7 Mistakes New Real Estate Investors Make

ABOUT THE GUESTS

Alex Goldstein

ABOUT Alex

ABOUT HOSTS

Joseph Anderson

ABOUT Joseph

Alan Clopine

ABOUT Alan

Published On

June 12, 2017

Alex Goldstein, the author of “No Nonsense Real Estate,” offers 7 Mistakes New Real Estate Investors Make. Joe and Big Al discuss 3 ways to sell your real estate, Social Security taxation, and 7 Social Security mistakes to avoid. Plus, potential ways to fund Trump tax reform, and who pays for weddings these days?

Show Notes

Trump Tax Reform: How Will We Pay For It? (0:48)
Alex Goldstein: Real Estate Investing Mistakes (12:44)
Alex Goldstein: Cash Flow Vs Appreciation and More Real Estate Investing Mistakes (24:19)
3 Ways To Sell Your Real Estate (33:42)
Seven Social Security Mistakes (Motley Fool) (41:03)
Social Security Taxation (54:32)
Who Pays for The Wedding? The Rules Have Changed (1:02:06)

Transcription

For most people who are homebuyers, it is the largest financial decision they’ll ever make. So they’ll spend a lot of time figuring out how to make an extra half a percent on a fund, but they won’t think about the fact that a wrong decision, in the way that they buy or sell their home, can have a much more significant impact on their finances. – Alex Goldstein, author, “No Nonsense Real Estate”

That’s Alex Goldstein, author of “No Nonsense Real Estate.” Today on Your Money, Your Wealth, he tells Joe and Big Al about 7 Mistakes New Real Estate Investors Make. The fellas also discuss 3 Ways to Sell Your Real Estate, Social Security taxation, and 7 Social Security Mistakes. They’ll also take a look at who pays for weddings these days, and they’ll throw in a little Trump tax reform as well. Now, here are Joe Anderson, CFP and Big Al Clopine, CPA.

0:48 – Trump Tax Reform: How Will We Pay For It?

JA: There is speculation still, Al, if Mr. Trump, President Trump, can get his tax reform through. And as we’ve talked about it over the last several weeks, some of the changes on his one sheet of paper of the proposals, where there are cause and effect.

AC: Right. So there are lower tax rates. And so how do you fund that? I mean, if our country was flush with money, you might say, “all right, we can lower the rates,” but we’re not. Of course, the thought is if you lower tax rates then companies are going to have more profits. Individuals are going to have more money, they’re going to spend more money. The economy is going to grow faster, which is going to generate more income, which is going to generate more taxes. That’s the theory. Trickle down, supply side economics, or whatever you want to call it.

JA: I was listening to a radio show, and this guy, he’s like, “there’s no way that this is going to work. We’ve been doing this trickle down economics for years and it’s not going to work.” And here was his side of the story. We’ve all experienced 2007 and 8. And what happened? We kind of overspent a little bit. We bought big houses that maybe we couldn’t afford, we levered them up.

AC: Remember the cars? Everyone was driving Hummers. (laughs)

JA: Right? Al and I were in an office that did real bad mortgages. Part of the collapse of our economy was probably some of these guys in our office, subprime, sub-subprime type mortgages. I remember driving in the parking lot and they were probably 22, 23. Lamborghini. Maseratis. And you look at them, and I was like, “they don’t look that intelligent. How are they driving? Are they selling drugs?” Well, pretty much. Subprime mortgages. Well, we overspent. And then there was a little bit of a collapse of large proportions.

AC: Yes. The so-called Great Recession.

JA: So what do you think has happened since 2008? I think a lot of people learned their lesson a little bit. Where if I’m making a little bit of money, am I going to buy the Maserati? Because I know I can lose it very very quickly. I might want to maybe stack that away.

AC: In my view, Joe, it was kind of a course correction. Particularly for baby boomers and younger generations too. But the baby boomers sort of got complacent there, where you could just make money, buy real estate, it goes up you pull money out, and you either spend it, or you buy more real estate. And the salaries were high, profits are high, the stock market was going gangbusters. I think it had to happen. Personally, that’s my opinion. We kind of needed to pull back a little bit, and get a little bit more sensible with our finances. And we have seen ever since that point, savings rates have gone up, and I think they’ve declined a little bit more recently. And you’re seeing some of the debt coming back, not near as badly as it was, but I think that was actually a pretty healthy thing for a lot of baby boomers, to kind of reset their thoughts about the future.

JA: Right that maybe this big fat paycheck is not going to keep coming forever.

AC: Right. And they had to adjust their lifestyles, and maybe that was OK going into retirement because you don’t necessarily have that same income unless you saved a lot of money.

JA: So his thesis was like, if we have a lot more cash flow, I don’t know if we’re going to spend it. When we did the whole Social Security tax. I forgot what that law was a few years ago when it went from 6.2 to 4.2. So we got a 2% savings there.

AC: Yeah it was a temporary reduction in the amount of our Social Security tax that employers had withheld.

JA: So that was a stimulus program to try to spur the economy. People that have excess cash flow, hopefully, they’ll spend it. But what they did was save it. So his thought process is like, “well, the people that were making that money, now they’re making the money again. Are they going to be buying the Lamborghinis and Maseratis?” Maybe, but I think there’s going to be a larger portion than before – even though it still might be the minority – they’re not going to be flushing the money back into the economy. They might be more or less saving it. But there’s always give and take with this. And so let’s say if they do lower tax rates. If you run the numbers, we still have things to purchase, such as military, roads, and police.

AC: And we’ve committed to programs like Social Security and Medicare.

JA: Right. So in Kiplinger’s tax letter, they’re looking at some potential ways to cut some of this.

AC: Yeah Joe. And the reason is that there is a pretty big debate on whether the trickle down economics is going to be enough to cover the tax breaks that lower taxes, and so they’re looking at other ways, I guess, to try to create more revenue. And one of the ways is looking at pension plans. For example, right now we have a 401(k) and a 403(b) limit of $18,000 per year that you can contribute. You can contribute pretax, which means that reduces your taxable salary, goes into the 401(k) or 403(b), it grows tax deferred. And when you pull the money out in retirement, then it’s taxable then. Also, we know that if you’re 50 and older, you can add another $6,000, so that’s $24,000. And so one of the proposals, this was back from the comprehensive tax reform plan of 2014. This is the Ways and Means Committee led by Chairman David Camp. And this is one of their thoughts is, we’ll keep that $18,000 and $6,000. But you can only do half pre-tax. The other half has to be a Roth 401(k) – meaning that you can only get a tax deduction for half of that contribution. So that’s actually one of the more controversial ideas. However, interestingly enough, if they do that, that’s yet another example of fixing today to the detriment of tomorrow.

JA: Whoever is coming up with this have never run any type of projection.

AC: No, they’re looking at their next four years in office. And that’s it.

