Better investment options than Real Estate?

[Anonymous]

We have an investment property and plan to hold on to it for 10 more years.
On the surface it seems great. We have someone paying our mortgage down (with a little extra) and the property is appreciating. Of course when we go to sell, we'll have to pay for the transaction costs and capital gains.

But i know there are a lot of haters on the DCUM forum here with investment condos. So what is a better investment with the same kind of returns and less tax/costs

[Anonymous]

I used to think investment properties were good but the only way they work is if you make rental income. So smarter to buy multiple smaller properties to have a revenue stream and the added benefit of the mortgage being paid down. IF, the only gain you are really getting is the mortgage being paid down then you not doing so well for yourself.

Long term investments will do better for you and give you a great return. For the past 50 years the stock market has had an avg annual return rate of almost 11%. So unless a house can do better than that it is not going to be a good investment (factoring in maintenace, taxes, etc).

You would be better off posting this in the money forum.

[Anonymous]

This is a question that can only be answered with an Excel spreadsheet. Put in the incomes and expenses for your property, including the taxes you pay on the income, upkeep, etc. Then figure in taxes when you sell.

Then do the same for whatever other investments you have available. Most likely just stocks and bonds. Bonds are going to be the worst off.

My guess is that you'll find that investing in equities is a better investment. Certainly it is a more liquid investment, which might not matter to you.

[Anonymous]

Almost everything...

[Anonymous]

OP there's also the 25 percent depreciation recapture tax, which you'll be required to pay whether you've been taking a depreciation expense deduction or not.

[Anonymous]

If you had to pay a ~ transaction cost of ~6% when buying/selling AND pay ~1% of the portfolio value every year, just to hold it, AND spend ~0.25-0.5% on "maintaining" them every year...

Guess where the S&P 500 would be if those were the rules....One guess. Down in the dumps. Now, rental properties are different. The math on them gets seriously complex, but if all you are looking for is "investment", equities, and other financial products are MUCH better investments.

But, you know why most people don't do the above but "invest" in real estate instead?? One word. LEVERAGE.

If you're putting down 5% and are able to get a house, that's a 20x leverage. Show me a stock broker that will allow that level of leverage and I'll show you the bridge I'm selling. This is the ONLY reason "small" investors play more in the real estate markets. Blackrock? It goes out and sells a bond for $30B and has fun with the proceeds.

[Anonymous]

Anonymous wrote:If you had to pay a ~ transaction cost of ~6% when buying/selling AND pay ~1% of the portfolio value every year, just to hold it, AND spend ~0.25-0.5% on "maintaining" them every year...

Guess where the S&P 500 would be if those were the rules....One guess. Down in the dumps. Now, rental properties are different. The math on them gets seriously complex, but if all you are looking for is "investment", equities, and other financial products are MUCH better investments.

But, you know why most people don't do the above but "invest" in real estate instead?? One word. LEVERAGE.

If you're putting down 5% and are able to get a house, that's a 20x leverage. Show me a stock broker that will allow that level of leverage and I'll show you the bridge I'm selling. This is the ONLY reason "small" investors play more in the real estate markets. Blackrock? It goes out and sells a bond for $30B and has fun with the proceeds.

Citigroup and other places will allow 2 percent down on stocks. Always had. Just need to be a qualified investor.

That said cash is king to buy rentals. Hard money discount. I recall I dated a girl her mom had around 200 properties. 199 paid for cash. What she did was mortgage prior purchase to buy next first few. From there she used cash flow to buy more. She buy cheap.

All her transactions are like straight transactions. She never actually records the rent. She lets it pile up then buys another house. It was truly hilarious out of a movie. She take one of her large sons on rent day but both busy I went with hey and collected at least 90 rent payments nearly all cash. Once in a while check made to cash. No one had a lease. A lot were illegals or poor credit from kid. That day in 1995 we picked up around $80,000 in rent.

She was a character. The town newspaper was calling her out on suspicion so she bought town newspaper. She also randomly collected stuff. Like tiny weird small run down commercial properties if she knew developer was trying to build. She also had a realtor license and own real estate business.

She is still alive as I see her on Facebook. When she dies that will be interesting. She has four kids and multiple grandkids so assume she knowing her is transfering properties. Even in 1996 she had ski houses, Florida condos, her crown jewel 200 buildings on a rich Long Island town. She literally owns 10 percent of town but through lllcs and stuff who knows she started this in 1972.

My cousin on other hand legally owns 3,000 homes

[Anonymous]

Anonymous wrote:If you had to pay a ~ transaction cost of ~6% when buying/selling AND pay ~1% of the portfolio value every year, just to hold it, AND spend ~0.25-0.5% on "maintaining" them every year...

