Originally Posted by Danger Close (Post 2598105)

I think it all comes down to personal preference. The extra flying is the easier route that pays very well. I find myself morr gravitating to stories of what people accomplish outside of the cockpit.

Originally Posted by FullFlaps (Post 2597312)

I'm not a pilot... yet. I recently left Wall Street and just started ground school. I was curious about this thread because I plan to continue my personal investments on the side but also maybe starting an advisory or small RIA / hedge fund on the side if I could.

I have traded or managed real estate, equities and fixed income. My 2 cents:

Real estate is a great asset class for pilots because it offers positive income streams, consistent inflation adjusted yields but most importantly tax incentives for owner operators. You don't have to actively manage for the most part and if you outsource management it's pretty much an absentee business. Do not over lever at this point in the cycle and go for base hits unless you are getting an asset really really really cheap. Put yourself in positive carry scenarios with fundamental upside.

Self Directed IRA's are great but there's also a lot of rules involved and a lot of the custodians are very shady 2 man operations. Go with larger FDIC covered institutions. The larger institutions are very strict with guideline where some of the smaller firms may not be. I just don't want to wake up and read in the Journal or FT that my custodians took all the money and now live in a non-extradition country.

Equities - where we are in the cycle it's hard to get really excited about equities and with rates increasing systemic leverage should decline eventually. Vol is still the best bet in my opinion but you would have to trade it actively, I mean be in front of a screen whenever you are not sleeping, to really take advantage of that trade. Don't mess with Vol ETF's - the rolls make them horrible and never carry well. You're just lighting money on fire and making it rain ashes.

Fixed Income - yields now do not really reflect real risk. BBB new issue at 4.5% still blows my mind. There is still a lot of offshore money coming into the system, just global macro it doesn't look attractive to me.

The above is not an order to buy nor sell securities. The above is not a recommendation to buy or sell securities nor does the above constitute legal nor tax advise. Please confer with a financial advisor or tax advisor before buying or selling any investment.

If you guys had advise for a guy just starting out what would it be?

If you could fly for any airline right now (very subjective question) where and why?

I took a look at some of the earnings reports for the 3 majors. Delta seems to be the most profitable but they have just hired 4,000 pilots over the last few years and I doubt they will need more by the time I get through training and the 1,500 hours and then time at a regional, or am I missing something?

Originally Posted by Gunfighter (Post 2597046)

1. Mega Back Door Roth IRA. You can make an after tax contribution to the Delta plan and convert to a Roth up to 415C limits. If you do this early in the year, the company contribution comes to you as DPSP Cash every paycheck.

Originally Posted by Schwanker (Post 2598558)

Care to elaborate further on this?
What advantages are there to doing it this way?
Steps in the process?

Originally Posted by CoefficientX (Post 2598006)

On the flip side several I know have personally decided a one day green slip quickly off sets the side hustle with far less hastle. They have therefore given up the side hustle.

I agree with the points made about not having all your eggs in one basket. I’ve been furloughed, twice, so I’m well aware the music can stop.

Originally Posted by Gunfighter (Post 2598585)

The advantages are highly dependent on your personal financial situation. DO NOT try this based on reading a few APC posts. At a minimum, spend a couple hours on Bing/Google looking at Backdoor Roth and Mega Backdoor Roth. It is also worth a trip over to the lawyer version of APC https://www.biglawinvestor.com/. It is a forum where highly compensated professionals (lawyers) discuss investing and finances.

My primary purpose is for estate planning, not retirement planning. A Roth account does not have a required minimum distribution like a traditional account does, therefore it is one of the vehicles I'm using for estate transfer. A secondary purpose is for income splitting, so I can access retirement funds without increasing my taxable income via 401K withdrawals. I'm expecting a higher tax bracket in retirement, due to my "side hustle", therefore Roth is advantageous.

I set my deductions set to take 75% of pay into a 401a after tax account until my contribution plus the company 16% hits my 415C annual limit. Every pay cycle, I call Fidelity and move the money from the 401a, into my Roth IRA. It doesn't take long to hit the limit with a good PS check on 2/14. After the 415C limit, the company 16% is paid out as DPSP cash, since they can't contribute into my retirement account. At the point I've hit the 415C limits, I fund a Traditional IRA, convert it to a Roth(currently $5,500) and max out my HSA.

I've placed a high priority on Roth funds, so my approach is fairly aggressive. It also results in no take home pay for the first few months of the year. It can be done in a more balanced manner throughout the year with more of the company 16% flowing into the pretax portion of the 415C limit vs DPSP cash.

DYODD and get real advice from several other sources.

Originally Posted by FlightCrewTools (Post 2598645)

This is a good explanation of the process. I’ve been doing this for years on a much less aggressive basis, generally shooting to have a 50:50 ratio of Traditional:Roth money.



The DPSP is unique from many other 401k plans out there, in that Delta contributes a very high % (relative to other US employers), which if done over decades will result in a high balance of traditional (pre-tax) retirement money.



Having a mix of pre-tax and Roth money in retirement, not only lowers your mandatory retirement income due to Required Minimum Distributions at age 70.5, it allows you to manage your tax bracket better by having access to Roth $ for spending (which is after tax and won’t bump you into a higher tax bracket in retirement.)



All of the above theory is based on the un-knowable future wrt tax brackets, politics, national debt (although we do know which way it’s trending), the viability of SS, etc. Given that there is no right answer, I’ve chosen a balanced approach. That may not be the right play for everyone - DYODD.

Originally Posted by tunes (Post 2598649)

Am I doing it wrong? I let them put 16% into traditional 401k and I put 15% into Roth 401k until I hit my max


Sent from my iPhone using Tapatalk

Originally Posted by jagbn (Post 2595196)

Anything the airlines can do to minimize such disruptions, they're going to do.

Originally Posted by SonicFlyer (Post 2594523)

So after the property management, taxes, and insurance you generate $800 profit, all of which goes back in to paying down the mortgage?

Originally Posted by liveupthere (Post 2600365)

On their days off, most DAL guys earn extra income as the guard police.

Originally Posted by SonicFlyer (Post 2594523)

So after the property management, taxes, and insurance you generate $800 profit, all of which goes back in to paying down the mortgage?

Originally Posted by freezingflyboy (Post 2600581)

You could do that if paying off the house was your primary goal. But it's cheap to borrow right now so what I think is a more prudent strategy (especially if your goal is to grow your rental business) is to keep those profits in an account ready for future investment or to cover the inevitable pop up expenses. As I said earlier, vacancies happen (planned and unplanned), evictions happen (months of lost rent plus some extra move out/make ready expense is probable), repairs happen (planned and unplanned). As a data point, in the last 12 months I have had a water heater go bad ($1200), an AC unit need replacing ($2500) and hurricane damage ($1200...and of course I carry a $1500 deductible, go figure). Best not to be sweating it to cover those expenses or covering just basic mortgage payments and upkeep while the property is vacant (as my dad was fond of saying, "that lawn ain't gonna mow itself!").

For me, the side hustle isn't about income now. I get plenty of that for my current needs from Momma Delta right now. Its about replacing that income when Momma Delta is out of the picture, be it because of retirement (early or otherwise), medical issues (car wrecks happen even to the best drivers), or these JVs don't pan out after all and Delta goes T-U during the next economic downturn or black swan event. That's my bottom line.

Originally Posted by Han Solo (Post 2600628)

Slightly off topic but the money gurus seem to be here in force. Selling a piece of inherited investment property that is in mine, my mother's, and sister's names. Are we required to split the proceeds equally or can we distribute the profits in any way we choose without any other tax implications other than the capital gains we'll have to pay on the profit?

Originally Posted by FlightCrewTools (Post 2600645)

How is the property titled and how long ago was it inherited?

If all 3 are on the title then you may have an issue splitting it up other than 1/3’s. It would essentially be as if you were gifting some of those proceeds to the one taking the largest %.

Depending on the value you’re talking about though, it might be achievable. You can gift up to $14k to/from an individual per tax year. For example, you could sell the place and then you and your wife could each give $14k of proceeds to your sister and her husband, for a total of $56k in 2018. If it’s a big amount you could “give” another $56k in 2019 without incurring a tax liability for anyone.

I ask about how long ago it was inherited, because typically there is a step up in basis on death, meaning if you sell soon after it is inherited there should be little to no capital gains.

All of this is just from past family experience and I’m not a tax lawyer or accountant, so DYODD. It does sound though like you have some options available to get creative with what you’re trying to accomplish.

Originally Posted by Han Solo (Post 2600657)

We inherited it in early 2001. The property is worth a LOT less now than when it was inherited :(. So the cost basis is upon inheritance and not purchase date?

Originally Posted by LeineLodge (Post 2600589)

I like the idea of having a handful of houses paid off by retirement, but am torn on whether to pay one off at a time (safer) or spread it out and let the tenants pay them down.

Originally Posted by Trip7 (Post 2601406)

Seeing how many us in our profession are accredited investors, does anyone have experience with real estate syndications? So far my research has shown syndications providing similar returns to direct investments but with significantly less work. I've been looking into purchasing my first property this year but will likely hold off and reevaluate my options when I become an accredited investor Jan 1st

Originally Posted by tunes (Post 2601447)

honestly, i'd wait until this bubble pops to start buying...now when that will happen who knows. I'd just be ready with cash on hand.

Originally Posted by Trip7 (Post 2601406)

Seeing how many us in our profession are accredited investors, does anyone have experience with real estate syndications? So far my research has shown syndications providing similar returns to direct investments but with significantly less work. I've been looking into purchasing my first property this year but will likely hold off and reevaluate my options when I become an accredited investor Jan 1st

Originally Posted by tunes (Post 2601447)

honestly, i'd wait until this bubble pops to start buying...now when that will happen who knows. I'd just be ready with cash on hand.

Originally Posted by Gunfighter (Post 2601536)

Investing in a linear market like IND, MEM, HOU, ATL, etc. with good rent to value ratios on a consistent basis is more predictable than timing the market. You could find yourself sitting on the sidelines for a few years and missing out on some good returns, while waiting for the crash.

Staying away from the cyclical markets like NY and CA is wise.

Originally Posted by Gunfighter (Post 2601526)

I've reviewed many syndications and have always chosen to be a direct investor. There is far more control over the investment that way. You control the timing of long term gains, have the option of equity stripping via cash out refi, preserve the option for a 1031 down the road, etc. I'm also more confident in my own due diligence than that of a syndicated offering. If you are looking for a hands off approach while preserving the direct investment advantages, evaluate a NNN property vs a syndication.

JMHO, DYODD, disclaimer, etc.

Originally Posted by Trip7 (Post 2601764)

Thanks for the advice. I've been looking for direct investment opportunities but haven't found anything reasonable cashflow wise yet. Starting to look out markets outside ATL and will continue to build cash. What type of properties have you invested in? SFHs or Multifamily?

Originally Posted by Air Stang 7 (Post 2601798)

Mobile home parks and self storage seem like a good bet from some people I’ve been talking to.

Originally Posted by Gunfighter (Post 2601881)

Self storage was a great investment before it became known as a great investment. There are a lot more dollars chasing resales and new development these days. The spread between cap rates and cost of capital has been shrinking since 2012 and has just recently began opening up. If the spread continues opening there may be some more opportunities in the class B/A- properties in secondary and tertiary markets.

I'd love to learn more and possibly invest in mobile home parks. So far most of the ones I've seen have too many park owned homes. I want to be a lot landlord, not a mobile home landlord. Extended stay RV parks are a close cousin of the true MHP which may be an alternative.

Originally Posted by notEnuf (Post 2602227)

One word of caution on self storage that is unattended. Meth and trafficking have been issues. The ownership is usually left with the tab on cleanups.

Originally Posted by tripled (Post 2598523)

Thanks for the informative post that leverages experience from a previous life. You’ll make a lot of friends in the cockpit if you continue to share free financial advice based on your past endeavors.

As for the airlines, right now the big3 passenger carriers seem to be at the top of the heap for applications. Of those Dal has a lower debt ratio compared to aa or ual but I’m just repeating hearsay whereas you probably know the proper sources to research and validate the claim.

You also surely understand volatility and I think most pax pilots would emphasize how volatile the industry is. The highs are pretty high but the lows are lower. ‘Elastic demand’ is the term if I’m not mistaken. If that’s a worry then a freight airline is another good option to consider. The business model seems more stable. In both cases, the projected hiring picture in either airline sector is good enough in the medium term so the real key for one in your position is probably speed. How fast can you get your tickets and necessary hours? The next question after that is to probably decide where home is/will be. In any case, welcome to the discussion and thanks for offering an honest financial assessment in exchange for some honest airline advice. Good luck on your journey!

Originally Posted by FullFlaps (Post 2602883)

Thanks Tripled

I am hoping i can get all my sign offs by the first quarter of 2019 and hopefully a year and change of flight instructor time. I might join a flying club and split time with people when I am not getting enough hours instructing. Hopefully I can average 100 to 120 hours a month as a CFI. I would like to get to 1500 hours by first quarter or second quarter 2020 and then let the dice roll where they may.

As far as airline hiring, Delta has hired around 4,000 pilots in the last 3 to 4 years, do they really need more? AA has 3 regionals they can feed from. Will there still be enough from the demand side for me to have a decent shot at a major or legacy airline by the time I have enough hours?

Originally Posted by Big E 757 (Post 2602888)

Even if you remove growth from the equation, which gives a more pessimistic number, Delta will need to hire at least 4000 more pilots, at least, over the next ten years just to cover retirements. I can’t remember the exact number.