Commercial real estate investing can be a great way to achieve financial freedom and build wealth over time. Whether you’re an experienced investor or just starting, it’s crucial to access the best resources available to make informed decisions and grow your portfolio. That’s why we’ve compiled a list of the 11 best books for commercial real estate, covering everything from investing to advanced strategies for maximizing returns.
“The Millionaire Real Estate Agent” by Gary Keller, Dave Jenks, and Jay Papasan
“The Millionaire Real Estate Agent” is a comprehensive guide to building a successful real estate business focusing on commercial properties.
The book covers everything from lead generation and marketing to negotiation and closing deals. It’s a must-read for anyone looking to become a top producer in the commercial real estate industry.
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“The Art of Commercial Real Estate Investing” by Doug Marshall
“The Art of Commercial Real Estate Investing” is a step-by-step guide to investing in commercial properties.
Marshall shares his years of experience in the industry, providing practical advice and case studies to help readers navigate the complexities of commercial real estate investments.
This book is an excellent resource for new and experienced commercial real estate investors.
“The ABCs of Real Estate Investing” by Ken McElroy
“The ABCs of Real Estate Investing” is a comprehensive guide to rental property investing, covering everything from finding and financing properties to managing cash flow and building wealth over time.
McElroy provides practical advice and real-world examples to help readers build a successful rental property portfolio.
“The Millionaire Real Estate Investor” by Gary Keller, Dave Jenks, and Jay Papasan
“The Millionaire Real Estate Investor” is an excellent book for anyone seeking financial independence through real estate investing.
The authors share the strategies and mindset of successful real estate investors, providing a step-by-step road map for building a profitable portfolio.
“Long-Distance Real Estate Investing” by David Greene
“Long-Distance Real Estate Investing” is a practical guide to investing in rental properties from a distance.
Greene shares his years of experience in the industry, providing actionable strategies for finding and managing properties remotely.
This book is a must-read for anyone looking to expand their real estate portfolio beyond their local market.
“The Commercial Real Estate Investor’s Handbook” by Steven D. Fisher
“The Commercial Real Estate Investor’s Handbook” is a complete guide to investing in commercial properties.
Fisher covers everything from due diligence and property management to tax strategies and capital markets.
This book is an excellent resource for anyone looking to take their commercial real estate investments to the next level.
“The Real Estate Game” by William J. Poorvu
“The Real Estate Game” is an excellent book for anyone looking to understand the world of real estate investing.
Poorvu provides a comprehensive industry overview covering everything from residential properties to shopping malls and office buildings.
He shares real-life examples and practical advice for making informed investment decisions.
“Buy Even Lower: The Regular People’s Guide to Real Estate Riches” by Scott Frank and Andy Heller
“The Intelligent Guide to Real Estate Investing” is a master guide to building wealth through real estate investing.
Frank and Heller provide a step-by-step roadmap for finding and financing properties, managing cash flow, and maximizing returns.
This book is a must-read for anyone looking to become a savvy real estate investor.
“The Best Ever Apartment Syndication Book”
It is a comprehensive guide to investing in apartment complexes.
Fairless and Hicks share their years of experience in the industry, providing a step-by-step roadmap for finding and financing properties, managing cash flow, and maximizing returns.
This book is an excellent resource for new and experienced commercial real estate investors, covering everything from due diligence and property management to marketing and raising capital.
One of the key insights in the book is the importance of syndication, which involves pooling resources and expertise to acquire more significant properties than one could afford individually.
Fairless and Hicks explain how to create a syndication structure, find the right partners, and navigate legal and regulatory requirements.
“The 4-Hour Work Week” by Tim Ferriss
While not specifically about commercial real estate investing, “The 4-Hour Work Week” is an excellent book for anyone looking to achieve financial independence and create passive income streams.
Ferriss shares his strategies for building a successful business that allows for a flexible lifestyle and financial freedom.
This book is a must-read for anyone looking to break free from the traditional 9-5 work model and create their path to success.
“The Book on Tax Strategies for the Savvy Real Estate Investor” by Amanda Han and Matthew MacFarland
“The Book on Tax Strategies for the Savvy Real Estate Investor” is a practical guide to maximizing tax benefits and minimizing tax liabilities for real estate investors.
