Tools of the Rich #1 – Depreciation

Tools of the Rich #1 – Depreciation

An October 13th, 2018 article in the New York Times discussed how Jared Kushner avoided paying almost no federal income taxes several years running. According to the article, Kushner, who has a net worth of $324M plus, paid little to no taxes from 2009 through 2016.  Just by my first two sentences, you can see the slant of the article – how things are tilted unfairly toward the rich.

To avoid paying taxes, the article pointed out that Kushner used “depreciation, a tax benefit that lets real estate investors deduct a portion of the cost of their buildings from their taxable income every year.”

Before we get too far into this post, let me state one thing – I didn’t vote for the current president nor do I like how he’s running the White House.  That will be the most political I say on this blog as I’ve tried to be very apolitical.  However, I’m going to defend Mr. Kushner’s use of depreciation throughout this post and I don’t want anyone to believe I’m doing so for political reasons.  I’m doing it strictly because it’s the right thing to do.

As we get started, let me be clear.  The depreciation “tool” is available for every real estate investor, but you must get in the game to use it.  Otherwise, you’ll just be standing on the sidelines, wondering how come there are others running up and down the field.

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Do the Hustle!

Do the Hustle!

On January 4th, I released The Side Hustle, a self-published crime fiction novel.  I didn’t seek a publisher for this novel for a couple of reasons.  I’ll get to that in a bit.

Before I do, let me tell you about the book.

The Side Hustle is about the murder of Jacob Kidwell, a personal finance blogger.  Jacob’s life was seemingly perfect, but during the investigation, it’s discovered that something dark lurked underneath his life.  That something led to his death.

Two major crimes detectives, Quinn Delaney and Marci Burkett, are assigned the case.  They’ve been partners for several years and are a good team.  However, something is off in Quinn’s life and he’s not clueing Marci into what’s occurring with him.  This creates tension in their partnership as he hides what’s bothering him.

Also featured in The Side Hustle is Kirby Willis, a young man whose success is built on self-discipline and self-sacrifice.  He’s a friend of Jacob Kidwell as well as a personal finance blogger.  When Kirby discovers that his friend has been murdered, he wants to know why.  He begins poking his nose into places he shouldn’t.

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If You Can't Read This, You're Not Reading Enough

If You Can't Read This, You're Not Reading Enough

On the previous New Year’s Eve, I wrote a post (How Many Books Did You Read This Year?) that detailed the number of books I read (30) in 2017.  This was in follow-up to an earlier post, You Are What You Read.  Personally, the latter article is one of my favorites and in it I shared my personal reading plan.

With both of those articles in my mind, I started 2018 fresh and set a reading goal for myself.  I would read 52 books over the year.  For those terrible with math or a calendar, that’s one book a week.

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Quick Update - Hang in there!

Quick Update - Hang in there!

 Okay, so you’ve probably noticed that I’ve been a little quiet over the past several weeks.   It’s been a busy period of real estate acquisitions and writing (albeit not blog work).  I’ll fill you in on the real estate stuff in coming weeks, but for now I’m going to give you a quick sneak peek into the upcoming writing projects.

First, I have a self-published novel that I’m targeting for release on December 1st, 2018.  I’ve worked on this story for over a year and half now.  I’m extremely excited about this one and there is some method behind the thought process on self-publishing.  Those mystery readers who are into personal finance will dig this story line.  I’ll do a separate post on this soon.

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Lessons from The Force

Lessons from The Force

When most people learn that I formerly was a police officer, they raise their eyebrows and will usually say something like, “Really?  Why would you quit?”

To most, the idea of being a police officer has an exotic feel to it.  It’s because they have envisioned the Hollywood cliché of law enforcement – heroic exploits of men and women in a daily struggle against crime and corruption.  While there are some of those moments on the street, that’s not what happens behind the scenes within the department.  Most of the stuff that happens is boring, day-to-day decisions just like you have at your job. 

Who do I want to work with? 
Am I correctly filling out this new paperwork?
What educational path should I pursue for my career?
Where should I go to lunch?

Most of that’s not interesting to share.

However, why I got into law enforcement, what I learned about it and personal finance, and why I eventually left are things I believe are worth sharing.

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Are You Telling Your Friends and Family Too Much?

Are You Telling Your Friends and Family Too Much?

A friend of mine, Andrew (not his real name), is married with two kids.  A few years ago, his life was like many Americans – he carried consumer debt, had no savings, and was stressed out.  Life was not turning out the way he’d hoped.  Then he realized he was responsible for the mess he was in and set about to change things.

He worked hard to improve his financial position.  He eliminated all his consumer debt, leaving only his home mortgage which he has now paid off more than half.  He owns a single rental property which he recently paid off completely.  Due to his and his wife’s diligence in paying down their debt, his wife recently stopped working to stay home and care for their children full-time.

Andrew’s family lives in a nice home, but he and his wife drive older, paid-off cars.  They don’t take annual, expensive vacations.  They aren’t flashy.

Andrew listens to financial podcasts like The Money Peach, reads books like The Richest Man in Babylon, and is excited about his future.

Although some would like to think so, this isn’t easy for them.  Andrew works two jobs.  One is seasonal while the other is commissioned-based so there are good months and bad months, good years and not-so-good years.  This requires frugality and communication.  Sometimes the couple is on the same page about purchases and sometimes they are at odds (like all of us), but they are always focused on the same goal – staying debt free so they can live a life that most can’t achieve.

While I’m in the office, I touch base with Andrew about our financial journeys.  It’s one of our favorite topics to weigh-in on and we’re very open about how each of us is doing.

One morning recently, he was slightly bothered.  I asked him what was wrong, to which he replied, “I learned something disturbing this weekend.”

“What?” I asked.

“You can’t talk about how you’re doing to most people.  They’re either going to be jealous or expect you to start paying for everything.”

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What are the Poor Four?  And are They Keeping You from Being Wealthy?

What are the Poor Four?  And are They Keeping You from Being Wealthy?

I read the most astounding paragraph in the June 19th, 2018 edition of USA Today.  In Wealth of Millionaires Surges 10.6% to top $70 Trillion for the First Time, David Carrig was reporting on the World Wealth Report 2018 recently released from global consulting firm Capgemini.  It was the third paragraph of the article that really caught my attention,

The number of high net worth individuals (HNWI) – which Capgemini defines as those having investable assets of $1 million or more excluding primary residence, collectibles, consumables and consumer durables – grew almost 10 percent, or 1.6 million to 18.1 million in 2017.

After reading the title of the article, I wondered if this was supposed to be a shocking paragraph?  Was it something to get the readership wound up enough to raise their collective fist in anger and yell, “Life’s unfair?”

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The Investment Property Process

The Investment Property Process

If you’re looking to purchase an investment property, whether it be a residential single-family home or a commercial building, the purchasing process is very similar.  While there are some differences between the two processes, I thought they are close enough that I thought we should take a quick run through to get a discussion in place for future articles.

For discussion purposes, residential properties are single family homes, duplexes, triplexes, and quadplexes.  Commercial properties encompass everything else including retail, office and industrial buildings as well as multi-family projects of five units or more.

The investment purchase process for both residential and commercial properties looks like this:

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