Real Estate Investing

If you're like me, watching little kids do an Easter egg hunt is a pretty beautiful thing. But I always feel bad for the littlest of the pack.

It always seems so traumatizing to see that little one run for an egg she has her eye on, only to have a bigger kid sweep in and steal it at the last second. Hi, it's Doug Hastings with Moody Radio, and unfortunately this same kind of situation has become a traumatizing reality for families all across the country. Families are out searching and finding their dream home, only to have it pulled away by another hunter at the last second. Which is why I'd really like you to meet my friends at United Faith Mortgage. Unfortunately, this faith-focused mortgage team can't scare off the other hunters, but they can very quickly get you pre-approved and make it look as good as possible to sellers.

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Most people don't think of author Mark Twain as a financial advisor, but he did occasionally weigh in on investing. One of his pithiest quotes is, by land, they're not making it anymore. Hi, I'm Rob West, and while many a fortune has been made investing in real estate, it's also an easy way to lose money if you don't know what you're doing. Real estate expert Sanford Coggins gives us a crash course today, then it's on to your calls at 800-525-7000, 800-525-7000. This is MoneyWise Live, where biblical wisdom meets today's financial decisions. Well, our guest today is new to the program. Sanford Coggins has nearly 30 years experience in real estate investing. He's the founder and CEO of VisionWise Capital, which controls a portfolio over 50 million dollars in real estate assets. More importantly, he's a faithful follower of Christ, a very good friend, and Sanford, great to have you with us on the program today. Thank you so much, Rob. It's an honor to be able to serve you and your listeners today.

Well, I'm looking forward to diving into this topic. So many of our listeners are thinking about real estate investing and whether or not it would be good for them. Sanford, as someone who's been so successful in real estate investing, I know that you have an overriding philosophy on how you approach this space, and I think that would be a great setup today for you to begin to unpack this topic by sharing that with us. Yeah, that makes me reflect back to years ago when I was introduced to the idea of the difference between ordinary and extraordinary and the fact that it's just a little extra. So we carry that over into our business by virtue of recognizing that serving the investors and our vendors and staying in business as an enterprise is sort of ordinary, but going to servicing our residents and making sure that we serve our city, that we're buying properties in, that's the extra, and we make it a habit of pursuing that extraordinary effort. Well, it's phenomenal because we honor the Lord in doing that.

We serve others, as you said, and when we do that, we put ourselves in a position to experience God's best as well. It's just good for business. Sanford, I'd be interested to know how you compare real estate to other forms of investing, like, let's say, the stock market. You know, 10 years ago, I was actually more active in managing stocks and bonds for investors, and I was prompted to consider, you know, what did those guys in Matthew 25 invest in, in that whole parable of the talents? And I thought about it where one traded and the other one gained, and one of them was not very productive.

But in breaking that open, I realized a few things are true. One is they had a long time to do the investing, and the second thing, maybe more speculative, is they didn't borrow. There's no evidence of that, and apparently they worked by the sweat of their brow, which was consistent with what happened in the garden. And then I thought about the diligence and the laziness and the slawfulness that God talks negatively about means that they actually worked for it. So when I look at that picture and I think about how I want to minimize the amount of borrowing, real estate allows me to do that. I can borrow at a much lesser leverage rate so that I don't have to risk losing the asset to the lender in a downturn, which is what we do, but it requires work.

We just have to actually work the product to make it work for us and for our investors. Well, obviously you're buying real estate investments in a portfolio as a professional investor on behalf of your clients. Let's talk about our listeners for a moment and the opportunity they have to buy real estate as an investment.

So often they're wondering if it's right for them, and in particular, whether or not they should be borrowing to do it. What have you learned in your business and over the years that could apply to helping them navigate that decision about the use of debt in buying real estate investments? I have been so clear in seeing that the greatest risk in real estate is not the real estate itself. It's really the way you structure the financial modeling. And if you over leverage, and I can give you some very specific algorithms to identify just how much leverage you should have on any particular property. But if you over leverage on a real estate deal and you hit a bump in the economy, that's when you lose everything.