Han and MacFarland provide actionable strategies for structuring deals, deducting expenses, and taking advantage of tax credits.
This book is a must-read for anyone looking to build wealth through real estate investing while minimizing their tax burden.
In conclusion, these 11 best books for commercial real estate are a great place to start for anyone looking to build a successful real estate business, achieve financial freedom, and maximize investment returns.
Whether you’re just starting or have years of commercial real estate experience, these books offer a comprehensive guide, practical advice, and real-world examples to help you succeed in the competitive world of real estate investing.
So, whether you’re interested in apartment buildings, office buildings, shopping centers, or any other commercial property, check out these great reads and take your real estate business to the next level.
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The industrial real estate market has experienced significant growth in recent years, driven by the rapid expansion of online shopping and e-commerce companies. Investors seeking lucrative investment opportunities increasingly consider industrial properties such as warehouses, distribution centers, and fulfillment centers attractive alternatives to traditional commercial properties like office space or retail spaces. This article explores the pros and cons of investing in industrial real estate, focusing on warehouse properties as a prime example. Let’s dive in.
Pros of Investing in Industrial Real Estate
High Demand
One of the main drivers behind the growth of the industrial sector is the increasing demand for warehouse space due to the surge in online shopping. As consumers continue to shift their buying habits toward online platforms, companies require more square footage to store and distribute products. This trend is especially prevalent in urban areas and industrial zones in the United States and the United Kingdom, where warehouse properties are in high demand.
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Industrial properties, particularly warehouse facilities, tend to have long-term leases. Tenants often prefer these arrangements because they provide stability for their business operations. For property owners, long-term leases can translate into a steady stream of passive income, as rental rates for industrial spaces tend to be more stable than those for other types of real estate, such as residential or office buildings.
Triple Net Leases
Investing in industrial real estate can provide investors with substantial tax deductions. These can include depreciation on the property’s structure and easily removable or mechanical assets (plant and equipment), interest repayments, insurances, and property management fees. Taking advantage of these deductions can help offset the costs of owning and maintaining an industrial property.
Warehouse Automation and Technology
The increasing adoption of warehouse automation and other advanced technologies is making industrial warehouses more efficient and attractive to potential tenants. Automated systems can help businesses reduce labor costs, streamline operations, and improve productivity, making the properties more appealing to a wide range of tenants, from small businesses to large e-commerce companies.
Cons of Investing in Industrial Real Estate
Upfront Capital Requirements
Industrial properties, especially warehouse facilities, can be quite expensive to purchase. Investors looking to enter this market will need a substantial amount of upfront capital, which may limit the pool of potential buyers. It is crucial for investors to consult with financial professionals to ensure they have the necessary funds in place and can manage the ongoing impact on their cash flow.
Maintenance and Repair Costs
Although triple net leases can help reduce property owners’ maintenance responsibilities, investors should still be prepared for occasional repair costs. Issues such as leaks, structural damage, or the maintenance of assets owned by the property owner, such as air conditioning systems, may still require attention and financial investment.
Illiquid Investment
Industrial properties, like other types of real estate, are considered illiquid investments. It may take time to sell an industrial property, which can be challenging for investors who need to access their capital quickly. Consequently, investing in industrial real estate should be viewed as a long-term investment strategy.
Finding the Right Tenant
Securing a suitable tenant for an industrial property can be challenging, as the specific needs of different businesses can vary greatly. Investors may need to invest in modifications or improvements to the property to accommodate the needs of prospective tenants. Additionally, potential investors should carefully consider the types of tenants they would like to attract and research the local market to ensure that there is adequate demand for the type of property they are considering.
Market Fluctuations and Economic Factors
The industrial real estate market, like any other investment sector, is subject to market fluctuations and broader economic trends. Factors such as interest rates, financial crises, or changes in trade policies can have a significant impact on the demand for industrial spaces and, consequently, on the value of an industrial property investment.
