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11
Managing And Investing In Physical Real Estate / Re: Latest Mortgage Rates
« Last post by PandaAtlanta on December 20, 2020, 05:34:28 PM »
prabhat

I am closing on two of my refinances next Tuesday. These are investment SFRs I purchased in 2012 and 2013 and they have doubled in value.

Here are my numbers.
$121,493 refinance from 4.2% to 3.0% closing costs $1295.41  P&I $512.22
$123,528 refinance from 4.0% to 3.0% closing costs $1261.14  P&I $520.80

From my investment refinances, I was able to bring my total interest from about $43k a year down to $31k / year. About $12k/year savings in mortgage interest. I think it is important to get very lean on your overhead going into 2021.
12
Hey guys.. I am new to the crowd funding investment space and looking to do some research before investing. Fundrise's platform is intended for individuals interested in long-term investments so we need to keep our funds there for at least 5 years. This seems quite illiquid to me. Do you get the same tax write off benefits as physical real estate? For example, if you incur losses, are you able to off set that loss against your earned income?

Would like to get some feedback from investors who are invested in Fundrise and get their honest feedback of their experience thus far with this platform. What are pros and cons and pitfalls to watch out for? In my personal opinion real estate is not a very attractive investment without good leverage. If I don't use leverage, wouldn't a traditional REIT in the NYSE like "O" or "AGNC" that pays a month dividend be a better investment? I feel like you have more control of your money as mREITs and REITs as they are highly liquid. Any thoughts?

The benefits of owning physical real estate is more control, smart leveraging, depreciation, tax benefits, monthly cashflow, tenants paying down your mortgage. In some ways, I see good mortgage debt like a 401k plan, especially when rates are 3% for investment loans in today's market environment.

Between investing in FundRise vs Physical Real Estate vs REITs and mREITS in NYSE. Which is investment vehicle is the best in your opinion?

https://www.businessinsider.com/personal-finance/fundrise-review

Fundrise pros and cons
Pros
Available to non-accredited investors
Low minimum account size requirements
Highly diversified investments
Great for passive investing

Cons
Investments are illiquid
Complex fee schedule
Not for short-term investments
13
Are any of you bloggers purely just affiliates to generate revenue on your website? Although the thought of creating your own digital product is very appealing, I think the risk/reward is very high. I mean what if you spend 3-4 years writing an ebook that you think has amazing niche content that no one wants to buy even a $1? What if you were hoping to sell this ebook for $100?

I think the odds of successfully selling a $100 ebook is like 1 out of 10,000. Please do correct me if I am wrong. Wouldn't it be a much better / lower risk blogging business model to be a 100% affiliate marketer around your niche content vs creating your own digital product? Would love to hear from the Blogging veterans who are actually making some decent coin from their blogs. For those of you Bloggers making more than $50k/year... what are the mistakes to avoid and lessons can you share with the newbie bloggers who want to get started?

Panda
Newbie dreaming of a Blogging Business
14
Couchfi,

Thanks for sharing your numbers. i refinanced two of my rentals on Dec 11th and will be refinancing two more on Dec 22nd. I am also getting 3% 30 year fixed but will pay it down like a 20 year by paying the same principal and interest before the re-fi. My average rate on my entire mortgage portfolio is right at 2.82%. I think that 2010 was one the best times to buy physical real estate and 2020 is one of the best times to refinance.

11/04/2020: $284k at 3.0% with $3500 closing costs. 4.0% to 3.0% break even is about 16 months
12/11/2020: $128k & $129k at 3.0%  with $1950 closing costs. 4.2% and 4.0% to 3.0% break even is about 10 months
12/22/2020: $123k and $121k at 3.0% with $1250 closing costs. 4.625% and 4.5% to 3.0% break even is about 7 months

Waived escrows at no extra charge.





3% after paying 4.5k on a 250k loan. Haven't seen investment property rates below 4% before, so pulled the trigger and did it.
15
Is it possible to sell a $100 digital products like an eBook, Digital Artwork, Digital Music etc in your opinion? Do any of you know of someone doing this? I would think that the content would have to be so unique for a $100 digital product to move.

