Investing General Discussion

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OU Ariakas

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Hi everyone.. I'm interested in learning about residential real estate investing. Ie, buying a low cost property and renting it out, and I would be using a property management company. Would anyone be able to help walk me through the numbers?

For example:
Purchase price $60,000
20% down = $12,000 (how to lower 20% down?)
Leveraged $48,000 - do you really get a mortgage for this? Or?
How much does the property depreciate each year, and this is tax deductible?
Mortgage interest is tax deductible? What if it's not technically a mortgage and is instead a hard money loan?
What's the formula for how much rent should be based on purchase price?

We have a thread just for it and I wish there was way more activity on it: Real Estate Investment Thread

Where is the property located? Have you talked with a property management company to determine what the rental market is like in the area? I have properties that are a little higher priced than that one and I get a fair share of shitty tenants.

Rental properties are always 20% down on a mortgage; I have been trying to figure out how to lower this cost myself since it is usually the largest one.

The 48k is going to be a mortgage or hard money loan unless you are paying in all cash.

Property depreciates over 27 1/2 years or 330 months. That one would depreciate at 181.19 per month and it is tax deductible. Mortgage interest is also tax deductible but a hard money loan would not be since it is technically a personal loan between two parties.

Rent should be at or above 1% of purchase price. If you buy that house and get above 600 a month you should be good to go. If the going rate for that type of house is at 700 or above then it seems great.
 

Khane

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So I want to start an investment account for my niece who is turning 1 soon. After some initial research it seems like a UGMA or UTMA is the way to go as it acts as a gift that I am the custodian of until she comes of age and is a true investment account that I can open through Vanguard. Anyone have any experience with these or know of potentially better alternatives?
 
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Captain Suave

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So I want to start an investment account for my niece who is turning 1 soon. After some initial research it seems like a UGMA or UTMA is the way to go as it acts as a gift that I am the custodian of until she comes of age and is a true investment account that I can open through Vanguard. Anyone have any experience with these or know of potentially better alternatives?

Are the parents competent investment-wise? My grandfather had some money that he wanted to pass to the grandkids and he just wrote us a yearly check under the single-year gift limit. While we were minors our parents opened investment accounts in our name where they were the custodians. We took over when we hit majority.

As long as the parents don't take the money or otherwise fuck up the investment that works fine.
 

Khane

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Yes they are both successful, very good with money and very good parents.
 

Aorin

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So I want to start an investment account for my niece who is turning 1 soon. After some initial research it seems like a UGMA or UTMA is the way to go as it acts as a gift that I am the custodian of until she comes of age and is a true investment account that I can open through Vanguard. Anyone have any experience with these or know of potentially better alternatives?

Be aware that you might creating a tax headache for the parents. They will have to deal with the 1099-B/1099-DIV on the childs tax return. I have an UTMA for my son, and I tax gain harvest every year(So far the gains are under the limits for having to file a tax return, so tax free). Hopefully by the time he gets the money he won't owe much in capital gains. I don't like the restrictions on 529s so I went with an UTMA. Just make sure the parents are on board with dealing with this...its something they will have to remember every year for the next 18-21 years.
 

Khane

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Good advice, thanks. I didn't want the restrictions on a 529 either, if she doesn't want to go to college because she finds better opportunities outside of it or because college gets even more prohibitively expensive by the time she's college aged I didn't want her to feel pressured to do it just so she can get the money.
 

AladainAF

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Big fucking win. SOLD. Even if AMD hits 500 a share, i dont care. This is one of my biggest wins ever in the market.

(I still have over 4,000 shares but the cost basis is 15-27 on those)

210693
 
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Burren

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Good advice, thanks. I didn't want the restrictions on a 529 either, if she doesn't want to go to college because she finds better opportunities outside of it or because college gets even more prohibitively expensive by the time she's college aged I didn't want her to feel pressured to do it just so she can get the money.

IUL (indexed universal life insurance). No funding limits - though total size depends on contribution for a kid, which means parents have to have an equal or greater amount - all growth and all income is tax free (like a Roth) and can be used for anything, whenever. No restrictions like an IRA, Roth IRA, 529, etc. The wealthier the client, the more cash value life insurance they have because growth and income are tax free with the gov't rules about how you can use the money. And, of course, god forbid something happens, someone else is taken care of.

When it comes to college planning for this sort of asset, we actually encourage the funding up THROUGH graduation. Life insurance assets don't count against a family when getting loans and grants and they SHOULD get those loans; establish some credit and then when college is done, use the cash in the IUL to pay back the loans.
 

AladainAF

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Well done!

