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Old 12-23-2016, 04:53 PM
 
2,560 posts, read 2,288,326 times
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Quote:
Originally Posted by Listener2307 View Post
The only way to "buy a broad index fund once" in 1965 would be to have the money. $40,000 in 1965 is the equivalent of $303,237 in 2016.
In 1965 I was 20 years old and (unsurprisingly) didn't have the money. Just like (unsurprisingly) I don't know any 20 year olds who have $303,237 today.

Good plan on paper, though.
Your calculations aren't even close to being right. LOL. You have to include investing the difference over 40 years, etc. But I know you think real estate is the answer so that's ok. Believe what you want.

Last edited by Burkmere; 12-23-2016 at 05:05 PM..
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Old 12-23-2016, 05:01 PM
 
2,560 posts, read 2,288,326 times
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Quote:
Originally Posted by aslowdodge View Post
Once again people like to say how the stock market outperformed the real estate market. You are comparing the earnings of the stock market against a personal residence in which case the stock market probably eeked out a better return.
But no one likes to address comparing the stock market versus RENTAL PROPERTIES because then the stock market doesn't look as rosy then.

You assume people who own apartment complexes like the one you live in are killing themselves managing it and have no life. I'd be willing to bet they have a better life than you and probably make more money than you. Most apartments employ a property manager and the owners do very little. They have more time than you do because they make a healthy income while assigning the day to day work to someone else.

Two of my friends retired with rental properties in their mid 30's and have property managers. They are not a couple, but two seperate people and lives.) Both were aggressive real estate investors for under five years. They are both currently traveling in Asia ( seperately) full time having the times of their lives and no timetable to return to the US.
A third took on a lucrative part time consulting gig because after retiring 2 years ago and self managing 16 rentals was bored with all the free time she had. She doesn't like to travel and is a home body and her hobbies are pretty low cost.

Did the stock market do that for you at age 30? Are you still currently working? If you are do you have to wait for a vacation to travel? My two friends travel whenever they want and for how long they want. They aren't spending all their time managing properties.

The fact that you had a rental for five years and did so poorly with it shows you didn't know what you were doing. That's not the say you couldn't learn how to do it right.

I and other real estate investors are thankful for people like you though because you pay the rents which pays off my rental cash cows and when paid off you pay for my travel and toys. My rentals are paid off so people like you are just paying for my living expenses and playtime.
LOL. Your assumptions couldn't be further from the truth. I'm retired and can do whatever I want whenever I want. Last year I was gone over 50% of the time mostly abroad ....all because of a mouse click. Your friends took a LOT OF RISK and sure, it CAN work out, but won't necessarily..and it was a ton of work....don't kid us. We all know it's much much easier to make a killing and it's no work at all accumulating and managing a bunch of rentals as opposed to contributing to a broad index for 35-40 years with a mouse click. Those mice are heavy!!

My rental was one I owned and it did fine, but I decided a mouse click was much easier and made me wayyy more money than my rental which still had to be actively managed.

But do whatever you want. Don't let facts get in the way.

Run out right now and buy a bunch of apartment complexes. Easy! Much easier than contributing like 15% of your income to a broad index (and yes you could invest years ago) over 30-40 years. No risk at all. Have at it! Anyone who can fog a mirror to do it.
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Old 12-23-2016, 07:56 PM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,295 posts, read 8,459,563 times
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Quote:
Originally Posted by Burkmere View Post
LOL. Your assumptions couldn't be further from the truth. I'm retired and can do whatever I want whenever I want. Last year I was gone over 50% of the time mostly abroad ....all because of a mouse click. Your friends took a LOT OF RISK and sure, it CAN work out, but won't necessarily..and it was a ton of work....don't kid us. We all know it's much much easier to make a killing and it's no work at all accumulating and managing a bunch of rentals as opposed to contributing to a broad index for 35-40 years with a mouse click. Those mice are heavy!!

My rental was one I owned and it did fine, but I decided a mouse click was much easier and made me wayyy more money than my rental which still had to be actively managed.

But do whatever you want. Don't let facts get in the way.

Run out right now and buy a bunch of apartment complexes. Easy! Much easier than contributing like 15% of your income to a broad index (and yes you could invest years ago) over 30-40 years. No risk at all. Have at it! Anyone who can fog a mirror to do it.

Congratulations on waiting for 35 to 40 years to be financially self suffucient while my friends waited for five years to be just as self sufficient. You clearly beat them to a pulp on that one. I can't believe the mice are that heavy, but maybe at your older age they are. Did they even have mice when you started investing 40 years ago?

It's funny that you make a lot of assumptions yourself about how much risk they took. It's a lot of risk to you because you know nothing about rental real estate. You keep saying how much work it is, but the fact that I mentioned I use a property manager to do everything is akin to having a broker take care of your stocks. But for those that study it, analyze it, put a system together, it's very little risk.

