Blog 3
Lisa Li
Principal
Licensed Broker
Phone: 617-335-4829
e-mail:
lisali.realtor@gmail.com
WeChat: lisa_fengli00
Proficient in self-housing and rental housing in all good school districts and high-end districts in the Greater Boston area. If you need to buy or sell a house, please contact me.
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All blogs on this site are original, please do not plagiarize, all opinions and experiences are personal opinions, and are for reference only.
The feeling of being a landlord --- it's great!
In the first two articles, I focused on the investment in self-housing, which should be planned first. During the few years when we were waiting for the appreciation of our own housing, rental housing came into the picture! Probably the U.S. government is particularly afraid of the homeless people on the streets, so it gave the landlords a lot of tax incentives. Let’s put it this way, if you earn wages from 9 to 5, based on the tax rate of a couple’s annual salary of 160,000, In Massachusetts, you have to pay about 38% of taxes (federal tax, state tax and social security social security tax). If you have a high income, you are more likely to collect more than half of your income to pay taxes. If you speculate in stocks, you will have to pay a lot of taxes in the short and long term. Only investing in rental houses, you basically don’t need to pay taxes! Really, as long as you plan properly, your rental house does not need to pay tribute to Uncle Sam on the books, which is equivalent to free cake! Therefore, my investment theory is to live in the left hand, rent out the right hand, buy at intervals, and walk on two legs. Self-housing manages a one-time large amount of money that does not need to pay taxes, and renting houses manages the same money that does not need to pay taxes every month. If you are not careful, if the value-added of the rental house is relatively large, you can exchange it for better or more rental houses. , also do not need to pay taxes! . . . There are staple food, snacks and some small wine to drink, this is called a big meal!
Someone asked, isn't this pie in the sky? It is true, so listen to me. Rental housing has the following magical features:
1. Borrow chickens to lay eggs, use small and big leverage: All real estate has this point, but the advantages are more prominent in rental housing, because this is an asset with income, as an investment, it must be counted income. Generally speaking, for the sake of stability, I suggest that the down payment on rental housing is usually 20-30%, so that even if there are some vacancy rates, there is no need to stress too much. Making money is important, but the quality of life must also be guaranteed.
2. Cash flow: People who often invest or start their own companies must be particularly sensitive to this word. The calculation method of cash flow: the monthly rent received, minus all expenses (loan, land tax, management fees, repair costs, and other expenses borne by the landlord), the rest is cash flow. When buying an investment house, you must be rational , as long as the cash flow is a negative asset, no matter how hyped it is, or there are many people robbing houses, it has nothing to do with you, just leave. All these boasting and unprecedented grandeur are just expectations for a bright future. If the actual figures do not support it, then everything is vanity. Don't talk about long-sightedness here. What you want to buy is assets that are beneficial to you, not heartbeats. If others can put in more down payments to get positive cash flow, that is their strength, and if you don't have that strength, get out of the way in time.
3. The tenant helps you maintain the house: You see, in addition to the down payment you have to pay yourself, a good investment house has positive cash flow, that is to say, your house is maintained by the tenant for you. Don't pay a penny yourself, just collect money. If your loan is paid off in 30 years, then after 30 years, such a large house will be real and 100% yours.
4. Appreciation: Generally speaking, the house is a sharp weapon against inflation, which means that it will increase in value every year on average, so you are not only collecting rent, but the house itself will grow from a small pig to a big fat pig. Just wait for the meat!
5. Free income allowed by tax incentives: There are too many items that can be deducted from rental income, some of which are:
- Depreciation depreciation deduction, the algorithm is: (house selling price - land price) / 27.5, this number can be deducted every year when filing tax returns. If the house is worth 500,000, the depreciation deduction is $18182 a year, which is a huge deduction
- loan interest deduction
- Land tax deduction
- Home Insurance Deduction
All expenses paid by the landlord are deductible, such as legal fees, loan brokerage fees, transportation expenses, repair expenses, Supplies, coal and electricity expenses, management fees, cleaning fees, advertising fees, etc.
Therefore, a good rental house is definitely for you to earn money while lying down, commonly known as Passive Income. Generally, I suggest to make a rough plan. After calculating the income and expenses, the income and expenditure can be 0, which is the best, and there is no need to pay Taxes, and the tax bureau will not let the taxation bureau keep an eye on them. However, some people have too much income from other investments and need to use the negative income from rental housing to offset. In this case, the upper limit is -$25,000. I am a real estate person, so I basically don’t have this trouble. People, sometimes stocks make too much money, and they will use this. However, the annual income and expenditure of real estate is not as good as the roller coaster of stocks, so the annual tax return for the same house varies too much, and it is not a long-term solution.
Next, I want to talk about what kind of investment house is the hen that lays eggs, and what kind of investment house will make you miserable and haggard. In short, with a rental house, your life will undergo a lot of changes. Are you ready? Ok? Stay tuned. . .