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06-22-2018, 08:22 AM
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#121
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Posts: 12,654
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Sometimes, it even hits the credit union a day or two early! As when the 1st is a holiday, or a Sunday.
Just like getting SS (which I won't get), except you can start younger!
Quote:
Originally Posted by ExFlyBoy5
I call my monthly pension deposit "wake up pay" As long as I wake up on the 1st of every month, then it keeps rolling in. Actually, I can sleep all day and it still hits the bank.
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__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
Even a blind clock finds an acorn twice a day.
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06-22-2018, 08:26 AM
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#122
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Thinks s/he gets paid by the post
Join Date: Mar 2008
Location: Atlanta Suburb
Posts: 1,499
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I can think of only one entirely passive activity and most of us are trying to avoid/delay it!
__________________
"Oh, twice as much ain't twice as good
And can't sustain like one half could
It's wanting more that's gonna send me to my knees" - John Mayer
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06-22-2018, 08:50 AM
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#123
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Recycles dryer sheets
Join Date: Jun 2015
Posts: 350
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I think of my monthly rental income the same way. The thing is you worked a very lot of non-passive hours to earn your pension. My rental income is generated working 40-60 hours a year. I'd consider it for the most part quite passive. If nothing else I'm paid a significant amount for the actual work it takes if calculated by hourly wage.
I could work full time for a year and not generate the income I do through the rentals only working 40-60 hours a year. I view it more as a lucrative paid volunteer work.
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06-22-2018, 09:16 AM
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#124
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Recycles dryer sheets
Join Date: Apr 2016
Posts: 191
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I just did all the math so I could present a current summary here.
My passive real estate portfolio consists of DST and LLC investments which are comprised of:
31 necessity-based retail properties throughout the country
4 multi-family projects in NC and AZ
4 hotels in AZ
other properties held via short-term notes or diversified direct ownership in funds. (too many details to list here)
I own small percentages of these properties, so the total stake isn't as large as you might think.
The real estate portion of my portfolio is 37% of my net worth and returns 9.35% cash-on-cash which pays 65% of my monthly spending. I never could have RE if not for this income stream. Considering that two of the properties (about 14%) aren't even paying distributions yet, I feel pretty good about not having to return to work.
My combined effort in managing this portfolio consists of reading quarterly reports and listening to the occasional conference call. A few months ago, one of the DSTs was sold, so I stepped up my engagement to select a rollover property and managed the 1031 exchange. It took about 20 hours in a month with most of it being paperwork. Vetting multiple properties and picking the best replacement property was the most intense effort, but I enjoyed it. This DST rollover may occur every 7-10 years per property.
My active dividend-paying stock and bond portfolio is 40% of my net worth and returns 4.88% (dividends only) which pays 35% of my monthly spending.
This is definitely an active pursuit as I continually adjust its makeup for reliable long-term performance.
You'll note that the stock&bond portfolio is larger than the real estate portfolio, but provides only half the income.
So if one were to grade the EFFICIENCY of these two portfolios, the real estate would vastly outperform the stock&bonds.
ANY well-diversified portfolio REQUIRES exposure to alternative assets, with real estate being one of these. I am overweight in real estate, because I find it easy to understand and it pays high returns. You may be able to get similar exposure to this asset class by buying REITs, and I do too, for areas where I'm underexposed, but the post-tax returns of direct ownership are hard to beat. And it's efficient, which is as close to passive as one can get when discussing any investment.
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06-22-2018, 09:22 AM
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#125
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
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Quote:
Originally Posted by Joylush
I think of my monthly rental income the same way. The thing is you worked a very lot of non-passive hours to earn your pension. My rental income is generated working 40-60 hours a year. I'd consider it for the most part quite passive. If nothing else I'm paid a significant amount for the actual work it takes if calculated by hourly wage.
I could work full time for a year and not generate the income I do through the rentals only working 40-60 hours a year. I view it more as a lucrative paid volunteer work.
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But didn't you have to work to earn the money to buy your rental properties, the same way a pensioner had to work all those hours to earn his pension?
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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06-22-2018, 09:28 AM
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#126
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: ATL --> Flyover Country
Posts: 6,649
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Quote:
Originally Posted by Joylush
The thing is you worked a very lot of non-passive hours to earn your pension.
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That is a good point, but I spent several years traveling the world seeing some very cool places on the tax payers dime. Then again, I spent quite a while trying my best not getting killed, too!
__________________
FIRE'd in 2014 @ 40 Years Old
Professional Retiree
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06-22-2018, 09:58 AM
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#127
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,888
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Quote:
Originally Posted by Bruceski44
... My active dividend-paying stock and bond portfolio is 40% of my net worth and returns 4.88% (dividends only) which pays 35% of my monthly spending.