Location and Accessibility
The success of an industrial property investment is heavily dependent on its location. Proximity to major highways, transportation infrastructure, and urban centers can play a crucial role in attracting tenants and ensuring the property remains in high demand. Investors should carefully consider the location of a potential investment property and evaluate its accessibility and potential for growth in the coming years.
Environmental and Zoning Regulations
Industrial properties, especially those used for manufacturing or distribution purposes, may be subject to various environmental and zoning regulations. Investors should familiarize themselves with these requirements and ensure that their property complies with all applicable regulations, as non-compliance can lead to fines, penalties, or even legal action.
In conclusion, investing in industrial real estate, particularly warehouse properties, can be a lucrative and rewarding endeavor for those willing to navigate the challenges and complexities of this market. The high demand for warehouse space, driven by the growth of online shopping and e-commerce, presents a compelling opportunity for investors seeking long-term, stable income.
However, potential investors should carefully weigh the pros and cons, conduct thorough research, and consult with professionals before committing to an industrial real estate investment. By considering factors such as location, tenant mix, and market conditions, investors can make informed decisions and build a successful industrial property portfolio.
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John C. Maxwell is a renowned author, speaker, and leadership expert who has written over 100 books, many of which have been New York Times bestsellers. He is an internationally recognized leadership expert named the #1 leadership expert in the world by Inc. magazine.
Maxwell has trained millions of people in leadership through his books, speaking engagements, and leadership programs. He is also the founder of The John Maxwell Company, The John Maxwell Team, and EQUIP, a non-profit organization that provides leadership training to people worldwide.
His leadership philosophy is based on the idea that anyone can become a great leader with the proper training and development. Leadership is about influencing others to achieve a common goal. Maxwell’s work has had a significant impact on the world of leadership, and he is widely regarded as one of the most influential leaders of our time.
In this book summary, we will review the business week best-selling author’s book: The 21 Irrefutable Laws of Leadership.
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Good Leaders: Good leaders get the job done and meet expectations. They are dependable and reliable but only sometimes take their organization to the next level.
Better Leaders: Better leaders have a vision and can inspire and motivate others to work towards that vision. They can create a positive and productive work environment and bring out their team’s best.
Great Leaders: Great leaders are those who not only have a clear vision but also can execute that vision. They have a deep understanding of their organization and its people, and they can bring out the best in everyone. Great leaders can create a legacy that lasts long after they have moved on.
Strong Leadership
Studying strong leaders such as Winston Churchill, Theodore Roosevelt, Harriet Tubman, Maurice Mcdonald, and Mother Teresa, John Maxwell keenly understands what successful leaders do and how they live.
Teaching his team members to take suitable action and understand how to develop each of their leadership abilities is an example of why John Maxwell is considered an authority on the best leaders.
There are several books on effective leadership laws, each with its laws or principles. However, one popular book that outlines 21 laws is “The 21 Irrefutable Laws of Leadership” by John C. Maxwell.
The 21 Irrefutable Laws of Leadership
The Law of the Lid: Leadership ability determines a person’s level of effectiveness.
The Law of Influence: The accurate measure of leadership is influence, nothing more, nothing less.
The Law of Process: Leadership develops daily, not in a day.
The Law of Navigation: Anyone can steer the ship, but a real leader must chart the course.
The Law of Addition: Leaders add value by serving others.
The Law of Solid Ground: Trust is the foundation of leadership.
The Law of Respect: People naturally follow leaders stronger than themselves.
The Law of Intuition: Leaders evaluate everything with a leadership bias.
The Law of Magnetism: Who you are is who you attract.
The Law of Connection: Leaders touch a heart before they ask for a hand.
The Law of the Inner Circle: A leader’s potential is determined by those closest to them.
The Law of Empowerment: Only secure leaders give power to others.
The Law of Reproduction: It takes a leader to raise a leader.
The Law of Buy-In: People buy into the leader before they buy into the vision.
The Law of Victory: Leaders find a way for the team to win.
The Law of the Big Mo: Momentum is a leader’s best friend.
The Law of Priorities: Leaders understand that activity is not necessarily accomplishment.
The Law of Sacrifice: A leader must give up to go up.
The Law of Timing: When to lead is as important as what to do and where to go.