JA: Exactly. I think that would be an awesome thing. More people put more money in Roth, their money would stretch out that much further. There’s human behavior, and then there are numbers. If you take a look at the people that are saving dollars, versus people that are not saving dollars, they’re not saving money because of the tax deduction, it’s because they’re living paycheck to paycheck and there’s not enough information and education for them to save money. If people in the highest tax brackets would go back and say, I take that tax deduction, now I have this big pot of money that’s all taxed at ordinary income, versus forego that tax deduction, now it’s all tax-free to me? I would guess that most of the people that we see, that have millions in retirement accounts, said yeah, that tax deduction was fine at the time, but I really wish all this money was in Roths. And we see that because they now are seeing the light, and they’re like I need to get some of this diversified. I need to get money into Roths. I mean to get money into non-qualified accounts. So they’re doing this. I think you’re only going to help us, as the consumer or as the retiree. But how many projections have we run? Thousands and thousands. In looking at projection after projection, there are significantly more dollars if the money’s in the Roth, because of compounding growth of that account, tax-free, that never has to be pulled out.

AC: And Joe you can run a simple analysis to say, I’m in the same tax bracket today as retirement, in some cases maybe in a higher bracket than retirement, and you could say, well then, you shouldn’t do a Roth IRA. But that presumes that you take the tax deduction and you save the difference. And the truth is, nobody does that. And when you run it, the math as far as human behavior, you actually get a completely different result, which is what you’ve been saying for quite some time and I tend to agree with that.

JA: Yeah if you save the deduction, so what I’m saying here is that you saved $10,000, you get $2,500 tax deduction. Then you take that $2,500 and you save it. But no, they’re saving $10,000 into their 401(k) plan and everything else is getting spent.

AC: Yeah I’d rather have you put $10,000 into a Roth, not get that tax deduction, and you won’t spend it because you don’t have it.

JA: Right. It’s forced savings. And then when you have the money down the road, it’s a 100% tax-free. So with all this talk of saying let’s go more Roth, I’m all for it, but I think then they’re going to mess with it down the road potentially, because then if they run the numbers, it will blow them up.

AC: Yeah related to that, Joe, is they’re talking about getting rid of the traditional IRA altogether and only a Roth IRA. It’s the same thing. In other words, you forego the tax deduction. You don’t get a tax deduction today, but all future growth is tax-free. And sure, it would help now. But 10, 20, 30 years down the road, it’s a time bomb for the government. Because all of a sudden, all that growth is not taxed.

JA: Because today there’s $24 trillion, give or take a couple of bucks, in retirement accounts that went in pretax, that now the IRS can get their tax money. That’s a ton of dough. If there’s $24 trillion in Roths, it’s over. There’s no tax revenue to generate. So stay tuned. Monkeying around with the retirement plans is risky business.

AC: It’s tricky. And sometimes they’re talking about even reducing the amount you can put in, which basically makes our retirement issue that much bigger because people aren’t saving enough. I mean don’t you want to encourage more retirement saving?

JA: The money’s got to come from somewhere. So then you have all these people. We’ve already seen the numbers and the statistics of the lack of savings, I’m not going to go there. But if it disincentivizes people from saving, because I don’t have an option anymore to put money into any account, and we know too that if someone has a 401(k) plan, Roth or traditional, versus someone that doesn’t, the person with the 401(k) plan has significantly more assets, because it was easier for that individual to save. So if they’re thinking, “let’s take this incentive away.” No one is going to save. You’ve got to look at the human behavior behind it besides just the numbers. If they looked at that, they might come up with something pretty solid.

AC: Right. But then they wouldn’t agree. That’s the problem.

JA: Right. Well, they’re not agreeing now so what’s the difference?

AC: That’s what I’m saying.

It’s been three decades since the last major tax reform, but this could be about to change in a major way. That said, the President and the Republican Party are still divided on a number of key policy questions. Visit the White Papers section of the Learning Center at YourMoneyYourWealth.com to download the white paper “Tax Reform: Trump Vs. House GOP” for a deeper look into the proposals. How might income tax, estate tax, and business tax change? Are your tax strategies at risk? Download the Tax Reform white paper to find out more. Visit the White Papers section of the Learning Center at YourMoneyYourWealth.com

12:44 – Alex Goldstein, author, “No Nonsense Real Estate”: Real Estate Investing Mistakes

JA: We got Alex Goldstein on the line. He wrote a book, “No Nonsense Real Estate.” Alan, you’ve been a real estate investor for a couple of days, haven’t you?

AC: I have. I’ve owned investment properties for about 35 years, so I’m going to find out all the mistakes – I already know a ton of mistakes that I made, but I’ll find out the rest from Alex, I’m sure. (laughs)

JA: Yeah, he’s going to blow you up. Alex thanks so much for joining us. Welcome to the show.

AG: Thank you so much. Terrific to be here.

JA: Let’s dive in. No Nonsense Real Estate. What made you write the book? Tell us a little bit about yourself. What are some things that we can move forward with?

AG: Sure. Well like Alan, I was a real estate investor for a long time, and like Alan never ever made a mistake, not one.

AC: Yeah. Until I did. (laughs)

AG: Yes, until I did. And got hit pretty hard by the last down cycle. And when everybody was kind of running for the exit, it occurred to me that all of the representation I had at that time, who were supposed to advise me and help me protect myself, was nowhere to be found. And it was disheartening, to say the least, and I realized that hey, people need better advice here, and a better understanding of what they’re doing. And so that’s what this is really about, is to help people better understand these important financial decisions they’re making in the form of real estate, and to know enough to not make the big mistakes, and to do a better job of hiring the right people.

JA: What do you think is the biggest or the most common mistakes people are making?

AG: Well I think a very common mistake that people make is not even recognizing that this is a huge financial decision for them. For most people who are homebuyers, at least in the United States, it is the largest financial decision they’ll ever make. And so they’ll spend a lot of time reading the Wall Street Journal to figure out how to make an extra half a percent on a fund, but they won’t think about the fact that a wrong decision, in the way that they buy or sell their home, can have a much more significant impact on their finances. Not to mention the quality of life that their family enjoys.

JA: Do you think people learned their lesson from 2008? I think a lot of individuals might have overbought because anyone could basically get a loan or you what are you seeing now? I would imagine people learned a little bit. But are those mistakes coming back?

AG: We have to remember that in the last cycle, the banks were the great enablers. They were like the drug pushers. They’re giving everybody drugs. They’re like, “hey, take it today and pay us tomorrow” kind of thing and everybody was getting addicted to the easy money. And so I remember, at one point I went to a Starbucks and the barista was telling me that she had just purchased her third home in Scottsdale, and the third home was $750,000. Now, I’m thinking to myself, “let me understand the underwriting there. So she’s making I think $12 an hour something, plus benefits, and buying millions of dollars worth of real estate. So with that kind of access to capital, people got pretty crazy. Where we are today is an environment where the standards are much tighter. So even if people want to make dumb decisions, they can’t make decisions that are quite as colossally stupid as they could back in the day. But they can still make decisions that can have a long-term impact on their financial future and their family’s lifestyle.

