Great show today guys, really appreciated the discussion on that last question from all 3 of you. Puts things into perspective, it's not all about the numbers..
I’ll chime in on the housing supply. I’m an underwriter for a regional bank in the SE financing new home construction. Yes, home builders themselves are more conservative post-GFC. But, lenders are also much more conservative in their construction loan portfolios. They are very wary of lending out too much for land/lot development which has constrained lot supply for new homes. They are also very wary of how much they’ve leant for “speculative homes” (homes that are started without a buyer under contract)
I’ll also add that the reason banks are more conservative in loan portfolios is because of stricter portfolio metrics handed down by the regulators at the FDIC post-GFC. As you can tell, we are still feeling the reverberations from the catastrophe that was the GFC
I’m 45 and own 5 properties between Washington and Arizona, but haven’t bought anything since 2017. I bought when people were afraid to, now they’re the same ones complaining about not being able to buy one now
I wanted to do a portfolio cash out refi in 2020, but banks were tightening their lending. I would sell if I had a better place to put the money, but the low rates, cash flow and annual depreciation is too good to give up for now
Imho, companies like Airbnb have unintentionally caused a large amount of the issues surrounding the lack of affordable housing and ability to purchase a home. A leisurely look on Airbnb for any area shows just how many houses are currently empty and cannot be purchased. I am not saying Airbnb is an evil business (quite the opposite according to it's stock price), but I do find the prioritization of owning multiple homes simply to rent them out poses ethical issues that are manifesting themselves in the larger economy. Yes, I have used Airbnb in the past, but from now on I plan to forego using it even if it will save me a few dollars and provide more space for me. Feel free to disagree as these are fresh thoughts I am still working through myself.
I didn't answer the RSU question exactly as it was asked. I answered it in terms of what to do after vesting. Here's the answer for those interested: RSU's are treated as supplemental income/compensation, and taxed at ordinary income. If someone's expecting a huge tax bill, they should sell to cover and pay their taxes up front and hope the actions they take after will result in a refund. If they're looking for ways to reduce their tax bill, it's the same protocols as for ordinary income: -losses offset up to $3k -max out pre-tax 401k -max out HSA and FSA if available -Make Charitable donations or use a Donor Advised Fund and/or charitable trust -don't let taxes undermine the huge win. enjoy it!
You all are looking at institutional purchases on your charts for homes, not overall institutional ownership of rentals. I’d be interested to see THAT percentage, which I would guess to be much higher due to my experience with the rental market.
Great show but bad answers on the Tax planning & RSU question: - Gifting to kids doesn’t help the tax bill - The DAF allows a current yr deduction so that can help. But to fully take advantage of the DAF you want to give highly appreciated shares(from the brokerage) not RSU’s that will not have a gain at vesting. - He should diversify, not hold the implied volatile position. - Standard RSU withholding is 22% generally done on the employees behalf at vesting, it might be worthwhile to withhold more in this instance given what appears to be a large inflow of funds taxes at ordinary income rates.
correct, there are no RSU tax mitigation options like gifting them to a DAF or a charity. Vesting = ordinary income, tax is due. The only option is to diversify the exposure to the single stock as they vest. Vesting options is another story in that you control when to recognize the gain, but those options are unregistered and typically are not transferrable. Sure they could donate the proceeds but thats nearly the same as spending it.
Something that people don't take into account is that if they OWN a rental, they are effectively lowering housing supply and driving up prices. Part of the problem
I'm confused. Pew research indicates the average number of people per household is currently 2.6. If we are adding 0.81 homes per person, that works out to 1.23 people per new home built. Doesn't that mean we have been building more homes than the number of people filling them in the 2020s? Even in the 2010s, the rate of new home construction was one house per every 2.27 people. The facts don't align with the narrative.
Wouldn't the last couple who just received horrible news about their health status be eligibility for Disability and Medicare, particularly the gentleman. I feel that should be considered. Whether he qualifies now or not it may help them in the future.
The gentlemen with RSUs should remember the tax rate is never 100%. He got a 10 bagger probably without doing anything to contribute to that… stop complaining and just take the money and run
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Great show today guys, really appreciated the discussion on that last question from all 3 of you. Puts things into perspective, it's not all about the numbers..
Duncan had some great perspective in this episode! I loved his advice to quit the job and just enjoy retirement.
I’ll chime in on the housing supply. I’m an underwriter for a regional bank in the SE financing new home construction. Yes, home builders themselves are more conservative post-GFC. But, lenders are also much more conservative in their construction loan portfolios. They are very wary of lending out too much for land/lot development which has constrained lot supply for new homes. They are also very wary of how much they’ve leant for “speculative homes” (homes that are started without a buyer under contract)
I’ll also add that the reason banks are more conservative in loan portfolios is because of stricter portfolio metrics handed down by the regulators at the FDIC post-GFC. As you can tell, we are still feeling the reverberations from the catastrophe that was the GFC
RSUs are normally automatically paid out at vesting, which means, you can't time the tax hit. You just need to deal with it.
