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sowanome

Passive Income Ideas w/Tax benefits

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With the stock market returning 9-12% a year on average while not accounting for capital gains tax, portfolio mgt. fees, inflation, lack of tax writeoffs (okay you get where I'm going...), What are some other Investments that provide monthly cash flow with a consistent yearly return that also provide maximum tax reductions while also appreciating yearly? The great thing about some of these ideas are that they provide legal tax loop holes which heavily reduce your taxable income, which equates to an instant Return directly from yours truly, Uncle Sam!!

Please add to my list and let's all educate one another and become more financially aware:

-Investment Property (Monthly cash flow, Tax deductions of depreciation/mortgage interest/expenses/mileage/real estate taxes,etc.)

-Parking spaces in high density cities (i.e. Chicago/NYC...Monthly cash flow, Tax deductions, low/no maintenance, consistent appreciation,etc.)

-Taxi Cab Medallions (Look it up in Chicago/NYC/Boston...Buy the permit and charge rent for your "Paper Permit" daily/monthly)

-Affiliate Programs/Multi Lvl mkting.

Edited by sowanome

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Avoid affiliate programs/MLM/the "lead generation industry." I know someone who does that full-time, and he says the bottom really fell out of it in the last few years.

You already mentioned rental property. Depending on the type, that seems like a good idea. People gotta live somewhere.

I wouldn't count on parking spaces to consistently appreciate. In my experience, it's not always true.

Standalone parking garages in big cities are having a hard time competing these days. Some offer free car washes, dry cleaning, and other perks just to attract customers. That's because most new development is required to have its own parking, so the third-parties are shut out, except if you're in a bar/restaurant/theater area and can milk the tourists.

I know one five-story parking garage that is now a surface parking lot because the money wasn't there to maintain the structure. Nearby, they're talking about converting one of the big parking garages under Grant Park in Chicago into a data center because so many people are taking mass transit instead of driving.

In 2003, I paid $300/month for a parking space in downtown Chicago. Today, the same garage is charging $130/month for the same space, and it's converted the ground floor parking spaces into street-level retail. Sounds to me like parking might not be the place to be.

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Avoid affiliate programs/MLM/the "lead generation industry." I know someone who does that full-time, and he says the bottom really fell out of it in the last few years.

You already mentioned rental property. Depending on the type, that seems like a good idea. People gotta live somewhere.

I wouldn't count on parking spaces to consistently appreciate. In my experience, it's not always true.

Standalone parking garages in big cities are having a hard time competing these days. Some offer free car washes, dry cleaning, and other perks just to attract customers. That's because most new development is required to have its own parking, so the third-parties are shut out, except if you're in a bar/restaurant/theater area and can milk the tourists.

I know one five-story parking garage that is now a surface parking lot because the money wasn't there to maintain the structure. Nearby, they're talking about converting one of the big parking garages under Grant Park in Chicago into a data center because so many people are taking mass transit instead of driving.

In 2003, I paid $300/month for a parking space in downtown Chicago. Today, the same garage is charging $130/month for the same space, and it's converted the ground floor parking spaces into street-level retail. Sounds to me like parking might not be the place to be.

Really appreciate the input as that's the only way to learn! Also, I know exactly what your talking about in regards to the costs of parking spaces. I rented a space in 07-08 for $235 across from the Merchandise Mart. that's now renting for $185-200,but the owners of the pkg. spaces got killed when they paid $55-60k+ but now selling for less than $40k. Just had a thought that this would be a good time to buy, but hearing the news that you just mentioned is definitely cause for concern.

Edited by sowanome

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Really appreciate the input as that's the only way to learn! Also, I know exactly what your talking about in regards to the costs of parking spaces. I rented a space in 07-08 for $235 across from the Merchandise Mart. that's now renting for $185-200,but the owners of the pkg. spaces got killed when they paid $55-60k+ but now selling for less than $40k. Just had a thought that this would be a good time to buy, but hearing the news that you just mentioned is definitely cause for concern.

Storage seems to be an ever-expanding industry these days. I read an article recently that stated the reason is that a lot of people are starting to define themselves by what they own, rather than who they are as a person.

With the recession and so many people being forcibly downsized, maybe this is an opportunity area.

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I wouldn't count on parking spaces to consistently appreciate. In my experience, it's not always true.

Standalone parking garages in big cities are having a hard time competing these days. Some offer free car washes, dry cleaning, and other perks just to attract customers. That's because most new development is required to have its own parking, so the third-parties are shut out, except if you're in a bar/restaurant/theater area and can milk the tourists.

I know one five-story parking garage that is now a surface parking lot because the money wasn't there to maintain the structure. Nearby, they're talking about converting one of the big parking garages under Grant Park in Chicago into a data center because so many people are taking mass transit instead of driving.

In 2003, I paid $300/month for a parking space in downtown Chicago. Today, the same garage is charging $130/month for the same space, and it's converted the ground floor parking spaces into street-level retail. Sounds to me like parking might not be the place to be.

I think you may overstate the general decline in value of parking. In particular, there is little evidence that an increase in the number of people taking mass transit has anything to do with the proposal to convert a portion of the Grant Park parking into a data center. That parking is relatively inconvenient to office workers and is only heavily used when there are large events in Grant Park. Further, there has been no significant increase in transit usage in Chicago. The CTA's ridership has been pretty stable.