This is definitely an active pursuit as I continually adjust its makeup for reliable long-term performance.
You'll note that the stock&bond portfolio is larger than the real estate portfolio, but provides only half the income.
So if one were to grade the EFFICIENCY of these two portfolios, the real estate would vastly outperform the stock&bonds.
...
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I must disagree, but before I do, I want to be clear that I have nothing to say about you liking to have real estate and having it work for you, that's your choice, and it's fine.
But, you (maybe unknowingly) are putting up a straw man argument against a portfolio. A couple things you just have wrong:
1) A portfolio must be measured by Total Return. It's basic arithmetic, it's the only thing that matters. If it didn't, not a single person with a single functional brain cell would purchase BRK, it provides zero "income", and has an almost zero chance of ever providing "income". Yet many people have done very well with it. It's not an illusion, it is real money. Total Return. Period.
A balanced portfolio 70/30, returned ~ 10.99% in the past 12 months. More than double the number you are using. Using the 10.99 number, your 40% portfolio should have provided 78.8% of your monthly spending. Sure, that number will vary more than the divs alone, but it also will outpace divs alone in the long run.
2) A stock/bond portfolio does not require active pursuit. A "couch potato" portfolio has been shown to out-perform most attempts at active management.
-ERD50
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06-22-2018, 10:02 AM
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#128
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Recycles dryer sheets
Join Date: Jun 2015
Posts: 350
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Quote:
Originally Posted by scrabbler1
But didn't you have to work to earn the money to buy your rental properties, the same way a pensioner had to work all those hours to earn his pension?
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Well kind of but no more than anyone who saves some of their income and invests it in other assets.
And in the case of mortgages you don't need much of your own money. You can make the asset work for you using other people's money to purchase and eventually pay off the asset which you then own free and clear. You don't have that option with more traditional-passive investments.
Recent Example: My significant other purchased a distressed property using all borrowed funds. House cost $54,000. He borrowed $70,000 so as to have rehab funds which he spent on the property. He nets (after costs) $5,000 a year on the property (bought in Sep 2014). So he's earned roughly $20,000 in rental income to date. In addition the property is now valued at $115,000 and he owes about $65,000 on it. So he's potentially earned $70,000 on the property in 4 years having spent zero of his own money (excluding his original sweat equity).
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06-22-2018, 10:15 AM
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#129
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,361
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Quote:
Originally Posted by ERD50
I must disagree, but before I do, I want to be clear that I have nothing to say about you liking to have real estate and having it work for you, that's your choice, and it's fine.
.... A portfolio must be measured by Total Return. It's basic arithmetic, it's the only thing that matters. If it didn't, not a single person with a single functional brain cell would purchase BRK, it provides zero "income", and has an almost zero chance of ever providing "income". .....
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Exactly what I was thinking... price appreciation is such a significant part of owning securities that have different dividend yields that it needs to be included in order to make a fair comparison....as would property appreciation which is typically modest in most areas.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-22-2018, 10:24 AM
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#130
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,361
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Quote:
Originally Posted by Joylush
... My rental income is generated working 40-60 hours a year. I'd consider it for the most part quite passive. If nothing else I'm paid a significant amount for the actual work it takes if calculated by hourly wage. .....
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Interesting perspective..... now consider the hourly wage of owning an investment portfolio... while I play around with mine because I like it and it is a bit of a hobby, I could easily restructure it so it would take no time at all... so if a $1 million portfolio returned $70k in a year and took 2 minutes of effort a year, then that is $2,100,000/hour. Just sayin.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-22-2018, 10:29 AM
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#131
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gone traveling
Join Date: Nov 2011
Location: The Deep South Bay
Posts: 744
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Calculate my rate of return on this deal, probably my least lucrative property with having a new AC unit and 2 evictions with rehabs during this 9 year period.
Purchase price 90k now 280k
Rental income 9 years = 80 months for vacancy $88k
Tax ($8400) manager($6440) repairs/evictions (16k) total expense $30,800
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06-22-2018, 10:33 AM
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#132
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,361
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You've done very well, but numbers like you have quoted are not common for real estate investments.... just like numbers for the angel investors in Apple are not common either.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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06-22-2018, 10:42 AM
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#133
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
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Quote:
Originally Posted by pb4uski
Interesting perspective..... now consider the hourly wage of owning an investment portfolio... while I play around with mine because I like it and it is a bit of a hobby, I could easily restructure it so it would take no time at all... so if a $1 million portfolio returned $70k in a year and took 2 minutes of effort a year, then that is $2,100,000/hour. Just sayin.
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Similarly, it depends on where you draw the line between actual time spent "working" on the portfolio versus simple "hobby" time such as basic record-keeping and monitoring.
