Calculating Cash on Cash Return from Multiple Properties

The gist of this exercise is to get data from Zillow, import it into excel using the “Zillow to Excel” Chrome extension, and then creating another custom tab on the Excel file to analyse the data. We take annual income minus expenses and divide that over our cash investment which consists of our downpayment and closing costs. If there is rehab or initial repair work that would also be in the denominator.

Watch for yourself and see if you can make your own cash return spreadsheet to find the best deal! If you wouldn’t mind I’ve love for you to subscribe to my YouTube channel while you’re at it by clicking on the video via the “Watch on Youtube” link and subscribing.

The Fake Wealth Pyramid Explained – Video

A lot of people fall into the trap of believing they have it well off based on what they can “afford” to buy. If they aren’t buying these off of residual they should think again. Watched the embedded video for the full content.

20 Years Since US Government Ran a Surplus

“The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale” -Thomas Jefferson

“Government debt is a system, not only ruinous while it lasts, but one that must soon fail and leave us destitute” – Abraham Lincoln

If you’ve graduated from university in the past 20 years most likely you’ve been taught that deficit spending is good for an economy, you’re also most likely aware that for the past 20 years that we’ve had consistent government deficit spending. The last time the government ran a surplus was between 1998 to 2001. Going back further the last surplus before 1998 was in 1969 when Nixon took office. The period between including the 70’s and 80’s the US experienced high inflation but on paper PPP per capita GDP also went up. If you look at the chart below the Federal Debt was still less than 60% of GDP throughout the 70’s and 80’s but as of the latest data reported at the end of 2020 we are currently at 127% Debt/GDP.

Federal Debt as % of GDP

The last time the US has ever had this much Federal Debt was back in 1945, when the US had not only spend a lot of money on Roosevelt’s New Deal to get out of the Depression but also we had spent an enormous amount of money on bringing an end to WWII.

US Public Debt Historical

 

The US has disastrously mismanaged the COVD-19 crises and unfortunately had to pay a lot of money because of it. How many rounds of stimulus will be enough, or will this become the new normal? A major beneficiary of this stimulus has been the stock market and real estate has been buoyed by historically low interest rates. However I think our consumption economy may have rough seas ahead unless it can tackle a few issues:

  1. Tax Evasion by Mega-Corporations – Without getting too much into specifics large corporations have ways to avoid taxes, a luxury not available to smaller businesses. This is a double edged thorn because not only does it stifle competition but also it further contributes to a growing national debt. Add lobbyists to the equation and the little guy has his work cut out for him. Ironically for us the investor class it means we should “go with the flow” and make sure we are at least riding the wave of blue chips and the Silicon six to retirement.
  2. Boosting manufacturing – the US needs to produce goods especially high tech manufacturing so it does not become eclipsed by other countries. It needs to make sure it can make medicines and vaccines domestically as well as cutting edge semiconductors, batteries, and circuit printing. Even though Intel is I would say one generation behind other companies I think the US needs to focus on getting it and other manufacturers caught up with, for example, Taiwan and South Korea.
  3. Repair infrastructure that was built in the 60’s. A lot of the US, especially the power grid and train systems, are woefully out of date. Rather than just giving money away, expanding the idea of UBI, the US should emphasize infrastructure from roads, electricity, trains, hydroelectric, and nuclear energy. Solar panel construction should only be done after evaluating the carbon cost of production and disposal, as well as impact on local environments.
  4. The Suburbs. The Suburbs as a concept were well-intentioned, but common sense and other towns across the world show that it really makes more sense for people to live closer if not walking distance from where they work. Strictly regulated commercial vs residential zoning should be re-evaluated so that people don’t need to travel by car or by train for that matter for everyday life. I think this will become essential as populations grow and in the US as the dollar starts to lose its status as the reserve currency.

So in conclusion, the US has some time left to fix a few things before the Federal Debt becomes an issue too hard to handle. It needs to use the time it has leverage as the world’s reserve currency to put the value of the currency to good use to put us on solid ground going into the future. Other countries have been keeping our standard of living up by creating cheap goods and accepting US dollars for them even though they know we can create dollars out of thin air. The Federal Reserve should keep it’s interest rates low while this transition takes place so the Government Debt doesn’t spiral up to 200% of GDP. Banks should be vigilant as they dole out mortgages with low interest rates to avoid another massive real estate bubble.

