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Old 05-28-2015, 06:06 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,420,368 times
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Quote:
Originally Posted by ncole1 View Post

And I don't really know how you are assuming I take no action - I have a few passive, unleveraged, investment portfolios, to which I add more every year. I am always allocating capital in some way or another, just as you.
But exactly what action can you take after taking a sizable portion of your portfolio and burying it in your house? Rebalance your house much?
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Old 05-28-2015, 06:10 PM
 
12,708 posts, read 9,981,349 times
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Quote:
Originally Posted by honobob View Post
But exactly what action can you take after taking a sizable portion of your portfolio and burying it in your house? Rebalance your house much?
Well it depends on a lot of individual factors such as how much you have in other liquid assets and income, and on risk tolerance.
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Old 05-28-2015, 06:11 PM
 
71,672 posts, read 71,801,099 times
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Quote:
Originally Posted by honobob View Post
But exactly what action can you take after taking a sizable portion of your portfolio and burying it in your house? Rebalance your house much?


lots of people don't count the home they live in as part of their investments. they count it as a cost cutter as long as they live there or potential cost cutter .

i know i never counted my home in any portfolio calculations as it served no purpose except for estate tax purposes or to feel good.

that was true whether my portfolio was 100k as when i was in my 20's or multiple 7 figures today.

even when we held substantial investment real estate holdings they were held outside the scope of anything i did portfolio wise.

in fact our investment real estate in nyc was worth many times the size of our portfolio but it was still kept separate , unlike if i owned a reit in the portfolio.. it was treated more like you would a business than a passive investment like my stocks and bonds .

can't say i ever re balanced the living room or needed to.

Last edited by mathjak107; 05-28-2015 at 06:25 PM..
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Old 05-28-2015, 07:36 PM
 
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I would certainly include the equity in my house as an asset and part of my net worth.
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Old 05-28-2015, 08:54 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,420,368 times
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Quote:
Originally Posted by mathjak107 View Post
lots of people don't count the home they live in as part of their investments. they count it as a cost cutter as long as they live there or potential cost cutter .
That's because lots of people don't know they could buy investments to live in. Big mistake. All the properties that I bought provided a "cost cutter" when I was living in them but were also increasing my net worth by a much larger amount than what the expense was. Basically all those properties paid me to live in them and more. That's how you invest in real property.

I seem to remember you claiming you couldn't make any money with inherited Manhattan real property.
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Old 05-29-2015, 01:15 AM
 
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no you have it wrong . we made a lot of money with the real estate.

they were co-op apartments with original rent stabilized tenants in them, in one of nyc's most prestigious buildings over looking central park but the rents are close to break even. but we have been buying out the leases the last 12 years for 100k and selling the apartments for 7 figures.

out of 9 apartments we sold 7 but have 2 left where so far the tenants are not moving so rents are near break even. but who cares , the other 7 were so lucrative those tenant could stay and it does not matter. if we don't get to sell them in our lifetime the kids will inherit them and win.

we also held lease rights to the commercial properties which we sold last year in one of the largest lease right sales in nyc history.

so nyc real estate has been an incredible investment.

as far as inheriting it we got the ability to buy in to the business because of a chance we had a claim to an inheritance but we didn't inherit it because it would have been a very expensive legal battle. .

instead we had to buy out some estranged heirs who were inheriting it and they didn't want to sit with the stabilized apartments as well as the rest of the partners didn't want them .

we might have had a claim or not because of trust defects so basically the partners said if we bought the new partners out of their share and didn't chance a court battle they would accept us as partners instead .

so we had to came up with 500k which was only available to us because it was no longer tied up in a house we owned and we were renting . we bought their shares out and we were partners in a deal that turned out to be an amazing value . but it is something we would never have been able to do if we still had the house as there was no way we could afford to pay back an equity loan not knowing if and when we would ever sell the apartments .


so renting and investing elsewhere was a big winner for us.

i find to take the biggest advantage financially there are times to own and times to rent.

most can't invest much in the beginning , they can barely rent and come up with a down payment.

so buying can be a good start. after an up turn it can pay to rent , take the lump sum from the house's appreciation and invest it in assets that grow at a far greater rate then residential real estate you live in.

later in life when you are not investing as aggressivly say at retirement buying as a cost cutter can once again be the better deal long term,.

