What is "wealthy?" Most millionaires say they're not

But there comes a point when it may be time to quit "aspiring" and start "enjoying" . . . or just realizing how lucky you (probably) are vis a vis many other people.

A life spent constantly trying for promotions and always being resentful because someone else is doing "better" sounds like a pretty unhappy existence.

 

If the four properties are rented at a 80% rental rate, that is still $4,000 a month or $48,000 a year.

Taxes will take about $1,000 per property, so we are down to $43,000. Maintenance, maybe $1,000 per year per property. Let's say $2,000 a year, which is on the high side, cut you down to $34,000 a year in profit.

If you set up an LLC for $500 and call this a business, you can have the business purchase your car and you also open up a ton of potential tax write offs like mileage, phone, internet, etc...

Also, property tends to appreciate over time, so let's be conservative and say 3% growth on that. It might not be happening now, but it will soon. So that is an extra $15,000 a year.

Taxes can claim a portion of your $34,000 profit, so you might be down to $25,000 a year on these properties, not counting the increased value of the real estate over time. You can add another $12,000 a year if they stay rented at 100%.

So a 5% ($25,000) to 7% ($35,000) yearly return, after taxes.

 

You offered information, then get pissy about a friendly follow-up inquiry?

 

It is not nearly as easy as it was even ten years ago. Also, wait until you get shitty tennants and how time consuming it can become.

 

True. That is why I go to teachers and nurses first when I have an opening.

 

I don't wanna give YankeeFan too much info for his stalking of me, he already has a file of every post I have ever made anywhere on the internet.

 

Also re: the rental real estate. A good rule of thumb I have read is that you should get, AT A MINIMUM, around 2% of the purchase price in monthly rent to even begin to consider it. That is, a real estate investment only begins to cross over into the positive territory (at least as compared to other investments), when the monthly rent is at or above 2% of the purchase price (i.e., $2,000 per month for a $100,000 property). While that's a general rule, I suspect it's a pretty good one.

 

Late to the party, but I am guessing, by any useful world standard, everyone currently writing on this thread is absurdly wealthy. Homeless Americans live better than the middle-class in many third world nations.

 

That rental number seems absurdly high.

The house I sold two years ago in Florida went for $220K. I cannot imagine the buyers --- if they decided to rent it out --- asking $4,400 per month for that house.

At the time I sold, rents for properties like mine were around $1,800/month.

 

To answer the question, I would sit down with a financial adviser and see how most of that money can work best for me.

I wouldn't retire or quit my job for $1 million (I would for $30 million), but I would want to be able to live off the interest however it was set up.

That said, I would set aside enough to buy a modest 3-bedroom house (maybe even splurge for something in the $150,000 range), and a decent car (perhaps something with less than 50,000 miles).

Unlike apparently many lottery winners, I would plan for the inevitable: larger taxes (especially on winnings, property and income), larger fees for things such as car tags, and a few vacations I would like to take.

It would take way more than $1 million to get me to buy a new car (they depreciate as soon as you leave the lot). And I don't need -- nor want -- a mansion. Don't want a boat, or an RV. I would like to have a Dan Quisenberry replica Royals jersey, so I might splurge on that.

 

My wife's sister's husband brings home as much in two months as I make in a year. That's OK. We have full use of their beach house and don't have to pay hurricane insurance.

 

On the rental property: A few years back a buddy of mine got the bright idea to invest in some low-rent shit holes to rent. He bought four houses and trailers. One was a converted old store building where people lived. In all his wisdom, all he thought he had to do was drop by and collect the rent checks each month. We told him right from the start that anyone willing to live in those places wouldn't be able to pay the rent.

He didn't listen. It wasn't long before I was going with him to collect items such as a set of tires and a government-provided scooter in place of the rent. He even had one old lady's social security check endorsed to him. His tenants would tear out metal and take it to the scrap heap for drug money. He had one renter ask to borrow a string trimmer and mower to take care of the place to cover his rent. The dude took the stuff to a pawn shop. Once he got a call in the middle of the night from the cops. They wanted him to come with a key because a guy had committed a burglary and was hiding in one of the houses.

It was the ultimate "We told you so, dummy!"