[quote author="No_Such_Reality" date=1214198575]Panda,
I've been pondering your situation. Given your business, I'm assuming you have a good tax person. If you don't you need one. The second thing is have you worked out a plan with a fee only financial advisor? You probably should. Your original post, which I'm glad you overwrote, identified how much you are actually saving on top of retirement savings annual. Which is quite impressive.
There's no getting around it, your business is generating substanial cash flow. Given such, the tax implications of moving to California and maintaining other properties raises the question of selling the Georgia place and replacing it with a nice little 'primary' residence in Texas or Washington for tax impacts. You could do something in Austin where you rent it to grad-students during the year and live there a couple weeks, to shelter your income. Granted with the business, you can make a lot of income virtually vaporize, still IL has a 3% rate and you'll be paying nearly 9.3% in California.
My 2nd question on the Georgia place was in regards to the potential above market rent, why is the tenant paying it? Or did I misunderstand and market rents are that high and owning is cheaper than by in that area? I'd find that surprising since Atlanta had CA comparable bubble. Unless you know the person well that is there, an absentee landlord and tenant with above market rates is a bad combo.</blockquote>
NSR,
My CPA is here in Chicago, however once I move to Irvine I plan to look for a new one. If you have anyone good in mind, please let me know. I've used financial advisors before in my early 20s and many gave me the wrong advice looking back now. I have always done my own research, and looked to financial/investment books and mentors when making my investment decisions. I am also study very closely to see which sectors Warren Buffet is investing in. When it comes to equity investments, he is my hero. I prefer to manage my own assets and investments.
I've been contemplating my options with the Georgia home. Managing an out-of-state rental property has its own challenges as you can't touch/feel/ and see the condition of your home. I am very lucky with an excellent tenant who has always paid in time and he has been my tenant for almost 2 years now. Ideally I would like to sell my Atlanta home to my tenant and with the equity from my Georgia home, buy my second home in Irvine where I can rent it out. My lawyer recommended to me to buy my primary home in Irvine in a living trust and if I decide to sell my Atlanta home and buy a second property in Irvine or Aliso Viejo to purchase it as an LLC for maximum asset protection. Ideally I prefer to have all of my real estate holding in Orange County, CA than one home in Texas and another in Georgia so that I can manage them better.
To your second question, the market was very hot in Atlanta in 2006. When I found my tenant, $3000 - $3200 was the going market rate. For example, there is one house in my neighborhood where the asking rent is $2300 because the home owner is moving back to Korea and he deperately needs to cover his mortgage payments. So to answer your question, if you are not deperate, you are still able to collect $3000 rent for the same house, however it is just more difficult now than two years ago. I bought my Atlanta SFR in June 2006 for $550,000 and prices have reduced to $539,900 so Panda is drinking a little cool aid myself. Again, I really hope that Atlanta market does rebound by next year.
Atlanta did not have bubble that OC and LA did. Real Estate prices only rose 4-5% while LA and OC was going up 20% a year. Currently with 20% down, your rent will cover your mortgage, with a little cash left over.
I hope that this answered all of your questions.
Panda