I’m 45 and own 5 properties between Washington and Arizona, but haven’t bought anything since 2017. I bought when people were afraid to, now they’re the same ones complaining about not being able to buy one now
ever think of selling any of them now that prices are so much higher? or just like the income?
I wanted to do a portfolio cash out refi in 2020, but banks were tightening their lending. I would sell if I had a better place to put the money, but the low rates, cash flow and annual depreciation is too good to give up for now
I wish I had a father like you
@@JoeOh100 me too
Fair point
-- guy who was scared to pull the trigger before '21
Imho, companies like Airbnb have unintentionally caused a large amount of the issues surrounding the lack of affordable housing and ability to purchase a home. A leisurely look on Airbnb for any area shows just how many houses are currently empty and cannot be purchased. I am not saying Airbnb is an evil business (quite the opposite according to it's stock price), but I do find the prioritization of owning multiple homes simply to rent them out poses ethical issues that are manifesting themselves in the larger economy. Yes, I have used Airbnb in the past, but from now on I plan to forego using it even if it will save me a few dollars and provide more space for me. Feel free to disagree as these are fresh thoughts I am still working through myself.
I didn't answer the RSU question exactly as it was asked. I answered it in terms of what to do after vesting. Here's the answer for those interested:
RSU's are treated as supplemental income/compensation, and taxed at ordinary income.
If someone's expecting a huge tax bill, they should sell to cover and pay their taxes up front and hope the actions they take after will result in a refund. If they're looking for ways to reduce their tax bill, it's the same protocols as for ordinary income:
-losses offset up to $3k
-max out pre-tax 401k
-max out HSA and FSA if available
-Make Charitable donations or use a Donor Advised Fund and/or charitable trust
-don't let taxes undermine the huge win. enjoy it!
You all are looking at institutional purchases on your charts for homes, not overall institutional ownership of rentals. I’d be interested to see THAT percentage, which I would guess to be much higher due to my experience with the rental market.
nick said doctor ripping heaters! love it
Jeez. Does everyone make 200k these days? I'd love to "not to brag" someday
Great show but bad answers on the Tax planning & RSU question:
- Gifting to kids doesn’t help the tax bill
- The DAF allows a current yr deduction so that can help. But to fully take advantage of the DAF you want to give highly appreciated shares(from the brokerage) not RSU’s that will not have a gain at vesting.
- He should diversify, not hold the implied volatile position.
- Standard RSU withholding is 22% generally done on the employees behalf at vesting, it might be worthwhile to withhold more in this instance given what appears to be a large inflow of funds taxes at ordinary income rates.
correct, there are no RSU tax mitigation options like gifting them to a DAF or a charity. Vesting = ordinary income, tax is due. The only option is to diversify the exposure to the single stock as they vest. Vesting options is another story in that you control when to recognize the gain, but those options are unregistered and typically are not transferrable. Sure they could donate the proceeds but thats nearly the same as spending it.
Convo was about the stock after vesting not the RSUs
@@Endurehybridtrainingconvo missed the point of the question.
Something that people don't take into account is that if they OWN a rental, they are effectively lowering housing supply and driving up prices. Part of the problem
But if you’re in the rental marketplace all the homes are institutionally owned. Not running into many houses owned by a single owner
I'm confused. Pew research indicates the average number of people per household is currently 2.6. If we are adding 0.81 homes per person, that works out to 1.23 people per new home built. Doesn't that mean we have been building more homes than the number of people filling them in the 2020s? Even in the 2010s, the rate of new home construction was one house per every 2.27 people. The facts don't align with the narrative.
I buy small houses that I light renovate for max 100 k, that can rent for 1000/month. The calc works, have 7 units now. Its going to be my pension
Prob should give the last question a hefty discount for a year, or for few hours' advice...since you used their question on air. Just a thought.
They gave them a free financial plan.
Fire up chips!
Wouldn't the last couple who just received horrible news about their health status be eligibility for Disability and Medicare, particularly the gentleman. I feel that should be considered. Whether he qualifies now or not it may help them in the future.
The gentlemen with RSUs should remember the tax rate is never 100%. He got a 10 bagger probably without doing anything to contribute to that… stop complaining and just take the money and run
My heart goes out to the the last couple, they need a move to India or Mexico or Turkey.
Average guy here. Own 3 rentals. Definitely don't know what I'm doing 😂
thank you for confirming my priors ;)
Same
Some people want to rent , so don’t blame mom and pops …. They are better landlords then the govt or big corporations