Guess where the S&P 500 would be if those were the rules....One guess. Down in the dumps. Now, rental properties are different. The math on them gets seriously complex, but if all you are looking for is "investment", equities, and other financial products are MUCH better investments.

But, you know why most people don't do the above but "invest" in real estate instead?? One word. LEVERAGE.

If you're putting down 5% and are able to get a house, that's a 20x leverage. Show me a stock broker that will allow that level of leverage and I'll show you the bridge I'm selling. This is the ONLY reason "small" investors play more in the real estate markets. Blackrock? It goes out and sells a bond for $30B and has fun with the proceeds.

These are all very good points.

[Anonymous]

Tesla. The only property to invest in is your own home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you had to pay a ~ transaction cost of ~6% when buying/selling AND pay ~1% of the portfolio value every year, just to hold it, AND spend ~0.25-0.5% on "maintaining" them every year...

Guess where the S&P 500 would be if those were the rules....One guess. Down in the dumps. Now, rental properties are different. The math on them gets seriously complex, but if all you are looking for is "investment", equities, and other financial products are MUCH better investments.

But, you know why most people don't do the above but "invest" in real estate instead?? One word. LEVERAGE.

If you're putting down 5% and are able to get a house, that's a 20x leverage. Show me a stock broker that will allow that level of leverage and I'll show you the bridge I'm selling. This is the ONLY reason "small" investors play more in the real estate markets. Blackrock? It goes out and sells a bond for $30B and has fun with the proceeds.

Citigroup and other places will allow 2 percent down on stocks. Always had. Just need to be a qualified investor.

That said cash is king to buy rentals. Hard money discount. I recall I dated a girl her mom had around 200 properties. 199 paid for cash. What she did was mortgage prior purchase to buy next first few. From there she used cash flow to buy more. She buy cheap.

All her transactions are like straight transactions. She never actually records the rent. She lets it pile up then buys another house. It was truly hilarious out of a movie. She take one of her large sons on rent day but both busy I went with hey and collected at least 90 rent payments nearly all cash. Once in a while check made to cash. No one had a lease. A lot were illegals or poor credit from kid. That day in 1995 we picked up around $80,000 in rent.

She was a character. The town newspaper was calling her out on suspicion so she bought town newspaper. She also randomly collected stuff. Like tiny weird small run down commercial properties if she knew developer was trying to build. She also had a realtor license and own real estate business.

She is still alive as I see her on Facebook. When she dies that will be interesting. She has four kids and multiple grandkids so assume she knowing her is transfering properties. Even in 1996 she had ski houses, Florida condos, her crown jewel 200 buildings on a rich Long Island town. She literally owns 10 percent of town but through lllcs and stuff who knows she started this in 1972.

My cousin on other hand legally owns 3,000 homes

What does this tirade have to do with an "investment" analysis??

[Anonymous]

Anonymous wrote:OP there's also the 25 percent depreciation recapture tax, which you'll be required to pay whether you've been taking a depreciation expense deduction or not.

If you’re carrying losses forward because you can’t deduct them then the losses generally offset the depreciation recapture.

OP, this is going to depend on your specific tax situation.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you had to pay a ~ transaction cost of ~6% when buying/selling AND pay ~1% of the portfolio value every year, just to hold it, AND spend ~0.25-0.5% on "maintaining" them every year...

Guess where the S&P 500 would be if those were the rules....One guess. Down in the dumps. Now, rental properties are different. The math on them gets seriously complex, but if all you are looking for is "investment", equities, and other financial products are MUCH better investments.

But, you know why most people don't do the above but "invest" in real estate instead?? One word. LEVERAGE.

If you're putting down 5% and are able to get a house, that's a 20x leverage. Show me a stock broker that will allow that level of leverage and I'll show you the bridge I'm selling. This is the ONLY reason "small" investors play more in the real estate markets. Blackrock? It goes out and sells a bond for $30B and has fun with the proceeds.

Citigroup and other places will allow 2 percent down on stocks. Always had. Just need to be a qualified investor.

That said cash is king to buy rentals. Hard money discount. I recall I dated a girl her mom had around 200 properties. 199 paid for cash. What she did was mortgage prior purchase to buy next first few. From there she used cash flow to buy more. She buy cheap.

All her transactions are like straight transactions. She never actually records the rent. She lets it pile up then buys another house. It was truly hilarious out of a movie. She take one of her large sons on rent day but both busy I went with hey and collected at least 90 rent payments nearly all cash. Once in a while check made to cash. No one had a lease. A lot were illegals or poor credit from kid. That day in 1995 we picked up around $80,000 in rent.

