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There’s an almost universal misperception that the every day American family simply can’t arrive at retirement with more money than they ever made on the job. I’m here to tell you that is a fallacy, at least in my experience. Don’t get me wrong, the lower the income the longer it takes and the lower the ultimate income in retirement. Still, though most folks give impressive lip service to what can be done with solid self discipline, a solid plan, a real purpose, and the flexibility to adjust when necessary, they generally aren’t walkin’ their talk. In other words, they don’t really believe what they want to believe.

Let me sprint to the bottom line here. If you have long enough, and you have enough capital, which doesn’t hafta get within shoutin’ distance of being impressive, you can indeed retire with more after tax income than you made in your best year on the job.

Jim is a young (30) engineer makin’ roughly $60,000. His wife, Melisa, (29) is in retail sales, makin’ roughly $35,000. They don’t have kids yet, but that’s likely to change in the very near future. They don’t live super cheaply, but are relatively wise with their money, saving while still enjoying life. Let’s lay out a short outline of what’s possible for ‘em. We’ll assume they retire sometime in their 60s, 30-35 years from now.

A Broad Brush Look at What’s Possible

An EIUL policy with an inflation based monthly premium of about $500 will, in 30 years produce a tax free income of roughly $4,000. That’s a rough estimate, but done by a pro in the industry. Then there’s Melisa’s income, which doesn’t come with a company sponsored 401k plan. She and Jim decide to start Roth IRAs, one for each of ‘em. Jim long ago eschewed any participation in his employer’s 401k plan. In fact, years ago while still in college, he followed my advice to gut his small 401k with the big box store employing him, and paid off all his outstanding debt.

Now, before too many years go by they’ve accumulated enough to each buy one modest discounted note, secured by real estate. We’ll say this began when Jim was about 35 or so. By the time they’re both 60 they’ll have grown their note portfolios to the point of a combined potential tax free monthly income exceeding $10,000. For you Doubting Thomas types out there, they’d get about half that much if they NEVER bought a note for 30 years, just each contributed the annual allowed amount each year for that long, THEN bought notes. However, doin’ it for 30 years or more, allowing the payments to build up, reinvesting them too, plus reinvesting paid off notes, adds up hugely over what would then have been approximately half their lifetimes.

So far, Jim and Melisa have arranged to generate somewhere around $150,000 a year at retirement, all of which is defined by the Internal Revenue Code as TAX FREE. Even if we’re gonna be cartoonish about …read more

Let me tell you how much I despise one-on-one showings with perspective tenants.

Okay, “despise” is a strong word. It’s meant for dramatic effect.

But I’m a busy person. And driving to my property to show a vacant unit to one person is a massive waste of time.

Yes, I pre-qualify the tenants over the phone. I’ll ask them a series of questions to make sure that they have the proper credit history, they can move in at the proper time, and they are generally serious about looking for a place to live.

Regardless of how much time I spend trying to prequalify a tenant over the phone, though, I still lose far too much of my precious time conducting showings that will obviously go nowhere.

Sometimes a potential tenant will very clearly dislike the unit. Their disappointment with the house is evident — it’s written all over their face.

I’ll see them glance at some aspect of the home that I can’t control, such as the square footage of the kitchen, and I know immediately that the 15 minutes I spent driving to the unit, the 10 minutes I spent waiting for the potential tenant to show up, the 10 more that I will spend showing them the place, and the 15 minutes that I’ll spend driving back home are just a total write-off. Bye-bye, one hour of my life.

Other times the potential tenant will no-show, which is even more frustrating.

But don’t worry — there are two awesome solutions.

The first and most obvious fix: Hire a property manager. That’s a different conversation for a different day.

But here’s a second, less-obvious fix: Hold an Open House.

The Awesomeness of the Open House

I took a page from the real estate sales playbook and started hosting open houses.

When I list a vacant unit, I plan two Open Houses: the first on a weekday evening, and the second on a weekend.

For example; I’ll state that I’m hosting an Open House on Wednesday from 6 p.m. to 8 p.m. and on Saturday from 11 a.m. to 1 p.m. (Note: Don’t plan the Open House too early in the morning. People like to sleep in, myself included.)

When potential tenants call to ask me about a vacant unit, I’ll tell them that if they want to see the unit, they can come at one of those two times. I’m clear that I’m not doing any private showings.

The vast majority of potential tenants are okay with this. Every now and again, someone will protest: “Oh, I can’t make it during one of those times!,” at which point my reaction is — basically — “Tough. If you really want to rent this unit, you’ll find a way to make it happen.”

(Note: I once rented a unit to someone who couldn’t come to either of the …read more

Some architects don’t like to draw inside the lines and some homeowners don’t like to live like everyone else. Have you ever gotten bored with the same old “cookie-cutter” designs that home builders have been using for centuries on end?

