendously.
In end, all I'm saying is there's many ways to own house. I think it's better to have your own corporation buy it. Many ways to stash your cash. My personal favourites is zero-debt, maximum growth with fattest pile of cash in whatever time-frame you choose, 5, 10, 20, 30-yrs, etc. Most people don't crunch the numbers over that timeframe and compare numerous paths they can take. There's way more than just one we're brainwashed into taking to fatten the bankers.
When you get into options and futures, there are incredible maneuvers that lowers tax payments tremendously.
In end, all I'm saying is there's many ways to own house. I think it's better to have your own corporation buy it. Many ways to stash your cash. My personal favourites is zero-debt, maximum growth with fattest pile of cash in whatever time-frame you choose, 5, 10, 20, 30-yrs, etc. Most people don't crunch the numbers over that timeframe and compare numerous paths they can take. There's way more than just one we're brainwashed into taking to fatten the bankers.
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Re-fi to a 10 year loan or maybe pay it off??
I did the 10 year thing 7 years ago on a rental that never had a positive cash flow but I was in long term.
Soon it will be a retirement income. I am a believer in property myself.
Townhouse might have changed my perspective. SFH in my case. It has doubled in value. Probably leave it to my kids at this point but still happy with the decisions.
10-15% is worth it but not sure that is sustainable.
Good luck!!
I did the 10 year thing 7 years ago on a rental that never had a positive cash flow but I was in long term.
Soon it will be a retirement income. I am a believer in property myself.
Townhouse might have changed my perspective. SFH in my case. It has doubled in value. Probably leave it to my kids at this point but still happy with the decisions.
10-15% is worth it but not sure that is sustainable.
Good luck!!