My portfolio is very simple on both counts, especially the former which includes rarely rebalancing, using excess dividends to buy new shares, and changing the distribution option for dividends once in a while. I spend maybe 2 hours a year on these tasks, so a $40k income translates to earning $20k an hour!
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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06-22-2018, 10:43 AM
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#134
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Full time employment: Posting here.
Join Date: Jul 2013
Posts: 953
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Can't we all agree that my ___ is bigger than your ____?
__________________
Well it's all right, we're heading to the end of the line...
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06-22-2018, 10:44 AM
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#135
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Recycles dryer sheets
Join Date: Jun 2015
Posts: 350
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Quote:
Originally Posted by pb4uski
You've done very well, but numbers like you have quoted are not common for real estate investments.... just like numbers for the angel investors in Apple are not common either.
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Not all real estate purchases are good investments. Not everyone is a good landlord. But obviously there are many who are and who do make good investments which is evident by real estate investors who post here.
Those who had poor experiences aren't likely going recommend real estate investing.
I've had excellent results but have been doing it for 30 years. So I'm going to tend to be pro real estate investing. Admittedly though it is not for everyone.
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06-22-2018, 10:54 AM
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#136
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Thinks s/he gets paid by the post
Join Date: Mar 2008
Location: Atlanta Suburb
Posts: 1,499
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Quote:
Originally Posted by Joylush
...........I've had excellent results but have been doing it for 30 years. So I'm going to tend to be pro real estate investing. Admittedly though it is not for everyone.
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My DW and I ran into a friend in Home Depot the other day. The friend was thinking about buying a rental. She knew we had owned rentals and asked about our experience. At the same time, I blurted out "great" and the DW blurted out "terrible". Obviously we owned the same properties.
So much for getting this forum to agree. I can't even get agreement on this topic in my own household with the same properties.
__________________
"Oh, twice as much ain't twice as good
And can't sustain like one half could
It's wanting more that's gonna send me to my knees" - John Mayer
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06-22-2018, 12:16 PM
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#137
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,888
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Quote:
Originally Posted by flintnational
My DW and I ran into a friend in Home Depot the other day. The friend was thinking about buying a rental. She knew we had owned rentals and asked about our experience. At the same time, I blurted out "great" and the DW blurted out "terrible". Obviously we owned the same properties.
So much for getting this forum to agree. I can't even get agreement on this topic in my own household with the same properties.
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We need some of your wife's posts for balance! While I'm kidding, it actually is quite telling that she views it the opposite of you.
I've explained my B&H, simple broad-based index investing approach to DW, and she 'gets it' (I did play with more active approaches in the past). She would have no problem taking over for me, but would probably hire someone to do the taxes (or maybe one of our kids would walk her through it, since I've taught them how to do theirs). Though I'll add that our B&H portfolios add very little effort to our taxes. Some divs, maybe a capital gains distribution, and maybe an occasional sale for cash flow (generally not even more than 1x per year).
-ERD50
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06-22-2018, 12:37 PM
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#138
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Dallas
Posts: 1,155
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Quote:
Originally Posted by flintnational
My DW and I ran into a friend in Home Depot the other day. The friend was thinking about buying a rental. She knew we had owned rentals and asked about our experience. At the same time, I blurted out "great" and the DW blurted out "terrible". Obviously we owned the same properties.
So much for getting this forum to agree. I can't even get agreement on this topic in my own household with the same properties.
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My wife and I would probably have the same reaction! The reason is, I am looking at ROC on both equity and labor while my wife would be looking at my time away from family!
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06-22-2018, 01:49 PM
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#139
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Thinks s/he gets paid by the post
Join Date: Mar 2008
Location: Atlanta Suburb
Posts: 1,499
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Quote:
Originally Posted by pjigar
My wife and I would probably have the same reaction! The reason is, I am looking at ROC on both equity and labor while my wife would be looking at my time away from family!
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Yep. I calculated the return and she calculated the hassle factor.
__________________
"Oh, twice as much ain't twice as good
And can't sustain like one half could
It's wanting more that's gonna send me to my knees" - John Mayer
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06-22-2018, 01:56 PM
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#140
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Thinks s/he gets paid by the post
Join Date: Mar 2008
Location: Atlanta Suburb
Posts: 1,499
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Quote:
Originally Posted by ERD50
We need some of your wife's posts for balance! While I'm kidding, it actually is quite telling that she views it the opposite of you. ..........-ERD50
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Hey, wait a minute! Maybe she is already on this forum and I don't know it. That would explain the occasional push back I get with some posts!
__________________
"Oh, twice as much ain't twice as good
And can't sustain like one half could
It's wanting more that's gonna send me to my knees" - John Mayer
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