If you’ve ever wanted to try something different with your next home or building project, perhaps these unique houses around the world will offer you some inspiration (and good luck getting approval from your Home Owners Association)…

Related: 20 Of The Weirdest Things Documented During Property Inspections (Some Of These Will Blow Your Mind, Especially #2)

1. Tiny House, United States

Source: tumbleweedhouses.com

2. Transparent House, Japan

Source: sou-fujimoto.net (via boredpanda.com)

3. Skinny House, Poland

Source: domkereta.pl (via boredpanda.com)

4. Flintstones House, United States

Source: boredpanda.com

5. Seashell House, Mexico

Source: demilked.com

6. The Simpsons Replica House, United States

Source: mentalfloss.com

7. Skateboard House, United States

Source: boredpanda.com

8. Cat Heaven, United States

Source: theownerbuildernetwork.co

9. School Bus / Mobile Home, United States

Source: hankboughtabus.com | Photos: Justin Evidon (via)

10. Vintage Boeing 727, Costa Rica

Source: tripadvisor.com

The post 10 Of The Strangest (And Coolest) Houses You’ve Ever Seen is property of The BiggerPockets Blog. and is Copyright

Meeting with clients this time of the year is great for my Bigger Pockets writing….it creates lots of real life situations that I can share with you guys on things to look out for and mistakes to stay away from. Today I wanted to talk about legal entity mistakes. I am not an attorney so I do not have the credentials to provide you with legal advice. In fact, my legal opinion is probably worth about a dollar, if that. Nonetheless I would still like to share these common errors that I see with you and I would love to also hear some comments from attorneys in our Bigger Pockets community as well.

Here is the Common Scenario:

A client walks in with their tax information and tells me they have formed a few legal entities. Company A was formed to hold rental property on Main Street. Company B was formed to hold property on Harbor Street. Company C was formed for some fix and flip that they were planning on doing. And last but not least Company D was formed to be the holding company of all of these entities. My first question is generally: Great, tell me how the new entities have been working out for you?

Inevitably, there will be the client who turns red and then tell me that they have actually not used any of these entities that were created. Rental properties are still held by their personal names, rent checks still being made to their personal accounts. What about the game plan for that lucrative fix and flip business? Well, it was hard to get a property under contract so no deals have actually been done in the entity just yet.

Related: C Corporation: The Active Real Estate Investor’s Preferred Choice of Entity

Reality Check…

This means that I, as the tax advisor, have to be the bearer of bad news and give them a reality check. Essentially, what has happened is that the client has incurred a lot of costs (i.e.: legal fees, state fees, etc.) and time to form these legal entities that they are not getting any benefit for. Why would someone go through all the trouble of forming entities for asset protection and tax write offs but then never actually use the entities? I can’t answer that question myself….but I can say that this scenario applies to a lot of people that I meet with. So, if what I described above sounds eerily like you, don’t feel too bad because you are not alone.

My guess as to why this happens is that I think maybe some investors have a false sense of security in that they think by simply paying an attorney to form a legal entity that somehow they magically get asset protection. Well….this is definitely not the case. Based on my experience, owning a legal entity alone provides you with no real asset protection. You actually need to be utilizing the entity correctly and in the way that you attorney intended for you to use it before you get any real asset protection.

The minimum to be done is to at least transfer your property into the entity. Title should definitely be transferred out of your personal name if you want to protect your personal assets from potential lawsuits.

You will also want to makes sure you set up a company bank account for your entity so that the account can be used to receive income and pay expenses with. This way you can show that the entity is distinct and separate from you. Another great benefit of having an entity bank account is that it makes things a heck of a lot easier for you at tax time. If you have ever paid your real estate expenses from your personal bank accounts, you know what I am referring to when I talk about the pain and time needed for you to break out the real estate expenses from your personal bank account at tax time. This is something that can easily be avoided if you have an entity bank account to pay for all your real estate related expenses.

Related: What Type of Legal Entity Should I Hold my Real Estate In?

Furthermore…

Having separate bank accounts can help you tremendously for audit protection purposes. IRS generally puts more weight to something being a business expense if it is paid out of a legitimate operating legal entity rather than out of your personal bank account.

Now what about that entity you formed last year for your planned fix and flip business? Well, I would definitely ask yourself the question: Do I plan on flipping properties this year? If the answer is yes, then start using that entity for all your flip related income and expenses. If the answer is no, then now is a good time to visit with your CPA to strategize on what the best thing is to do with that entity. For example, are there other ways we can use this entity to save taxes or minimize liability exposure? Or is it simply better to just dissolve the entity and minimize costs of an entity that is no longer needed.

Another common myth that I see is that people often think that because a legal entity was not used, there are no taxes to be filed. That is definitely incorrect. Yes, it is possible that in certain instances, you would not be required to file a tax return if no business was done in the entity. However, most of the time tax returns are required even for entities with no activities. Whether a tax return needs to be filed for an entity or not will depend on the state you live in, the state the entity is formed in, as well as who the owners are. The IRS imposes hefty penalties for entities that don’t file the required …read more