That's when you have a recognized loss. And so I'm very clear on the fact that leverage is something we shy away from. We minimize it, but it does boost returns undoubtedly. So we're very, very careful in how we apply it.

Yeah, that's so good. And as we say often here, borrowing is permissible, but clearly over time we want to move to being more and more debt-free. And as you point out, Sanford, in terms of evaluating just the merits of the investment, having that leverage under control, meaning using minimal debt is so key to the ultimate return you can achieve.

Well, we're going to continue to unpack this just around the corner. Is real estate investing for everyone? And what does Sanford think about the housing market?

He's going from California today as an interesting perspective. Sanford Coggins, our guest today, you can find more about him at visionwisecapital.com. That's visionwisecapital.com. Much more to come on MoneyWise Live. Stay with us.

We'll be right back. Thanks for joining us today on MoneyWise Live. Joining me today, my good friend and real estate investing expert, Sanford Coggins, CEO and founder of VisionWise Capital that controls over $50 million in real estate assets. Sanford, you have a unique vantage point into this space being someone who resides in California where the real estate market, let's just say, has been interesting. You've found pockets of incredible value there for your clients, but you said something before the break that was really interesting to me, just related to your philosophy of not only achieving a desirable financial return and serving your investors, but really how you've positioned your company and your real estate portfolio with an intentional focus on serving the residents that actually live in these properties. Talk about that aspect of what you do.

That is a real hot button for me, Rob. I've never felt that you have to be in business of any kind really without everybody winning. And in this case, there's just no reason for the investors to win and the enterprise to win and not have the residents win. So, we treat them with a great deal of respect. My goal is to retain 50% of our tenants when we buy a property because we're going to do a full renovation, and that means that we're going to be increasing rents and some are going to need to move. But we're approaching that goal now, and I think we do it because the day after we close escrow, we actually visit with every tenant, one-on-one or one-on-a-few, and we answer their three greatest questions. The first question is, what's my rent going to be? And we tell them because that's clearly a schematic that we've already worked out. And the second question is, so when are you going to increase my rents or when do I have to move out? And we tell them because that's exactly what we have written. The third question is, what are you going to do to justify the rents? So, we show them previous projects and what we've done to the kitchens and soft-close cabinets and drawers and the various things we do internal and external. At that point, they go out and look for a place to live, and they usually look in a one- or two-mile radius. And we've never priced our product any higher than what's already available, so they tend to stay. And we enjoy that very much. We don't like displacing people. We don't like having them have to change their school district for their children. We host barbecues early on so they get to know one another and develop a sense of community. We have a blast with these residents, and they tend to, by virtue of history, pay their rent because even through this pandemic, we've collected over 94% of the rents because I think they see the landlord as a face and not just sort of a check-receiving entity out there somewhere.

Yeah, and that makes all the difference. Sanford, as our listeners are thinking about real estate investing, and I know many of them are, is real estate investing for everyone, or should some investors stay away? You know, I ponder that question a lot over the years, and I've come to the conclusion it's sort of like is a personal financial plan, a necessary item for everyone.

I think that it is. I think it's for the sake of balance. I think it's for the sake of being able to have a non-correlative portfolio that actually has something winning in every economic turn. And real estate definitely does that. If you're directly invested in it, it offsets the downturns of some more typical interest rate markets that bonds or stocks may be affected by.

Yes, interesting. And a lot of this has to do with what we talked about a moment ago, and that was the leverage. How much debt are you taking on to buy a property?

Unpack that a bit more. What have you learned about leverage and its impact on real estate investing, and how might that apply to individual real estate investors? Yeah, I think the second hot button besides the way we manage and handle and communicate with residents is the debt issue. I honestly believe, Rob, that if you minimize the debt on your real estate investing, then you also significantly minimize the risk of losing the asset to the lender in the event of a black swan or some unexpected economic event like a pandemic. And what we've done in that regard is mathematically figured out what level of debt can we have on a property without the risk of losing it to the bank. And we've come up with a 50% number just backing into algorithms that allow that to be our number. With that number, we would have made it through the Great Recession without losing not one asset. We've made it through the pandemic without having a notice of default. So I would recommend to anyone investing in real estate not to be aggressive on the debt. It's the one way that you have not only a realized but a recognized loss, and that's just unacceptable.