The Law of Explosive Growth: To add growth, lead followers, to multiply, lead leaders.
The Law of Legacy: A leader’s lasting value is measured by succession.
In conclusion, John Maxwell’s “21 Irrefutable Laws of Leadership” is a comprehensive guide to becoming an effective leader. The book covers many topics, from the importance of character and integrity to the value of vision and communication.
Through his insightful and practical advice, Maxwell teaches readers how to cultivate the skills and traits necessary to lead excellently. By following the 21 laws outlined in the book, readers will understand what it takes to be a successful leader. They will be equipped with the tools they need to impact their personal and professional lives positively.
“The 21 Irrefutable Laws of Leadership” is a must-read for anyone seeking to develop their leadership skills and become a more effective leader. Whether you are a seasoned leader or just starting, this book offers valuable insights and practical advice to help you achieve your goals and lead excellently.
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As a sales professional in the United States, there’s nothing quite like the thrill of the hunt. Whether you’re pounding the pavement, networking at industry events, or scouring social media for new leads, the excitement of chasing down a potential sale keeps us going. It’s actually these free things that are a real adrenaline rush.
For many salespeople, the ultimate payoff of all that hard work is the commission check that comes with a successful sale.
That sense of accomplishment and the financial rewards that come with it can be a major source of motivation for sales hunters. In this article, we’ll explore the joys and challenges of being a sales hunter, from the rush of the chase to the satisfaction of closing a deal and earning that coveted commission.
As a sales hunter, the thrill of the chase and the ultimate payday of a commission check are what keep you going.
It’s no secret that high-performing salespeople can earn some serious money. And when the commission checks start rolling in, it’s tempting to indulge in a few of life’s luxuries.
From fancy dinners to luxury vacations, high-performing salespeople often live well and enjoy the fruits of their labor.
However, balancing the thrill of the hunt and the excitement of earning a commission with the need for long-term financial planning is important.
In this article, we’ll explore some of the common temptations that salespeople face when it comes to spending their commissions, and offer tips for making smart financial decisions that can help you build a secure financial future.
So whether you’re a seasoned sales veteran or just starting out in the world of sales, read on to discover how to balance the thrill of the hunt with the importance of financial planning.
But as the years go by, you may start to wonder how you can make your hard-earned money work for you.
Perhaps you’ve already indulged in a few of life’s luxuries with your commissions, but you want to do more than just enjoy the fruits of your labor. That’s where passive investing comes in.
Passive investing puts your money to work for you. A couple google checks will show you that for many high-performing salespeople, real estate is a popular choice for passive investing.
That’s exactly what I discovered in 2015 when I decided to take the plunge and invest in a rental property.
At first, I wasn’t sure what to expect. The idea of being a landlord and dealing with tenants was daunting. Being a hunter, I was looking for great deals.
Eventually, I found a property that met my criteria and had the potential to generate passive income for years to come.
After purchasing the property, I set to work getting it rent-ready.
I worked with contractors to make necessary repairs and upgrades to give it a fresh new look, and I even added some special touches to make the property more appealing to potential tenants.
I was thrilled when I found the perfect tenant and even more thrilled when I saw the rental income roll in.
As time passed, I had more responsibilities and challenges as a landlord.
I had to be available to handle maintenance issues, collect rent, and address any concerns or complaints from my tenant.
I also had to be prepared for unexpected expenses, such as repairs or legal fees.
Despite the challenges, I found that being a landlord was a rewarding experience.
Not only was I able to generate income, but I also had the satisfaction of providing my tenant a safe and comfortable home.
I managed my property and successfully built a profitable rental business.
Since 2015, that same $20,000 commission check has earned over $150,000. Other commission checks have done the same; however, each path has yet to be equal and not without some hard work in addition to keeping my sales job and family.
Eventually, finding deals on the internet was not financially feasible anymore. To get easier access to discount properties, I began networking with real estate groups.
This became like a job in itself. Prices were moving faster than rents were, and I still had to manage the property and find tenants.
I feel that all the best sellers I read about passive income through rental properties were just a bunch of fake content. Not to mention that over time, some properties become average performers.
Flipping
I’ve had the opportunity to flip several properties over the years.
