How Hard is it to Invest in Real Estate?

There was an interesting article written by Scott Trench who recently wrote an article about how easy it is to invest in Real Estate. In the beginning he talks about how some of the most successful entrepreneurs started off with nothing. That’s a very typical story of how entrepreneur’s become millionaires. Many of us has read many stories about these successful people, but what about working class or middle class people?

In this article, he personally talks about how he was able to achieve his financial freedom through gradual investment of real estate while working his full time job that he personally loves, while making medium to medium high income. It is true that most people would love to live that kind of lifestyle of being able to make additional money on the side while making money from their jobs that they love. That is the dream! However, later in the article he talks in detail about how every single investment always has a risk, which is true! Any investment always comes with risk, no matter how big or small. Additionally, there is some commitment involved, which is one of the reasons most people could not leave their jobs to pursue an investment journey to reach financial freedom.

At the end of the article, Trench states that real estate investing does not have to be so hard. Although there are some instances where it is easy if you make it to be. There are a few considerations to think about before you get into investing property.

The Good, Bad, and Ugly of Real Estate Investments states that knowing your market well would be beneficial. Looking for deals that are underpriced for one reason or another would be a good idea, because you won’t know which deals are underpriced unless you have a good sense of how properties are priced.

And another problem that you may have to consider is who the tenants are. There are some stories where tenants would bring in stolen merchandise into the property and store them in there. Another instance would be, party goers, they may wreck your property which will incur many costs and repairs, which will cost more than what you are earning from them for rental payment. And another is when tenants treat your property like its theirs, painting the homes, adding unnecessary items to the home that stays in the home etc. Lesson here is to make sure to check your tenants on a frequent basis.

Overall, investing can be easy, but always remember to consider some of these facts as they can be very helpful in your future obstacles that you may face when you invest in real estate. 

**Article Based on Biggerpockets.com**

Corporate, Personal Income Taxes: EDD Extends Deadlines for Employers Affected by Wildfires in Los Angeles and Monterey Counties

The California Employment Development Department (EDD) is extending deadlines for employers in Los Angeles and Monterey Counties who were directly affected by the wildfires that began on July 22, 2016. Qualifying employers may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. Written requests for extension must be received within 60 days from the original delinquent date of the return.

Baby Boomers- It’s Time to Spend Your 401(k) and IRA – Pay Taxes or Not

A generation crosses a magic finish line and finds the IRS waiting. Here are some tips to minimize the bite.

At age 70½, the bill comes due on all those tax-deferred savings accounts we’ve been building, and this week the oldest baby boomers will begin to reach that finish line—with many millions more to follow.

Those waves of retirees will be required to start pulling money from their IRAs and 401(k)s. Following an Internal Revenue Service formula, these annual withdrawals can push you into a higher tax bracket, so CPA can put a lot of energy into building strategies to minimize the tax bite.

To be most effective, you need to plan far in advance of the magic age. So anyone with sizeable savings may want to get familiar with how these required minimum distributions work.

1. While you have the option of tapping tax-deferred retirement savings accounts without penalty starting at age 59½, you are required by law to start taking distributions from your IRA, 401(k) and other kinds of tax-deferred accounts a) by April 1 of the year after you turn 70½. From then on, you have to take money out before Dec. 31 every year. b) If you are still working at that age and participating in your employer’s 401(k) plan, you may be able to defer required minimum distributions from that account.

2. The amount you must withdraw is tied to an IRS formula based on life expectancy. For example, you just turned 70½ and have one $600,000 IRA. An IRS sets your distribution period of 27.4 years. Your $600,000 divided by 27.4 equals about $22,000. Whether you want it now or not, that’s what you have to take out.

3. The penalties for noncompliance are steep. If you forget to take a required minimum distribution, or don’t withdraw the full amount, the IRS wants 50 percent of the amount you didn’t withdraw. You can avoid this by having your CPA to calculate your required minimum distributions for you and automatically transfer the money to an account with them or your bank, a service many offer.

4. You can make “qualified charitable distributions” of up to $100,000 a year. That way, required minimum distributions won’t be included in gross income. You have to be careful.  The company holding your tax-deferred account must send the money directly to a qualified charity.   You need to consult with your tax professionals.