So my friends started and retired in 5 years, how long did it take you? eh 40 years! Sure it's easier your way working for 40 years of your life, but some of us don't want to wait 40 years like you did. Retiring young and traveling when your young as well as middle age and older is more fun than just traveling when you are older. When you are younger you are physically in better shape to do more things. Plus some of us actually think that doing some work and research now for greater rewards is preferable to waiting for 40 years like you did. Some people take on a second job to get ahead. In their case their second job was rental real estate.

How many people want to work for 40 years waiting to have enough to retire? Many people are worried they won't make it to the 40 years as technology and outsourcing are eliminating their jobs and their ability to "mouse click" funds into retirement. I have friends that won't hit their retirement goals as you did because they a getting laid off and have stopped contributing. I feel bad for younger people as things aren't like they were before where you worked and were loyal to the same company all your life then you had a house paid for and a retirement and health care. Used to be get a degree and get a good job. That American dream and goal is slipping away. many graduates can't get a job, are underemployed, some living at home with mom and dad. I can see where some people would want to secure a nest egg earlier than waiting 40 years just to feel better about their future.

If you think it's easy moving a mouse, then operating a real estate business isn't much harder. Making a phone call, sending an email, or paying vendors and contractors and managers with online banking isn't much harder.
You live in an apartment. If you have a maintenance issue do you call the owner or the manager? If you need a toilet fixed, does the owner come out or is it a handyman or plumber?
Plus waiting 40 years is a risk in itself. If the market doesn't pan you're a lot older and have less time to catchup. You peak earning years are probably behind you.

You might want to reexamine your comments about letting facts get in the way. The saying "You don't know what you don't know." applies to you here. You think you know the answer, but it's obvious you know little about the real estate rental business, so how can you really make a fair comparison? If you did you would know you could have done way better than your little rental that you actively managed.

I understand your point of view-it's all you know an you aren't willing to expand your education. Most people don't want to make any effort.
They buy rentals and expect it is like buying mutual funds. Buy it and forget it. For them your way is the most practical. There is more work than that when you first get started and as you build it up it gets easier. For those that don't trust the system or have the time to wait to see if it pans out like maybe it did for their parents, taking responsibility for their lives and their futures is what they need to do.
It's just a plain good idea to educate yourself in finances and retirement, I don't think anyone can argue that. By the same token if you are going to do real estate, take the time to learn how to do it right. Don't learn about stocks, bonds, 401Ks etc for investing in the market, then not take the time to educate yourself in real estate rentals and poo poo it because you didn't learn how to do it correctly and now you say it can't be done.

BTW if you knew anything you would not tell people to go out and buy apartment complexes, that's what people who don't know about how to make money in rentals would say-even if jokingly. That is a lot bigger jump in at the start. I don't own apartments, I own single family homes. If someone makes $100k a year and puts 15% away each year like you suggest, they could use that 15% to buy a house and rent it out. That can get themselves a $50K house which if bought correctly (no you can't sit on your butt like you did and click and forget) will get them a positive cash flow after all expenses including a manager so they don't have to actively manage like you did. They could buy one house each year and after a while get two a year. In 10 to 15 years they could be totally self sufficient with 12 to 20 houses and retire early if they wanted or know that they are secure financially. They don't have to worry about getting laid off or worse hurt and unable to work. Achieving this in 10 to 15 years is preferable to waiting 40 years for an outcome on how their lives will be.
Tenants pay for the house with rents which when paid off they the person now owns plus they get some extra cash which can in turn be saved to buy another rental. The also pay less taxes as they get mortgage interest write off and depreciation. Thus they keep more of their income which they can use to accelerate their real estate purchases.
Like I said I owned and self managed 5 rentals back in Ca a few years ago. I devoted 35 hours a year or roughly 40 Minutes a week "actively managing" them. I had them dialed in and systemized. If you find that is way to much work, then I can't argue with you.
On the other hand if you spent way more time with your rental to a point where you thought it was too much work, maybe you just didn't know what the heck you were doing and I can see where you would prefer clicking a mouse for 40 years instead.
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Old 12-23-2016, 08:59 PM
 
Location: Forests of Maine
37,255 posts, read 61,001,894 times
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Quote:
Originally Posted by Burkmere View Post
As has been illustrated many times (and folks like to talk about the 40k house they bought in the 60s that's now worth 400k or whatever)...they'd be much further ahead to have bought a broad index fund once and then watch it grow to many time over the 400k. Not to mention it's easier to do a mouse click than to actively mange properties, deal with buying them blah blah blah.

