Chris Sciora

Comments:

• Ah, also forgot to mention the raging stock market returns from the past ten years. Prices tend to skyrocket across the board when people are feeling wealthy regardless of whether it's money that can be spent safely.

  Post: Talk About Hot

  Link to comment from March 23, 2022

• Actually, I don't think it's luck or timing. It seems like historical averages. When we started investing in real estate, my rule of thumb was property values doubling in about 15 years. That's translates to about 4.75% annual appreciation which is the historical average (close enough depending on who's arguing about it). Most everyone seems to forget that from 2008 through 2019, real estate growth was either flat or still recovering from 15 - 50% declines when the market crashed in 2008. Although our home has gone up in value tremendously over the past two years, the cumulative appreciation over the past 14 years is still only double the original sales price. Most likely it will keep shooting up for another year or two and level out again for the next decade. That's pretty typical for most of the properties I've seen around the country that have sales data over fifteen years. It's skewed because all the growth is happening in a relatively short time window due to Covid mobility, low mortgage rates, buyer demographics and reduced home building after the last crash from developers going bankrupt and choosing another line of work.

  Post: Talk About Hot

  Link to comment from March 23, 2022

• You're right about high earners being excluded. That's why there's an explicit income cap for making Roth IRA contributions (despite the availability of Backdoor Roth contributions). However, it's been almost fifty years and Roth IRAs still hold only a tiny fraction of total retirement assets. In this particular case, it also sounds like the Roths are being funded with relatively high-tax dollars which is good news for the government. https://monosnap.com/file/u3STpz7h9nB0DipBq4WeuCBycvchT3 Personally, I love this strategy along with using Roths for active business investments. My young kids (12 & 10) have shiny new Roth IRAs with a bit of money invested. Next step is putting together enough earned income to make them worthwhile over the next ten years.

  Post: Gifts With Interest

  Link to comment from March 9, 2022

• Source of income matters far more than size of income when deciding whether to do your own taxes. I don't believe any W2 employee or self-employed business owner running a service business will benefit from using a CPA or even a tax preparer. After owning multiple business and working with a number of different CPAs over the years, it always ended up being the particular CPA that determined whether the cost was justified. I've paid $500 / hour for garbage advice followed by being billed to file amended returns after pointing out their mistakes. Decided against paying that invoice. One CPA firm seemed to believe that several weeks to return calls and emails was acceptable. I disagreed. There were often philosophical differences in how we'd approach filing taxes. The tax code is complex and ambiguous. CPAs often interpreted rules in different ways depending on whether they were conservative or aggressive. That was particularly true for CPAs pushing outside of their comfort zone of expertise or who simply preferred particular viewpoints for whatever reason. e.g. LLCs are awful!!! vs. Always use an LLC!!! The least useful advice came from someone who wouldn't actually make a professional decision or offer any alternatives to things I was already doing. They would outline three different possibilities and say "What would you like to do?" My answer was usually something like "If I knew that, I wouldn't be paying you hundreds of dollar for advice after talking with me for an hour." It took five years for me to discover MERP plans only to find out my CPA had one herself for the past decade and never bothered mentioning it. Probably 1 out of 3 were a good fit for me.

  Post: 22 Tax Season Tips

  Link to comment from February 23, 2022

• The lessons are good, but you're mistaken about some of the rules. Properties are required to be auctioned to the highest bidder. That's one of the things that speeds up the game. It also allows the player landing there the possibility of acquiring it for under list price. And while you're right about zero rent when there's a mortgage, that because you're required to first sell off all house and hotels before mortgaging the property. You're no longer a landlord at that point. https://www.hasbro.com/common/instruct/00009.pdf The most important lesson is learning how to negotiate trades with other players in order to obtain monopolies (all properties in the same color group). If no one is willing to do that, the majority of games will end in a stalemate as shown by a zillion (yep, that the exact number) of Monopoly simulations that I've seen.

  Post: Advance to Know

  Link to comment from February 13, 2022

• The necessary paperwork is readily available from sites like Legal Zoom or real estate investor sites. If you're uncomfortable using those directly, you can hire an attorney for a few bucks to review or make changes. Although they're overly complicated, you can also use the same "official" boilerplate docs that Realtors use. Either the owner, attorney or title company can file with the county clerk. Some states require attorneys for closing in which case they'd handle all the paperwork. My wife usually filed for our own sales. In Colorado, it was one or two pieces of paper and a nominal fee.

