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Investment question

Old 08-23-2019, 11:33 AM
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Suppose you paid off a debt that was approx $4,500 a month. You have no other debt, are financially secure and already invest in the stock market. You also own your home free and clear and don't want to move.

Would you give that money to your financial advisor or invest in real estate?

The real estate options are a commercial rental, a beachfront condo and do air bnb weekly rentals or a stand alone house within a few blocks of the beach and also do air bnb. The condo or house would be about 10-15 minutes away from home and the plan would be to use it when we would like to.

Not really interested in becoming a regular landlord.

Old 08-23-2019, 11:35 AM
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I would never give a dime to a financial advisor.

I'd probably choose the stand alone and have a PM do all the work and take th nominal hit on return.

I should also note I do not yet own rental property, so take that into consideration.
Old 08-23-2019, 11:36 AM
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Originally Posted by 38P6 View Post
Not really interested in becoming a regular landlord.
That pretty much scratches most of the real estate off the list. Maybe empty lot. LOL
Old 08-23-2019, 11:37 AM
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Originally Posted by 38P6 View Post
Suppose you paid off a debt that was approx $4,500 a month. You have no other debt, are financially secure and already invest in the stock market. You also own your home free and clear and don't want to move.

Would you give that money to your financial advisor or invest in real estate?

The real estate options are a commercial rental, a beachfront condo and do air bnb weekly rentals or a stand alone house within a few blocks of the beach and also do air bnb. The condo or house would be about 10-15 minutes away from home and the plan would be to use it when we would like to.

Not really interested in becoming a regular landlord.
My $0.02 is stick to "safe" investments until you can lose a job for 6 months and then cover relocation costs and a down payment. Once you've covered the dooms day scenario, then more risky/hands on investments make sense.

Lots of people have done well in a upper middle class lifestyle following my advice. Very few people strike it rich playing it safe like I'm suggesting.

These types of questions are hard to give advice without knowing your risk level and goals because there is no one right answer.
Old 08-23-2019, 11:54 AM
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Lol call a MF company.
Old 08-23-2019, 11:56 AM
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I am retired and have a comfortable pension, we also own a restaurant that is very successful. If we closed the doors tomorrow I still have a guaranteed income.

We came up with this idea because of two things, we need to stay near the restaurant so we can never really get away for vacation. This place would be our little getaway close to home. Also in talking to some friends who are well-off we are seeing that anyone who has a large amount of money did something with real estate.

It probably is a Gamble and not the safest bet but we can afford to take the loss if it doesn't work out.

Last edited by 38P6; 08-23-2019 at 12:30 PM.
Old 08-23-2019, 12:09 PM
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Originally Posted by 38P6 View Post
Suppose you paid off a debt that was approx $4,500 a month. You have no other debt, are financially secure and already invest in the stock market. You also own your home free and clear and don't want to move.

Would you give that money to your financial advisor or invest in real estate?

The real estate options are a commercial rental, a beachfront condo and do air bnb weekly rentals or a stand alone house within a few blocks of the beach and also do air bnb. The condo or house would be about 10-15 minutes away from home and the plan would be to use it when we would like to.

Not really interested in becoming a regular landlord.
No. Investing in the market has far less headaches and historically better returns and done right, ever increasing income without even asking. Then there is the more favorable tax implications, never having to attend a meeting, replace a roof, deal with eviction or a management company, etc..
I could go on.....
Old 08-23-2019, 12:15 PM
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If you don't want to be in the real estate business, don't.

And, unless you have some weird, complicated financial stuff to figure out, don't spend a percentage of your investment income on a financial manager.

Every time a financial manager touches your money, they get paid. There's a lot of incentive to touch the money. I buy index funds and then I don't touch the money. I beat the market every year and I probably beat 90% of financial managers - and I don't pay their fees.
Old 08-23-2019, 12:19 PM
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Originally Posted by maintenanceguy View Post
If you don't want to be in the real estate business, don't.

And, unless you have some weird, complicated financial stuff to figure out, don't spend a percentage of your investment income on a financial manager.