Yeah, that's really helpful. Now, Sanford, I know you deal mostly with commercial real estate, but I'm confident you have an opinion about the current surge in home values, especially having a front row seat to what's happening there in California. Is this a good time for someone to invest in residential property?

Yeah, you're right, exactly right. That's not my primary business model, and maybe I don't have primary data to share with you, but I can tell you this that I think is fairly spot on. We had a shelter in place occur last year that caused millennials to save money because they had to. They just weren't going out and spending it on lifestyle nearly as much. And I believe that's really a point of reference for why single-family homes are selling so rapidly. It's an aging millennial demographic with housing being necessary for families that they're now growing. And you're right, houses are selling off the shelf like hotcakes. Plus, you have interest rates that are low.

That helps. And in the commercial market, we don't experience the same sense of movement. It's still driven primarily by economic valuation and not as much by location and school districts. So we're not experiencing the same run-up in values, but to your point, California is very expensive, and you do have to navigate through how you invest and how you run the numbers for this particular part of the country.

Yeah, that's exactly right. And back to your earlier point about minimizing debt, that really becomes even more important in a market like this. All right, so someone's thinking about moving into real estate investing. What from your experience would you offer in terms of advice on homework they should do before making an offer on an investment property? I really believe that Warren Buffett, who's a hero of mine in terms of his own philosophies on finance and money, his comment is clearly that the greatest risk in investing is not knowing what you're doing.

I believe that in real estate, like pretty much anything else, you need to know all the various factors that are likely to impact your profits and your capital. And some of those need to be weighed out in terms of plausibility, and the various risk profile needs to be weighed out and prioritized. But if you don't know every facet of those risk factors, then you're subject to be caught by one. I call that an ignorance tax. People just don't know, and that's just how that works in real terms. And to minimize that, I think people find advisors and trustworthy operators that they feel do know the answers to those questions, and that's the whole point of finding an advisor that you can trust to do just that.

Yes. So then our real estate investment trust, Sanford, a better way to go for the average investor to have an allocation that's uncorrelated to stocks and bonds in their portfolio? When REITs came out in 1960, it was an effort by President Eisenhower at that time to allow smaller investors to participate in what institutions were being able to freely enjoy.

And I still think that's true. I think that if an investor is smaller in terms of their capital base, a REIT is a great opportunity for them to engage in a real estate investment. I'd say the alternative picture I have of that is that REITs, in many cases, especially publicly traded REITs, are not really real estate. We don't want to confuse that. There are shares of a company that owns real estate, and therefore they trade in shares, and they are volatile and very much like the stock market is.

It's an opportunity to have an on-trader real estate, but it's not directly investing in real estate, which is the part of the activity that really gives you the greater returns and allows you to modify your risk. Very good. Well, we've just scratched the surface today, so we're going to have you back to talk much more about REITs and also direct real estate investments. Sanford, really appreciate you coming by today. Thank you very much, Rob.

I've enjoyed it and have a great deal of respect for you and your team without question. Thank you, Sanford. Bless you, buddy. Sanford Coggins has been our guest today. You can find more about him at visionwisecapital.com. Your calls are next, 800-525-7000. Delighted to have you with us on MoneyWise Live today. We're taking your calls and questions.

The lines are filling up, but we have room for a few more. Here's the number, 800-525-7000. Just ahead, we'll be taking your calls on anything financial, saving or investing. Perhaps you're thinking about giving or paying off debt, whatever it is, 800-525-7000.

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Just head over to moneywiselive.org, click the donate button, and that is the way to give quickly, easily, and safely, and thank you in advance. Let's head to the phones. First up today is Ann in Pennsylvania. Hi, Ann. Thank you for your call. How can I help you?

