Thanks in advance before you continue reading. I am 25 years old and i earn about 125k a year. I had purchased my first house last august for 450k and the house is now worth about 650k, I am currently renting that house out for about 1800 a month and going negative on the mortgage about 600 dollars. I am currently building my 2nd home that i had purchased for 630k and its not finished being built but the new models are selling for 725k on a little bit smaller lot...and for myself, i live at home with my parents. I hear about the housing burst etc etc, so i wanted to know what my next investment should be. I am currently going to be part owner in a 30 person company that i work for as well. I wanted to know what i can do to better diversify myself as far as my assets go and what other suggestions people may have i should with the excess money. I currently only have a monthly obligation of 524.50 which is my car payment which i can pay off at any time, but don't chose too for the 3.9% financing. I max out my 401k for the last 2 years and other retirement funds. So in a nutshell, instead of me buying stupid stuff, id like to invest in something else...I wanted to get into commercial real estate or maybe stores of some sort...any suggestions would be helpful...
typical savings vehicles apply (as always). what do you do at 25 that brings you 125k a year? depending on your obligations, you should be able to sock a significant portion of that away each year into various investments and cash holdings.
25 yo, $125K a year, own one rental home with over $200K appreciation in less than a year, about to own equity in your business. Yeesh.
If you're female, PM me.
Auream
Senior Member - 1K
posted: Apr. 26, 2005 @ 11:33a
I don't understand, you're renting out a house with negative cashflow, have another one that is being built, yet you live with your parents? Why not SELL the house that is losing you money each month? That right there is a great way to diversify your investments and make your money less concentrated in a bubbly real estate market. Also, do you plan on living in the second house? If you plan on using it for investment, I'd just flip it right now (assign the contract to someone or whatever). You can't beat a risk-free $100K or so profit. I'd also open a Roth IRA since you've maxed out your 401(k), and perhaps look into investing in some stocks or mutual funds outside of your retirement accounts.
davellie
Senior Member - 1K
posted: Apr. 26, 2005 @ 11:35a
um, with that kinda cash, why don't you just hire a financial advisor?
chuzzlewit
Senior Member - 1K
posted: Apr. 26, 2005 @ 11:41a
This is the guy with no degree and apparently a lot of luck (except for all of his gambling losses which he can't figure out if he can write off or not).
Date Posted: Dec/10/2004 2:47 PM Posted By: Luniz97 Rank: Senior Member age = 25 no degree profession: Equipment financing Sales manager 115k salary full benefits 4 weeks PTO 401k plus 50 cents per dollar match we are hiring by the way 3rd year at the job 1st year at the job you make about 50k, 2nd year 75k and 3rd over 100k
LankyBiscuit23
Senior Member
posted: Apr. 26, 2005 @ 11:53a
chuzzlewit said: This is the guy with no degree and apparently a lot of luck (except for all of his gambling losses which he can't figure out if he can write off or not).
Date Posted: Dec/10/2004 2:47 PM Posted By: Luniz97 Rank: Senior Member age = 25 no degree profession: Equipment financing Sales manager 115k salary full benefits 4 weeks PTO 401k plus 50 cents per dollar match we are hiring by the way 3rd year at the job 1st year at the job you make about 50k, 2nd year 75k and 3rd over 100k
I think it's possible, if the sales job is commission based or extra pay. The more that sales the more he makes, just be envious and crawl in a corner like me.
tazzy531
Senior Member - 4K
posted: Apr. 26, 2005 @ 11:58a
Auream said: I don't understand, you're renting out a house with negative cashflow, have another one that is being built, yet you live with your parents? Why not SELL the house that is losing you money each month?
Not such a horrible idea. With his income, he's in the top bracket. By renting out a place with a negative cashflow, he can use the amount he loses as investment losses for the purposes of taxes. He's holding onto a property that appreciated 200K. If he cashes out on that, that's going to be a lot of taxes. May be a good idea to hold onto it at a loss and let the property appreciate. It only needs to appreciate around 5000/year for him to break even. Depending on the area and the market, that may be quite easy to do.