Here is an interesting article discussing investments in parking spaces. Note that it mentions Chicago FWIW ... “The average parking space on the ParkingSearch.com website for the city of Chicago—that’s any ZIP code that starts with 606—was $28,000 in 2005; $30,000...in 2006; and about $33,000 in 2007.” and " lease rates for parking spaces (in Chicago) have increased from $260 per month in 2005 to $272 per month in 2006, and to $285 per month in 2007, Sinclair said. Of course,since then, with the recession and real estate bust and all, prices have probably dropped. But as Sowanome speculated, that might make it a good time to buy . . .

Another article Sowanome might find helpful.

Edited by Houston19514

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I think you overstate the decline in value of parking. In particular, there is little evidence that an increase in the number of people taking mass transit has anything to do with the proposal to convert a portion of the Grant Park parking into a data center. That parking is relatively inconvenient to office workers and is only heavily used when there are large events in Grant Park. Further, there has been no significant increase in transit usage in Chicago. The CTA's ridership has been pretty stable.

More interesting facts in regards to transit usage...My original thought is that with future population estimates and reliable job locations (i.e. Merchandise Mart/river north just north of loop..not downtown in the loop, bc that place is a ghost town after 6pm) in an international city, at least a space or even storage units will appreciate at the same rate of inflation or more in the first five years while providing return in the form of tax reductions. The other facet is that there will always be a % of tenants who will need an additional parking space or storage that's not readily available from the condo itself.

Any other ideas?

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With the stock market returning 9-12% a year on average while not accounting for capital gains tax, portfolio mgt. fees, inflation, lack of tax writeoffs (okay you get where I'm going...), What are some other Investments that provide monthly cash flow with a consistent yearly return that also provide maximum tax reductions while also appreciating yearly? The great thing about some of these ideas are that they provide legal tax loop holes which heavily reduce your taxable income, which equates to an instant Return directly from yours truly, Uncle Sam!!

Please add to my list and let's all educate one another and become more financially aware:

-Investment Property (Monthly cash flow, Tax deductions of depreciation/mortgage interest/expenses/mileage/real estate taxes,etc.)

-Parking spaces in high density cities (i.e. Chicago/NYC...Monthly cash flow, Tax deductions, low/no maintenance, consistent appreciation,etc.)

-Taxi Cab Medallions (Look it up in Chicago/NYC/Boston...Buy the permit and charge rent for your "Paper Permit" daily/monthly)

-Affiliate Programs/Multi Lvl mkting.

There is such a thing as passive income with tax advantages (think muni-bonds) (and do not confuse real estate for a passive investment), but there is no such thing as passive wealth management. Do not allow your eyes to glaze over at the sight of a periodic check. Always consider the full costs of investment, inclusive of your time, and the risks associated with the value of the underlying asset.

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There is such a thing as passive income with tax advantages (think muni-bonds) (and do not confuse real estate for a passive investment), but there is no such thing as passive wealth management. Do not allow your eyes to glaze over at the sight of a periodic check. Always consider the full costs of investment, inclusive of your time, and the risks associated with the value of the underlying asset.

How much do muni-bonds typically payout in terms of IRR%? What type of tax incentives are avail. and are they taxed in the "Cap gains" world?

Maybe it's something worth looking into...thx

Edited by sowanome

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How much do muni-bonds typically payout in terms of IRR%? What type of tax incentives are avail. and are they taxed in the "Cap gains" world?

Maybe it's something worth looking into...thx

They're just a tad more than treasuries, but they're low-risk and tax-free, with returns that are commensurate with the risk and the lack of taxes.

Yeah, I know you were hoping that I'd say 20%. Sorry. Investments don't work that way.

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They're just a tad more than treasuries, but they're low-risk and tax-free, with returns that are commensurate with the risk and the lack of taxes.

Yeah, I know you were hoping that I'd say 20%. Sorry. Investments don't work that way.

Yep, thx. I looked into some muni bonds and they don't look bad at all, esp if u are gaining 7-8% return tax free w/o maint. costs. Not 15-20%, but that equates to 9-11% a year, not bad at all Niche! A few muni's could really serve as a stable bond flow and a way to have your money WORK for you and not the opposite.

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Yep, thx. I looked into some muni bonds and they don't look bad at all, esp if u are gaining 7-8% return tax free w/o maint. costs. Not 15-20%, but that equates to 9-11% a year, not bad at all Niche! A few muni's could really serve as a stable bond flow and a way to have your money WORK for you and not the opposite.

Damn. Is it that much!? Which bonds are you looking at?

Be careful not to invest in the City of Detroit's bonds (or Houston's for that matter).

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Damn. Is it that much!? Which bonds are you looking at?

Be careful not to invest in the City of Detroit's bonds (or Houston's for that matter).

Or anything in the state of California.

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Damn. Is it that much!? Which bonds are you looking at?

Be careful not to invest in the City of Detroit's bonds (or Houston's for that matter).

I checked into a few.

I'm curious at which ones he look at.

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I checked into a few.

I'm curious at which ones he look at.

I can't recall which site I went to but I believe it had something to do with New Jersey....I guess it deals with all of the taxes that they collect!

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So a home builder is building a a huge master planned community in Baytown close to all the plants in Mt belvieu. There are still huge chunks of empty land around there.

What would be a good way to make money from the soon to be built community?

Strip centers?

Buying land surrounding the planned community and holding it?

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Perhaps a REIT that knows about this area?

This got me thinking... Those megachurches... Is there any way one could invest in those? Not as a member of the congregation but as an investor.

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