Federal Income Tax Reform Proposal - Effect on Californians (rental homes, homeowners insurance)

[aslowdodge]

Originally Posted by 2sleepy

Property tax is due in two installments so how much money are you really able to invest, the only other thing that goes into your escrow account is insurance. The whole idea sounds a little penny wise and pound foolish to me.

That's because you live in a world of owning only your house and follow the herd. See my other post.

[2sleepy]

Originally Posted by JJonesIII

You might want to look up rates on high yield checking accounts. As far as I'm concerned, it doesn't matter if it's just a free tank of gas every 6 months or taking care of 75% of a grocery trip, it's something that's extremely easy to do with a minimum of effort (like looking up the amount of withholding on a payroll check and planning accordingly on taxes, instead of complaining about it). Gee, there's a novel thought.

I'd never describe something like this as foolish (but I would of the other item, especially when it meant one paid less taxes).

I don't need to look up high interest rate checking accounts, I have one. I get 2.43% for balances up to 15k I get 2% interest on my impounds. It would not be a free tank of gas every 6 months, with luck it might be a gallon of gas every 6 months. Good for you for spending your time pinching pennies though, it's always a good idea not to leave money on the table. And just to save you time and energy in the future I don't need your advice about planning tax withholding, my son is a CPA and takes care of that stuff for us, thanks anyway though

[aslowdodge]

Originally Posted by JJonesIII

Yeah, you're right. That's just so foolish

It's just so hard to have part of a direct deposit to a mortgage go to a separate checking account and then at the end of 6 months, write a check and mail it. It would take all of about 10 minutes to set something like that up once, and it would be done. And with an median home going for $1.6 million in San Francisco right now (starting annual property tax bill of $16k + insurance), that couldn't possibly be worth all that hardship.

Sure, let's just argue for the sake of arguing.

The tax bill would be closer to $19K not including any assessments they add. Insurance can easily be $4k.
That's 23K impounded. People who are lazy and can't invest think it's penny wise and pound foolish to not let them impound the account.
At Ally bank that $460 of interest. I guess I can only hope to be so wealthy where $460 isn't a fair amount of money.
In my case that money as I detailed in another post earns me thousands.
But some people will just be sheeple.

[2sleepy]

Originally Posted by aslowdodge

That's because you live in a world of owning only your house and follow the herd. See my other post.

The post where you said you've "done" 5 mortgages? Ok great, do the math for me, how much will you save by not using an impound account, don't forget to include the interest the mortgage company pays on the impound account.

[2sleepy]

Originally Posted by aslowdodge

The tax bill would be closer to $19K not including any assessments they add. Insurance can easily be $4k.
That's 23K impounded. People who are lazy and can't invest think it's penny wise and pound foolish to not let them impound the account.
At Ally bank that $460 of interest. I guess I can only hope to be so wealthy where $460 isn't a fair amount of money.
In my case that money as I detailed in another post earns me thousands.
But some people will just be sheeple.

You forgot to offset that by the amount of interest the mortgage company pays on impound accounts and you included interest for the entire year, but you don't have the use of that money for the entire year, you need to calculate the average balance not the entire annual amount required for impounds. For someone who owns all these houses I would have expected you to know that.

[aslowdodge]

Originally Posted by 2sleepy

The post where you said you've "done" 5 mortgages? Ok great, do the math for me, how much will you save by not using an impound account, don't forget to include the interest the mortgage company pays on the impound account.

Did you not read the post that I can buy a rental house a year earlier and what net rents are?
I’m not going to run an entire spreadsheet analysis for you, figure it out yourself. I’ve done real estate for years and own 25 rentals so it’s not like I don’t know what I’m doing.
I did not include all the rentals, just the 4 that had loans. Btw the couple of percent you claim the mortgage company pays pales to the returns I get by a long shot.

[bad debt]

Originally Posted by 2sleepy

You forgot to offset that by the amount of interest the mortgage company pays on impound accounts and you included interest for the entire year, but you don't have the use of that money for the entire year, you need to calculate the average balance not the entire annual amount required for impounds. For someone who owns all these houses I would have expected you to know that.

That was the first thing I thought too. This is pretty basic.

[2sleepy]

Originally Posted by aslowdodge

Did you not read the post that I can buy a rental house a year earlier and what net rents are?
I’m not going to run an entire spreadsheet analysis for you, figure it out yourself. I’ve done real estate for years and own 25 rentals so it’s not like I don’t know what I’m doing.
I did not include all the rentals, just the 4 that had loans. Btw the couple of percent you claim the mortgage company pays pales to the returns I get by a long shot.

I'm not arguing whether you have more than I do I'm absolutely sure that you do. I just can't see how managing your own impounds is such a big savings. And I wasn't just claiming that 2% is paid on escrow accounts, it's state law. The other thing to consider is that if you ask the mortgage company to waive impounds they can charge a fee usually .125% or .25% of the loan amount at closing, or offer you a higher interest loan. And depending on your LTV ratio you can be required to have an escrow account.

[aslowdodge]

Originally Posted by 2sleepy

I'm not arguing whether you have more than I do I'm absolutely sure that you do. I just can't see how managing your own impounds is such a big savings. And I wasn't just claiming that 2% is paid on escrow accounts, it's state law. The other thing to consider is that if you ask the mortgage company to waive impounds they can charge a fee usually .125% or .25% of the loan amount at closing, or offer you a higher interest loan. And depending on your LTV ratio you can be required to have an escrow account.

No fees are charged for not having impound accounts on my mortgages. Shop your lenders. If you have a high ltv like when you put down 5% you have little skin in the game so I can see why the lender might do this plus you also need to pay PMI.
I will tell you ballpark on the 5 mortgages my taxes are about 15K. Insurance is about 8K. That's 23K right there. That kind of money I want in my pocket, not theirs. You're looking at what interest you can earn on both sides and that's all. I look at it as opportunity cost to invest it into something more than a savings account interest. The ability to buy a cash flowing asset that provides $4800 per year net one year earlier because I have access to the cash now is the reason.

[aslowdodge]

Originally Posted by bad debt

That was the first thing I thought too. This is pretty basic.

You should also consider that while they are sitting on your money they aren't paying you tax bill until the very end. Also pretty basic.