What If I Told You…

Posted @ 7:34 pm - Filed under 1031 Exchanges, BawldGuy Axiom, Capital Growth, Purposeful Planning, RE Investment Practice, Retirement

It’s Sunday, so let’s play ‘What if…’ but with a twist. ‘What if I told you…’ is a game one of my mentors used to play as a teaching exercise. ‘Course he was tryin’ to make me think by trippin’ me up. I won’t put anything here tonight that’s not true or at least on the drawing board. Fair enough? Let’s go then.

“What if I told you…

…that opting to pay capital gains taxes is sometimes far more beneficial than executing a tax deferred exchange?

…being prohibited by the Internal Revenue Code from using any or most of your available tax shelter (depreciation) is more often than not, a very cool blessing in disguise?

…takin’ a loss on your current income property and movin’ the equity to an economically superior region is a long term plus for you?

…group investments might be available for fix-ups with a tax deferred strategy for the newly created value? (And no, I don’t mean TICs.)

…waiting to buy more investment property or exchange your current equities until the recovery starts is a decision to ‘horde’ your losses?

…having to make up for one year’s investment losses is far more damaging to your retirement plan than a string of good years is great for it?

…takin’ yer capital from Wall Street and putting it in real estate at 0% annual appreciation for 5 years is more more prudent than wishin’ and hopin’ to make it up the same place that put you where you are today?

…your IRA when converted to ’self directed’ can expand your menu of potential options beyond what most folks realize?

…a 5% annual appreciation rate over a 5 year period can mean a net capital growth rate of over 20%?

Sure, these are facts that might interest you. Now go back and ask yourself for each one: Does the impact of this statement affect me? Has it already affected me? Was I aware of it’s personal impact on me? Am I even aware now?

BawldGuy Axiom: It’s not the answers to the questions you ask that get you into real financial trouble. It’s answers to the questions you didn’t know to ask that do you in every time.

What answers to questions you haven’t known to ask are sneakin’ up on you? Contact me and we’ll put our heads together. Nothin’ like a well thought out, well executed Purposeful Plan to ensure the retirement for which you’ve been workin’ so hard. Have a good one.

This entry was posted on Sunday, December 7th, 2008 at 7:34 pm and is filed under 1031 Exchanges, BawldGuy Axiom, Capital Growth, Purposeful Planning, RE Investment Practice, Retirement. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

12 comments to “What If I Told You…”

Robert Coté on December 8th, 2008 at 12:54 pm said:

Damn, I’ve been confronted with near a third of those. It scares me that I wasn’t aware of 1/3rd of the rest.

The leveraged capital appreciation type questions are beginning to look like irresistible investment opportunities in the market next year.

BawldGuy on December 8th, 2008 at 6:39 pm said:

Robert — Over the years I’ve been confronted by all of them, and a bunch more I didn’t publish.

It’s amazing, isn’t it? Like you, I’m scared sometimes wondering what questions I haven’t asked.

The leveraged capital appreciation questions may very well separate the wheat from the chaff in ‘09.

Robert Coté on December 9th, 2008 at 9:43 am said:

When preparing for first flight of experimental aircraft the hard and fast rule was “24 hours.” You finish the vehicle and leave it alone for 24 hours. If you decide in that time that there is something that just must be changed you reset the clock until you can actually leave it untouched for 24 hours. Works for investments although the 24 hours could be days or whatever reflects the circumstances. Nothing increases the chances of a crash and burn than last minute decisions/changes.

Best, you can backtest for free. Would this exact same deal have been better if executed last month? Think rental quads in Charlotte [yes]. See? Well then the other side of the coin, if it is a better deal now and you’d already be regretting having done the then deal of last month you realize you aren’t exactly investing but timing and that the deal wasn’t just an investment. Fine for some, I’ll stick to investing.

BawldGuy on December 9th, 2008 at 9:54 am said:

Robert — I can’t improve on that. Well said. Timing the market, any market is the punch line to a joke.

How do you make a small fortune in real estate?

You start with a large fortune, and ‘time’ the market.

Robert Coté on December 9th, 2008 at 10:40 am said:

“I can’t improve on that. Well said.”

Thanks but you can and often do do better. You can explain how to distinguish twixt investment and asset control and speculation for one.

I’m still disappointed at my failure to 1031 in 2006 for some properties. I couldn’t identify and schedule a viable deal within the time constraints. I’m still way ahead of holding but also well behind reinvesting.

BawldGuy on December 9th, 2008 at 2:23 pm said:

Don’t we all hate that pesky Monday morning quarterbacking we do to ourselves?

I don’t go to the extreme of not closing sales without having my upleg(s) in place, but I do know they’re there beforehand. The lesson I learned long ago, was that an average quality decision on an exchange almost always proves superior to taking a sale sans the tax deferment.

Again, 20/20 hindsight, right?

Robert Coté on December 9th, 2008 at 4:38 pm said:

An average quality decision on an exchange almost always proves superior to taking a sale sans the tax deferment.

Ohhh, ooh! I know this one, it goes:
A sufficient decision timely beats even the very best answer too late.

BawldGuy on December 9th, 2008 at 5:24 pm said: