More power to you on rental properties.

Ive seen some really smart accountants lose their shirt on the rental condo at the beach... (But at least they get the coveted January week to use for themselves when the unit is empty!)

I have a friend that after 7 years, liquidated and broke-even on his rental properties...

I have family that are real estate professionals that have had their rentals destroyed by their tenets (including one pouring cement down the toilets when they were evicted by the sheriff after many months of non-payment)...

And I’ve had an ol captain absolutely killing it on slum landlording in urban Atlanta. (He sends his wife to the door to collect payment!)

There are those that do really really well with rentals and don’t mind fixing problems (or paying others to manage) and I can’t fault anybody for wanting to pursue maximum retirement money. It’s just not for me.

 

You gotta think bigger. You're an Accredited Investor. You can get in on passive Commercial Real Estate deals. Large Apartment buildings. Mobile Home Parks. Self Storage. These are large enough assets that the cost of property management is justified. Same tax benefits as small rentals property investments minus all the hard work unless you want to be the General Partner/Deal Maker.

Investing in Real Estate Private Equity: An Insider's Guide to Real Estate Partnerships, Funds, Joint Ventures & Crowdfunding https://www.amazon.com/dp/B01IW0G0S0..._pf4mEb1XCQ0J5

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Smart money years ago was rental apartments in College Park......Whoops..

 

By chance are you doing the QRP status? I wondered how taxes were on passive income for an expat.

 

Actually, you do cede that 16% will be automatically put in the 401k and there is nothing you can do about it until it is maxed out or you hit $285,000 in pay. Just an FYI

 

My experience has been unless you can show off shore taxes paid, you are on the hook to Sam.

 

I'm using Fundrise right now. Heard great things about Crowdstreet and will invest on that platform soon.

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Good point. Let's not exacerbate that! Personally, I've never hit $285k.

I don't use the brokerage side... can folks not control pretty broadly where and how that money is invested?

 

I'm kinda thinking the opposite. Why pay taxes now that you can put off until maybe never. If I die tomorrow I don't care what I leave my heirs my life insurance will take care of them. If I live to a ripe old age, I'll have a bigger pot of money to decide what to do with. RMDs might only put me in the lowest bracket by then. Besides why would you prepay taxes and give any money to Sam early? You known he'll just use it to pay down the debt! Right? I also don't prepay college tuition or have pet health insurance but I guess I'm kind of an idiot.

 

I haven’t had the time to do this math..... maybe someone else can.

We have 60%+ of guys hitting the 401C max currently. Take 16% above the 285k number (tax bracket here) and invest it at 9% for 5/10/15/25 years. Compare that to 16% above the 285k number and tax defer the same amount at 5% for 5/10/15/25. So almost half the growth but 16% deferred vs the idea of 100% post tax (60%ish best case) being invested with compounding. Paying the tax later vs in highest earning years may be huge. Don’t have the time to do the math and illustrate right now. Just say a guy makes $300k, married, a couple kids, and 10% PS with a max out of 401K contributions. Don’t even mess with catchups in the math.

Show those numbers. The real question becomes simple. If we can defer taxes now for roughly 50% of annualized and historical return- is it worth it. Optional, fine, but where is the “line” of things making sense by known numbers now and historical returns.

Please compute.