Last edited by mathjak107; 05-29-2015 at 02:29 AM..
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Old 05-29-2015, 01:25 AM
 
71,672 posts, read 71,801,099 times
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Quote:
Originally Posted by jrkliny View Post
I would certainly include the equity in my house as an asset and part of my net worth.
absolutely it should be included in net worth but the point is it plays no part in portfolio construction or re balancing or anything else that involves the portfolio.,

Last edited by mathjak107; 05-29-2015 at 01:43 AM..
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Old 05-29-2015, 02:49 AM
 
71,672 posts, read 71,801,099 times
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Quote:
Originally Posted by honobob View Post
But exactly what action can you take after taking a sizable portion of your portfolio and burying it in your house? Rebalance your house much?

while i don't agree with the part about worrying about re-balancing a house the first part is very true since if all that money and equity was still tied up in the house we would never have been able to take part in the investment deals we did.

the other thing about paying off the house is that mortgage being payed off may have zero to do with the affordability factor down the road.

as jrkli can tell you , homes in our area in the 1970's went for 30-35k . mortgages , which were a lot of money back then were in the 250 a month range.

today most of those homes are payed off and the owners are no longer paying 250 a month for a mortgage but their real estate taxes can be 12-18k a year and utilities 450 a month .

the fact a 250 buck a month mortgage is retired means little in the costs today of living here.

many in the tristate area with paid off homes have no choice but to retire elsewhere as that paid off mortgage did little to help them afford living here . it is like if they paid it off or not was a moot point in the scheme of things.

Last edited by mathjak107; 05-29-2015 at 04:04 AM..
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Old 05-31-2015, 12:46 AM
 
Location: Myrtle Creek, Oregon
12,275 posts, read 12,516,106 times
Reputation: 19440
Quote:
Originally Posted by mathjak107 View Post
lots of people don't count the home they live in as part of their investments. they count it as a cost cutter as long as they live there or potential cost cutter .

i know i never counted my home in any portfolio calculations as it served no purpose except for estate tax purposes or to feel good.

that was true whether my portfolio was 100k as when i was in my 20's or multiple 7 figures today.

even when we held substantial investment real estate holdings they were held outside the scope of anything i did portfolio wise.

in fact our investment real estate in nyc was worth many times the size of our portfolio but it was still kept separate , unlike if i owned a reit in the portfolio.. it was treated more like you would a business than a passive investment like my stocks and bonds .


can't say i ever re balanced the living room or needed to.
Exactly. Rental income is a business, not an investment. I have a cousin who owns a couple dozen rental units in a small college town. About half of them are vacant during summer term, but they average about $20k a month. He employs one handyman full time, which runs about $6k/month, plus materials for maintenance, so he only nets about $10k/month or maybe a little more. It's a good business with a regular return. He is in the process of retiring and just sold his medical clinic to the docs, but he plans to keep the rentals. I think they are all depreciated out, but they are also all paid for.
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Old 10-14-2015, 12:06 PM
 
11 posts, read 13,605 times
Reputation: 14
Is Paying off your mortgage worth it?
Is it worth it to pay off your mortgage as soon as possible? I heard that after paying off your mortgage, there were taxes, but everyone is like "pay it off asap or as soon as you can" to get rid of a tremendous burden, but is that right, or do the tax increases offset the benefit of paying off your mortgage asap? What about if you have 2 houses? Any tax benefits/disadvantages if paying off an investment home? I'm all for paying it off ASAP but a family member is against it and wants the tax benefits to it. Please advise. Thanks. Specifics and thorough info would be great!
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