calmloki
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
So here's the overview:
Couple, no kids, 59YO. Early retirement is fast escaping, though some might argue i don't do enough to have anything to retire from. Still, i don't feel free to leave for any length of time, and when i do leave it just means i have the problems that cropped up in that time to deal with.
Most of our income comes from our 50-odd rental units, and it's enough that 2008 saw us put about a years living expenses in "new money" into savings or stocks. Income from loans or CDs is (in my mind game) income on "old money" and i don't include it.
As time goes on pieces of our bodies keep falling off or breaking down - shoulder surgery on one shoulder, now the other is keeping me awake, hernia i'm reluctant to take surgery down time for, my honey's extensive and ongoing dental R&R. Property sales don't seem to be happening - and given the income i don't see any reason to have a panic-y firesale.
If we were able to sell our properties the tax man will scoop up about 25% of the sale price, leaving us with 75% to invest, probably a bit more than 1.5M. If we could get 5% on that 1.5M that's $75k/year. If we keep renting the places we probably see $125k after budgeting in 20k for capital improvements each year. If we keep renting the places and improving them and wait for the property market to return we might be $50k/year to the good, plus sell for more during a time when dollars are worth less rather than holding dollars as they become worthless. ahhh, worth less.
So i'm getting this idea.... There is a 35YO man, son of my best friend, now probably my best friend. Sal has known JT since he was a baby, he lived with us for about a year when he was 22. JT has always been a worker - we have different personalities, but he's one of the few people i know that i would want if my life were on the line. Solid sense of honor. JT and his wife are having a baby soon - just as the HP silicone wafer job he got while living with us is going away. Sal just heard that the dealership where she works is cutting wages 10% to try and stay afloat - they nearly fired the service manager (her ex long-time job), but reconsidered - Sal's doing the 1/2 of every month with her Mom in Ca. thing and it would put a load on her to try and be service manager in her spare moments - i might get cranky. If the dealership does go belly up the main effect it would have on us is health insurance (we pay full freight for mine through her policy, she is covered). Hmmm.
JT has had some admiration for our lifestyle and the rentals. He has great yardwork and masonry skills and plumbing and electrical we've worked on together - he's getting there. His wife is great on customer service - worked waiting table and bartending at high dollar locations, great at making people feel good and a diamond sharp hard line. Good team.
I'm thinking of forming a sub-chapter S corporation, hiring JT at a salary as a manager, and having more freedom time. Idea is that the corporation could get insurance for Sal & I and JT's young family. I've never had a corporation - in the past our tax lady has argued against it as not being worth our while. Never have paid a salary to anyone with witholding - always subcontractors or a partner with an even split which made doing FICA easy to figure. That makes me a total n00b on this stuff.
Liability i'm not worried about - we have insurance and none of us are stupid. Relationship i have some concern for, but we respect one another - helped JT buy and sell his first home and he bought from us & is living in the first house Sally & i did together. He & his wife are excited about the possible job - could be a win-win for us all.
I'm just really curious about the requirements of Sub-chapter S on FICA wages (heard that we might have to pay ourselves a base $8000 salary to meet FICA minimums, then be able to take the remainder as distributions.
What are the advantages and negatives with incorporating? Do i get a free car? Annual meetings in Hawaii? Can we write in yard care and an upstairs maid for the principals (Honey & me?). Will insurance be buyable where it wouldn't for lone wolves? Is Quickbooks the answer to many of life's persistant questions? (we're quicken only right now...)
Couple, no kids, 59YO. Early retirement is fast escaping, though some might argue i don't do enough to have anything to retire from. Still, i don't feel free to leave for any length of time, and when i do leave it just means i have the problems that cropped up in that time to deal with.
Most of our income comes from our 50-odd rental units, and it's enough that 2008 saw us put about a years living expenses in "new money" into savings or stocks. Income from loans or CDs is (in my mind game) income on "old money" and i don't include it.
As time goes on pieces of our bodies keep falling off or breaking down - shoulder surgery on one shoulder, now the other is keeping me awake, hernia i'm reluctant to take surgery down time for, my honey's extensive and ongoing dental R&R. Property sales don't seem to be happening - and given the income i don't see any reason to have a panic-y firesale.
If we were able to sell our properties the tax man will scoop up about 25% of the sale price, leaving us with 75% to invest, probably a bit more than 1.5M. If we could get 5% on that 1.5M that's $75k/year. If we keep renting the places we probably see $125k after budgeting in 20k for capital improvements each year. If we keep renting the places and improving them and wait for the property market to return we might be $50k/year to the good, plus sell for more during a time when dollars are worth less rather than holding dollars as they become worthless. ahhh, worth less.
So i'm getting this idea.... There is a 35YO man, son of my best friend, now probably my best friend. Sal has known JT since he was a baby, he lived with us for about a year when he was 22. JT has always been a worker - we have different personalities, but he's one of the few people i know that i would want if my life were on the line. Solid sense of honor. JT and his wife are having a baby soon - just as the HP silicone wafer job he got while living with us is going away. Sal just heard that the dealership where she works is cutting wages 10% to try and stay afloat - they nearly fired the service manager (her ex long-time job), but reconsidered - Sal's doing the 1/2 of every month with her Mom in Ca. thing and it would put a load on her to try and be service manager in her spare moments - i might get cranky. If the dealership does go belly up the main effect it would have on us is health insurance (we pay full freight for mine through her policy, she is covered). Hmmm.
JT has had some admiration for our lifestyle and the rentals. He has great yardwork and masonry skills and plumbing and electrical we've worked on together - he's getting there. His wife is great on customer service - worked waiting table and bartending at high dollar locations, great at making people feel good and a diamond sharp hard line. Good team.
I'm thinking of forming a sub-chapter S corporation, hiring JT at a salary as a manager, and having more freedom time. Idea is that the corporation could get insurance for Sal & I and JT's young family. I've never had a corporation - in the past our tax lady has argued against it as not being worth our while. Never have paid a salary to anyone with witholding - always subcontractors or a partner with an even split which made doing FICA easy to figure. That makes me a total n00b on this stuff.
Liability i'm not worried about - we have insurance and none of us are stupid. Relationship i have some concern for, but we respect one another - helped JT buy and sell his first home and he bought from us & is living in the first house Sally & i did together. He & his wife are excited about the possible job - could be a win-win for us all.
I'm just really curious about the requirements of Sub-chapter S on FICA wages (heard that we might have to pay ourselves a base $8000 salary to meet FICA minimums, then be able to take the remainder as distributions.
What are the advantages and negatives with incorporating? Do i get a free car? Annual meetings in Hawaii? Can we write in yard care and an upstairs maid for the principals (Honey & me?). Will insurance be buyable where it wouldn't for lone wolves? Is Quickbooks the answer to many of life's persistant questions? (we're quicken only right now...)