Mister2
Ancient Member
posted: Apr. 26, 2005 @ 1:17p
Free advice, worth every penny
1. Move into your "new" house and finance with interest only mortgage. You will get the best rate, because you are living in it - not renting it out! You ALREADY have equity in it - and it isn't even built yet - so don't worry about contributing principal!
2. Do not renew your rental with your tenents in the "first" house when it expires! 3. When they move out of the first house - you move in! Keep careful track of how many months you were in the "new" house before moving into the first house. 4. Rent the "new" house with NO negative because you have the interest only loan - easy to cover with rent! 5. Stay in the "first" home, refinance to interest only mortgage 6. Move out and rent the "first" home too with NO negative
You have equity in both homes. You have two people covering ALL your payments. (Try and calculate the return on "0" investment - its infinite.) You are still building equity via the market. (for the time being) If you feel pressure, you can dump the properties and take the equity and a nice tax hit.
It the market can hold for awhile... You stay in the "first" house and take the profits tax free after two years. Then move back into the "new" house and finish off your two years there before selling.
Either way you have flexibility and are not dumping $600 bucks a month into housing investment.
the house i bought and am renting..i am showing as my primary residence.
the 2nd home i am building, there is a clause that says i can't rent or sell within the first year otherwise i will be penalized 50k. So what i am planning on doing is keeping one room to myself and renting the rest of the house which is perfectly legal and switch my primary residence to that house. i do also have my roth/sep/simple(depending on which i qualified for that year) ira maxed out every year as well since i was 16. Also, we all gamble, we all like to party, so thats the fun i have so i wanted to find out if i could write it off. I am in a sales position, so its not very hard to clear over 150k in this environment.
XFreebie
Senior Member - 2K
posted: Apr. 26, 2005 @ 1:25p
you're braggin' homeboy. solar-plate both those suckers, buy a hybrid and we all win!
TheGrayMan
Tired Member
posted: Apr. 26, 2005 @ 1:30p
Luniz97 said: I am 25 years old and i earn about 125k a year.
I am in a sales position, so its not very hard to clear over 150k in this environment.
Hmm, 25 yo. easily clearing over $150K a year in "sales" - can I take a guess what you're selling? j/k
Be careful when it comes to sales... 20 years ago my dad made $200k in one year at a company, and then two years later the company was gone and he was looking for a new job.
So my advice: SAVE SAVE SAVE! Watch your debt carefully... if you lose your job, suddenly you'll have $1mil+ in debt to deal with, and the bancruptcy laws aren't what they used to be...
I guess this goes with any job, but sales are known to thrash people.
Luniz97 said: my essential goal is to get 12 homes in the next 5 to 6 years and retire by 35Your current holdings have negative cash flow. How to you expect to retire on that?
dcwilbur said: Luniz97 said: my essential goal is to get 12 homes in the next 5 to 6 years and retire by 35Your current holdings have negative cash flow. How to you expect to retire on that?
He must be betting that houses keep increasing in value as he's seen with his 2 properties (200k appreciation in 8 months on his 1st house, and 100K on the house still being built).
Let's see here.... 12 homes X 100,000 appreciation/per year (mininum) X 6 years = $7.2 million (or more!)
Obviously this is a winning plan! When does your info-mercial come out showing you driving your Ferrari?
Luniz97 said: my essential goal is to get 12 homes in the next 5 to 6 years and retire by 35
I do not think that this is a "prudent" goal.
gradualness
Greedy Member
posted: Apr. 26, 2005 @ 3:30p
76hhma said: Luniz97 said: my essential goal is to get 12 homes in the next 5 to 6 years and retire by 35
Warning flag of real estate bubble...
