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Location: Was Midvalley Oregon; Now Eastside Seattle area
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We have found that in retirement, we look at Income and Income sources more so than Net Worth. For NW, How does one establish value of Real property and stocks/bonds?
We have found that in retirement, we look at Income and Income sources more so than Net Worth. For NW, How does one establish value of Real property and stocks/bonds?
The theoretical value.
The theoretical value of your real estate is determined by appraisals your county government makes for property tax purposes. You can, of course, pay an appraiser to estimate the value at any time.
The theoretical value of stocks is the current sale price of the stocks.
Bonds are negotiable instruments. Effectively, they are promissory notes. Their actual value is the face value of the bond, plus accrued interest.
Your real estate might be "worth" $500,000, but if you can't sell it for $500,000, then it isn't worth $500,000. It's worth whatever someone is willing to pay for it. Maybe you can sell your real estate tomorrow for $500,000 or maybe it takes you 3 years or maybe never. Maybe you have to sell it for $465,000 in which case it isn't worth $500,000 it's worth $465,000.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
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Quote:
Originally Posted by mathjak107
brick and mortar real estate is not really passive income . it is more akin to a business . why do people sell business's when they retire ?
because they want only liquid ,passive investments and no headaches from the business , in this case tenants and property issues . .
Yep, you and I have gone around and around with this.call it a business if you like. I only know I spend probably a similar amount of time as those that say they are retired with passive income from the market.
I don't deal with tenants or other issues, I pay a manager to do all that. That would be like me saying the market is a business dealing with all the companies and trades that need to be done. You don't, you let the experts do that for you and your hands on is minimal, much like my rentals.
People that spend time dealing with tenants and such aren't doing it right and blaming the investment of real estate as the problem, not themselves. Rather than learn how to,do it they just would rather complain what a pain it is. After all it is easier just to work your job every year and contribute to your retirement and follow the mainstream. Some of those people love to repeat the same mantra over and over like they are brainwashed "have fun getting calls at 2 am for a leaky toilet!" I doubt any of themever experienced that themselves, but for some reason they love to say it. In all my years when I self managed multiple properties I never had that call.
The problem is nowadays the 30 year path to retirement is filled with possible potholes. Health, job loss, life in general. I had the interruption of job loss and lost valuable saving years.
All I know is that I got to this point in a time that was well below the time it would have taken me by investing in the market. Had I taken all my money I invested in real estate and put it in the market my net worth would be less than it is now and I wouldn't have enough to retire as I am now. Even with a 7 percent draw every year the market would only pay me 60 percent of what I get now from rentals.
Yep, you and I have gone around and around with this.call it a business if you like. I only know I spend probably a similar amount of time as those that say they are retired with passive income from the market.
I don't deal with tenants or other issues, I pay a manager to do all that. That would be like me saying the market is a business dealing with all the companies and trades that need to be done. You don't, you let the experts do that for you and your hands on is minimal, much like my rentals.
People that spend time dealing with tenants and such aren't doing it right and blaming the investment of real estate as the problem, not themselves. Rather than learn how to,do it they just would rather complain what a pain it is. After all it is easier just to work your job every year and contribute to your retirement and follow the mainstream. Some of those people love to repeat the same mantra over and over like they are brainwashed "have fun getting calls at 2 am for a leaky toilet!" I doubt any of themever experienced that themselves, but for some reason they love to say it. In all my years when I self managed multiple properties I never had that call.
The problem is nowadays the 30 year path to retirement is filled with possible potholes. Health, job loss, life in general. I had the interruption of job loss and lost valuable saving years.
All I know is that I got to this point in a time that was well below the time it would have taken me by investing in the market. Had I taken all my money I invested in real estate and put it in the market my net worth would be less than it is now and I wouldn't have enough to retire as I am now. Even with a 7 percent draw every year the market would only pay me 60 percent of what I get now from rentals.
paying a manager to run your "business " is merely paying an employee just like any business . even silent partners have business's , but that still does not mean they don't own active business's .
i have been in real estate for 31 years . for the last 18 years we have had douglas elliman run the properties for us but it is no less a business because we still feel the effects of all the things that involve us , like legal issues , paying for repairs , etc .. in fact for us the biggest issues are dealing with local stabilization laws and tolerating the rules .
