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but they are taxed up front going in so you really wont know until you retire and see your ultimate tax bracket if it was better then defered in a traditional but thats another discussion.
lots of other benefits on the roth though from a wealth passing standpoint but from a tax standpoint for yourself lots of numbers and guessing about the future need to be done which may pan out or not
but they are taxed up front going in so you really wont know until you retire and see your ultimate tax bracket if it was better then defered in a traditional but thats another discussion.
lots of other benefits on the roth though from a wealth passing standpoint but from a tax standpoint for yourself lots of numbers and guessing about the future need to be done which may pan out or not
No different than the OP whose $120K he is planning to invest in real estate has presumably been taxed (or will be taxed) at some point.
I'd agree on not investing in a single asset class.
Currently I'm invested in Pimco Total Return and the Yacktman Fund, both have outperformed rivals for the most part, Pimco is the seemingly safer one, 7% annualized over 10 years, Yacktman is 11% annualized. These returns weren't lucky shots either, these people are at the top of their class. If I can get enough cash to get into Fairholme fund, that's on my radar as well.
I'm going the landlord route -been doing it for 27 years, started just after college. It's been good to me but yes you do have to put up with lots of hassles. If you can put a handyman or manager between you and the tenants it's easier. Tax breaks are great for me - pay hardly any income tax on my 'real job'. However I do have to pay a lot of property taxes to educate the children and anchor babies of Mexico.
In Progressive Farmer magazine, they list land sales in the midwest US.
Seems a lot of prime farmland is listed as sold to........investors.
A yearly return of 4% on leasing it to farmers is about normal and the only expense is real estate taxes on that bare land.
Do you know of any REITs being run using farmland as the asset base in the manner that the Plum Creek Timber (PCL) and Rayonier (RYN) REITs do with timberland?? There is one in Canada (AgCapita) but they are not open to US citizens.
From personal experience, Rental real estate can be good, but you have to find the PERFECT tenants. Otherwise, things fall apart fast.
I would NOT pay cash for rental real estate. Get the banks to take the risk of it falling apart. If you have 30% down, they should be able to do a rental property mortgage.
There are ways to invest and get more than 10% but the risk is higher.
I see it a little different. If you take the responsibility to make it work, rental real estate can be excellent.
Never plan for it to fail and then let the banks sit with the problem.
If you plan it properly before you buy, and make sure you will survive the worst case scenario, you can go into the investment with relitive certainty.
The more certain you are that it will work, the less the risks involved will be. Believe me when I say it can be an excellent investment if you do it correctly.
however real estate is a profession like anyother profession and to make money in good and bad markets requires skill,time and money.
most folks totaly underestamate the amount of time skill and money needed to carry properties thru... repairs, renovations ,good tenants who turn bad ,lawyers etc all eat into the bottom line.
here in nyc an eviction can take 3-6 months , no income for that period of time and then you have to deal with repairs and re-renting...
when i talk investments you can do passively i dont include real estate held by you directly
What you are saying is very true. It isn't without its problems. The point is though that if you provide a good service to the person renting, he is less likely to turn bad. Provide a good place to stay at a good price and you will be able to better select your customers, as you will have more interested. A rental property is a lot of work in the beginning but with time it gets easier and the work involved becomes less. So it will keep providing you with income while eventually you have very little to do.
25 years of landlording has taught me tenants going bad are outside of your control assuming you checked them out in the first place..
Job loss,divorce and health are the biggest reasons i got stuck by otherwise model tenants.
i certainly wouldnt consider it low risk...quite the opposite... repairs, real estate tax increases and all the expenses you have with owning your own home go with the deal..
any time you leverage the risks are high. you need substantial capital in reserve with real estate as expenses are always lurking.
yeah you can stick the bank but that credit report will haunt you for years... as well as your out any money you put in. 100% loss isnt low risk
Last edited by mathjak107; 09-01-2010 at 05:38 AM..
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