Reply to What a self made multiple millionaire would do in your shoes to increase your net worth.

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Thanks OP-this is 21:38.  You are correct-our rental is a former primary residence.

I appreciate your persepctive.  I guess we thought that our rental property was building equity and even though we lost some money, the transaction costs didn't make it worth it to sell.  I am doing a refi, and we will end up with a + cash flow, but only a few hundred/month.  I get what you're saying.

We have about another 300K saved up and I am looking for properties, but am nervous with buying in DC b/c it is so tenant friendly.  Do you have any words of advice of where you would buy now? [/quote]

OP here.  You are right that it was likely appreciating, but you could have used the same money to buy something else that was appreciating AND providing cashflow.  You really should sell this property and buy something that will generate better cashflow.

As for renting in DC, I have scores of tenants.  I rarely have a problem.  Screen your tenants well and allocate for rental loss and you will be fine.  That said, you should not buy another rental until you sell your old residence.  You have to change your mentality first.  Until your mentality is about cashflow, not appreciation; it is not a good investment for you.

As to your savings, you seem afraid to invest it (this is a common problem).  $300K is way too much to have saved liquid with no plan.  Your rate of return is so low that it is likely loosing money when inflation is factored in.  I'm not a huge fan of the stock market as the returns are nominal.  To be honest I use the stock market for retirement and to have a certain amount in what banks consider liquid fomr (it helps me get loans and leverage my other returns).  Saving money like that will prevent you from getting wealthy.  You have to get out of a saving mentality and into an investing mentality.  Obviously you need a certain amount in savings.  Figure out how much that is for you and then I want you to get the rest out.

I would prefer you to be more aggressive than this, but one good thing you can do with your money is convert retirement funds to a Roth.  You can only do this is your retirement funds are not with your current employer, but you should begin converting.  This makes sense for you because you income is very high and it is likely that it will remain high in retirement.  Tax free income is a beautiful thing.  You should seriously consider doing it in 2012, as tax rates are lower than they will be next year and I would bet in all future years for a long time to come.  It also gives you some very good estate tax deferral strategies, which are probably going to be relevant based solely on your salary.

Incidentally I noticed that you complained about not being able to find an 8% cash on cash return.  Please give me a neighborhood that you would like to invest in and explain why that neighborhood.  I will show you a property with your desired return (or point out a better neighborhood and why)[/quote]

I call BS - Troll.  There is no place in DC (and this is DCUM) where there is 8%-plus net return on RE investments.  Except, high risk (ghetto) neighborhoods where risk out weighs potential gain.  What a bunch of crap.  Silly advice on marginal investment improvement ( get 2.2% instead of 1.9% in my brother in laws company!) is total bull shit, not helpful except to feed the amateurs that look here for advice.

Show me a high risk, high return possibility and I'll listen.  High risk low retrun nonsense is just that.
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