Each project had its own set of challenges and opportunities, but the end result was always the same – a successful sale and a profit to be reinvested into my next project.
Which, inevitably, is the challenge with flipping…you are constantly pushing profits into the next project and never really in a comfortable spot.
Finding a distressed or undervalued property is my 2nd favorite part. The hunt for the deal, putting it together, and buying it is a rush.
This involves research and due diligence, including analyzing the local real estate market, evaluating the property’s condition and potential resale value, and calculating the costs of repairs and renovations. It also involves some risk and a bit of luck.
Once I’ve found a property that meets my criteria, I begin renovating with modern and favorite features.
This usually involves a complete interior and exterior overhaul, from replacing the roof and updating the electrical and plumbing systems to installing new flooring and fixtures to give the whole house a new look.
In addition to a discount on the house, it is critical to find great deals on all materials where possible.
Throughout the process, I work closely with contractors and other professionals to ensure the work is completed on time, within budget, and to my specifications.
Once the renovations are complete, I work with a real estate agent to market and sell the property. This involves staging the home, creating high-quality photos and videos, and holding open houses to attract potential buyers.
Flipping houses is not at all passive income; this is a genuinely active job, and I don’t suggest this for people that have a full-time sales job.
My work suffered, and it was also pretty hard on my marriage.
This form of real estate investing does not work well with sales professionals.
Syndications
After purchasing several single-family rental properties, I realized that scaling my portfolio would be slow and arduous if I continued.
I began to explore other investment opportunities and eventually found myself drawn to multifamily syndications.
Making the transition from single-family rentals to multifamily syndications was an exciting but different experience.
One of the main benefits of investing in multifamily syndications is the truly passive nature of the investment.
Unlike single-family rentals, which require a lot of hands-on management and maintenance, multifamily properties are typically managed by professional property management companies.
This means that the property’s day-to-day operations, such as leasing, rent collection, and maintenance, are handled by someone else.
As a passive investor in multifamily syndication, I can sit back and collect monthly cash flow without worrying about the day-to-day management of the property.
In addition to the passive income benefits, multifamily syndications also offer the potential for higher returns compared to single-family rentals.
By pooling funds with other investors, I’m able to invest in larger properties that generate higher rental income and have more potential for appreciation.
Additionally, the economies of scale associated with multifamily properties mean that expenses, such as maintenance and management fees, are often lower per-unit than for individual single-family homes.
While the transition from single-family rentals to multifamily syndications required a lot of learning and adaptation, the passive income benefits and potential for higher returns have made it a worthwhile investment strategy for me.
The cash flow returns are the same, or slightly less; however, overall returns are on par with single-family rentals. The primary difference is the time requirement.
There is very little due diligence up front, and no maintenance or tenant calls after.
There is only cash flow distributions and appreciation and tax benefits.
Investing in syndications is similar to buying stock except having much better tax benefits and adding an actual asset to your portfolio.
In conclusion, real estate syndications offer a unique opportunity for sales professionals to diversify their investment portfolios and generate passive income.
By pooling funds with other investors and partnering with experienced real estate professionals, sales professionals can access larger and more profitable properties than they could on their own.
Syndications also offer a truly passive investment, allowing sales professionals to focus on their careers and personal lives while still earning monthly cash flow from their investments.
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By definition, depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. It is a way of spreading the asset’s cost over the years in which it is expected to be used rather than taking the total cost as an expense in the year of purchase.
And, you can USE this IRS code to earn tax – free passive income.
Depreciation is calculated using a specific formula, which considers the asset’s cost, estimated useful life, and the expected salvage value of the asset at the end of its useful life.
The result of this calculation is the amount of depreciation that can be claimed as an expense each year.
Depreciation is used to reduce the taxable income of a business, which can result in a lower tax bill.
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Real estate investors use depreciation as a tax strategy to reduce their taxable income and thus lower their tax bill. They can claim depreciation on the cost of the property and any improvements made to the property, such as renovations or additions, strictly for tax purposes.
To use depreciation as a tax strategy, real estate investors must first determine the cost basis of their property.