Any thoughts on AMD Calls for June 2020?

Shit man I don't know. I do know that lots of people want to work with them (HP, Dell, etc) to get AMD chips in all their line ups on servers and consumer. I also know that the 7nm chips are no joke and AMD should have them out before intel has their 10nm out. Also infinite fabric really helps AMD keep manufacturing costs down, because wasted wafers are way way lower than intels. AMDs silicon waste is less than half of what intels is I think.

I think its still very positive for AMD, all things considered. Obviously, just personal opinion.
 
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Vinen

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Still seeing zero pickup on AMD in the Fortune 50 market I work with. I tend to look at what customers are configured with out of curiosity and its still all Intel.
 

ver_21

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Still seeing zero pickup on AMD in the Fortune 50 market I work with. I tend to look at what customers are configured with out of curiosity and its still all Intel.

Yeah this is one of the reasons I want to take a little longer view.
 

Big Phoenix

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Still seeing zero pickup on AMD in the Fortune 50 market I work with. I tend to look at what customers are configured with out of curiosity and its still all Intel.
AMD has gotten a number of super computer wins. Most powerful computer in 2021 will use AMD cpus and gpus.

They definitely have a lot of institutional bias towards Intel(dunno how any remains after the failure of their 10nm process and laundry list of cpu vulnerabilities) they have to overcome but they are making great progress. Prior to EPYC they had .1% of server market, now they are at 3.5-4%. Second half of the year is the perfect storm for them though, their 7nm cpus combined with Intel's inability to respond.
Big fucking win. SOLD. Even if AMD hits 500 a share, i dont care. This is one of my biggest wins ever in the market.

(I still have over 4,000 shares but the cost basis is 15-27 on those)

View attachment 210693
Should have sold when it hit $34 last year. Im still all in at $3 though.
 
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Sanrith Descartes

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So I want to start an investment account for my niece who is turning 1 soon. After some initial research it seems like a UGMA or UTMA is the way to go as it acts as a gift that I am the custodian of until she comes of age and is a true investment account that I can open through Vanguard. Anyone have any experience with these or know of potentially better alternatives?
I have a custodial account for my daughter I manage. Make sure to check the individual laws applicable to her state. I use Fidelity.

Yearly profits under 1k have no tax implications. 1k to 2k the liability hits the child. Over 2k the parents.

If you are the only custodian, you are the only one who can trade. No money can exit the account until its handed over to the child at adulthood.
 

Blazin

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Instead of people only talking about winners lets talk about losers. The position I'm most uncomfortable with in my portfolio is NFLX, I had two others that I sold this year 3M (MMM) and Simon Property Group (SPG). I try to stick with only selling a stock when I no longer fundamentally believe it has a strong competitive advantage with growth. I only have 100 shares of Netflix but I'm starting to think that it's best days are now behind it, but I just can't see Reed Hastings sitting on his laurels and not continuing to evolve the company. Gaming maybe? The international growth is still there but US subs is going to be stagnant at best.

I look at my own use and the anecdotal posts here on the forum that I think more subscribers are going to start subbing for the shows they want then canceling in the interim. Any thoughts on this one? Dump the market laggard or be more patient?
 

Sanrith Descartes

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Instead of people only talking about winners lets talk about losers. The position I'm most uncomfortable with in my portfolio is NFLX, I had two others that I sold this year 3M (MMM) and Simon Property Group (SPG). I try to stick with only selling a stock when I no longer fundamentally believe it has a strong competitive advantage with growth. I only have 100 shares of Netflix but I'm starting to think that it's best days are now behind it, but I just can't see Reed Hastings sitting on his laurels and not continuing to evolve the company. Gaming maybe? The international growth is still there but US subs is going to be stagnant at best.

I look at my own use and the anecdotal posts here on the forum that I think more subscribers are going to start subbing for the shows they want then canceling in the interim. Any thoughts on this one? Dump the market laggard or be more patient?
I dont know what your cost basis is on NFLX, but I truly believe if you are profitable you should be cashing out. With Time Warner, Disney and Apple on the way, NFLX is about to understand what competition is. And I mean deep pocket competition.

My honest opinion is this bull is dead and has been since Dec. When Mnuchin called the Plunge Protection Team and resurrected it, it has basically been nothing more than Trump and friends abusing the algos with tweets. Most of the Treasury yields are inverted and the SP500 P/E is way too high from a historical perspective. Trump and the Fed are kicking this bitch on until Nov 2020. The price we will pay wont be a soft landing. It's going to be ass ravaging when it finally corrects. Robert Shiller's Cape has the SP at the 3rd highest level in history.