Hello. I inherited some money, probably 300,000, one of which was in a mutual fund and it just rolled over. Of that 300,000, I have 100,000 left to do something with. I was wondering, should, would you recommend I put that in a mutual fund or an annuity or I'm 80 years old and I, you know, it's money that I really don't have to use right now. Okay, very good.

Yeah, so that was going to be my first question. So you said you're 80 and your income is really covering your monthly expenses. You're living off of Social Security or some other income source, is that right? Yes, yes, I'm fine.

Very good. And how are you viewing this money? Is this money you'd like to grow? Obviously, if you needed it for major medical expenses down the road or some long-term care, it would be there, but are, you know, apart from that, are you looking at it to pass on as an inheritance?

Are you looking to do some giving at some point? What's your primary motivation and driver behind this money in the future? Well, I know it's all the Lord's money, so I want to, I want to invest it wisely. And of course, if there's any left, it would be inherited by the children, but I just wasn't sure what direction to, you know, if it's, if I should put it, what I should, where I should put it for right now until it's needed.

Yeah, very good. Well, I think, you know, the purpose of the money is obviously critical because that really gives rise then to the time horizon. And if you're saying, you know, and I don't have any expected need for this money, there's always the unexpected need for it, but I don't have any expected need and therefore it could grow.

If the Lord tarries and you have good health, you could live a while longer and, you know, a couple of decades. So we need this money to last. And as you said, you want to be a faithful steward of it and manage it wisely. You know, you asked about a mutual fund and you asked about an annuity and both could be in play here. And the challenge is there's all varieties of mutual funds, very aggressive mutual funds that are all stock based, others that are much more conservative that have a mix of stocks and bonds. And there's even a fixed income only mutual funds that just have bonds and bond like instruments. And then on the annuity side, there's a whole variety of annuities that you could use.

I'm not a particularly a big fan of annuities just because they tend to be complicated and expensive and you tie up your money. The one significant benefit is if you just said to me, Rob, I don't want to take any risk. I want to transfer that risk to an insurance company in exchange for a guaranteed rate of return. And I'm willing to give up my money for that. And at some point, you know, I could convert that to an income stream or I could get it back.

You know, that would be the only reason. But again, I think because of the cost and the complexity and the fact that it does severely limit your access to the funds, if you need it, I'd rather you do investing outside of an insurance product like an annuity. So then that leaves you with, OK, what types of investments and you'd want to be properly diversified. So I think exchange traded funds or mutual funds are the way to go.

If you said you wanted to do this yourself and make those selections on your own, I would say you'd probably want to avail yourself of something like the Sound Mind Investing newsletter at soundmindinvesting.org, where they could help you select some mutual funds that are appropriate for your age and risk tolerance. But my first recommendation for somebody in your situation would be to find an a trusted advisor, a competent professional who knows the heart of God, who understands the scriptures, who has significant experience significant experience in managing money and a significant track record. We use the Certified Kingdom Advisor as kind of the gold standard for those advisors.

And so if it were me, I would find two or three Certified Kingdom Advisors in your area, interview them, find the one that's the best fit for you. And the reason is this is a lot of money and you want to protect it, but you also want to grow it. And I think going it alone perhaps would miss out on availing yourself of some real expertise that could understand you, your heart, what God's doing in your life, your goals and objectives, what you want to do with this money, and then build an investment strategy that matches that so that, you know, at 80 years old there's a focus on preserving what you have, but also growing it so you're not stuck with a half a percent a year in a high-yield FDIC-insured savings account. You have the ability with your expenses covered to take a modest amount of risk, at least with a portion of the portfolio, so that that portion could be more of a growth engine that would lift the whole portfolio, not eight or ten percent, probably not even six percent, but maybe four or five percent a year, where if the market was down for two or three years you just would let that portion ride, and if you needed to draw something out you'd take it from the more stable portion. That's the kind of portfolio an advisor could build for you, but if you have the time and desire you could do that yourself with some assistance from, again, something like soundmindinvesting.org, but reflect on everything I've said because I've thrown a lot at you, I'd love your thoughts. Okay, all right, and the other thing I wanted to ask you, what's the difference between volatile and non-volatile?

