Posted on February 5, 2010 @ 4:00 am - Written by BawldGuy
Ever walked into a movie you’d really been lookin’ forward to, only to learn they’d totally mislead you with the trailers? We all have, and with an exception or two here and there, it rarely turns out to be a movie we like. Don’t ya hate it when the happens? For me, the worst time was when I went to what I thought was a comedy, which sadly turned out not only NOT a comedy, but a chick flick to boot. How it got past my ChickFlickRadar™ I’ll never know. 
This is one of those nuts ‘n bolts things every real estate investor should know. The IRS doesn’t usually buy the whole ‘dog ate my homework’ — ‘I had no idea’ type of excuse when it comes to unintentionally recognized capital gains. So, heads up. Read the rest of this entry »
Posted on January 28, 2010 @ 6:00 pm - Written by BawldGuy
Many aren’t aware of the new rule allowing conversion to a Roth IRA from a traditional IRA. — regardless of either your income tax filing status or your income. Income? Yeah, those makin’ over $100,000 annually used to be restricted from creating Roths. That rule has now been eliminated for good. It became effective the first of the year. You’ll be happy to learn it also allows you to spread the conversion’s tax hit over three years — AND — you’ll be able to skip 2010 totally. This makes it possible to split the tax between 2011 and 2012. This tax split is only available this year. As you might imagine, this bundle of carrots offered to taxpayers has generated a buncha IRA owners to dive into the conversion pool.
Here’re a few other facts you should know about converting to a Roth IRA Read the rest of this entry »
Posted on January 7, 2010 @ 5:27 pm - Written by BawldGuy
One of the things this blog is known for, is how focused it is. It’s about investing in real estate for a magnificently abundant retirement. Sure, there are one or two other vehicles I recommend from time to time, but only as part of your particular Purposeful Plan.
Also, it’s been my aim, and I think successfully, to make this blog open to honest debate, but while using the manners most of us were taught as kids. This isn’t Tombstone, this is Mayberry, so to speak. I don’t cultivate false controversy or drama here. This blog is to generate business for me, sure, but by way of education, enlightenment, and helpin’ those who would like to learn without the trauma of making real life mistakes. Read the rest of this entry »
Posted on December 22, 2009 @ 10:51 am - Written by BawldGuy
This is a long post — it should be. Follow the progression and the numbers closely. At some point you’ll be reminded of someone in your past (present?) who followed Grandpa’s strategy and is now locked into their own life sentence.
There are many schools of thought when it comes to investing in real estate for retirement. Two of them dominate.
One says you buy property and hold it forever. When you’ve saved up enough to buy another one you do — and hold IT forever. The idea is you allow rental income to pay off debt as quickly as possible, arriving at the point of a free and clear cash flow machine. Do this more than once and you have the basis for a nice retirement income stream. Or so the story goes.
The other says cash flow comes from the yield on either capital or equity in an asset. The larger the capital amount or equity in the asset, the larger the income in terms of dollars. The ‘yield’ itself is expressed in terms of a percentage. For example, 8%. This school says that since the yield is the same, more or less, for a larger figure or a smaller figure, why not arrive at retirement with the largest amount of capital and/or equity possible?
The ‘Buy & Hold’ school (BHS) gets you there. But in what condition, and how much cash flow relative to the ‘Capital Growth First’ school (CGF)?
Buy and Hold Read the rest of this entry »
Posted on December 17, 2009 @ 4:11 pm - Written by BawldGuy
What matters most when implementing a Purposeful Plan is the thought process preceding it. That process involves the application and integration of several principles and concepts. The foundation though is the all encompassing drive for safe, reliable retirement income, preferably as sheltered from governmental taxation as possible, given the individual investor’s unique circumstances.
Many who like real estate as both a capital growth and cash flow vehicle, fail to clearly understand what roll both approaches play in their retirement. Possibly the #1 myth is that buying real estate for cash flow is always the way to go. It’s that attitude which has led many an investor to mediocre retirement income, and/or the forbearance of millions of dollars in net worth. It’s the latter you can blame for most of the disappointment when talking ’bout retirement income.
Maximizing your retirement income through real estate investing is all about timing. Read the rest of this entry »
Posted on December 15, 2009 @ 3:48 pm - Written by BawldGuy
When any particular resourse we have is finite in nature, trading it for something on our menu means, by definition, there’s something for which we didn’t trade. Though we chose ‘A’ over ‘B’, part of the cost of choosing ‘A’ was passin’ on ‘B’. Much of the time we learn what that exact cost was by way of hindsight. Best case scenario is that cost being, more or less, about what we thought in the first place.
This concept is called opportunity cost — the economic consequences of choosing one thing over another. Sometimes the cost isn’t just economic. For example, did you attend college? Did you have a wide choice? Years later, are you happy with the one you chose? Opportunity cost. Read the rest of this entry »
Posted on December 8, 2009 @ 5:10 pm - Written by BawldGuy
The cliché about partial knowledge often being more dangerous than downright ignorance has proven true in my professional experience. We humans seem to desire absolutes when we learn new things, especially when it comes to investing. Allow me to smash that fantasy once and for all. The old saw sayin’, “The only absolutes are death and taxes” is as real as a heart attach. Ironic, cuz the consequences of behaving as if things are narrowly defined in the Internal Revenue Code as infinitely incontrovertible truths of the universe, impervious to changing facts, are sometimes heart stopping.
Consider the following. I wrote about this earlier this year, but in the last several weeks, there have been similar requested consults. Sadly, a couple of them came to me too late for me to really help much. Pay attention, cuz this particular story gets played out every year across the country. Gettin’ a huge tax bill as a complete and shocking surprise is no fun — I know, I experienced it as a young man. It was gut wrenching to say the least.
This particular story has a pretty happy ending — not always the case, unfortunately. Earlier this year an agent called me out of the blue. I’d never met them, but they’d been reading my stuff here and over at BloodhoundBlog.They had just one question, which led to a boatload more, as usual. Read the rest of this entry »
Posted on November 19, 2009 @ 4:30 pm - Written by BawldGuy
The most common reply I hear from folks calling me is, “I didn’t know that was possible.” Or something similar. It all goes back to the root of successful investing, which is doing things on Purpose — Purposeful Planning. One of the main factors in any Plan is how taxes/tax shelter blend into the big picture. Though you never wanna buy property solely for the tax benefits (VERY rare exceptions.), Incorporating them into your Plan with maximum impact is almost always a key factor in ultimate performance. (Think I sprained a finger typin’ that sentence. )
BawldGuy Axiom: In the long run the investor who doesn’t use all available strategies when creating and executing their Purposeful Plan pays a bigger price for inferior results.
The following are just a few of the questions to be answered when discussing taxes/tax shelter and real estate investing. First though, let’s agree on a layman’s definition of depreciation.
It’s what many call a ‘paper loss’ which allows for the aging and physical deterioration from usage, obsolescence, passage of time, or just simple wear and tear. There is no actual loss of money — which is why it’s commonly called a paper loss. Read the rest of this entry »