I have taken most of my profits off the table to cash. What I am still holding are value positions with strong cashflow and dividends (ex. ATT). My only loser I am still holding is an all world ex-US etf that I got greedy on and held it longer than I should have. As they say, greed is the debil.
 
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Captain Suave

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<the crash is coming>

Totally agree, and the reason I'm not putting money in the market now. My dad even went so far as to cash out of equities entirely given that he's 70, comfortable with his current asset level compared to expected spending, and does not want to deal with waiting until the other end of the recovery to see his value again.

I'm seriously tempted to do the same, since I'm up +50% or something stupid over the last four years. There just isn't much higher for the market go regardless of how low the Fed keeps rates, though it may bump up and down for the next 3-12 months. It could all go to hell with a quickness if rates go up, there's some crisis of public confidence, a war, China fucks with trade, Europe shits the bed, or any number of other fairly likely possibilities.

Whenever it inevitably happens the correction will be a bloodbath. I'd much rather not be involved and in a position to buy back into the trough.
 
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Sanrith Descartes

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Totally agree, and the reason I'm not putting money in the market now. My dad even went so far as to cash out of equities entirely given that he's 70, comfortable with his current asset level compared to expected spending, and does not want to deal with waiting until the other end of the recovery to see his value again.

I'm seriously tempted to do the same, even though it's contrary to the canonical "never time the market" advice. There just isn't much higher for the market go regardless of how low the Fed keeps rates, though it may bump up and down for the next 3-12 months. It could all go to hell with a quickness if there is a war, China does something drastic, Europe shits the bed, or any number of other fairly likely possibilities.

Whenever it inevitably happens, the correction will be a bloodbath and I'd much rather not be involved and buy back into the trough.
I manage my mom's assets (she is likewise in her 70's) . Treasurys are still viable as I dont envision inflation getting up above 3% because I dont believe Trump and Powell wont allow it. The only equity positions she still holds are high quality dividend payers. In a correction they are still going to dive share price-wise, but all her dividend yields are solid and the company balance sheets are rock solid and they arent going anywhere recession or no.
 

AladainAF

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Instead of people only talking about winners lets talk about losers. The position I'm most uncomfortable with in my portfolio is NFLX, I had two others that I sold this year 3M (MMM) and Simon Property Group (SPG). I try to stick with only selling a stock when I no longer fundamentally believe it has a strong competitive advantage with growth. I only have 100 shares of Netflix but I'm starting to think that it's best days are now behind it, but I just can't see Reed Hastings sitting on his laurels and not continuing to evolve the company. Gaming maybe? The international growth is still there but US subs is going to be stagnant at best.

I look at my own use and the anecdotal posts here on the forum that I think more subscribers are going to start subbing for the shows they want then canceling in the interim. Any thoughts on this one? Dump the market laggard or be more patient?

My personal opinion after some thought is NFLX best days are behind them. Using Disney as an example.

Right now, Disney and others give a small tiny percentage of their content to NFLX to stream off and on for a royalty fee. They recycle a lot of things. But when Disney has their content service up, ALL Disney content should be available ALL the time. Other studios, etc will follow suit. NFLX was a stepping stone to get where we're going which is....

I think we are entering the age we've all wanted for 30+ years and that's alacarte cable TV, but in streaming form. There will be a lot of these streaming services, and every studio will have the content on their own servers and services. However, I do still think that netflix can have a role to play depending on how this plays out in that they can still be the *middle man* for these other services, where you pay netflix a monthly fee for their content, but also pay a additional fee to activate the other content (Disney content, Paramount content, Warner Brothers content, etc). That fee would be slightly higher than paying Disney or another provider directly, but you have a situation where netflix can be the central hub and interface for all of the other places. Other studios can link their servers into the netflix system, and netflix gets a small fee (from consumer most likely) for this ease of use. The cost structure would be something like... $7 per month for Netflix, $9 for Disney, $8 for WB, $7 for Paramount, etc. You total it all up and say it's going to be about $100 per month. Sounds like a hell of a lot more than what you pay today but a few things to note: 1. I see ALL content from the studios being available, at ALL times. 2. It's still less than a typical cable bill. 3. No contracts, and it's alacarte, so you can adjust these at will.

Alternatively, the customer could just get the Disney app, and the PAramount app, and the WB app, etc and pay say $0.50 less per month per service, but have to deal with every one having their own app, own login, etc. Netflix can play a role that ties all of it together.

Sorry if I didn't explain this well. I am bad at these long-winded things and am not Lithose. But I think you get the general idea where I'm going with this.