This is a good one, 76hhma... hahahaha
jayK
Senior Member - JayK
posted: Apr. 26, 2005 @ 3:39p
dcwilbur said: Luniz97 said: my essential goal is to get 12 homes in the next 5 to 6 years and retire by 35Your current holdings have negative cash flow. How to you expect to retire on that?Easy, he'll make it up in volume.
Auream said: I don't understand, you're renting out a house with negative cashflow, have another one that is being built, yet you live with your parents? Why not SELL the house that is losing you money each month? That right there is a great way to diversify your investments and make your money less concentrated in a bubbly real estate market. Also, do you plan on living in the second house? If you plan on using it for investment, I'd just flip it right now (assign the contract to someone or whatever). You can't beat a risk-free $100K or so profit. I'd also open a Roth IRA since you've maxed out your 401(k), and perhaps look into investing in some stocks or mutual funds outside of your retirement accounts.
With his salary, a ROTH IRA isn't possible. I think the maximum salary you can make as a single person and be able to contribute is around 115k or so.
jayK said: dcwilbur said: Luniz97 said: my essential goal is to get 12 homes in the next 5 to 6 years and retire by 35Your current holdings have negative cash flow. How to you expect to retire on that?Easy, he'll make it up in volume.
Hey! That's my business plan!
chuzzlewit
Senior Member - 1K
posted: Apr. 26, 2005 @ 4:52p
First he says this is his 3rd year on the job, and he started at 50K. Then he says he's been maxing out his SEP, IRA, etc. for 9 years, since he was 16. Something doesn't add up, most 16years olds I know have other commitments (like school). I guess this guy's so smart he dropped out of middle school to earn 100K a year, yet he can't quite figure out if he can write off his gambling losses at age 25.
whchuang
Member
posted: Apr. 26, 2005 @ 6:35p
I bet that you are living in South California or something like that (e.g. SF Bay area)... anyway, my advice is: buy more single family houses, hold it, rent it out (try to manage these property by yourself to cut the cost)... and later when you have 5+ houses, convert them into commercial real estate with 1031 exchange, and get a professional property management company to manage your commercial property, and get ready to retire..
chuzzlewit said: First he says this is his 3rd year on the job, and he started at 50K. Then he says he's been maxing out his SEP, IRA, etc. for 9 years, since he was 16. Something doesn't add up, most 16years olds I know have other commitments (like school). I guess this guy's so smart he dropped out of middle school to earn 100K a year, yet he can't quite figure out if he can write off his gambling losses at age 25.
I have had part time jobs since 16 years old. I am fortunate my parents paid for everything until i left school. I've had a sep ira because i had my own company that i did consulting with and IRA with various jobs.
I am not really looking for negativity, just suggestions on what to do next or to stop what i am doing and diversify of some sort..if so what should i move into.
Bycracky said: MazdaMP said: reckner77 said: I call shenanigans!do you believe me that i have 4398472398473289 apartment complexes and i'm only 13?
While we're feeding the trolls, I used to buy and sell entire star systems in my youth food...mmmm!
Daniel01
Member
posted: Apr. 26, 2005 @ 11:21p
MazdaMP said: Bycracky said: MazdaMP said: reckner77 said: I call shenanigans!do you believe me that i have 4398472398473289 apartment complexes and i'm only 13?
While we're feeding the trolls, I used to buy and sell entire star systems in my youth food...mmmm!
I don’t know forget the rentals … sell the houses cash in all assets and bet it all on Red You only live once
EDIT - dont neg this thread! It has so many negs, its falling off peoples radar screens! This, combined with OP's other threads, are destined to become FW Finance Classics ____________________________________________________
Didn't you know that red is the new green? There should be a search function for the lowest rated threads.
Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.
Members of our community may attach files to a post in accordance with the User Agreement. FatWallet is not responsible for the content, accuracy, completeness or validity of any information contained in any attached file. Files have *not* been scanned for viruses. Be especially wary of Excel files which may contain malicious content.
