[earlyretirement]

[quote=Jazzman][quote=earlyretirement][quote=Jazzman][quote=earlyretirement]I know this isn’t applicable to the OP as you aren’t an ex-pat but I thought this would still be interesting to post.

http://www.usatoday.com/story/news/world/2014/03/08/usa-citizens-relinquish-passports-tax-filing/5859371/%5B/quote%5D

IRS filing for US expats is antiquated, which is why so many Americans living abroad don’t bother with it. I’m sure the IRS would agree and welcome changes to the requirement. The allowance before you owe Uncle Sam tax is reasonably generous, and there is probably no requirement from your foreign employer abroad to provide the IRS with data, so you might be able to get away with filing your own returns. If leaving the US for good, watch out for the exit tax.[/quote]

I agree it’s antiquated. I guess you could complain but who would listen? Yes, the allowance as you mention (foreign earned income tax exclusion) is quite good. $97,600 for a single person or you can legally structure it if you are married and own your own business to double that to $195,200 if you get 2 salaries for you and your spouse.

I lived abroad for many years but I’d never leave the USA for good…. we have it too good here compared to other countries.[/quote]

Living abroad broadens one’s horizons, and can make you see your home country in a different light. I’ve lived in the US for ten years and in other countries for shorter periods. That has lead to a curious unraveling. I tend to see not so much countries, but enforced boundaries (borders if you will), often through wars, organized by a collective group bound by laws that a few so-called elected (or otherwise) individuals have drawn up. The US is a perfect case in point. A young country that imposed the rule of law and property rights on a land, previously without those structures. The US is a legal entity, with a cultural focus on business and the resulting life style. Certain freedoms are a part of that package, helping to inspire a love of one’s country, that the Founding Fathers knew was needed to glue together a multicultural society. You cannot love a country. That is an illusion.

The post war decades in the US seemed very much in keeping with the ethos of individualism, egalitarianism, and evenly spread prosperity. More recent events, however, seem to echo pre-WWII periods, which have eery parallels to much that was (is) wrong with Europe, the wellspring of earlier American historical development. Whether you believe social thinking evolves or not, old models that were once the backbone of a society can erode bringing with it change that breeds conflict and social unrest. Perhaps, the only thing that keeps mankind on his toes is the certainty of uncertainty.

Sometimes I feel the only thing keeping me here is the tax climate, and the Hawaiian climate:) Like you, I would never give up my (non-US) passport, but that is as as much for sentimental reasons. The Bush tax cuts could of course be reversed, and if health care costs increase as is widely anticipated, that could be the tipping point. The lack of investment opportunities seems universal, but when all said and done, you go with where your spirit and wallet feel the most comfortable. There is no “national” preference in my view, just survival.[/quote]

Excellent post. Just out of curiosity Jazzman, if you had to move somewhere else…where would you opt to move if you left the USA?

[earlyretirement]

[quote=CA renter]As someone who has been short stocks far more often than long, I can say that shorting stocks can be the worst possible investing decision you can make.

I started to go heavily short back in ~2005, and this was after **extensive** research (full time, for years) into what I believed would be the worst financial crisis/depression in our lifetime. We had significant short positions in banks, mortgage lenders, ratings agencies, auto manufacturers, and a handful of retailers, among others. I have a tendency to be early, so made sure we could withstand a period of time when the market would move against me (long-dated options/LEAPS and kept rolling those over when the market would take a short-term dive; straight short stock positions with lots of extra money to protect myself against margin calls, etc.; and NO leverage, whatsoever). I built the positions up over time, but even while I took precautions (but only some hedging), we had unrealized losses of just over 30% at the market peak ~2007. It was not an insignificant sum, BTW.

Eventually, things did pan out the way I thought they would and the positions paid out rather handsomely, but the Fed’s actions throughout the process, along with the bans on short-selling and other market manipulations against the shorts, made things very volatile and gut wrenching. I got out of all my short positions in October 2008 when everyone thought things were going to get far worse. Best decision I ever made, and I was glad to be out. Some others I know who were shorting throughout the bubble as I was did not do so well, and some were absolutely slaughtered.