AC: Let’s start with buying your home. So how much of buying a home would you say is for the investment side versus quality of life? Should it be most the quality life, or what’s your view on that?

AG: Well the way I encourage people to look at it because ultimately it comes down to budget. People are thinking, “OK, what’s the right amount of money to spend on a house? Because if it’s an investment, maybe I’ll invest more. It’s just going to be consumption, maybe I should be more conservative.” And I take a different viewpoint on that. I look at the time frame. I say, if you’re going to be making a real estate decision that you can live with for 10 years or longer, then I think that you should just get what you want to get, but get it in the most intelligent fashion. If you’re in a situation where you may have a change in the size of your family, or a job or something like that, and you may have to move in say two years or four years or something along those lines, I advise people to be much more conservative and to buy maybe less house than they’d like, because the market may put them in a situation where it’s going to be a lot tougher for them to move if they’ve overbought. So I don’t know if that directly answers your question, but that’s the way I typically advise my clients.

AC: Well how about an investment property. What would you recommend? You and I have been investors for quite some time, and it’s a lot of work. And, what do you advise those that kind of think that real estate investing is easy? They watch it on late night TV and they think anyone can do it.

AG: Yeah it’s definitely not. And the interesting thing is that when most people want to get into some type of investment, whether it’s real estate, stocks, Bitcoin, whatever, it seems that when most people are talking about it, it’s the worst possible time to get involved. And it’s not just from the standpoint that prices are higher, but in the case of being a real estate investor, if you’re looking to fix and flip, good luck getting a good crew who’s going to actually do what they say on any kind of a budget in this environment. I mean, you’re competing with so many people that are out there looking for that talent, and they’re willing to pay up. So there is, I think, a certain naiveté when people watch a show and see this dramatic transformation take place before their eyes in a matter of 10 minutes or 30 minutes or whatever it is, and it leaves them with a really skewed perception of what it’s really going to be like once they get into it. And once you bought that property, you’re in it.

JA: I love the Flip or Flop. And what’s that one in Texas? Fixer-Upper. So they’re buying these homes for $70,000, and then all of a sudden they turn around and it’s like a mansion. And it takes them three days. It’s like, “here was your all in budget of $150,000.” I’m like, “this is awesome. I’m going to do this!” Or you watch this other Flipper Floppers show and then it’s like, OK, you got this girl in college trying to pay her tuition. So she’s like, “well, I’m going to buy this condo and I’m going to repaint it and two weeks later I’m going to sell it at a $50,000 profit.” Who doesn’t want to do that, right Alex? I mean that makes sense to me.

AG: Yeah and it makes sense, like all things, until it doesn’t make sense. And so, what people are doing when they’re taking that sort of mentality, they’re only looking at the upside. And there clearly is upside to investing in real estate, if you know what you’re doing and you buy right, you can make a lot of money in real estate. But, market conditions can change very quickly, and people also need to be realistic about what’s their skill set. So to me, I look at it and think, well, if I want to be invested in real estate and I’m will be honest with myself about my abilities, I’m going to take a more conservative approach. So to me, I think the smart thing for people to do is they’re going to attempt a fix and flip, I again look at the time horizon. And if you’ve never done a fixed and flip, just try doing a remodel on the home you are in right now. Get through that, before you start turning it into investment. Because at least if you’re doing some kind of a major remodel on the home you’re in and you mess up, well you’re going to enjoy your house more. So even if it costs you more than you thought, you’re not going to be in a catastrophic financial situation. The problem with a lot of these fix and flips is that people build in these totally unrealistic budgets and totally unrealistic timeframes for turning things around. And now they’re stuck with this cash black hole that’s just eating up money every month, and getting worse and worse. At least if people do that with their own home, they don’t wind up in that position to the same extent. And I think it also teaches them a lesson, to say, “am I really the type of person and do I really have the type of connections that can successfully do a remodel?” Because if you get aggravated or have problems just trying to do it with your own residence, it’s safe to say that you’re not going to be able to compete with the efficiency and the skill of professional investors in your market.

JA: I think you hit the nail on the head there. No pun intended with a fixer upper, but Al and I have clients that are contractors, that build apartment buildings, they build gas stations and everything else in between. They have the access to materials at a very low cost. They have access to a crew on the weekends at a very low cost. And so they could go in, and they could buy homes, and they can flip them out, because they already have the manpower, and they already have the know-how, and they have the skill sets. But if I’m sitting on my couch watching and saying, “Hey, I want to do a flip.” I think where I’ve seen people run into problems is that they don’t have that background at all, and they’re looking to make a quick buck, and then they put all the capital that they have into that one home, and everything is sitting, and as you said, then it just turns into a black hole and it kind of blows up on them.

AG: Absolutely. And one thing I think people don’t realize too is just how competitive it is to get a really great crew, who’s going to actually do what you want them to do, on time and on budget. I think every single person who has ever done this, has encountered circumstances where they find someone great until suddenly they’re not great. it’s like, “hey everything’s going.” And then wait. Nobody showing up. And to get a really great crew who is going to do solid work and anything close to the budget you want, those people are in tremendous demand. And so in a sense, you and the investor are auditioning for them, because they have a choice of different people they can work with, and I’m thinking if I’m a contractor, who do I want to work with? Do I want to work with somebody who has fixed and flipped 500 homes, has a great proven track record, knows their numbers, and is not going to mess around with me, versus somebody who said, “Hey, I saw a great show on TV, and I want to get into this.” If you’re a contractor, you’re going to run from that person who has no experience, and the person who is going to say yes is probably going to be somebody who can’t get work elsewhere for a good reason.

Your Money, Your Wealth brings you actionable advice to help you invest and retire successfully – but that’s only part of the equation. How do you leave a lasting legacy for the ones you love? Learn 10 gruesome estate planning mistakes to avoid at our free webinar, July 11 at 10:30 am Pacific. Visit PureFinancial.com/estate to register. Nicole Newman, Attorney at Law, and Joe Anderson, CFP, will answer questions like should you have a will or a trust? How do you protect your assets from probate, in-laws, creditors, predators and the expenses of long-term care? How do changes in estate tax law impact your existing estate plan? Visit PureFinancial.com/estate to sign up now for our free webinar, 10 Gruesome Estate Planning Mistakes to Avoid, Tuesday, July 11 at 10:30 am Pacific. That’s PureFinancial.com/estate.

24:19 – Alex Goldstein, author, “No Nonsense Real Estate”: Cash Flow Vs Appreciation and More Real Estate Investing Mistakes

JA: Welcome back to the show, show’s is called Your Money, Your Wealth. Joe Anderson, Big Al, hanging out here. We’re talking to Alex Goldstein. We’re talking real estate, Alan, your favorite topic. Let’s switch gears, let’s talk about, let’s say if I wanted to buy an investment property, and I think sometimes people don’t understand the numbers. We live here in Southern California. The average cost of a home is, I don’t know, $700,000? And so they’re like, “I’m going to buy some rental single-family residences in San Diego and rent them out.” Well, those numbers don’t necessarily jive for income. They might be fine for growth if you lever. But talk about what people should look at. Let’s say if they wanted to get into real estate as an investment property?