Stable, yeah, stable or volatile, it just has to do with the degree of fluctuation in the investment, so a volatile account would be an aggressive account and you'd have highs and lows that are deviations from the mean with a bigger wave, so you have higher highs and lower lows, you don't want that, you want more stable, slow and steady, so you're not going to open your statement one day and you're down 20 or 30 percent. Let's, you stay on the line, we'll talk a bit more off the air, and I think you're on the right track and I want you to get some wise counsel. I'll talk to you more about how to do that. Stay with us folks, much more to come on MoneyWise Live. We'll be right back. Welcome back to MoneyWise Live.

Thanks so much for being with us today. We were talking with Ann just before the break and I mentioned the Certified Kingdom Advisor. This is what we consider the gold standard in professional biblical financial advice. These are men and women who are financial advisors, each at their own firms. They might be with a big name on Wall Street or they might be with an independent shop. The key is they've been especially trained to bring biblical counsel, understand the counsel of Scripture as it relates to financial decision making, and through a 50-hour course and a proctored exam, they demonstrate proficiency in that. On top of a pastor reference, client references, statement of faith, code of ethics, annual continuing education requirements, a whole host of requirements that give us confidence that these are people who have met high standards in delivering competent financial advice from a biblical perspective. There's more than 1,500 of them so you can find one in your area when you visit our website MoneyWiseLive.org. Just click find a CKA. Back to the phones today, 800-525-7000 in Missouri. I understand it's pronounced Yvonne, is that right? Yes, sir. Very good.

How can I help you? I have a question about mutual funds. I rolled over some money to a rolling IRA.

It has that base FDIC 1%. I'm over 60s, I'm not looking to do anything aggressive, I want to keep it conservative, low risk, stable. When you're looking at mutual funds, it seems like to me that is the best way to go, but what type of mutual funds are tops in the choice range for some progress or growth but not anything that's going to put me at high risk?

Yes. What's the time horizon for this money? Is this money that you think will be invested for the next 10 years or longer?

It's hard to say. It's money that now would be in a range for emergencies. Do you have a savings emergency fund that you'd use if the washer dryer needed to be replaced unexpectedly or you had some sort of unexpected expense or would you have to draw from this account for that?

I would not have to draw from this one. And so this is money that really is earmarked for retirement? Yes. And how far out would you expect that might be? I'm at retirement age. I'm getting Social Security intentions right now. Very good. And how much, roughly, money are we talking about, Yvonne? We're only talking about $15,000, if not a lot. Okay.

That's okay. $15,000 is a lot of money. And as you said, it's money that you want to grow it conservatively but you want it to be there if you need it down the road.

The good news is it sounds like your expenses are covered. And so it really is truly for the unexpected and beyond just the month-to-month unexpected, probably something medically related or something like that. You know, a mutual fund, Yvonne, is simply a basket of investments. And those investments could be anything from debt instruments like bonds to equities like stocks and anything in between, including precious metals and other asset classes. So, you know, a mutual fund just speaks to how the investments are held. They're held in a fund and they're priced at what's called the net asset value at the end of every day based on the outstanding shares and the value of the investment in the basket, so to speak. But among mutual funds, there's all flavors and varieties from the most conservative without any stocks, probably straight bonds and, you know, other fixed income type assets, all the way to the ultra high risk, very aggressive, you know, high flying tech mutual fund and everything in between. So I think what you're talking about is what you would tend to call a balanced fund, which has a mix of stocks and bonds, so that if, you know, the market was down, you wouldn't be down as much as you would be with an all stock mutual fund.