I nailed the internet/stock bubble, and nailed the housing bubble, and I am 99% convinced that we are in another peak wave of the same credit/asset price bubble that has plagued us for more than a decade. As a matter of fact, I think the bursting of this one will be even worse because the PTB are nearly out of their traditional ammunition since they’ve wasted it on trying to keep these bubbles afloat over all these years. We are tapped out on all levels, public and private, IMO. But I’m still extremely hesitant to short things this time around. If they DO decide to pour gasoline all over the fire again, I think they will go to extremes that have never been seen or thought of before.

I want to short, am very comfortable shorting, and I’m far more bearish and willing to take lots of risks when it comes to shorting… more than anyone else I’ve known personally or on blogs (even bearish blogs). But I am scared to do it this time around; the last time was incredibly stressful — and that was when I was 100% right!

If you short, be VERY careful, and do NOT use leverage! Do not put any money at risk if you’re not comfortable with huge losses. I cannot stress this enough.

IMO, the best move to make if you think things are going to crash is to get out of your long positions. Maybe, you can buy some puts on index ETFs or a few stocks that you think are wildly overvalued, but I think the best bet is to keep these positions small. Just be careful, whatever you do.

Good luck![/quote]

EXCELLENT analysis CAR. I’ve also shorted stocks before and done fairly well. However, I’ve been in situations like you and you nailed it. It’s very very stressful because your potential losses are unlimited if you don’t hedge.

Also, besides what you wrote you have the oddball situations like a crappy company getting an offer to get bought or some other one off event. It’s not for the faint of heart.

[earlyretirement]

I guess some realtors will do anything for a little publicity.

[earlyretirement]

[quote=spdrun]Define “good” — if you’re making the salary of an average middle-class American family in a country where per capita income is 1/3 that of the US, you can live like a king.[/quote]

Well, I lived abroad for 9 years and yes in some respects you can live like a king but the grass isn’t always greener on the other side. Depending on where you go but I can tell you there is a LOT of corruption, inefficiency, and red tape in many other countries.

I still own properties in 4 different countries and always will and will definitely continue to visit but long-term living, I’d NEVER give up my US passport. I do plan to live a few months out of the year once I fully retire abroad but no way I’d give up my passport.

[earlyretirement]

[quote=ocrenter]We dropped by Marston and found the homes essentially squeezed into tiny lots on the non-powerline side, and the side with decent lot size had the powerlines. Making the whole development highly undesirable.

MR and HOA are probably about the same, but you’ll have a gated community with the Lakes. So resale wise the Lakes will likely hold up better.[/quote]

As usual, ocrenter is spot on target. I always agree with his advice and it’s not any different here.

ocrenter – I should really thank you again as you were the one that got me turned on to Santaluz which is the area we ended up buying 3 years ago and LOVING!

[earlyretirement]

[quote=Jazzman][quote=earlyretirement]I know this isn’t applicable to the OP as you aren’t an ex-pat but I thought this would still be interesting to post.

http://www.usatoday.com/story/news/world/2014/03/08/usa-citizens-relinquish-passports-tax-filing/5859371/%5B/quote%5D

IRS filing for US expats is antiquated, which is why so many Americans living abroad don’t bother with it. I’m sure the IRS would agree and welcome changes to the requirement. The allowance before you owe Uncle Sam tax is reasonably generous, and there is probably no requirement from your foreign employer abroad to provide the IRS with data, so you might be able to get away with filing your own returns. If leaving the US for good, watch out for the exit tax.[/quote]

I agree it’s antiquated. I guess you could complain but who would listen? Yes, the allowance as you mention (foreign earned income tax exclusion) is quite good. $97,600 for a single person or you can legally structure it if you are married and own your own business to double that to $195,200 if you get 2 salaries for you and your spouse.

I lived abroad for many years but I’d never leave the USA for good…. we have it too good here compared to other countries.

[earlyretirement]

I know this isn’t applicable to the OP as you aren’t an ex-pat but I thought this would still be interesting to post.

http://www.usatoday.com/story/news/world/2014/03/08/usa-citizens-relinquish-passports-tax-filing/5859371/

[earlyretirement]

[quote=AN][quote=temeculaguy]As far as other investments, I missed at least 50k when I checked a few years ago on those stocks I mised out on, I don’t really want to know today’s number because I’m sure it’s worse.[/quote]Why would anyone every put stock (no pun intended) on anonymous stranger stock pick? If any of us is any good, we’d be sitting on our own island enjoying the sun instead of posting on here.[/quote]

I’d have to agree with you AN that I wouldn’t put much “stock” in financial advice from anonymous people on the Internet. It’s been my experience that people like to play up their winners and downplay their losers.