Last edited by mathjak107; 11-18-2018 at 02:14 AM..
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
Reputation: 16698
Quote:
Originally Posted by mathjak107
paying a manager to run your "business " is merely paying an employee just like any business . even silent partners have business's , but that still does not mean they don't own active business's .
i have been in real estate for 31 years . for the last 18 years we have had douglas elliman run the properties for us but it is no less a business because we still feel the effects of all the things that involve us , like legal issues , paying for repairs , etc .. in fact for us the biggest issues are dealing with local stabilization laws and tolerating the rules .
As I said we can view it our own way. Paying a mutual fund company to pick and choose your stocks is like paying several employees to run your chosen business or company and their decisions are ones you feel. Buying stock in one company all the employees and bosses are really your employees and their decisions can affect your bottom line, unless of course you pay absolutely no cost to that company.
I think all things like legal, marketing, etc are all dealt with by that company on your behalf. Company takes a hit because of issues you don't deal with it, but you might certainly feel it.
In the market, The moment you start trading or rebalancing I don't feel it's passive at that point. If you have social security that's passive to me.
But based on what you are saying all the people posting in the investing forum who have been trading stocks, none are retired either, all have a business in which they actively trade stocks, even if they no longer are working.
stocks are different . i am not the one who has to have the grief when the furnas goes and foot the bill , or we need a roof or a major elevator repair . i had months of legal hell trying to get a tenant out which i had to be involved in and go without rent for those months .
that is very different then just having the mgmt company to do the work. passive investing is just that . except for rebalancing and clicking to buy or sell there is nothing else to get involved in unless you want to research your own stocks in which case you are becoming less passive and more active.
passive investing is our money working for us while we work for our money . as a real estate investor i had to go around and look at properties and evaluate whether i wanted to get involved . there were deals to negotiate , and all sorts of business decisions like loans and terms ,etc .
real estate is only passive until its not in my opinion .
there is nothing wrong with it for those who want to bother , but for us , it is not something we would consider doing in retirement .
Last edited by mathjak107; 11-18-2018 at 07:49 AM..
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
Reputation: 16698
Quote:
Originally Posted by mathjak107
stocks are different . i am not the one who has to have the grief when the furnas goes and foot the bill , or we need a roof with stocks or a major elevator repair . i had months of legal hell trying to get a tenant out which i had to be involved in and go without rent for those months .
that is very different then just having the mgmt company to do the work. passive investing is just that . except for rebalancing and clicking to buy or sell there is nothing else to get involved in unless you want to research your own stocks in which case you are becoming less passive and more active
And that's your experience with real estate. I've had those things happen, it affects the bottom line, but I did not get personally involved myself like you did. That was your choice, you chose to invest in that form of real estate. Just because you got involved with a tenant tells me you chose to do real estate differently than I did.
You own a stock and it has costs, it affects your bottom line. My real estate can have the same and have the bottom line affected also. In either case you don't get involved and neither do I.
My time is just book keeping for taxes at the end of the year and watching things to see if I need to ask the manager for changes. This year I don't have to do even the book keeping as new software generates statements and reports I can simply email to the accountant. Your time is spent rebalancing and selling and buying. In either case it has to be done by us, why is is your time considered passive and mine is not?
Both actions take away time we could be traveling or whatever. Now if you never examine you portfolio at all and do anything to it, then it is truly passive.
the definition of passive investing is not disregarding your portfolio .
passive investing
"Definition
An approach to investing that involves buying and holding securities for long periods of time. Passive investors do not attempt to predict or profit from short-term movements in a stock's price.
Passive real estate investing, is a form of real estate investing in which you place your capital into a real estate venture that you will not have any direct responsibility for managing."
we all have our own definitions of that word "managing "
we have a senior partner who basically calls the shots in our manhattan real estate . but when we got a bill for the apartments for 20k for new windows in the building and an elevator upgrade i am directly effected . the part i don't like for retirement is the fact it is not liquid and the money invested can't be put in to better opportunity . i don't want to be beholden to tenants anymore in retirement . so thats our issues and why we sold everything we could .
Paying a mutual fund company to manage investment selection is similar is some respects to a management company managing real estate but it’s no where near the same.
In my experience, people who don’t have the stomach for the stock market turn to real estate. There’s really no other good reason, given historical returns.
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