She was a character. The town newspaper was calling her out on suspicion so she bought town newspaper. She also randomly collected stuff. Like tiny weird small run down commercial properties if she knew developer was trying to build. She also had a realtor license and own real estate business.

She is still alive as I see her on Facebook. When she dies that will be interesting. She has four kids and multiple grandkids so assume she knowing her is transfering properties. Even in 1996 she had ski houses, Florida condos, her crown jewel 200 buildings on a rich Long Island town. She literally owns 10 percent of town but through lllcs and stuff who knows she started this in 1972.

My cousin on other hand legally owns 3,000 homes

What does this tirade have to do with an "investment" analysis??

I often wonder if there are multiple people who write posts like this on here or if it’s all just one guy. It reads the same as the person who runs his condo by the beach in NY.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

That said cash is king to buy rentals. Hard money discount. I recall I dated a girl her mom had around 200 properties. 199 paid for cash. What she did was mortgage prior purchase to buy next first few. From there she used cash flow to buy more. She buy cheap.

All her transactions are like straight transactions. She never actually records the rent. She lets it pile up then buys another house. It was truly hilarious out of a movie. She take one of her large sons on rent day but both busy I went with hey and collected at least 90 rent payments nearly all cash. Once in a while check made to cash. No one had a lease. A lot were illegals or poor credit from kid. That day in 1995 we picked up around $80,000 in rent.

She was a character. The town newspaper was calling her out on suspicion so she bought town newspaper. She also randomly collected stuff. Like tiny weird small run down commercial properties if she knew developer was trying to build. She also had a realtor license and own real estate business.

She is still alive as I see her on Facebook. When she dies that will be interesting. She has four kids and multiple grandkids so assume she knowing her is transfering properties. Even in 1996 she had ski houses, Florida condos, her crown jewel 200 buildings on a rich Long Island town. She literally owns 10 percent of town but through lllcs and stuff who knows she started this in 1972.

My cousin on other hand legally owns 3,000 homes

In other words-a tax cheating slum lord. Got it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP there's also the 25 percent depreciation recapture tax, which you'll be required to pay whether you've been taking a depreciation expense deduction or not.

If you’re carrying losses forward because you can’t deduct them then the losses generally offset the depreciation recapture.

OP, this is going to depend on your specific tax situation.

You can't offset recapture depreciation from the passive loss. You could only use passive loss for offsetting capital gains. Recapture depriciation would never be offset. If that would be the case then all the super rich people would buy only REs and not stocks because they would not have any gain to show.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If you had to pay a ~ transaction cost of ~6% when buying/selling AND pay ~1% of the portfolio value every year, just to hold it, AND spend ~0.25-0.5% on "maintaining" them every year...

Guess where the S&P 500 would be if those were the rules....One guess. Down in the dumps. Now, rental properties are different. The math on them gets seriously complex, but if all you are looking for is "investment", equities, and other financial products are MUCH better investments.

But, you know why most people don't do the above but "invest" in real estate instead?? One word. LEVERAGE.

If you're putting down 5% and are able to get a house, that's a 20x leverage. Show me a stock broker that will allow that level of leverage and I'll show you the bridge I'm selling. This is the ONLY reason "small" investors play more in the real estate markets. Blackrock? It goes out and sells a bond for $30B and has fun with the proceeds.

Citigroup and other places will allow 2 percent down on stocks. Always had. Just need to be a qualified investor.

That said cash is king to buy rentals. Hard money discount. I recall I dated a girl her mom had around 200 properties. 199 paid for cash. What she did was mortgage prior purchase to buy next first few. From there she used cash flow to buy more. She buy cheap.

All her transactions are like straight transactions. She never actually records the rent. She lets it pile up then buys another house. It was truly hilarious out of a movie. She take one of her large sons on rent day but both busy I went with hey and collected at least 90 rent payments nearly all cash. Once in a while check made to cash. No one had a lease. A lot were illegals or poor credit from kid. That day in 1995 we picked up around $80,000 in rent.

She was a character. The town newspaper was calling her out on suspicion so she bought town newspaper. She also randomly collected stuff. Like tiny weird small run down commercial properties if she knew developer was trying to build. She also had a realtor license and own real estate business.

She is still alive as I see her on Facebook. When she dies that will be interesting. She has four kids and multiple grandkids so assume she knowing her is transfering properties. Even in 1996 she had ski houses, Florida condos, her crown jewel 200 buildings on a rich Long Island town. She literally owns 10 percent of town but through lllcs and stuff who knows she started this in 1972.

My cousin on other hand legally owns 3,000 homes

What does this tirade have to do with an "investment" analysis??

I often wonder if there are multiple people who write posts like this on here or if it’s all just one guy. It reads the same as the person who runs his condo by the beach in NY.

The writing style is very distinctive.