Many people like to talk about their big successes but not too many like to talk about their failures. We’ve addressed this in other posts on this subject. Most people I have met only talk about their winners not their loser investments.

As far as bit coin goes, I never got into it although I have a few clients that have done well with it. I see situations like Mt. Gox and just shake my head. True cash isn’t paying much of anything but it would have sucked to have been one of the many that got wiped out at Mt. Gox.

http://www.pcworld.com/article/2105280/10-questions-on-the-mt-gox-implosion.html

[earlyretirement]

[quote=spdrun]Property manager should collect rent, handle repairs, and find tenants (if you have the stomach for renting to randoms). Stuff that could result in foreclosure like taxes, mortgage bills, and HOA bills should go directly to the owner.[/quote]

Well it just depends on the situation. But many people that own rental properties live out of state or even in a different country. Many property managers handle ALL payments for owners. However, I still recommend investment property owners to audit (or at least review) the financial statements each quarter.

[earlyretirement]

[quote=EconProf]Ask your property manager why he did not notice no HOA monthly bills came to him for the past year. But also ask the HOA why they did not contact you, the owner of record. Pay all the accumulated monthly fees, but push back on the other costs.
However, you may also be somewhat at fault for not noticing.[/quote]

I agree with EconProf. How in the world a reputable property manager didn’t notice no HOA fees for months on end I have no idea.

Also, how often do you review the financials from the property manager? I know many owners can get complacent but I always recommend property owners (even if they have a property manager) to review their financial statements from property managers at least every quarter.

What is your property manager’s excuse?

[earlyretirement]

[quote=FlyerInHi]250 rentals… That’s a lot!

I’m not experienced enough to do vacation rentals remotely. Maybe it’ll come with time.

I don’t mind the work, because I know it will pay off in the end. I still have to inspect to make sure that everything is in good order. It was kinda fun at first and you get a sense of pride thinking “this is mine”, but it gets old quick.[/quote]

Yeah! It was a major pain. Very labor and time intensive. I had to have a staff of over 50 employees (maids, handymen, check-in/out staff, reservations staff, office management, accountants, administration, bill paying staff, etc) . Not easy especially considering all the properties were in different locations (i.e. not under one roof like a hotel).

It’s not easy to do remotely but it is getting easier with technology. On most of my rentals I put those electronic Schlage locks that you can pre-program with codes. Send a detailed welcome guide ahead of time, have VOIP phone set up so they can call the USA (my properties are located outside of the USA).

Still, I agree with you that you have to have someone dependable managing it taking care of issues/problems (always seems like there are some issues to deal with).

Absolutely there is a sense of pride on setting up a good property that you own. And it can be lucrative if you are in a desirable city and set up operations properly. I have some properties that have completely paid for themselves with rentals in the span of a few years. But yes it can “get old quick”. But having a good property manager can take away lots of the headaches.

[earlyretirement]

[quote=spdrun]^^^

No law against an apartment swap for a week (no monetary compensation) or renting out part of one’s own apartment for under a month, if one is staying there.

Also, I can’t speak to AirBnB/VRBO, but there are plenty of short-term situations on Craigslist (search sublets for “week”, “weekly”, or the name of a month, as in “March” 9-15). Technically illegal, but unless one is an idiot about it and rents to a bunch of annoying party kids or an axe murderer, no one will say anything about it.

Examples…
http://newyork.craigslist.org/brk/sub/4360039045.html
http://newyork.craigslist.org/brk/sub/4360228727.html
http://newyork.craigslist.org/mnh/sub/4360170772.html

See also…
http://www.nydailynews.com/new-york/brooklyn/williamsburg-bursting-airbnb-rentals-article-1.1614996

The good thing about NYC is that if it doesn’t annoy anyone, it’s generally tolerated with the exception of occasional well-publicized crackdowns that go away after a while. Witness every new mayor since Lindsay trying to fine jaywalkers, and the campaigns mercifully going away after a few weeks of unpleasantness.[/quote]

Yep. I totally agree with you spdrun. There are all kinds of people that are renting out their properties in New York. I know they have laws against it (same as in Paris) but it’s almost impossible to enforce if you structure things the right way and set the right expectations on the front end.

I have friends that do in both cities even in building where it’s supposedly not allowed and they do a good job screening their potential guests as well as setting the right expectation BEFORE taking the booking.