And, you know, you still have some income being generated. I think the best way to go would be one of two ways. One is, if you visit with our friends at soundmindinvesting.org, their sound mind investing newsletter could give you some great recommendations on some really stable, conservative, very high quality mutual funds that would meet your needs if you want to make these decisions yourself with the assistance of somebody else. Again, soundmindinvesting.org. You'd want to subscribe to the SMI newsletter.

These are believers, and they'll give you very practical and excellent recommendations. Otherwise, I'd probably use with 15,000 what's called a robo advisor, where you would answer a series of questions, you in those questions would respond indicating your desire to be very low risk and conservative. And then the algorithm would generate what's called an ETF portfolio, which is exchange traded fund. These are indexes that would be largely income based indexes, so they just capture the broad moves of the market.

But based on the way you answer the questions, it would put you on the very low risk end of the spectrum. They're very low cost. And again, they're very broadly diversified. The one I would look at would be the Schwab intelligent portfolios or Betterment. Just based on the amount of money you have, I look at those two.

So if you want a robo advisor where you answer the questions and they build it for you, Betterment, Schwab intelligent portfolios, if you want to pick them yourself, soundmindinvesting.org could help with the mutual fund selections. And we appreciate your call today. To Chicago, Illinois, Martha, thank you for your call. How can I help you?

How are you doing? My question is, well, it's pertaining to some land that my husband inherited near New Deming, New Mexico, from his father. I'm sure it was well intentioned. However, it's in the middle of the desert. And we went to go visit the area and it's pretty much worthless. Right now, the only initially when we got married, you know, I was paying the tax bills diligently. However, now we're just getting an increasing amount of tax, you know, because it's, like I said, as far as we, you know, we're aware of what's basically worthless. What would be our actions at this point, besides paying an enormously large tax bill for a piece of worthless property?

Yeah, well, I'm sorry to hear that you're in this situation. It sounds to me, Martha, like you might need to challenge your property tax assessment on this inherited land. Generally speaking, land that is almost worthless shouldn't generate a large tax bill. You know, counties and municipalities are hungry for tax money and over assessing property, unfortunately, is not uncommon. So what you would do is call the local assessor's office, set up an appointment to appeal. You could fill out the property tax assessment appeal application. It would be found on the county tax website. Then you'd file that application, pay any required fees and wait for a confirmation postcard.

You'll request an exchange of information from your county assessor to find out what comps or other documents they used to determine the property value. And then you generally have 30 days prior to your hearing to request those documents. And then you could certainly consider hiring a professional to represent you. I think the key is if you're right, then it could help you to avoid a very large tax bill. So I would take that as a next step. And certainly we'd love for you to report back and tell us how it goes.

I know that must be frustrating. And maybe you'll be pleasantly surprised to find there's some value in this property that you're unaware of based on the comps they furnish. Maybe you could sell it. But if not, the ideal situation would be you could sit on it. You'd get that tax bill way down because there's not a lot of value there.

And you could just wait and see what happens in the future. Maybe they'll put in some roads or something that'll change the landscape significantly and give you a piece of property that's worth something. We appreciate your call today, Martha.

Thank you very much. More to come on MoneyWise Live. We're going to Florida to talk about a home that somebody wants to sell. And we're going to be talking to Farah in Montana as well about renting or buying. And Ryan in Grand Rapids about investing.

More to come right after this. Stay with us. Thanks for joining us on MoneyWise Live, taking your calls and questions today on anything financial.

This is the program we recognize that God owns it all and that we're a steward and that money is a tool to accomplish God's purposes. Let's see if we can help to apply God's wisdom to Lynn's question calling from Florida. Lynn, I understand you're looking to move into another home.

How can I help you? We're thinking about it. We live in thank you for taking my call. We live in a home in that we purchased in 2020 in the middle of the pandemic.

So we got a really fabulous interest rate of 1.875. And we moved in this past February. We're not crazy about the house. You know, it's a nice house.