This includes the cost of the asset (physical asset), as well as any closing costs, legal fees, and other expenses related to the acquisition of the property.
From this cost basis, they can deduct the value of the land, which is reasonable since it does not wear out over time.
The remaining property value is depreciable over its useful life, which the Internal Revenue Service determines is the depreciable amount.
For residential rental property, the useful life is 27.5 years, while for commercial property, it is 39 years.
Real estate investors can claim a portion of the depreciation expense each year as a tax deduction, which reduces taxable income and lowers their tax bill for several years.
Depreciation is a powerful tax strategy for real estate investors because it allows them to generate income from their property while reducing their tax burden.
Sometimes, it will allow investors and business owners to receive a tax return despite having earned significant capital gains on a fixed asset.
There are several different methods of depreciation for various businesses and Accounting professionals to consider.
The type of business, asset, total amount of cost, carrying value, and rate of depreciation will vary with each.
Different Methods of Depreciation
The Matching Principle
The matching principle is an accounting concept that requires companies to match expenses with the revenue they generate in the same accounting period.
This principle is fundamental to accrual accounting, the accounting method most businesses use.
With the matching principle, expenses are recognized in the period they are incurred, not necessarily when cash is paid.
For example, if a company provides a service to a customer in December but receives payment in January, the revenue would be recognized in December, when the service was provided.
By matching expenses with the revenue they generate, the matching principle ensures that a company’s financial statements accurately reflect its performance in a given period.
This allows investors and other stakeholders to make informed decisions based on the company’s financial results.
Straight-Line Depreciation Method
It is called a “straight-line” because it assumes the asset will lose equal value each year over its useful life.
This is the most common method for real estate investors and their accountants.
The straight-line method calculates the annual depreciation expense by dividing the asset’s cost by its estimated useful life.
For example, if an investor purchases a property for 1,000,000 with an estimated useful life of 39 years, the annual depreciation expense would be $25,000 ($1,000,000 / 39years).
Other assets are added to the depreciation, such as new HVAC, floors, lighting fixtures and amenities.
These will be depreciated at a 5-year rate, adding to the tax depreciation.
The advantage of the straight-line method is its simplicity to calculate and its predictability in the amount of depreciation expense each year.
This makes it easier for companies to plan and budget for future expenses.
Accelerated Depreciation Method
Accelerated depreciation is a method that allows for a higher amount of depreciation expense to be recognized in the early years of an asset’s useful life.
This results in a lower taxable income in the early years and a higher taxable income in later years.
When using accelerated depreciation, the asset is depreciated faster in the early years and slower in the later years.
This reflects that many assets, such as machinery and equipment, lose more value in their early years of use.
There are several accelerated depreciation methods, including the declining balance method, the sum-of-the-years-digits method, and the double declining balance method.
These methods allow for a higher amount of depreciation to be recognized in the early years, which can help businesses to reduce their tax bill and free up cash flow.
Accelerated depreciation can be especially beneficial for businesses with high capital expenditures in the early years of their operations.
Accumulated Depreciation Method
Accumulated depreciation is a contra-asset account that reflects the total depreciation charged against an asset over its useful life.
It is a running total of the amount of depreciation expense that has been recorded on an asset since it was acquired.
As an asset is depreciated, its book value (which is the asset’s original cost less its accumulated depreciation) decreases.
The accumulated depreciation account is used to reduce the asset’s value on the balance sheet, which accurately reflects the decreasing value of the asset over time.
For example, if a company purchased a machine for $100,000 and depreciated it at $10,000 per year using the straight-line method, the accumulated depreciation would be $30,000 after three years ($10,000 x 3 years).
The machine’s book value would be $70,000 ($100,000 – $30,000).
Accumulated depreciation is an essential account for financial reporting because it allows businesses to accurately reflect the value of their assets on the balance sheet.
It is also used to calculate the gain or loss on the sale of an asset. When an asset is sold, the difference between the sale price and the book value (which is the asset’s original cost less its accumulated depreciation) is recognized as a gain or loss on the income statement.
Double-Declining Balance Depreciation Method
The double-declining balance method is an accelerated method of depreciation that allows for a higher amount of depreciation expense to be recognized in the early years of an asset’s useful life.
