Tag Archives: real estate

Pet Peeve – When People Say “I need more write-offs!”

This just doesn’t make any financial sense. Why do you need more write-offs? To me, this is just a fancy way of saying that you need to find things to buy that you don’t really need that happen to be tax-deductible.

It’s like when one of my good friends told me I need to buy a bigger house with a larger mortgage for the larger write-off. Let’s say my mortgage write off now is $1000 per month (basically saving me $300 per month on taxes). She thought I should get a $3000 per month mortgage so I’d have a bigger write-off. Ok, so I’d save another $600 per month on taxes but spend an extra $2000, essentially still spending $1400 MORE per month!

Or another friend of mine who bought a new computer for business even though her old one was working fine because she NEEDED the write-off! Instead of saving $500 on taxes she could have had $2000 in her pocket.

Yes, my numbers are simplistic. Yes, you should take all the write-offs the government allows. But you should NEVER buy something simply because it’s a write-off! It makes no financial sense.

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Barbara Corcoran – If You’re Listening I Want to Talk!

I just read this book Shark Tales by Barbara Corcoran. She was a real estate mogul in New York City in the 80s and 90s and sold her company for tens of millions of dollars. She’s now on the ABC show Shark Tank and is investing in other people’s businesses.

You have to love Barbara. She’s brash, honest, simple in her approach and is also utterly charming. I’m not sure if the techniques that worked so well for her brokerage 20 years ago would work the same way today, but maybe that’s just me making things more complicated than they are.

I’d love to get an interview with Barbara. The people who get on Shark Tank generally seem to take for granted that they are standing in front of 5 people who could change their life forever. Believe me, if I ever got face time with Barbara I’d come out of it with the knowledge to make millions. So, Ms. Corcoran, if you’re listening, please drop me a line. I’ll meet you anytime, anywhere.

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Property Value Twist

I’m under contract for Rental #3. I have a purchase price of 25k. I was expecting there to be around 15k in repairs putting me at a 40k price for a lower rent than my other properties at $850 per month.

Two problems came up today that I’m concerned about.

#1 – The repairs are going to be a lot more than I’d expected at about 25k. There are roof and mold issues that are going to need some very expensive repairs.

This I could deal with if I got a good enough price reduction. The next issue is the biggie.

#2 – The appraisal came back on Rental #1 ( which I’m mortgaging to buy #3) at only 45k.  At a 75% mortgage plus closing costs I’m walking with about 29k. And #1 is in the same area as #2 and slightly larger with 1 more bedroom.

If you’re an investor by now you’re putting together the pieces. The whole point of mortgaging these properties was to be able to at least buy one more with each mortgage. The closing costs are relatively the same for higher priced vs. lower priced properties, so I’m paying a higher percentage for lower amounts. If a better property than the current one I have under contract will only appraise for 45k, then putting even 40k total into this one seems a little silly IF I’m planning to mortgage it, which I am.

There are other areas of town where there are a wider spread of values, making it easier to have “instant equity”. I don’t like those areas as much for steady rental, but if I’m only going to mortgage 6 and buy 8 more in the next 2 years I just don’t think I’ll have enough cash if I’m only getting 30k out of each one that’s mortgaged.

Plus there was a dead bird in front of the garage today. This just doesn’t seem like a good sign.

UPDATE 10-30 I ended up cancelling this contract. The seller wasn’t willing to go down in price and there are other deals where the repairs wouldn’t be so incredibly extensive. Sheesh. A ton of time for me and the contractors for nothing.

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Mom Intro

I’m a new mom with a 6 month old daughter. We’ll call her B. I also have a wonderful husband who will be Dad. Although I’m a mom, being a mother is not the over-arching term that defines me. This is about my navigation of a world that’s obsessed with money but afraid to talk about it.

More importantly, it’s about my quest for $1,000,000.00 in equity. Right now I think I can do it in 10 years with real estate. I own 2 rental properties which I purchased for cash over the past 18 months.

Here is the breakdown of what Dad and I bring home:

Dad – 85k salary since June 2011
65k salary from May 2010 – May 2011
Grad school before that
Mom – Self employed real estate agent
– 2008 ~ 75k after expenses
– 2009 ~ 140k after expenses
– 2010 ~ 140k after expenses

We live in Atlanta, GA where cost of living is relatively low. We live on a budget, but the budget is high. I’ll be completely honest about our income and spending, what we spend on, where I think we’re messing up, and where I think we’re doing well. I’d love it if others would weigh in on how much they spend, how they are reaching their goals, etc.

Let’s open up an honest conversation about money and hoist ourselves out of this economy by our petards! I’m aware Dad and I make more money than most. I want to know what you’re doing within your means to plan for your future, spend, and enjoy your time now. Can’t wait!

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