Is this going to happen? Probably not. Another large scale event like Covid, such as a new war would really cause issues with our government debt and most likely also crash the stock market. Stagflation may be the new buzzword and everyone will be wishing they were holding gold or bitcoin instead of stocks.

What’s the Future of Bitcoin?

What’s Happened in a Year

So unless you’ve been sleeping under a rock without wifi you’re probably aware that bitcoin has made an astounding jump from about $8,000 to $54,000 in a year. A single bitcoin can now be a downpayment for a house, 31 ounces of gold (today’s gold spot price is $1,710), and depending on where you live in the world a year or two of retirement in comfort.

Now what’s the future of bitcoin? Should I keep it or sell it? Is it going to be killed off by quantum computers?

Should I keep or sell bitcoin?

I wouldn’t sell all my bitcoin just because the price has gone above $50,000. If you would like to use the money in other investments such as real estate I think it would be prudent to sell enough to buy a house but don’t sell everything because I think you’ll regret it.  If you’ve made money on bitcoin via Robinhood I suggest getting rid of it and converting it to “real” bitcoin on your controlled wallet as soon as your situation allows. Keep in mind taxes while you do this.

The whole point of the rise of bitcoin is getting away from holding cash, and putting money in bitcoin puts you in a limited supply cryptocurrency recognized and accepted in many places around the world as a store of value. Not unlike gold has been, which I will get to later.

Should I buy more bitcoin?

Keep in mind bitcoin historically has had huge pumps and then dumps, falling in 2017 from 20k down to the low 3k’s. Maybe this time is different, maybe not. Yes there are a lot more institutions buying up bitcoin such as Tesla and major banks and investment firms, but the possibility still exists for bitcoin to fall and hurt people that put money they depended on in this. If you still want to buy at current prices (mid 50k’s) I’d dollar cost average over a longer period of time by setting aside a few hundred dollars per month to purchase. I’m bullish myself on the long term prospects, but can see the coin drop all the way back to 20k and if that does happen it will be a great time to pick up more.

To me, bitcoin is like gold in a few other aspects. Gold has been around since early civilization, it may not be the smartest thing to carry around to do day to day transactions with but has been recognized a good store of value that is not easily defiled. Other cryptocurrencies that have come out since are not as distributed as bitcoin, meaning they are more easily taken over and manipulated and or controlled by a central authority. Yet even other  cryptocurrencies are not “mined” but instead “pre-mined” and distributed by a central node (such as Algorand). However, these other coins have features such as “proof of stake” which allow in their algorithms to dole out “interest” to existing coinholders. Coins with this feature include but are not limited to: Algorand, Cardano ADA, Cosmos, and Tezos. Of these Cardano ADA has by far the highest market cap with 36.8B as of today (March 9th, 2021). That’s still dwarfed by bitcoin’s enormous 1.001 T market cap. At the bottom of this post you can explore some details on various cryptos but you’ll see that bitcoin is closest to reaching its max supply of 21 million coins. Once that hits we may see price rise even further.

 

Crypto Market Cap

Crypto Market Cap

Should We Worry about Quantum Computers?

Short answer, yes. Quantum computers are far from being mature enough to run sustainably and accurately enough to overload bitcoin mining processing power to overtake 50% computing power and delegitimize the transaction verification process and spoof transactions. However, as the technology improves (and it will) it will post a larger threat to bitcoin. That being said, bitcoin can be upgraded if enough of the miners choose to upgrade and it would be in their best interest to do so to start to build improvements as Quantum computer mature. The largest threat in my opinion would be a state actor working in secret building up Quantum Supremacy before bitcoin (and other encryption used throughout the world for that matter) can adapt itself. I wouldn’t worry about it in the next five years.

If this possibility scares you away from Crypto, I’d just settle for real estate and gold. Any assets not on or depending on the internet for that matter, because ultimately banks and financial institutions and the internet itself and all that rely on it could technically be broken with a mature Quantum computer. All encrypted information over the internet would be at risk.

The bottom line is a new form of cryptography needs to be put in place ASAP before Quantum Computers can be used to destroy the internet, I’m not super worried this doomsday event will occur because safeguards will be built beforehand.