I have a deal for you.
Pay me 1000$ each month starting on January first.
Every month I will give you 600$ on the last day of the month.
Every month I’ll store away 266.66$ in an account called equity.
On April 15, 2018 I’ll give you 210$ in time for tax time.
On subsequent years, I’ll give you 840$ On April 15 in time for tax time.
We’ll do this for five years (sixty months).
On December 31st, 2022 I will give you 16000$ from the equity account.
On April 15 2023, I’ll give you 630$ in time for tax time.
We can double, triple, or more the numbers above if you’d like.
(In case it is not clear, in the above example, I function as both the bank that holds a mortgage and a tenant. From the prospective of the landlord, the bank and tenant being the same entity is a non-factor. I am sure some bank’s employees rent.)
The above deal is about as good as purchasing a home and renting it at a lost. I’d contend it is better because you don’t need to involve a bank, lawyers, managing tenant issues (ex. vacancies, not paying, breaking things), or worrying about filing all the taxes for the property and doing regular maintenance. In fact, unlike a home where after five years the equity is tied up in the home, in the above scheme you get 16K in liquid equity (cash)!
It only costs you 800$ a year yet I save you 840$ a year in taxes!!!
An important point to all readers: if you want to save 100$ in taxes, I will gladly take 150$ from you and pay 100$ towards your tax bill.