Curious to hear from other bloggers who have successfully sold $100 digital products from their blog/website. Would you care to share your story when you remember getting an order on your first digital product?
16
@mpspringer:

You do not need to wait to declare your investment(s) worthless.  In some cases (see below), you may even lose your ability to claim a loss if you wait.  The answers to your questions are contained in IRS instructions.  The short answer is, be reasonable and document the reason for your decision.  The even shorter answer is, and I say this as a friend: if you invest in vehicles like RS you should have an accountant who can handle questions like this and defend you in case of an IRS audit.

For tax purposes, for an untraded private asset, you can use your own reasonable method to determine when your investment becomes worthless.  You certainly do not have to defer to RS.  In my view, the factual circumstances make it reasonable to declare some of these RS investments worthless, even if RS has not yet admitted it.

If your investment is a partnership (LLC) interest, you can declare it worthless and take a (long-term) capital loss.

If you have not had partnership liabilities allocated to you (check your last Form K-1), in many cases you can affirmatively abandon your partnership interest and take a loss against ordinary income.  This approach would be better for you, if you determine that you are allowed to take it.  Here you must notify the LLC and document very carefully.
https://www.cpajournal.com/2016/10/01/partnership-abandonment/

If your investment is in the form a promissory note, the tax treatment is different.  A failed investment is treated as a bad debt.  If it is a personal investment, it must become 100% worthless, at which point you can deduct it as a long-term capital loss.  It is up to you to determine when it becomes worthless.  Note:  the IRS states that you MUST claim the loss in the year the debt becomes worthless.  If you wait until a subsequent year, the IRS could deny the loss.

Finally, a philosophical word about income tax:  when you invest in complicated private deals, the application of tax law and regulation to real-world situations is never 100% clear.  You have to do your best to comply, but there will often be gray areas that require judgment.  Consult an accountant.  Bear in mind, that if you act in good faith and document your reasons, the worst that will happen is that the IRS audits you and disagrees.  There is really no shame in that.  It happens all the time to sophisticated investors.  You will debate your position with them.  If you don't prevail, you will pay the difference in tax and some interest.  There may be some penalties, but you can avoid or minimize these by acting in good faith and documenting your decisions.

GOOD LUCK MY FRIEND.

Great info and links Stingray.

Thank you
17
@mpspringer:

You do not need to wait to declare your investment(s) worthless.  In some cases (see below), you may even lose your ability to claim a loss if you wait.  The answers to your questions are contained in IRS instructions.  The short answer is, be reasonable and document the reason for your decision.  The even shorter answer is, and I say this as a friend: if you invest in vehicles like RS you should have an accountant who can handle questions like this and defend you in case of an IRS audit.

For tax purposes, for an untraded private asset, you can use your own reasonable method to determine when your investment becomes worthless.  You certainly do not have to defer to RS.  In my view, the factual circumstances make it reasonable to declare some of these RS investments worthless, even if RS has not yet admitted it.

If your investment is a partnership (LLC) interest, you can declare it worthless and take a (long-term) capital loss.

If you have not had partnership liabilities allocated to you (check your last Form K-1), in many cases you can affirmatively abandon your partnership interest and take a loss against ordinary income.  This approach would be better for you, if you determine that you are allowed to take it.  Here you must notify the LLC and document very carefully.
https://www.cpajournal.com/2016/10/01/partnership-abandonment/

If your investment is in the form a promissory note, the tax treatment is different.  A failed investment is treated as a bad debt.  If it is a personal investment, it must become 100% worthless, at which point you can deduct it as a long-term capital loss.  It is up to you to determine when it becomes worthless.  Note:  the IRS states that you MUST claim the loss in the year the debt becomes worthless.  If you wait until a subsequent year, the IRS could deny the loss.

Finally, a philosophical word about income tax:  when you invest in complicated private deals, the application of tax law and regulation to real-world situations is never 100% clear.  You have to do your best to comply, but there will often be gray areas that require judgment.  Consult an accountant.  Bear in mind, that if you act in good faith and document your reasons, the worst that will happen is that the IRS audits you and disagrees.  There is really no shame in that.  It happens all the time to sophisticated investors.  You will debate your position with them.  If you don't prevail, you will pay the difference in tax and some interest.  There may be some penalties, but you can avoid or minimize these by acting in good faith and documenting your decisions.

GOOD LUCK MY FRIEND.