I’ve done home exchanges with people in NYC almost every single year and never had issues. They typically fed ex me the key ahead of time and set the guidelines for the building/doorman, etc. There is a right and a wrong way to do them.

[quote=FlyerInHi]As Downtowner mentioned, I’m thinking about taking over a timeshare on the resale market. I definitely would not buy from the developer.

I have heard of people loving their timeshares; and of course, horror stories are all over the Net. Generally people don’t talk about their bad investments in a social setting because they don’t want to burden the listener.

I’m thinking timeshare in Hawaii or Las Vegas, if I can get a deal. I suppose I need to do more research on the costs.

ER, I have a condo on VRBO. It’s working out well.. but it’s work… I need to find a better cleaning crew.

I would like to do VRBO or airbnb on a condo in NYC, but I hear that the city is cracking down on that.[/quote]

I’m sure you can probably find a deal that works for you. Still, lots of horror stories out there for me to ever get involved in timeshares but I’m sure there are some good opportunities out there.

FlyerinHI, VRBO is really good. I’ve been advertising mine on there for many many years and always get quality tenants. Check out Homeaway and even AirBnb.com I’m getting a larger and larger percentage of my bookings each year. They have really done a great job of building their business.

No doubt there are LOTS of hassles of the short-term or vacation rental property. The key is having a good manager. Absolutely what you mentioned with good cleaning crew is one of the toughest things I had to deal with in all my years of property management.

At one time, I was managing over 250+ vacation short-term rental properties and the absolute toughest problem I had to deal with was finding good, qualified and HONEST cleaning people. I didn’t have a problem finding office staff, check-in/out staff, professionals. It was always the cleaning staff that was the real pain.

[earlyretirement]

[quote=CA renter]Still wish I could get over the fear of doing a home exchange with our primary residence.[/quote]

I don’t blame you CAR. I wouldn’t mind using our primary residence for a home exchange but my wife absolutely will NOT allow me to do that. Fortunately we own several investment properties so it works out well.

But more times than not, we’re swapping with someone on their existing property. Before we moved to San Diego, we did several exchanges with owners in SD on primary residences. Worked out well.

[earlyretirement]

[quote=CA renter]This is a very scary time to try to navigate the investment world, IMHO. Even holding dollars is scary. :([/quote]

I totally agree with you CAR. Everyone trying to chase yield. The “poor” savers (no pun intended) are getting pummeled as interest rates are so low. So they too feel like they have to get into higher risk type investments.

I was just talking about this with someone the other day at lunch. The problem is that everyone says they are “long-term investors” but relatively few are and they look at the market the past few years and what a tear it’s been on and they feel like they are missing out.

Like some, I haven’t gotten in the stock market as heavy as I wish I did watching the way it’s gone on a tear.

It will be interesting to see how things turn out in the mid-term.

[earlyretirement]

You got some good advice on this thread. Do NOT underestimate the risk of currency spreads. % ROI is all relative when you have currency spread risks. Case in point, a few years ago my friend was raving about how she was going to get a guaranteed 20%+ annual rate in Argentina and I highly advised against it. 20% a year is moot if the currency devaluates at a faster rate (which it has done).

I’m not saying that will be the case with you but just keep in mind those risks. Anytime something is paying out that kind of yield, there will be risks.

Another risk which I didn’t see mentioned (although someone did mention the FBAR reporting) is that your odds of getting audited by the IRS drastically go up once you fill out a FBAR. (Take it from me as someone that has gotten audited 3 times in 5 years).

As well, I have many clients and friends that all have gotten audited and the one thing we have in common is we’ve all filled out FBAR’s. So by basic deduction I assume your odds of getting audited are drastically higher once you fill one of these out.

An audit in and of itself is not necessarily a problem but it’s a big hassle! And I think once you get audited your chances are higher in subsequent years that you will continue getting audited. (Again, not scientific but just based on what I’ve seen with many friends and clients and myself).

I still fill out a FBAR each year as I still have accounts in several foreign countries but I’d say keep in mind the main risk which is currency spreads/devaluation and also the hassles with potential audits by the IRS.

I’m certainly not saying you shouldn’t do it. I know people that have been very happy and seemingly making solid returns (so they tell me) in Uruguay and Paraguay. Just go in with your eyes open with the various risks.

Good luck.

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