Category

Taxes and Investing

Lifestyle, Small Business, Taxes and Investing

Investment Commercial Real Estate Profits and Pitfalls

Residential investment property is forgiving for the most part. Professional managers exist in most markets and except for the very worst of conditions it is possible to fill most apartments even if it is not at a profitable rate.

The number of residential properties available is large and unloading a single family home or duplex is fairly quick and simple. Many economists consider a six month supply of homes on the market a healthy balanced market.

Things get slightly less forgiving when you graduate to multi-unit apartment complexes. There are fewer to select from, they cost significantly more, there are more tenants to manage and it usually takes longer to sell the more expensive buildings. Not as many investors can swing a multi-million dollar deal or even finance one.

It might not be intuitive, but the more expensive the property the more likely it will be purchased as a cash deal. Big buildings carry big responsibilities and risks, but also are coupled with larger rewards.

Generally the rules are straightforward with residential rental properties. Lease contracts are generally standardized in most states and the landlord/tenant rules are clearly defined. The laws tend to protect the tenant more than the landlord. Still, the landlord, if she bought right, should turn a tidy profit.

Real estate investors usually start small, a single family rental or duplex, moving up to multi-unit buildings later. Most landlords stop at the duplex level with maybe a 4-plex or so tossed in for good measure.

The next leap takes courage. Financing a large deal is more difficult. Only a select number of banks are willing to fund a seven figure project. You need good credit, experience and a documented plan. At the end of the day the multi-unit complex is still a forgiving animal in the real estate world.

Then there is the commercial property.




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Early Retirement, Frugal Living, Lifestyle, Taxes and Investing

$10 Million Isn’t What it Used to Be

I remember the day I realized I crossed the seven figure mark. The actual moment of crossing was lost because I didn’t know I was doing so well. There was no party or celebration.

The year was 1996, I was 32 years old and the bank needed a personal financial statement for an investment property purchase. The real estate partnership I had with my dad and brother was in full swing, but I wanted to add a few additional properties to my personal portfolio.

The bank asked for a personal financial statement. It had been a while since I filled one out so I was interested in where I would end up.

Don’t get me wrong. I track my finances closely. Each individual investment gets reviewed annually or semi-annually. I don’t always add up all the numbers to see where my net worth is, however.

As I gathered each asset and wrote its value down I could see this was going to be higher than I originally anticipated. My liquid investments had advanced a lot over the years and the real estate in my portfolio was adding a serious number to my net worth.

Once I had the assets added I knew I had crosses the million dollar mark before tallying the liabilities. Debt was low, even with all those rental properties.




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New Tax Law Changes Dangerous to Your Wealth

On a recent ChooseFI podcast where I was the guest speaker I mentioned the possibility the backdoor Roth and her sister tax strategy, the laddered Roth, could be going away. Many people heard me say it WAS going away. That is false. It is only a proposal at this time.

Because so many potential tax law changes now whispered in the halls of Congress have the potential to cause great damage to those in retirement or working an accelerated program toward financial independence (FI), now is the perfect time to review those with the highest possibility of happening. A word of caution before we begin. These are only ideas floating around Congress. They are NOT current tax law! Not all ideas whispered in the halls of Congress become law, but all laws start as a whisper in the halls of Congress. There is a difference.

Most ideas for tax law changes never see the light of day or are significantly modified before becoming a law. Some ideas become law in a few years, other may take a decade or longer before working through both houses of Congress and signed into law by the President. As we review the ideas now floating around Congress I will give my opinion on the likelihood the change will take place and how soon.

Remember, this is one guy’s opinion. My opinion carries weight because I have decades of experience. I also rely upon sources outside my own viewpoint, such as continuing education courses I’ve attended, The Kiplinger Tax Letter, and calls to several Congressmen. (It should be noted I rarely get to speak with an actual lawmaker. Usually I speak with a staff member. They can still be very helpful with potential tax law changes working through the system.)




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Word is Out

Today The Wealthy Accountant has been exposed in his first ever podcast! (Why am I talking in third person about myself?) In January at Camp Mustache SE Jonathan asked me if I would do a podcast with ChooseFI. Brad loved the idea too. I agreed. A month ago the podcast was recorded. Then, through the magic of editing, Jonathan and Brad made me look good. Thanks guys!

