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re: Real estate or stock market?

Posted on 2/20/15 at 3:43 pm to
Posted by tirebiter
7K R&G chile land aka SF
Member since Oct 2006
9345 posts
Posted on 2/20/15 at 3:43 pm to
quote:

If I'm getting between 20 and 30 % annually on cashflow alone not even counting appreciation do you plan on getting that from your capital gains annually? Surely not from dividends. Maybe a combo?? Can you keep up that pace ?


If someone can manage their taxable income to certain levels to meet the Fed tax code, then yes, QDI is very tax favorable. You are writing like RE never goes down in value, nor areas may go into permanent decline, and it's simply not true. Due to the leveraged nature of RE, the cash flow can be significant and the depreciation benefits are nice to help reduce current year income, but as Iowa Golfer mentioned, when you sell and have to recapture years of depreciation and stack it on your other income the tax bill can be quite painful. Long term real returns in the US favor equities over RE, with a lot less hassle. I can live off the income stream from my investment portfolio, RE and passive partnership income add a nice cushion too.
Posted by Fat Bastard
coach, investor, gambler
Member since Mar 2009
73542 posts
Posted on 2/20/15 at 7:51 pm to
quote:

If someone can manage their taxable income to certain levels to meet the Fed tax code,


I have no troubles with this on my RE. others can do it just as easily.

quote:

You are writing like RE never goes down in value,


First off i never said that, and no, not at all, that just wasn't the point. Yes, and stocks can crash as well. right? I was just showing him comparables and asking him what his comparisons were that he was talking about.

quote:

recapture years of depreciation and stack it o


I'm still doing fine even after the depreciation recapture tax i'm hit with after a sale. Eschewing depreciation is a huge mistake. Don't try to scare people away because of this. They can do it. there are 1031 exchanges as well which benefit if used. These guys may never sell. They may be strict buy and hold investors for just the cash flow.

quote:

Long term real returns in the US favor equities over RE, with a lot less hassle.


really? well so far my RE returns are blowing my dividend paying stock returns out the water. Maybe what's a hassle for you isn't for me? So you telling me you would prefer a dividend paying stock paying 4% versus what i laid out earlier? with 20k invested into each? really? That makes absolutely zero sense. ZERO! That's one of the theoretical points i was making to the OP. as a matter of fact my cashflow return rate is maybe better than his possible capital gains as well.

quote:

I can live off the income stream from my investment portfolio, RE and passive partnership income add a nice cushion too.




great. I'm so happy for you! I'm happy for any investors who can succeed through a myriad of investment vehicles. My 401k is ok, my roth ira is doing fantastic, my private lending was alright, tax liens were ok, and commodities in the past were ok, and my stocks are ok. But guess what? none offer the passive cashflow like RE! NONE! ZERO! NADA! based on same amount invested. Now a nice cash flowing BUSINESS CAN/WILL BEAT RE. But that wasn't his question. He basically posed the question, RE versus stock market which in turn makes most think he is looking strictly at the passive cashflow of each versus one another. I'll take RE all day and twice on sunday.


This post was edited on 2/20/15 at 8:53 pm
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