This method assumes that the asset will lose value more quickly in its early years and therefore applies a higher depreciation rate to the asset in those years.
Under the double-declining balance method, the asset depreciates twice the straight-line rate. To calculate the depreciation expense for each year, the asset’s book value is multiplied by the depreciation rate.
The asset’s book value is its original cost, less its accumulated depreciation.
The depreciation calculation for this method would be a company purchases a machine for $100,000 with an estimated useful life of 5 years and uses the double-declining balance method with a depreciation rate of 40%, the asset’s value upfront (or depreciation expense for the first year) would be $40,000 (40% x $100,000).
The machine’s book value at the end of the first year would be $60,000 ($100,000 – $40,000). The depreciation rate for the second year would be 40% of $60,000, or $24,000. The book value at the end of the second year would be $36,000, and so on.
The double-declining balance method can be a valuable depreciation method for assets that lose value quickly in their early years, such as computers or other technology equipment.
However, it can also result in higher depreciation expenses in the early years and lower depreciation expenses in the later years, impacting a company’s balance sheet and income statements.
In today’s work culture, and forever, this standard definition of retirement has been the norm. Go to school, get a job, create a solid financial plan, have a family somewhere in the middle or after or before, and eventually retire.
If you are one of the lucky ones, you will not die 30 days after you finally ring the retirement bell. This…is your dream life. I learned a few years ago that this definition is half true. And as a result, I may not be retiring at 44; I plan on being work optional.
What is Retirement
The definition (formal definition) of retirement is when a person has stopped working and no longer participates in the labor force. It is a stage of life that typically follows a period of employment characterized by reduced work-related activities and increased leisure activities.
For most people, retirement is measured as a specific age or, in some cases, by the years of service that an individual becomes eligible for retirement benefits, such as a pension or social security. This age can vary, and due to the fantastic fiscal management of our government leaders (sarcasm), the age is consistently getting higher and higher.
Corporate America’s retirement package can be voluntary or forced, depending on the circumstances. Voluntary retirement occurs when an individual has reached a certain age or has sufficient financial resources to support themselves, then chooses to retire from work.
Forced retirement occurs when an individual can no longer work due to health reasons or changes in the labor market. In a volatile market, companies will use retirement packages to trim headcount and avoid a “layoff.”
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Financial advisors provide advice about money management. They help clients develop a comprehensive financial plan considering their unique goals, financial situation, and risk tolerance.
Financial advisors can help clients with a range of financial issues, including:
Investment planning: Advisors help clients choose investments aligned with their goals and risk tolerance. They can advise on investment strategies such as portfolio diversification, rebalancing, and tax-efficient investing.
Retirement planning: Advisors help clients plan for their retirement years by determining how much they will need to save and what type of retirement account is best for them. They can also guide Social Security benefits and retirement income strategies.
Estate planning: Advisors help clients plan to distribute their assets after they die. This can include creating a will, setting up trusts, and naming beneficiaries.
Tax planning: Advisors help clients minimize tax liability and maximize tax-advantaged investment opportunities.
Debt management: Advisors can help clients get out of debt and manage their credit more effectively.
Financial advisors monitor clients’ financial progress, recommend changes to their financial plans as needed, and provide ongoing support and guidance. They are trained to provide a customized plan that aligns with the client’s goals and financial situation.
Traditional Plan
The traditional path for Americans to work and retire typically involves working full-time for 40 to 50 years and then retiring at 65 or older.
This involves saving and investing in retirement accounts such as a 401(k) or individual retirement account (IRA) during their working years, working with an investment adviser, and maybe even participating in employer-sponsored pension plans, which provide a guaranteed source of income in retirement.
In the traditional path, people work until they reach their 60s or 70s and then retire, at which point they start living off their savings, investment income, and Social Security benefits. They may also downsize their homes, sell investments, or take on part-time work to supplement their retirement income.
Many people choose to retire earlier, work part-time, or continue working full-time well into their 70s and beyond. There are better options than this traditional path. Some people may also experience unexpected changes to their financial situation, such as job loss or a medical emergency, that can affect their retirement plans.