AG: Well, I’m a cash flow guy, because I got burned in speculation in the down cycle. So for me, for the rest of my life, I’ll never look at a real estate investment for appreciation. I just want to know about the cash flow. Having said that, it’s most important for people to get comfortable with what they need, because I have clients that have fabulous cash flow, and they don’t need more cash flow. So for them, it really is about appreciation. So the advice that I’m going to give a client in that particular position is going to be different from the sort of “advice I give myself” in terms of how to structure an investment. That said, the most conservative way to invest in real estate is to buy something for cash, and to collect cash flow. If you introduce leverage, or if you are counting on appreciation and speculation to be your return, you’re taking on more risk. And in a booming market, you can make more money that way, but in a down market, you can also lose more money.

AC: Yeah, it goes both ways. And I think in Arizona, Texas, it’s a lot easier to invest for cash flow. It’s much trickier in Southern California, and that’s our listeners, that’s kind of the dilemma that they have.

AG: Yeah. And I think probably for them, what you’re discussing in terms of fix and flip, is probably a better avenue to go with. But again if they’re going to do it themselves, they should start where they live. And the other alternative is, you don’t necessarily have to do it yourself. I’m sure that there are very successful fix and flippers in every market, who can use more capital to fund their deal. And so, becoming a lender, and participating in that fashion, may be a smarter option for people in markets where cash flow just isn’t going to happen.

AC: So can you go through the basics of the finances? You see a rental you want to buy, what do you look at in terms of the numbers to decide whether this is a good deal?

AG: Well again, I like to look at cash flow, so it really comes down to, for every dollar invested in that property, how many dollars are going to come out in terms of income after all the expenses have been taken care of? And there is a huge differential between markets in the country, in terms of that level of cash flow, or as we say in the industry, the cap rate. So where you choose to invest can be driven by how important that cap rate is for you. Investors who are buying single family homes in Ohio are going to get a much higher cap rate than any investor who’s buying a single family home to rent out in Southern California. So the implication there is that the appreciation in Southern California will make up for that cash flow and if you believe that, then maybe you should stay in Southern California. To me, I’d rather take an Ohio deal or an Arizona deal, and get paid from the beginning, then bank on future appreciation.

AC: So what would be a good cap rate in Arizona?

AG: In Arizona, I think you can you can make deals happen in the 5 to 7% range.

AC: OK. And just for our listeners, so that’s net cash flow, net profits divided by the cost of the property.

AG: Correct. So if you buy property for a million dollars, then you can expect to get $50,000 to $70,000 out of that property.

AC: Right. And then, of course, the problem in Southern California is the cap rates are probably 2 and a half, or maybe 3.

JA: Yeah. There are other kinds of pockets.

AC: There are. The cheaper neighborhoods – why don’t we talk about that, because a lot of people want to buy a luxury home and figure this is a great rental because people want to live there. Compare that, versus kind of just a bread and butter type of neighborhood.

AG: Well, in general, as you go up the ladder in terms of price point, you don’t necessarily see a commensurate increase in the rental rate. Now there can be certain nuances to that, depending on which market you’re in and where there’s demand. So if you live in a place where there’s a very obvious kind of tourist attraction, or if it’s right in the water or something like that, where you always have a high demand for short term high dollar vacation rentals, that can be a bit of an exception. But if you’re just looking at getting in a tenant who’s going to be there for a year or two years or three years and be a steady source of cash flow, you typically do better at the more modestly priced homes, because the million dollar home isn’t necessarily going to have 10 times the rent of the $100,000 home.

JA: Yeah that’s such a great point. I think that’s where people get confused.

AC: They do. And that happened in San Diego, downtown San Diego, people were buying million dollar condos, big negative cash flows. But they were going up 2% a month. So it’s like, “what’s the problem?” Until that changed.

JA: Yes. Until that million dollar condo was selling for $200,000. Hey, Alex, let’s say if I want to sell my home, what are some tips that you can give myself or our listeners? What are some mistakes that people make when they sell, and how do I get top dollar?

AG: Well I think that people should be more honest about how they walk into a home and look at it as a buyer. Because I see people walking into homes when they’re thinking about buying, and they’re hypercritical of everything. They will look at every last little detail and they’ll knock a house out because of something that, in my opinion, is fairly minor to fix. However, when they are selling their own home, they tend to look at it like, “oh, my house is great. And any negatives they’ll overlook because they’ll see how great my house is.” And so what I tell people to do it just to really be honest about how you talk about homes as a buyer and try to look at your own home in that way and to not overlook things because most likely most of the buyers won’t. Now know that in certain markets like Southern California, there’s so much activity that you can be a little lazy, but if you’re in a more balanced market, or you’re having trouble selling your home, then the first place start is just with a gut check about, “OK, what’s wrong with this property and what can I do to make it more appealing to my most likely buyer?”

AC: Yeah, we had a neighbor recently that did staging, and they had a company come in and bring in new furniture, and photos, and touch up paint, and they got a huge premium for the home I think.

AG: Yeah that can work really well. Sometimes staging is a great idea, but sometimes it’s not necessary. And what I try to do, whenever I’m counseling a client, is to come up with an idea of who is their most likely buyer. So do we have an indication, is this person is most likely going to be somebody who wants a turnkey, move-in ready home? They’ve got small kids and they won’t be willing to remodel a thing? Or is this the type of a neighborhood and area where there are lots of people coming in and doing wholesale remodels, and they really don’t care what it’s like? So you want to be focused on that end buyer in order to do the right thing by the property because if you spend money on staging a home that’s just going to be torn down or gutted, it’s probably a waste of money. Conversely, if everybody who’s walking into an open house is somebody who says, “yeah I don’t want to have to lift a finger.” Well then you’re going to want to stage it as best you possibly can.

We’re talking about Alex Goldstein, he’s featured in the New York Times, the Huffington Post, Wall Street Journal, and now Your Money, Your Wealth! (laughs)

AC: (laughs) That’s right, that’s the four big ones!

JA: That’s all you need, you made it, brother! Where can people find you, where can people get your book, where can they get more information on you?

AG: Sure. If people want to learn more about the book or to contact me, they can go to my website which is NoNonsenseBook.com. And I’d be happy to get them a free chapter, or reach out and talk to them about any of their needs, or point them in the right direction.

JA: Awesome. Thanks so much Alex. That’s Alex Goldstein.

Can your portfolio stand up to a stress test? Find out! Visit YourMoneyYourWealth.com and sign up for free financial assessment with a Certified Financial Planner who will stress test your portfolio. Are you on track for retirement? How much money will you need in retirement? How much income can you get from your portfolio? What Social Security strategies are available to you? Are your investments aligned with your goals? Stress test your portfolio: sign up for a free two-meeting assessment with a Certified Financial Planner at YourMoneyYourWealth.com

33:42 – 3 Ways To Sell Your Real Estate

JA: Alan, real estate has done quite well recently. It’s come back a little bit since the awful 2008-9.

