My Plan B------> Real Estate

So being truthful is not being positive??? If houses cost $48,000 in my area I would own at least 6, probably 10 at this point. That's the truth and that's the reality. 6 x 48000 is $288,000, which wouldn't buy you a tear down in my area (never mind a fixer upper). I can see a lot of heads nodding while reading this post. Can you tell me where that $48,000 all in is located?

 

I love in Virginia and that's possible in very rural areas. Texas has properties like this and some areas of Phoenix. That's all I know of. Plus, I have others here at the company that live in the bigger cities like LA and Chicago and if you can't get cheap in nice areas you go to worst areas and wait. I know where a friend bought a run down crack house in Compton 10 years ago and now its doubled in value. I think he bought it for just under 100K, could be wrong. But that's my best advice. Find the next emerging market in your city. I hate saying this but just drive around and look for black or Hispanic people walking around the streets or on bikes. These areas where your female co-workers wouldn't get out of their cars. Where trash and run down buildings are populated. Yes, this is racial but these are things that scare white buyers and this is why prices in those areas are cheap. But there in that area and just wait. Might take 20 years but your house will appreciate very slowly. But it will go up and the are will gentrify. Just put bars on the windows and put up a 6ft chain link fence around the whole house and put in flood lights and your house will be safe.

 

45 minutes outside of Philadelphia. One of the most expensive counties in the state. Top 50 most expensive counties in the country. House within 5 minutes cost $500,000. I own many homes. This was just a great deal that took over 2 years to materialize. I could buy and rehab homes that cost $50-$60k after rehab, worth $100k plus when finished and rent for $1000-$1300 month. My labor is a key component in keeping costs down. There are many other great deals I could tell you about but it seems many people on this site can't believe pharma reps can do other activities besides pushing pills.

 

So im going to post this here and in the general board. I love love love this thread. But let me tell you how I saved for my first rental property. I'm extreme and love outdoor living and in single and work well in an odd lifestyle.

So I lived in my storage unit and car for three years while working here. My unit was heated and cooled and it had a YMCA next door. I set up a cot and bag to sleep in and used. A camp stove to eat when I didn't eat out. I had all the amenities of an apartment but it was for free. Showered at the Y saved lunches for docs to eat for dinner and breakfast. Washed clothes at the laundry and had a UPS store address as my mailing address. Yes, it's extreme but I want to retire early. I saved 3k a month for years and all of my bonus money.

In three years I saved just about 150k. I bought my first rental condo a few months ago and rent it 1100 a month. Now I add that rent to my savings monthly also and I'm ahead again. I would love to hear your opinions but I'm just not cut out to work until I'm 65.

 

That's extreme, but I love it. Your sacrifice will allow you to retire earlier then 65. Too many people buy in that you need to work until 65. It is such a crock of sh*t. I build my investment portfolio everyday by reinvesting all the profits back into my investments. I was able to achieve enough passive income to retire by a set age. I realized this job is too easy to just walk away from so I continue to work. I know the inevitable lay off will come but when that happens it will force me to let go. Since you are willing to sacrifice and are willing to work for it, there are other ways to make money while you are a rep. Passive rental income is just a start.

 

I think I would just live with my parents and save. Isn't that what about half or more of all college grads do anyway?? Storage unit-really?

 

I bought 7 bank foreclosures between 2008-2011. Spent $340,000 on all after I did some renovation work. Making around $7200 in monthly rents. Sold 3 of them in 2014 for a total of $360,000. Have 4 homes left with no mortgages and all my initial investment returned.

 

That really was the best time to buy. Everyone who bought in those years almost doubled their money. Awesome.

 

I'm all for making a great profit, but how do you treat the income from all of your rentals on your 1040?

If no mortgage, then there are few tax write offs to counter the rental income. At our tax brackets, the taxes can be up to 28% or more.

Do you:

1. Load up on your 401k, before and after tax to the max? Load up on your IRA pre-tax? Any other tax breaks? Do you pay your full rental income at your bracket but no FICA?

2. If you have many rentals, does it now become a business and your tax burden is even higher and can you form your own tax shelters just for the business of real estate? Such as a 401k or other business tax shelters? Then if you ever take a cut of pay above your amounts tax sheltered from the business do you pay the full FICA 15.3ish% and at your 25-28% tax bracket sucking away up to 43% to Obongo, or do you declare it as capital gains with no FICA, etc?

3. Just not declare the income and take your chances of no audit? My personal preference.

4. Or something else I may be missing??????

 

There are deductions even if you don't have a mortgage. rehab costs, closing costs,supplies, utilities, insurance, taxes. Depreciation. You pay taxes after all that is calculated.

I list homes in my name with a large umbrella policy on top of my individual insurance policies. This allows me to file 1 tax return

I hire a CPA to do my taxes and my tax burden is not nearly as bad you might think. The way the tax laws are set up for rental properties make it very advantageous. Sure mortgage interest is deductible, but if I am able to avoid the interest by paying cash, I would gladly lose the deduction

I view any investment this way. At the end of the year if I need to pay taxes (after all deductions) I must have made a profit. Making a profit is better than watching a get rich program on TV and never taking a risk. 90% will never take significant risk thus the 10% who take educated risks reap the rewards.

 

I understand a profit is fine but it should be a substantial profit to make it worth your time.

As for depreciation, the caveat is that upon sale must you pay recapture taxes all at once or can you reinvest and delay them.

 

Very very soon the market will crash. I'm thinking it will be a huge decline. Get your money out of the market and into tangible property that can get you cash flow. Jobs are going to hermmrage and if you don't own "things" with value you are going to be very sorry. Buy in the best areas where upper class white families live or near colleges that are guaranteed to have teens needing to rent apartments. You must have cash flow and a regional reason your house won't lose value. Be in the great areas and at least your property will retain some value and come back faster after the next crash.

 

Oh please the scare tactics. The market will crash and then go higher and higher as in past history. Finance 101.

 

Diversification is key.

Take risks but manage your risks.

Stocks, 401k, real estate, etc.

Anything that produces cash flow and/or increases in value

Wouldn't it be nice at age 40, 45 or 50 be able to say I am done with Pharma and rely on the investment income. That is living. Going out and pitching drugs to docs is no way to live your life after a certain age. Many have left pharma at a relatively young age, why not you?

 

I don't believe it ! Tell the real story. The one that's opposite of what you describe.

 

Your Jealousy shines through. The years you wasted telling yourself next year will be the year I take a risk. Guess what? You got old and have nothing to show except a small 401k and a pharma job.

The doers retire early. The wannabes talk and dream. The haters show their jealousy. Fortunately the big house, pool, private school, expensive vacations never were important to me and didn't stop my investments. These items are the trapping of pharma reps trying to compete with each other. You will work for someone until you're 65 and wake up every day wondering when the next lay off hits. Not for me.

 

No one will be working until 65 at any pharmaceutical company selling pharmaceuticals I can tell you that. Those days are over and anyone who retired whether it was 55, 60, 62 or 65 was very fortunate and I have a lot of gratitude.

 

this thread is awesome. Wish I could find out who is posting here and have a small re investor meeting at the national sales meeting.

 

A bunch of FOS, broke, has been, RIF'd, liars dreaming ! That's who's on this thread and anybody who believes this horse shit is an idiot themselves

 

Signed,

The Curmudgeon