In these cases, it is essential to seek the help of a financial adviser to determine the best course of action.
High-Stress Careers
So many people are involved in a high-stress career. This career is characterized by high mental, emotional, and sometimes physical demands, leading to stress and burnout. High-stress careers are common in medicine, law enforcement, finance, and senior-level management.
People take high-stress careers for various reasons, including:
High salaries: Big money is a trade-off for considerable stress
Prestige and status: In some cases, a certain level of prestige and social status or recognition attracts people to these positions
Personal challenge: This is a personal challenge people want to take on. They may feel a sense of fulfillment and satisfaction from their ability to handle the demands of their job.
Career advancement: High-stress careers can often lead to rapid career advancement, appealing to ambitious people who want to climb the corporate ladder.
Passion for the field: Some people may be passionate about their work and will endure the stress to achieve career goals.
However, the stress of some careers can hurt one’s physical and mental health. It’s essential to find ways to manage stress and seek support from friends, family, and mental health professionals if necessary.
Careerist Lifestyle
If we enter the daily grind of a traditional life path, we create a set pattern for ourselves. (Or, we already have.) Each day, for our whole life, begins with the same alarm clock and ends at the same time at the same place.
This is, for the most part, a safe place to be and the traditional goal of our education system. But setbacks can happen. Physical health issues for you or your immediate family can occur. Cracks in the economy happen and cause companies to lay off employees.
This is the importance of having your plan in addition to traditional financial planning.
Do you have enough money to weather a financial storm?
How financially secure are you?
How well do you know your entire financial picture?
What will happen if you make one or two financial mistakes?
Do you have a bulletproof plan?
Financial Independence
Financial independence means having enough wealth to support one’s living expenses without relying on traditional sources of income. Savvy people want more control over their time and financial future.
This can be achieved by saving and investing in cash-flowing assets. The wealth needed to attain financial independence varies depending on individual circumstances, such as lifestyle and expenses.
For our entire life, we are brainwashed into thinking retirement happens at a certain age. It happens when your PASSIVE income matches or EXCEEDS your EXPENSES.
Suze Orman and Dave Ramsey will have you believe that frugality and reducing your annual spending with zero debt is the practical approach and an excellent long-term plan for the American Dream.
The crack in this simple living plan is that we will never have a zero-cost basis. Taxes, Insurance, and Food prices are always going to increase. We will consistently need to increase income; our ability to earn will decrease as age increases.
By learning the right things and making some strategic decisions, we can confidently attack future unknowns because our income is working for us.
Work Optional
My non-penny-pinching way to achieve a work-optional life through real estate. Rental Income is how I began my journey into Passive Income, the path to the good life, and being work-optional.
In 2009, I saw the equity in my house disappear like so many others. My neighbors all began selling their houses to investors for a fraction of the price. I’m sure folks had reasons, but one question kept repeating: How can I buy houses in a recession with cash?
I never wanted to be the guy selling in a down market. This is not a person who is selling on his terms.
I read all of the best books on the subject. Then, I went to a weekend seminar. Here I received some excellent information about rentals in the vast area of Houston and an entire investment strategy. It was there that I created a money mission statement.
As a supply chain and logistics salesperson, I receive commissions for business brought to the organization. The problem was the volatility of the various business cycles. And, it is easy to spend this money on things you are waiting for, especially with a growing family.
I was able to exchange commission (residual income) for rental income (passive income).
This was eye-opening; every month, I had an extra check. I was always looking for deals for work and houses for rentals. Eventually, it got overwhelming, and I sold them all off-turning rental income into capital gains income which is where the real money is.
I took some practical advice as my family was also scaling up. Investing in syndications is the most passive form of investing I can do. My dollars earn around 17-20% per year without my searching for deals, answering calls, filing evictions, or going to title companies.
As a busy professional and full-time dad, I needed a more passive vehicle to enable a work-optional life. Syndications have been ideal for our lifestyle of busy professionals and five kids.
I’ve stepped out of the landlord and house-flipping side hustles and enjoy being an investor. The same returns as rentals, the same tax benefits as rentals; however, 97% less time commitment!