AC: It has and the properties that I own, I bought them, saw them go way up, saw them go way down. Now they’re back up again. So it’s worked out all right, and for a lot of people, Joe, when you get to a point as an investor, your rental properties it’s like at some point, many times you think, “well, gosh, I don’t really want this property anymore. I’d love to have another property, maybe a bigger property, maybe I’ve got a little condo and I’d like to buy a house, or maybe a small apartment, something that has better cash flow or something that’s closer to home,” or any number of reasons why you might want to switch your rental properties. Problem though is, when you sell a property at a gain, you’ve got to pay all kinds of capital gains taxes, and it gets worse than that, you have to pay depreciation recapture, because when you buy a property, some of that property is considered building, and the building, if it’s a residential property, the IRS lets you depreciate that, or deduct it, over 27 and a half years. So if you’ve owned that property for 10 years, you’ve taken a lot of depreciation. You got some tax benefits. Now you’ve got to pay those tax benefits back, plus, by the way, the gain, you hopefully sold it for more than you bought it for, you got to pay taxes there.

JA: It’s funny. This was probably 2006 when we were doing those workshops around town.

AC: I remember, on real estate investing.

JA: Or real estate disposition planning. So Al and I were on the road, speaking to individuals, and we would get a ton of people there. But then no one will act because they thought that real estate was going to continue to go through the roof. So we came up with a workshop. I think we discussed like four or five ways to sell your real estate to mitigate, or to help with, the overall tax bite.

AC: We did, Joe, and of course the first one, as I was describing, it’s just an outright sale and then you just pay the tax. Now if you’re older and you’ve had rental properties for a while and one of the spouses dies, the survivor gets, in California, a full step up in basis. Which means they can sell that property and pay no tax whatsoever. So if you’re an older couple and you’ve got a property that’s highly appreciated, you don’t want to sell it while you both are living, because you pay a lot of tax, so that’s one thing. The second way is to do what’s called an installment sale, which means I’m selling the property, but instead of receiving all my cash now, I’m going to receive some of it over time. I become kind of like the bank if you will. And so, whoever I sell it to, the buyer, makes monthly payments to me. And as they make principal payments, I pay off a percentage of the gain that way as well. So that’s that’s another way to go. That has all kinds of issues, because if they don’t make payments, then you’ve got to foreclose on the property to get the property back, and a lot of people don’t necessarily want to do that. Another really good one though, Joe, is 1031 exchange. So you can actually sell one rental and buy another rental, and defer that gain into rental #2 and pay no current taxation.

JA: So you would do this to maybe get something closer, maybe it’s better cash flow.

AC: Exactly. Whatever your goals are. A lot of people, in fact in the 2002-2005 range, they were buying property out of state. There was quite a cycle they went through depending upon where they bought, but now in many cases, there are gains. They sell it because it’s too hard to manage out-of-state, so they come back to California. So the 1031 exchange, it’s actually not that difficult. What happens is, after you sell the property, you’ve got 45 days to identify three potential replacement properties. And you have to do that with your exchange accommodator. This is a third party that actually holds the money. So you sell the first property, and the money out of escrow cannot go to you. If it goes to you, even for a second, it’s a blown exchange. It has to go to a qualified intermediary that’s a third party. So you want to make sure that they’re bonded and have the strength. You don’t just go to anybody to do this. But you go to this exchange accommodator, and then in 45 days you identify three potential properties, and six months after the close of escrow, you have to actually buy one of those three properties. And as long as it’s rental, rental for rental, and as long as it costs at least as much as the property that you sold, you pay no current tax. So whatever that deferred gain is, just rolls into the second property. And sometimes people say, “well what’s the point.? I’m going to have to pay taxes on that anyway.” Well, the point is, if you hold the property for the rest of your life and you pass away, your kids will get it with a full step up in basis. There is no tax to pay. And in the meantime, you sold a property that you didn’t really want, and you got one hopefully that you did want. So that’s the real advantage there.

JA: Or some people might have 10 different single family residences.

AC: Yeah. Too hard to manage because they’re all over the place.

JA: They could exchange all of those into one apartment building.

AC: They could. Now that’s tricky because you have to sell ten all within the same timeframe. So you probably have to fire sale some. (laughs) But yeah, you can do that.

JA: In theory, it sounds good.

AC: You can sell 10 properties and buy one. You can sell one property and by 10. It doesn’t really matter. It has to be a like-kind exchange, but they’re real liberal. Like you can sell a condo and buy a house, or sell a house and buy an apartment, or sell a commercial property and buy a residential apartment, whatever. As long as it’s a rental property, that’s considered like-kind.

JA: It has to be the same value or higher. If it’s lower, then there’s boot.

AC: There’s boot. And let’s say your gain is $500,000 and you tried to do a replacement property and you almost did, you got $50,000 short. Well that $50,000 is going to be boot because it ends up in your pocket. And you have to pay tax on that $50,000

JA: How’d they come up with boot?

AC: I don’t know. (laughs) I have no idea where that term came from. (laughs)

JA: Boot. You got booted! (laughs)

Your Money, Your Wealth isn’t just a podcast, it’s also a TV show! Check out Your Money, Your Wealth on YouTube to see Joe and Big Al talking about planning for retirement over your entire lifespan, investing biases you may not realize you have, Social Security claiming strategies, and… Pure Financial Feud! Watch clips of the Your Money, Your Wealth TV Show – just search YouTube for Pure Financial Advisors and Your Money, Your Wealth.

It’s time now for Big Al’s List: Every week, Big Al Clopine scours the media to find the best tips, do’s and don’ts, mistakes, myths and advice to improve your overall financial picture – in handy bullet-point format. This week, Don’t Make These 7 Social Security Mistakes.

41:03 – Seven Social Security Mistakes (Motley Fool)

AC: Joe, #1 is thinking you don’t qualify for benefits. We know you have to work 10 years, 40 quarters, four quarters per year. Forty-quarters, or 10 years, to be able to qualify for Social Security benefits. But let’s say you haven’t worked 40 quarters, but you’re married to somebody that has worked 40 quarters. You can receive a spousal benefit.Or you’re married to somebody that passed away, you can receive a survivor benefit. Or you were married to somebody, now you’re divorced. You were married at least 10 years. You could get a spousal benefit there as well.

JA: Yeah. It’s interesting. So I think the ex-spouse one is the most interesting. I was married for 15 years, I’m divorced, and I’m looking to claim a Social Security benefit, and maybe my spouse had a lot larger income than I did, and I’m looking at my benefit. Well, it might make sense to look at your ex-spouse’s benefit, because you’re still entitled to half of their benefit, or yours, whichever is larger. So look into that, because you can claim on an ex-spouse. Now if you’re married twice, and you’re no longer married. As long as you’re married at least 40 quarters or 10 years to each individual, then you can claim on the higher of those two. So just a little bit of homework there, in a sense of making sure that you maximize your benefits.