18
Hello Everyone

Some updates : 

FG : Like most of you I too am wandering in the wilderness on FG. Not a lot of response from RS. Ian from the Law Firm has been responsive but that does not put any coin in my pocket. My FG investment was / is Church's Chicken in Orlando FL.  How you could screw up a fast food place in the heart of one of the biggest tourist places on the planet ( pre Covid) is beyond me. It IS in a good location, there should be at least some return of principal. Maybe 50% or slightly more.

Duval Way:  As I mentioned prior I spoke to one lawyer who is currently suing the developer of Duval . He was not optimistic. I tried reaching another lawyer who is ALSO currently suing the developer of Duval Way.  He did not even bother to return my calls or emails.   The fact that 2 different attorneys in the Bay Area where / are suing the developer of that property proves beyond any doubt that RS was writing loans with their eyes closed. 

According to RS Duval Way was sold last month for well below asking price. Further more the are Millions $ in liens. The thief that these idiots gave our money to has pledged that he will pay up $300,000 in one years time.  Good luck with that. I have better chance of being elected Governor of CA.   IF ( unlikely) that happens I MIGHT get some pennies on my dollar. After the RS people have wet their beaks of course.

As I saw someone prior comment ; I got into this because it was supposed to be " safe" as opposed to snake oil like TESLA.

So much for that.

Make sure you tell your tax preparer about this fiasco. Get what you can against other income.

Also make sure that you tell any elected official that you know and or more importantly any law enforcement persons that you know. Regardless of jurisdiction. Its quite probably the case that only when a US Attorney or District Attorney with a guy with a gun in tow shows us up will we get any answers.

Allover,
I am also in that Church's Chicken and the last significant update we had on it before falling through was about 2 years ago and it was down to just adding the tables and chairs.  I called the place a few times and it was eventually opened.  I am not sure now though but I would assume it is at least in renting condition.

Since this is still "open", do you know if we can use it as a lost on our 2020 taxes (filed in 2021) or do we have to wait until an actual final final outcome?  I don't have a ton of money tied up in FG, but I do have some in Tesla (ironic) and it would be nice to have to have an offset.

19
Getting Started / How to report spam or inappropriate posts
« Last post by Sydney on December 14, 2020, 11:17:17 PM »
Hi everyone. Thanks for being a member of the Financial Samurai forum! Let's all work together to keep spammers out and maintain a positive community.

If you ever see a thread or a post that is flat out spam, looks suspicious in any way, or is just completely inappropriate, please click on the "Report to Moderator" link at the bottom of that specific post.

We'll look into it promptly and remove it if necessary.

Thanks!

20
Hello Everyone

Some updates : 

FG : Like most of you I too am wandering in the wilderness on FG. Not a lot of response from RS. Ian from the Law Firm has been responsive but that does not put any coin in my pocket. My FG investment was / is Church's Chicken in Orlando FL.  How you could screw up a fast food place in the heart of one of the biggest tourist places on the planet ( pre Covid) is beyond me. It IS in a good location, there should be at least some return of principal. Maybe 50% or slightly more.

Duval Way:  As I mentioned prior I spoke to one lawyer who is currently suing the developer of Duval . He was not optimistic. I tried reaching another lawyer who is ALSO currently suing the developer of Duval Way.  He did not even bother to return my calls or emails.   The fact that 2 different attorneys in the Bay Area where / are suing the developer of that property proves beyond any doubt that RS was writing loans with their eyes closed. 

According to RS Duval Way was sold last month for well below asking price. Further more the are Millions $ in liens. The thief that these idiots gave our money to has pledged that he will pay up $300,000 in one years time.  Good luck with that. I have better chance of being elected Governor of CA.   IF ( unlikely) that happens I MIGHT get some pennies on my dollar. After the RS people have wet their beaks of course.

As I saw someone prior comment ; I got into this because it was supposed to be " safe" as opposed to snake oil like TESLA.

So much for that.

Make sure you tell your tax preparer about this fiasco. Get what you can against other income.

Also make sure that you tell any elected official that you know and or more importantly any law enforcement persons that you know. Regardless of jurisdiction. Its quite probably the case that only when a US Attorney or District Attorney with a guy with a gun in tow shows us up will we get any answers.
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