But you know, there's no emotional ties or anything. And the cost of living here is very high, just everything like groceries and gasoline and all that plus, we have to pay a community development district tax, which is an addition to your property taxes and pay this extra. And we also have our an HOA fee, which has already gone up once and it's going to go up again. So with the real estate market being what it is, we're considering whether we should sell this house. And we could sell it based on comparable sales in this neighborhood, we could sell it for between six and 700, we paid for 80. And then we would invest the money that we got the profits and live like cheaply somewhere for maybe six months or a year living in a manufactured home, for example, while we looked around and possibly found a house that was less expensive, with a less costly HOA, and without a CDB. So is that a feasible idea? Or is that crazy?

Well, you know, one of the downsides you're going to experience is if in fact you could get 650 out of this, and that'd be incredible. I mean, I realize real estate prices are skyrocketing, but we're talking about just over a year, right? About a year and four months. Is that right? Right. Right.

You know, for you to make, you know, $170,000 would be amazing. If you don't live there two out of the last five years, you'll end up paying capital gains tax. taxes on this, which you could avoid if you get to the two-year mark. So that would be one reason to wait. You know, you obviously could housing markets soften between now and then?

I mean, we're talking another eight months. Certainly anything can happen. I don't think they're gonna, you know, we're not in a bubble situation like we were in 08 and 09 with the credit crisis. This is, there's real demand and real lack of inventory on homes.

So yeah, they could, prices could soften, but I don't really see them in the next, you know, six to eight months declining. And so you just have to consider the tax aspect of this. The only other thing to consider would be just the fact that you'd be moving twice, which has its own expenses associated with it, as opposed to, you know, perhaps timing it with that two-year mark where you, you know, you don't have the capital gains, you and your husband would have $500,000 in gain that you could, you know, exclude before paying any capital gains, you'd be well under that. And then go ahead and buy a stick built house. You know, I saw in your notes, you were considering a manufactured home. And I think the key would be, yes, you could wait for the housing market to soften. But the key would be, are you going to get enough softening for you to justify the added expense of moving twice, buying and selling multiple times, you know, it has, it can be expensive.

Does that make sense, though? Yes, we've kind of figured in the commission, you know, what the real estate commission would be, and we'd have to pay part of the closing costs. And we still think we could clear like 180,000, because we have 100,000 in equity and 107,000 in equity and 80,000 of additional profit. And the people across the street bought their house in January of 2021 for 580. And they just sold it for 795. It's insane down here. Yeah, it's crazy.

No, I know it is. We could get a good price, but it's all the rest of it, you know, that has to be considered. What's the rate of capital gains tax? Well, it depends.

You know, it would probably be 15% for you on the gain. You know, for most people, that's what it is. Take that off too. Okay. Yes. Yeah.

All right. So that's why I'm thinking if you get to that two year mark, you can you can skip that. And then you could evaluate the housing market at that time and decide whether you want to, you know, live cheaply somewhere and kind of wait it out. But I would be hesitant on investing the proceeds because unless you have a five to 10 year time horizon, especially given the run we've had the last 12 years and certainly the last year in the stock market, I'd be hesitant with you investing it thinking you're going to make some money in the next two to three years in the stock market that you could then pull out. What if right about the time you're ready to buy your next home, you know, we hit a recession and your portfolio is down 20 or 30%.

We certainly wouldn't want that. So if your time horizon is less than five years, I'd say even less than seven years, I'd probably stay very conservative, keep that money protected so you're ready to move whenever that time comes. And I would try to miss that capital gains tax if at all possible. And to do that, you've got to get to the two year mark. We appreciate your call, Lynn. All the best to you in the days ahead. To Montana, Farrah, how can I help you? No, this is Farrah.

Farrah, my apologies. How can I help you today? You know, I'm wanting to move to California to be near my daughter.

And I live in Montana and needless to say, to move into California is very expensive. And I've done some, I've done some of my homework there, but I was just listening, I was in my car going to a doctor's appointment and then I heard y'all and I thought, I'm going to come and call and see what they have to say. So I didn't know whether, I don't know what to do. I won't get but about 230 to 40 out of my house. And as you know, everything else is way above there.