AC: What happens if you’re married twice and now you’re married a third time?

JA: Well then you would claim on your current spouse.

AC: You can’t go back to the second rich husband?

JA: Yeah if you had a rich wife and then she dumped me, and then now I’m with someone broke, no. I can’t go back. Just don’t get married to that other person.

AC: I suppose you could live together. You can’t legally get married, that blows that strategy.

J: It would blow up that spousal benefit. You can claim a survivor benefit, However. Let’s say if you’re married and someone passed, and then you remarry, but you have to remarry after age 60.

AC: All right, so you’d have to wait a few years on that one.

JA: Yeah about 20 years.

AC: (laughs) I’m already at that threshold.

JA: So you’re good.

AC: I’m good. If I need to remarry I can use Ann’s. (laughs) So #2 is thinking that your benefits will be substantial. $1365 is the average, which is about $16,380 per year. That’s the average of earnings. Now, that’s an average of people that have been retired for quite some time. But even if you look at the maximums, the maximum this year is $2,687 – that’s about $32,000. So that’s not exactly a high lifestyle.

JA: Depends on what you’re currently living on. Social Security was never meant to replace 100% of your income. It replaces a lot more of lower wage income earners and significantly less to higher wage income earners. It was built by design to make sure that there was some threshold of income, to just to keep people off the streets as the Great Depression.

AC: Yeah. And that is happening in some cases, we know the latest stats from Social Security Administration is that 21% of married couples’ Social Security income is 90% or more of their income. And when you look at single unmarried, it’s about 43%. Close to half of single individuals in our country receiving Social Security, that’s 90% or more of their income.

JA: I don’t think people are shocked. They’re like, “damn! I thought I was going to receive like 80 grand a year!” (laughs) I think most people know what their benefit is going to be.

AC: I agree. Because you get these statements. And the Social Security Administration – you’re too young to know this but, probably. (laughs) But I forget whether it’s every year or every few years, they sent you the benefits statement, and then they stopped doing it. They said you ought to go online, which I did, it was very easy. SSA.gov. But now, I think it’s when you’re 60, if I’m not mistaken, they start sending it again.

JA: They’ll send it every five years now. Even before 60, and then once you reach 60 they’ll send it to you every year.

AC: But you can go online. It’s very easy to see. Joe the third mistake is assuming you have to start collecting benefits at 65. I mean how many people that we talked to, “when are you going to retire?” “65. 65. 65.”

JA: And that’s not even full retirement age. Full retirement age is 66 and two months.

AC: Yes. Well, they got that because it used to be full retirement age. And it’s also the age where you can qualify Medicare, so they kind of think that’s when you’re supposed to retire.

JA: Some people think they can’t work after 65. Well yeah, if you’re an airline pilot. (laughs) Certain jobs. But no, you can still work. And then you can still collect your Social Security benefit and still have employment income, as long as your full retirement age.

AC: Yeah, and that’s a confusing fact right there. So full retirement age, right now, this year, is 66 years and two months. So if you’re 66 years and two months, you can start receiving Social Security benefits, and you can keep 100% of the benefits, regardless of your salary. Because people think, “well, how much can I earn and still keep my benefits?” Well, that’s if you’re younger than 66 and two months.

JA: If you claim benefits early. So if you take it at 62, that’s the earliest that you can take a retirement benefit, and if you do take it at 62, and you have wages of $16,900 or less, they’re not going to take anything back. But then any dollar figure over that $16,900 threshold, every $2 earned, they take a buck back. It’s not like they steal it from you. They just recalculate that you never took the benefit. Social Security runs their benefits on a monthly basis. So it gets a little bit complicated. But just understand that if you are making good wages, it doesn’t make sense to take your benefit early, because every $2 that you’re earned over that $16,900 threshold, they’re going to take a buck back. Once you reach the year of your full retirement age, it’s about $44,000. So let’s say my birthday is in June, I retire in January of my full retirement age year. And then I claim my benefit in January. That’s fine. I’m taking it early, because my birthday is in June, so I’m going to see a small reduction in benefit. But if I was still working, if I made more than $44000 in that six-month time period, then every $3 earned they’ll take a dollar back. So just be careful when you start claiming it. Because here’s what happens: you claim at 62, you’re still working, or let’s say you go back to work and then all of a sudden – they’re still going to give you your benefit because they don’t know you’re working until you file your tax return. And then next April, you file your tax return, Social Security Administration gets it and says What the hell you doing Clopine? You’re working here!

AC: They actually want you to tell them, but that doesn’t often happen until they get the tax return.

JA: Then the following year you retire, you’re waiting for that Social Security check to come in, and guess what, you’re not going to get it.

AC: Yeah. And it’s dollar for dollar until they get paid back, it’s not pro-ration. So if you got paid $6,000 too much, then the first $6,000 of your next year’s Social Security benefits is zero. That’s how that works. Fourth mistake, Joe, is collecting benefits too early. And we see this all the time. We know that the stat is about 50% of men and women claim their benefits at 62. That’s the absolute youngest age you can do it, which means you’re going to get a 25%, roughly, less benefit for life, on a monthly basis, compared to full retirement age. And then we know that about 80% of men and women claim benefits actually even before full retirement age. So it’s like the majority of people are kind of short changing what the future is going to be. And if I just tell you one little thing, of course, it’s different for everybody, so I’m not going to say everyone should wait till 70, which is the latest age. But the actuarial tables came out in the 1980s, meaning that life expectancy at that time was a lot shorter, so now if you have a normal life expectancy or better, you’re much better off waiting. You’re going to get a lot more money waiting than you are taking it early.

JA: Right. Because of the life expectancy tables of the 80s, it didn’t matter if you took it at 62, 65 or 70, you got to roughly the same amount of money out of the pool. But now we’re living a lot longer. So if I wait, I get a higher benefit, and I get that higher benefit for a longer period of time. That’s a key component of your decision-making process.

AC: It is key. We know a 65 year old male right now, his life expectancy average is 84, and a woman is about 88. That’s today

JA: Just wait 20 years.

AC: Let’s say you’re in your 40s Joe. By the time you get there, it’s going to be 95.

JA: Right? According to Ric Edelman, it’s gonna be 170. I’ll be going back to school, finding a new trade. (laughs) How much more are you got?

AC: I got three more. #5 is not making the most the benefit formula. And what they’re getting at there, Joe is how benefits are calculated. So they’re calculated on your highest 35 years. And let’s say, for example, you worked 28 years. So that means seven years in that example will be calculated at zero. So even if you work a little bit those seven years, you’re going to end up with a higher benefit, because it’s an average of 35 years.

JA: Yeah. And then sometimes people get confused. 35 years is still a long time. So if I work one more year is that going to really increase my benefit? Well, it’s a 35-year average, it depends.

AC: Yeah, it might a little. #6 is not sharing a strategy with your spouse. And we talked about that before. Are there spousal benefits? Make sure that you’re looking at that because the spousal benefit means that you can take the higher of your benefit or half of your spouse’s. And in many cases, that’s a better way to go.