But I"m glad some people wanted to invest in a nice apartment complex like the one I live in so I can take advantage of the stock market and do other things with my time like travel, etc. other than actively manage rentals (what a pain that must be.)..well, I did have a rental once for about five years..what a pain in the butt.
Non-passive investment is more work than passive investment. On that point you are correct.

You can click a mouse and thereby manage your investments, in a passive manner. I agree.

However I totally disagree with your assessment that index fund investing performs better as an investment. That is not the case with my experiences.

Besides have you gotten good tax sheltering from your index funds? Of course not, it is impossible. What you gain from stock, you are forced to pay taxes on. You can only get tax-sheltering from non-passive investing.

I started buying apartment complexes when I was 25. I retired at 42. My capital investment was the closing costs of each property, I never made any mortgage payments from my salary income, I only used OPM to pay off those properties. And now 35 years after I first began investing, it is 35 years since the last time I paid income taxes. It would not surprise me if you have paid more into taxes than I have paid into my portfolio.
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Old 12-23-2016, 09:24 PM
 
Location: Arizona
3,148 posts, read 2,707,516 times
Reputation: 6060
Buy rental property with borrowed money, store all the wealth in the equity of the house, take rent income every month that you have it occupied, sell down the road and keep the capital appreciation.

I don't know how that can be anything but a number one option for anyone seeking wealth.
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Old 12-23-2016, 09:42 PM
 
Location: Forests of Maine
37,255 posts, read 61,001,894 times
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Quote:
Originally Posted by tommy64 View Post
Buy rental property with borrowed money, store all the wealth in the equity of the house, take rent income every month that you have it occupied, sell down the road and keep the capital appreciation.

I don't know how that can be anything but a number one option for anyone seeking wealth.
If you must sell. Refinance first. So the selling price equals mortgage and fees.

Otherwise if you sell and show a profit you are on the hook for taxes.
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Old 12-23-2016, 10:03 PM
 
Location: NE Mississippi
25,361 posts, read 17,015,775 times
Reputation: 36977
Quote:
Originally Posted by Burkmere View Post
Your calculations aren't even close to being right. LOL. You have to include investing the difference over 40 years, etc. But I know you think real estate is the answer so that's ok. Believe what you want.
Actually, they aren't mine and they are spot on.
Calculate the value of $40,000 in 1965
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Old 12-23-2016, 10:07 PM
JRR
 
Location: Middle Tennessee
8,120 posts, read 5,574,386 times
Reputation: 15590
Quote:
Originally Posted by Submariner View Post
Non-passive investment is more work than passive investment. On that point you are correct.

You can click a mouse and thereby manage your investments, in a passive manner. I agree.

However I totally disagree with your assessment that index fund investing performs better as an investment. That is not the case with my experiences.

Besides have you gotten good tax sheltering from your index funds? Of course not, it is impossible. What you gain from stock, you are forced to pay taxes on. You can only get tax-sheltering from non-passive investing.

I started buying apartment complexes when I was 25. I retired at 42. My capital investment was the closing costs of each property, I never made any mortgage payments from my salary income, I only used OPM to pay off those properties. And now 35 years after I first began investing, it is 35 years since the last time I paid income taxes. It would not surprise me if you have paid more into taxes than I have paid into my portfolio.
Actually you don't always have to pay taxes on long term stock gains. As long as you stay in the 15% tax bracket, your long term tax gains have zero taxes. A couple of years ago I had a gain of about $23k on a buyout of a stock that I had. I kept my taxable amount below the $94k ceiling for that year and paid zero taxes on the $23k.

And under the Trump tax plan that ceiling would go to $105k for couples for the zero tax on long term gains.
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Old 12-23-2016, 10:15 PM
 
Location: Forests of Maine
37,255 posts, read 61,001,894 times
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Quote:
Originally Posted by JRR View Post
Actually you don't always have to pay taxes on long term stock gains. As long as you stay in the 15% tax bracket, your long term tax gains have zero taxes. A couple of years ago I had a gain of about $23k on a buyout of a stock that I had. I kept my taxable amount below the $94k ceiling for that year and paid zero taxes on the $23k.

And under the Trump tax plan that ceiling would go to $105k for couples for the zero tax on long term gains.
I stand corrected.

I keep thinking of the time when all Capital Gains were taxed separately.
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Old 12-23-2016, 10:27 PM
JRR
 
Location: Middle Tennessee
8,120 posts, read 5,574,386 times
Reputation: 15590
Quote:
Originally Posted by Submariner View Post
I stand corrected.

I keep thinking of the time when all Capital Gains were taxed separately.
Yeah, I keep thinking that they are going to do away with that as it doesn't really seem fair. I buy a stock and do nothing but hold it for a year and my $23k profit is not taxed. But someone working for a paycheck has to pay taxes on whatever they make. But I don't make the rules; I just play by them and the rules seem to be just getting better for those with more assets.
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