Every time a financial manager touches your money, they get paid. There's a lot of incentive to touch the money. I buy index funds and then I don't touch the money. I beat the market every year and I probably beat 90% of financial managers - and I don't pay their fees.
Which market S&P 500 TR or DJI TR?
Old 08-23-2019, 12:23 PM
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When I say I dont want to be a landlord, I mean that I dont want to have a tenant for a year. I dont mind air bnb, I have friends doing it with with about 15 properties and they love it.
Old 08-23-2019, 12:29 PM
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I'd be buying some physical gold/silver each month and then picking my own stocks (I like the miners, but they are very volatile).
Old 08-23-2019, 12:30 PM
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Originally Posted by 38P6 View Post
When I say I dont want to be a landlord, I mean that I dont want to have a tenant for a year. I dont mind air bnb, I have friends doing it with with about 15 properties and they love it.
That still makes you a landlord and have you thought about what happens when you have to start collecting /filling occupancy tax, have inspections to met codes, noise complaints from neighbors or when/if jurisdictions ban short term rentals? You'll never hear about the depreciation recapture or......
Old 08-23-2019, 12:30 PM
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Originally Posted by 38P6 View Post
When I say I dont want to be a landlord, I mean that I dont want to have a tenant for a year. I dont mind air bnb, I have friends doing it with with about 15 properties and they love it.
Make sure you understand current and future potential rules on Airbnb. Especially near the coast. Many have done well. Many have also gotten screwed.
Old 08-23-2019, 12:33 PM
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Financial manager is a failed investor

invest in the invesacenter
Old 08-23-2019, 12:34 PM
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Originally Posted by aubv View Post


That still makes you a landlord and have you thought about what happens when you have to start collecting /filling occupancy tax, have inspections to met codes, noise complaints from neighbors or when/if jurisdictions ban short term rentals? You'll never hear about the depreciation recapture or......
Thank you, this is exactly the type of information am interested in hearing.

On the flip side if it does become annoying I can still look at it as our vacation home and can easily afford to pay the mortgage. I was just thinking that it would be nice to Airbnb and have somebody else paying most of the bills. My friends make 20 to $25,000 a year profit off of each of their airbnb's on the beach and they have a mortgage on all of them.
Old 08-23-2019, 12:38 PM
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Originally Posted by 38P6 View Post
Thank you, this is exactly the type of information am interested in hearing.

On the flip side if it does become annoying I can still look at it as our vacation home and can easily afford to pay the mortgage. I was just thinking that it would be nice to Airbnb and have somebody else paying most of the bills. My friends make 20 to $25,000 a year profit off of each of their airbnb's on the beach and they have a mortgage on all of them.
A handful of large cap stocks pay most of my bills..... but I survive on saltines...

Last edited by aubv; 08-23-2019 at 05:46 PM.
Old 08-23-2019, 01:42 PM
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The way I read the OPs post the $4500/mo is ongoing. If that is true and you have no interest in picking individual stocks a monthly purchase of an inexpensive index will likely return high single digit returns. An ETF like VIG would be appropriate I think.
Old 08-23-2019, 01:57 PM
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Originally Posted by joe.giuliano View Post
The way I read the OPs post the $4500/mo is ongoing. If that is true and you have no interest in picking individual stocks a monthly purchase of an inexpensive index will likely return high single digit returns. An ETF like VIG would be appropriate I think.
I know the smart move would be to invest the money. If it wasn't so convenient living 2 minutes from our business we would sell our house and buy a beach house and not look back. I guess what it comes down to is whether or not we want to buy a second home and then if we want to Airbnb it.

The people that I know that do air bnb have no regrets. One makes alot of money doing it and the other is close to retirement and will make it his part time job. I am looking at it only so that someone else will be paying for my second property.
Old 08-23-2019, 02:15 PM
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Assuming you intend to to do the airbnb more than 14 days out of the year there are significant tax implications for you. If you offer your property for rent through a short term rental service like Airbnb, HomeAway, VRBO, FlipKey, etc. you will likely have to pay them a commission. If you are handling the rentals yourself the government may consider you to be self-employed and you may owe social security and medicare taxes on that income. Plus there's the time and money you will need to spend maintaining the property and keeping detailed records for the tax man. Financial advisor's fee may not be such a bad idea after all. If you're already financially comfortable investing in something that will take a substantial amount of time and effort to stay on top of may not be what you really want. Maybe you'd make a few more bucks than investing with a financial advisor, maybe not. Sounds like you've got $4500 a month to invest over and above what you need to live comfortably - you could invest it conservatively and be even more comfortable, or invest more aggressively and enjoy the thrill or victory or agony of defeat. FA can help guide you. Just sayin'.
Old 08-23-2019, 02:24 PM
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OP,
Have you ever owned a second home?

Originally Posted by joe.giuliano View Post
The way I read the OPs post the $4500/mo is ongoing. If that is true and you have no interest in picking individual stocks a monthly purchase of an inexpensive index will likely return high single digit returns. An ETF like VIG would be appropriate I think.
agree.


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