JA: Yeah. So you’ve got the spousal, you’ve got the survivor benefit. So, the rule of thumb type planning, the person with the higher benefit should push theirs out, just to protect the surviving spouse.

AC: Yeah. Because when it’s a surviving spouse, then it’s the highest benefit the survivor gets, whether it’s their own or their spouses. So yeah, you kind of do, if you can afford it, you kind of want to push out that highest benefit for a couple.

JA: Yeah because if that spouse dies, just know that Social Security benefit, one of them is going to go. So you want to make sure that at least there’s the highest benefit possible. Because then now you’re on one income versus two Social Security incomes.

AC: Exactly. And Joe, #7 is assuming that Social Security will end soon. How many times have we heard that? “Well, I’m not even going to plan for it because it’s not going to be around.” They even tell us in 2034 it’s going to be out of money.

JA: 20 years almost I’ve been doing this, so I’ve heard it every year since then.

AC: Right. And the truth is, if they don’t make any changes whatsoever, then you will get roughly 80% of your benefit, not 100%. That’s if they make no changes. It’s not bankrupt because they’re still collecting Social Security receipts from those workers, it just wouldn’t be enough to pay the 100% benefit. But the truth is, they’ve done this before. They extend the retirement age. They increase the rate that they collect, all kinds of things.The cap. So there are ways to fix it, I guess, is the point.

Nobody knows what’s ahead for investors, but Larry Swedroe’s book “Playing The Winner’s Game: Think, Act, And Invest Like Warren Buffett” offers bedrock investing principles that can help you profit in today’s shaky markets. Right now it’s available for FREE to Your Money Your Wealth listeners. Call 888-994-6257 or email info@purefinancial.com to get yours. That’s 888-994-6257 or email info@purefinancial.com. Learn how to think like Warren Buffett and build a well-designed portfolio based on solid evidence and your highest interests. “Playing The Winner’s Game: Think, Act And Invest Like Warren Buffett” by Larry Swedroe – with a foreword by Joe Anderson, CFP and Big Al Clopine, CPA. Email info@purefinancial.com or call 888-994-6257 to get your free copy. That’s info@purefinancial.com or call 888-994-6257 for your free copy of Playing the Winner’s Game. 888-994-6257 or info@purefinancial.com

54:32 – Social Security Taxation

JA: Talking taxes a little bit when it comes to retirement, and Social Security is a very significant portion of a lot of our retirement income. There’s still a lot of confusion in regards to how it’s taxed. And if you can maneuver your assets in such a way, potentially, you can receive a benefit from Social Security that is going to be significantly tax-favored to you. Or it could kill you on the other side, depending on kind of where you fall on this line here.

AC: Yeah it’s true Joe, and I’ll start just briefly in the states – many states do not tax Social Security. California is one of them. And if you look at our closest neighbors, Arizona, Oregon, Washington, Nevada, Hawaii – none of them tax Social Security either. But that’s not true in say Colorado for example, or Utah, where they do tax Social Security. So anyway, just be aware that, that in many cases and certainly California where we’re at, it’s tax-free. So when you can increase your Social Security income and have it be tax-free, that’s a double benefit. But then there’s the federal side. Because it used to be that Social Security wasn’t taxed on the federal side. And many years ago, I don’t know, 15 years ago or more, maybe 20. The IRS came up with this way to tax Social Security and it’s a sliding scale, Joe, based upon how much provisional income you have. And so they came up with a concept: provisional income just simply means you take all your income, plus things like municipal bond income, which is otherwise tax-free, and then you take half of your Social Security – so all other income, plus half your Social Security, that’s your provisional income. And then, depending on whether you’re married or single, there’s a table to figure out is your Social Security going to be taxed or is it not? And first of all, tax-free, if your provisional income is under $25,000 and you’re single, there’s no tax on Social Security. Or if you’re married, it’s under $32,000. And sometimes we see folks that end up retiring and that’s all they get is Social Security, and they’re not going to pay taxes on it because they’re going to fall under these limits.

JA: You know why this law passed is that back when it came to Congress, people in these upper-income limits was the 1%. So they were saying 99% of individuals will not pay tax on their Social Security benefits. Is just going to be the 1 or 2%. But just what they didn’t put in the bill? No inflation adjustments! So now you look at, 30, 40 years later, $44,000 today is completely different. $44,000 30 years ago was a ton of money.

AC: Exactly. Because now you’re over $25,000 and single. It’s $25,000 to $34,000 provisional income, then half of your Social Security is taxed. It’s not a 50% tax rate. It means half of the Social Security that you receive will be taxable, at whatever tax rate you’re in. And if you’re married, that number’s $32,000 to $44,000. But here’s where it gets tricky Joe, is let’s say you’re $25000 single, so no problem. You add another hundred bucks of income. You’re going to be in the 15% tax bracket, as a single taxpayer, so you pay 15% tax on that $100 for that income. That’s $15. But wait a minute. That $100 also pushed your provisional income up, and now half of that $100 will be attributed to Social Security, and that will be taxed at 15%. Which adds another 7%. So you think you’re in the 15% bracket, and all of a sudden it’s about a 22% tax rate. And then it gets worse because when you’re single and your provisional income is above $34,000, 85% of it is taxable. So if we use the same example, that same $100 will be taxed at 15%. But now it pushes $100 of Social Security to be taxed. 85% of that, 15% if you’re a math whiz, it comes out to about 12% and change. So your tax rate, your marginal rate, by adding a few extra dollars, is 27%. Even though you think you’re in a very low 15% bracket. And it’s shocking sometimes to people, like for example, when they take extra money out of their IRA or 401(k), and they thought they were in a 15% bracket, and lo and behold, they’re paying about 27% taxes and then you’ve got to go and look at state and see what’s going on there.

JA: Right. Because that one additional dollar adds another dollar of income. But it’s on the Social Security side. So Social Security is not gonna tax 100% of it, they’re going to tax 85% of it. So if you think of it this way, any dollar that you add is going to add $1.85 to your taxable income.

AC: Yeah and that’s the weirdest thing. So I make a dollar extra. But I’ve got to pay taxes on $1.85 because I got pushed up above these provisional income levels. And as a consequence, what we’re looking at, with a lot of a lot of folks, even if they don’t particularly have a lot of income or a lot of savings, doing Roth conversions so that when they are in retirement, they can pull money out of Roth IRAs – which, by the way, does not add to provisional income – and they can stay out of these little cliffs, or these points where the tax rates are higher. If you’ve got money in a Roth IRA, it makes retirement so much better, because you can manage your taxes based upon where you withdraw funds from.

JA: Right. And they could have a very significant income. $100,000 and basically pay zero tax on how you set this up because we encourage people to push out their Social Security. Not always, because, yes it’s longevity insurance, and you get the 8% delayed retirement credit after you reach your full retirement age. And there are some pros there, but the taxation of it – it just adds another layer because if I have a pool of money, let’s say in my 401(k) plan, I pull those dollars out, I’m taxed at state levels, federal level, at the full boat. So then it’s like well, I might want to dip out of those first and let my Social Security grow because now I have a lot larger benefit and it’s going to be taxed favored to me. So you have to look at all aspects when it comes to your overall retirement strategy to make the right decision.