  Post: Cutting Their Cut

  Link to comment from February 13, 2022

• 6% commissions are past history at this point, but I'm still surprised at how many people pay 5% instead of using a discount or flat rate broker. Those provide exactly the same services at a lower cost. Unlike FSBO, the seller doesn't have to do anything. The problem facing the realtor industry is the same as in many others - technology has automated most or all of the tasks once traditionally done by the Realtor. Something like 70% or more of people research online and bring specific listings to the Realtor. Showings are handled automatically with internet connected lockboxes that can provide access at particular times. Offers, closing documents and revisions are handled online with services like DocuSign. The majority of valuations are now handled through algorithms. 3D virtual walkthroughs are an excellent option to live showings and have only grown more popular during Covid. We're traveling for a year and I'm writing this while renting a home that was listed for sale on Feb. 1st in a *very* popular area. Aside from a handful of text messages to coordinate showings, the real estate agent is basically non-existent. The photographer and 3D photographer are the only people we've seen aside from prospective buyers. At a listing price of $925K, the sellers agent will receive over $45,000 for the sale. I understand that will be split with the buyers agent who typically gets 2.8% based on MLS conventions. That leaves the buyers agent with $20,000 for listing a property in one of the hottest markets in US history with a typical closing in 39 days. That's pretty tough to justify in my mind. In contrast, Redfin offers full service agents to sell your home for either 1.0% or 1.5% (plus the additional 2.8% buyers agent fee). If you're willing to take the full FSBO route, it's only a few hundred dollars to have it placed on the MLS. I've since learned that the 2.8% buyers fee is a convention, not a requirement so you could potentially offer far less in the listing. Is any buyers agent really going to say "Sorry, I'm not willing to show you the property that you just found because the fee isn't high enough?" Pretty doubtful. The scare tactic about selling undervalue is exactly that. It's in the agent's best interest to sell as quickly as possible regardless of price and the easiest way to accomplish that is leaning toward the lower end of estimated value.

  Post: Cutting Their Cut

  Link to comment from February 13, 2022

• To my reading, both Georgetown reports are chock full of data with little useful knowledge. The economic value report states that STEM and business majors representing about 46% of graduates earn significantly more than all others. That's flatly contradicted by the ROI report which states liberal arts college graduates earn about the same (actually a bit more) than than engineering schools. Presumably, engineering schools would be pumping out more STEM graduates in higher paid careers, no? The bigger problem with the ROI report is completely ignoring the more than half of enrolled students who never graduate with a degree. Do they have a negative ROI? Breakeven? Who knows. Overall, you end up learning that some majors and some graduates within those majors earn significantly more than others over a lifetime. And those same people typically earn significantly more than high school graduates. No one needs to read a fifty page report to reach those conclusions. All of these kinds of ROI reports I've seen over the years universally end up concluding that a college degree is the ticket to success. High school graduates will limp into retirement after a lifetime of poverty. The main problem is the underlying assumption that high gross earnings translates directly to high net worth. That simply isn't true.

  Post: College Math

  Link to comment from November 27, 2021

• The overall statistic is correct, but graduation rates are far lower for open admission schools and not particularly selective for-profit schools. Only about 1/4 - 1/3 of the students receive a degree in six years from those institutions. Clearly, many unprepared and unqualified students are being shoveled into degree earning programs that shouldn't be there. There's no end of suggestions to fix the problems, but my two favorites always come down to money. Eliminate all co-signers on loans and allow student loan discharge in bankruptcy. After those offending schools start eating half of the tuition dollars being billed, they will magically start finding ways of properly identifying students who should be enrolled in the first place.

  Post: College or Plan B?

  Link to comment from September 5, 2021

• Well, one obvious downside is you'll never beat the market. Since that's tremendously important to a huge chunk of brokerage firms, professional traders, financial advisors, fund managers and wealthy people, it's hard to imagine indexing going beyond a minority of investors. Indexing is literally saying you're willing to accept average performance. That's completely unacceptable to most investors regardless of how many stories they read about ending up with more money in the end. Everyone wants bragging rights. The earlier comment about hitting a bear market and looking for better returns elsewhere is spot on. That's when I think the popularity will wane. Who hires a coach to help them be average?

  Post: Is there a downside to the current popularity of indexing?

  Link to comment from August 7, 2021