Today is Memorial Day in the States and my intention was to take a day off from my publishing schedule, but with the podcast out I wanted my kind readers to have a chance to enjoy the podcast.

Enjoy, everyone. I’ll be back Wednesday with a Camp Mustache IV roundup.

P.S. I enjoyed doing the podcast and am open to doing more for other podcasters too. (Brad and Jonathan nailed me down for additional podcasts for ChooseFI.)



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Small Business, Taxes and Investing

Outsourcing Payroll

It had to happen. Reading personal finance blogs finally paid off. Your side gig or business idea exploded to the upside. Maybe you decided it was time to hire a household employee (nanny or groundskeeper).

Worse, you started reading this blog and finally pulled the trigger on your own accounting/tax firm. Now you have clients with payroll issues and you don’t want to spend the time or deal with the headaches of payroll. Your goal was a side gig, not an albatross.

You might have your own small business turning a tidy profit, but the taxes are killing you. You stumbled into this room and discovered there is another way, a way where you can earn the income and pay only a small portion in taxes.

Then you hear about this crazy accountant from Wisconsin promising to share his strategic alliances with readers only to discover he is a slacker. Until today.

There was more work involved than originally anticipated. It was all worth the effort. I have a major national payroll service with dedicated staff trained in my tax and wealth building philosophy.

You can do it yourself and take a chance you get it wrong; you will. Or you can cough up a hairball buying payroll software that is more expensive in many cases than hiring a professional team to do all the work for you. Time value of money, folks. Time value of money.




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Taxes and Investing

The Sweet Spot of Non-Cash Deductions

There is an old Looney Tunes cartoon where Daffy Duck is portraying Sherlock Holmes. Daffy is seated at a desk stacked with papers vigorously working the calculator. Porky Pig, portraying Watson, walks in and asks, “Whatever are you doing, Holmes.” “Deducting, my dear Watson. Deducting,” came the frantic reply.

Deductions come in a variety of flavors. We are all familiar with deductions matched with an expense. Donations to charity are deductible on Schedule A. Business owners deduct marketing expenses dollar for dollar.

There is another elusive deduction taxpayers only dream about: the non-cash deduction. The appeal of the non-cash deduction is the large write-off without a matching real world expense. Capitalizing on non-cash deductions can supercharge your retirement or debt reduction plans. The list of non-cash deductions is long. We will explore several ways you can reduce your taxes without spending a penny or taking a deduction significantly higher than the actual expense and stay out of jail in the process.




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Credit Cards, Taxes and Investing

The Ultimate Credit Card Rewards Hack

Living your dream vacation is easier than ever with credit card rewards. A litany of cards offer massive miles, hotel rooms or cash for spending a certain amount within a short period of time. And there’s the rub. How can the average person spend $3,000 and more to get bonuses of 50,000 points and up within a few months?

Enter manufactured spending. Reaching a level of required spending either requires owning a business with significant purchases, over spending your budget to get the rewards (why bother, it’s cheaper to buy the darn airline tickets) or manufactured spending. Manufactured spending takes time and requires jumping through hoops. There are also additional fees using many manufactured spending methods. And the time! Oh my god, the time to get it done. There has to be a better way.

Meeting spending requirements always required some fancy footwork. But for you, my friend, those days are over. Today I will show you how to reach nearly any spending goal you need for the vacation of your dreams at virtually no cost to you. In fact, you will probably get paid to engage my way of manufacture spending. The time requirements are nil and the whole process is easily handled from the easy chair in your living room.

If you want free vacations from now on, keep reading. The travel hack/credit card hack I am about to reveal is something I have not seen anywhere else. Even if you don’t care to travel, this strategy can drop $10,000 or more a year in your lap tax free.




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How to Become Wealthy in 2017

Here is an important interview with Warren Buffett everyone needs to listen to as we face significant tax code changes from the new administration. Warren's views are not always mine, but his fundamental understanding of taxes and how they work requires all intelligent people to listen and learn as we grade our representatives on how well they are leading.




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