1:02:06 – Who Pays for The Wedding? The Rules Have Changed

AC: Hey Joe, I’ve got a little thing for you. Our sound engineer is about to get married. And there are new rules on who pays for weddings. Because it used to always be the the the father and mother of the bride paid for weddings, and now it’s a little bit different, nowadays, because we’re marrying a little bit later. The average age for a woman is 29. And for a man is 31. And it used to be a lot younger.

JA: I’m just 10 years over that mark. (laughs)

AC: (laughs) Don’t worry about yourself here. But I guess the point is, that two things are going on. One is the cost of weddings is out of control. So the average price of a wedding right now, nationally, is $35,000.

JA: 35 grand! What is the proper etiquette of the cost of a wedding?

AC: I don’t know what the proper etiquette is.

JA: You know, like a wedding ring. What are you supposed to do there? Like two months salary? Isn’t that what it is, something like that?

AC: Sounds sounds reasonable, I guess.

JA: Well how about if I have Big Al’s paycheck? It’s going to be a giant rock! (laughs)

AC: You can’t even lift your hand up. (laughs) Now I will say that the averages in rural areas are closer to $20,000, and on the East Coast it’s about $80,000, is the typical cost of a wedding.

JA: 80 grand. That’s a great party.

AC: Yeah it is. And so the bride’s parents can’t afford it anymore. So that’s the problem. So here’s the breakdown right now. Currently, based upon, I don’t know, like 2000 weddings that this person studied, the bride’s parents now pay for about 44% of the wedding. The couple getting married, they pay for about the same. 42%. That’s kind of split. And then the groom’s parents, they gotta pay something – about 13%. So they pay a little bit.

JA: Dude. I’m gonna roll in when I get married. Father of the bride. “Hey, Bubba.” (laughs) I’m not putting a dime in. We’re going old school. I’m old fashioned ’cause I’m an old man.

AC: You’re putting in 42%.

JA: Right. Hey, we’re getting an $80,000 wedding and you’re paying for it. It And by the way I’m 42 years old. (laughs)

AC: So the final conclusion of this article, that’s in Money Magazine, is there are no rules anymore – so anything goes. Because I mean I’m looking at a picture of Steve Martin, remember that, Father of the Bride? It was a good movie, and he had to pay for the wedding himself.

JA: So one of my best friends from high school is an orthopedic surgeon, and he practices in Los Angeles. He grew up a couple of blocks away from me in Robbinsdale Minnesota. But he went to school at Pepperdine. Pretty smart kid. And then he went to Cornell Medical School, and then he met his future bride at Pepperdine. So he moved back to California, and her family, very, very successful. So I’m a groomsman in the wedding. There are 15 groomsmen because she’s got 15 bridesmaids. He was just picking people off the street so it’s even! (laughs) This wedding, I’m telling you, it was the most extravagant thing I’ve been to in my life. So we were at some country club in L.A. And so we’re on like this bocci ball court. And we’re all standing up there, and the preacher’s there, and everyone sitting down, it’s all nice. And all of a sudden, all these gospel singers come behind – we’re outside. No one in the audience could see them. And then the preacher goes, “Oh, it’s a glorious day or happy day.”And they start singing, “Oh Happy day!” Everyone’s up singing, dancing!

AC: Oh, I like it. That sounds like $80,000. (laughs)

JA: Oh, it was more than that. Soon as the wedding is done, there’s like 500 waiters with champagne. You don’t even have to walk five steps to get a cocktail. Then you walk another step and there was like a martini bar. And then there were three different places to eat, and they had three different bands, depending on what type of music that you wanted. It was pretty incredible.

AC: So my wedding, in 1988, Ann’s mom didn’t really have any money, so she did buy her own plane ticket to get to our wedding. So we didn’t have to pay for that.

JA: What, did you have it in your back yard? Legion Club?

AC: (laughs) No, we had it at Westminster Presbyterian Church in Point Loma. And then we had the reception in the Thursday Club which is right near there, and the Thursday Club is a woman’s club, it was actually a really nice venue, but they only allowed wine. So we went to Costco, and we had Chuck Bondi pour the wine. So we had our own little bartender, and we did get catering. That was the most expensive part. But yeah, we paid for it all ourself. My parents paid for the rehearsal dinner, which was great.

JA: Sure. Isn’t that what they’re supposed to do?

AC: Yeah. That’s what they’re supposed to do. And they kicked in like a thousand bucks, I think. But yeah we basically were our own for the wedding.

JA: Well this was 1000 bucks that’s 40 years ago. That’s a lot of money.

AC: Yeah. We had some extra. (laughs) Big time back then.

JA: (to Deb) So how much are spending on yours, $80,000? 10? 20? 30? How many times are you hitting it? That sounds like a $100,000. It’s ten. $10,000. That’s not bad. Who’s paying for it? Yourself. No parents are putting in money $1, $100, $1,000. $1,000.

AC: She got the same thing as me. They meant it more when I was younger (laughs)

JA: Yeah right. (laughs) You should say well Big Al’s parents gave him 1000 bucks, but that was 20 years ago.

AC: Yeah with inflation that’s about five.

JA: There you have it. Congratulations to Deb Reeves, she’s getting married here shortly. A couple of weeks. She’s off the market. I’m back to the drawing board.

AC: Yeah you got nothing now.

JA: I got nothin’. All right, that’s it for us, we gotta get the hell outta here. We’ll see you again next week. Show’s called Your Money, Your Wealth.

_______

So, to recap today’s show: There are three ways to sell your real estate, but doing so outright is probably the most straightforward. The GOP are considering taxing retirement contributions, reducing retirement contribution limits, or taking away the traditional IRA as part of the tax reform. Social Security is complicated, and it’s easy to make a mistake, but even if you do everything right, a portion of it may still be taxable. And, if weddings these days cost $80,000 on average, you might want to elope.

Special thanks to our guest, Alex Goldstein, author of “No Nonsense Real Estate.” To learn more about real estate investing, visit Alex’s website at NoNonsenseBook.com

Subscribe to the podcast at YourMoneyYourWealth.com, through your favorite podcatcher or on iTunes, where you can also check out our ratings and reviews. And remember, this show is about you! If there’s something you’d like to hear on Your Money, Your Wealth, just email info@purefinancial.com. Listen next week for more Your Money, Your Wealth, presented by Pure Financial Advisors. For your free financial assessment, visit PureFinancial.com

Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this broadcast and does not represent that the securities or services discussed are suitable for any investor. Investors are advised not to rely on any information contained in the broadcast in the process of making a full and informed investment decision.

Your Money, Your Wealth Opening song, Motown Gold by Karl James Pestka, is licensed under a Creative Commons Attribution 3.0 Unported License.