So I didn't know, what is the, I'm 73. I don't know what's the most reasonable thing to do. You know, whether it would be to rent, to try to maybe purchase a house, make payments on it or either buy a condo. And this, I've looked into the mobile home parks where the senior communities are.

And the only problem I can afford it, but then you have to pay eight to a thousand space rent on those homes even after you've purchased it. So I don't know what to do. I need some good sound advice.

All right. Well, one approach would be to stay put and buy a lot of plane tickets to California to see your daughter because you're right. This is going, you're heading to one of the most expensive states in the country with regard to real estate, not to mention the taxes that you're going to be paying as you make that your home. So I realize there's a pretty big reason for you to be there, probably the biggest reason and that's family.

So I don't push back on that at all. But I just want to make sure you go in with your eyes wide open because I don't want you to take on a bunch of debt and rental prices are very high right now. So I think Farah, you probably need to plan a trip to see your daughter and plan for it to be a working trip for you to really spend some time to understand what are the taxes you're going to be paying when you get there and what options do you have on real estate and how do they fit into your budget. Because if you can't find something that you can make work, despite your desire to be there, it's going to be a real problem financially. And again, both rental and purchase prices are sky high, which is why there is such a thing as there's such a thing as a 50 year mortgage in California because nobody can afford the real estate. And there's a lot of people leaving and moving to states with more reasonable real estate and certainly without the high state income taxes.

So I would just do your homework. You know, a good rule of thumb, Farah, would be that whatever that housing portion is of your budget, you keep the total below 25% of your take home pay, the portion you actually have to spend on a monthly basis. If you can keep it at 25% or below, then you should have enough to cover the rest of your expenses. If you can't do it, I'd perhaps push the pause button and see if you can wait it out.

Ask the Lord to give you some wisdom on finding something that would fit your budget. But we appreciate your call very much. I know this is a challenging situation and I'm confident the Lord will give you some insight here on how to proceed to Grand Rapids, Michigan. Ryan, you're going to be our last caller today. We have just about a minute. How can I help you? Oh, thanks so much for taking my call. I really appreciate it.

Sure. So my situation is that I just refinanced a property and came into about $100,000. And I am kind of an aspiring real estate investor.

I really just have one rental property right now. And I also have about $100,000 in student loans. And so I'm considering taking that money and just wiping out my student loans, which would be really fun. But I also have read and done quite a bit of research about real estate investing and how really I have a good rate on my student loans right now. And so I could turn that money into perhaps a good cash flowing real estate investment if I make a wise purchase. And so I'm just wondering if you wanted to weigh in. I also kind of considered the stock market, but I heard the last call about how it's probably not a good time to take a risk with that amount of money in the stock market.

But I also don't really need it right now. So what's Yeah, what would be your take on that? Well, a couple of questions.

And again, we don't have a whole lot of time here. But did you say you came into some money through a refi? Does that mean you cashed out of your home to get this money? I made a really good buy on a real estate investment about a year ago and did some work to it. And now it's cash flowing. And I did refinance it and pull this money out. And it's still a good, positive cash flowing property. And you're living in it?

No, I'm living in another home. I see. Okay. Yeah, I guess my I mean, it sounds like you have a bit of experience here. I mean, I wasn't saying that the stock market is not the place to be for the long haul.

I think it is. You just got to have the right time horizon. But it's a great passive investment. And if you already have some real estate, I like the idea of your investment portfolio being non correlated, meaning, you know, the housing market is not correlated to the stock and bond market. And so you have multiple asset classes.

So that may in fact be the place to go. The other option is just to pay this property off with that money and let that cash flow even more and then build it up as opposed to using debt. I'm concerned about you using debt to go into another property in this real estate market when prices are sky high.

So I would go slow and I wouldn't use that money to buy real estate. And we appreciate your call. I apologize. We're out of time.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thank you for being here. I hope you come back tomorrow and join us. We'll do it all over again. May the Lord bless you. Bye-bye.