[privatebanker]

Confirmed fact, Maisel Presley is severely under water.

[privatebanker]

Here’s the bottom line, you need to meet with a CPA that will give you objective tax advice. Look for one that does not provide investments (major conflict of interest). There are many tax strategies that you can utilize, you just need to be directed by a knowledgeable tax advisor. Like I’ve always said, this is the last place to receive any financial advice.

[privatebanker]

Why short stocks when you can buy put options? Shorting has no limit to risk. Put options can only expire worthless worst case scenario.

[privatebanker]

He was tired of the BS so he left. How can you put out an economic report that contradicts itself? I’m glad he made that statement of the truth. I’m looking forward to his commentary, hopefully he’ll keep being honest!

[privatebanker]

What a nightmare product! This reminds me of Japan’s “Generation mortgage”. Let’s say that prices drop a total 40% – 50% over the next 5-7 years, people will be stuck in these homes for a long, long time or they could choose to default. Without any calculations, I would guess that the monthly payment on these are only around $200 cheaper than a 30 year fixed per month. For a lender, this has to be right up there with neg am’s from a risk stand point. This clearly shows how desperate things are becoming.

[privatebanker]

When a Bank portfolios a loan it means they originate, service and hold the note until maturity or when the note is paid off. These are the banks that will typically offer really high deposit rates in order to continue to have money to lend out. This could be an interesting thing to watch as this market (real estate) begins to fall apart. I wouldn’t be caught having any deposit accounts at these little banks. They may not be around in a few years. Sure FDIC will refund your money but I would imagine that’s a lengthy process and a lot of documentation.

[privatebanker]

Bank’s that sell their loans typically have a clause with the mortgage back security holders that if there are nonperforming loans in the securitized package, the bank has to buy them back, not sure if it’s all or a certain percentage. This could really create some problems down the road. A lot of smaller banks portfolio their loans. I know of several that are at serious risk. Some losses can be minimised through the use of credit default swaps but there’s no guarantee.

[privatebanker]

Not sure what amount you are talking about investing here but, most US based Private Banks offer F/X denominated CDs, etc. I can do all the popular ones (currencies) but this is more or less just a service I provide my clients that have a full relationship with us. You may want to check around though, all Private Banks have different minimum qualifiers to work with them and most offer this service.

[privatebanker]

No problem SD Realtor, here are answers to your questions.

To clarify first of all, the annuity payments are based on the age of the owner(s) of the asset, the asset’s value and the AFR (IRS interest rate AKA Applicable Federal Rate). These factors will determine what your annuity payments are.

Taxes are paid on the annuity payments received plus if you have any additional cap gains or interest income from the investment vehicle of your choice. Just remember, trusts are taxed at a lot higher rate if the annual income from the investment vehicle exceeds something like $10k (not to be combined with your principal annuity payments). I would confirm this with a CPA. I’ve used tax-free bonds in the past because of the compressed tax tables for trusts (may not be suitable for everyone however).

If you pass away, the trust would remain until the last owners demise. Beyond that, the remaining funds are transferred to it’s beneficaries tax-free. Again, check with an attorney/cpa on that piece, who knows with the IRS.

I hope that helps! I’m not a Trust Attorney just a Private Banker and have worked with these issues for clients several times. They seem to be great alternatives to CRTs if the client wants to keep the money in the family, etc. Consult a Trust Attorney and CPA.

[privatebanker]

One last bit, PATs are irrevocable trusts. If you feel that you would need to access more of the principal than the annuity payment provides, this may not be a good solution. Again, something an attorney can help you with.

[privatebanker]

I’ve used PATs to assist a few clients in deferring their capital gains in the past. The key is to consult a knowledgeable attorney and possibly a CPA first. An example of a solution I provided a client (may not be suitable for you):

Client owned a commercial property with a low cost basis of which was now worth roughly $15,000,000.00.

Referred him to a trust attorney and created a PAT. Then transferred the property into the trust (non taxable event).

He then sold the property and we reinvested the entire sales proceeds into a tax-free bond portfolio, no capital gains taxes paid.

The client now receives a predetermined annuity payment. Payments are determined by the IRS life expectancy tables. He now only pays capital gains taxes on the principal annuity payments received (far less than the taxes he would have paid on the sale). Plus the tax-free income from the bonds which equates to a substantial amount.

It’s not a bad strategy as long as the IRS agrees to it. Consult a good trust attorney.

[privatebanker]

My take on this is that the original increase in rents as of late is the cause of investment property owners trying to lessen the bleed. I can’t tell you how many times I’ve heard people discussing this issue. There are no real fundamentals behind this increase, just look at all the available rentals on Craigslist. There’s pages and pages of properties for rent. A lot of these investment property owners are amateur investors that do not realize that their costs will increase once their ARMs adjust. This increase is simply unsustainable and has no fundamental backing. What average renter can afford to pay $2,500 per month? Very few I’m sure. Of course there are the long term property owners that have noticed an increase in rents and have followed suit, get’em while the gettings good! Have your renters sign long term leases if you can because who knows how long this could last.

[privatebanker]

Hi Powayseller,

Thank you for looking into that. Even though your deposits there may be insured by FDIC, it takes a long, complicated process to get your money back if the bank were to fold.

[privatebanker]

Masayako,

Sure people can give you ideas on this forum but if you are truly serious about establishing an asset allocation plan, go see a professional. A Certified Financial Planner with a lot of experience can set you in the right direction. Interview 2 or 3 of them and make a decision from there. Avoid those that jump to a product solution upon first meeting them and also be cautious of the insurance products some may offer.

Good luck!

[privatebanker]

I’m sorry but the more I think about this, I find it absolutely hilarious that Alan Gin (if that really is him) would jump on this forum and attack individual posters. How unprofessional can a guy be? Truly a great moment in the history of the real estate/credit bubble, take note of this day.

[Author]

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