The Ugly Truth About Real Estate as an Investment


Guy A

You make $75,000 per year.

You go extend yourself to buy a $425k house with a monthly mortgage of $2,000/month.

$1,400 of this mortgage payment is all interest payments. Total monthly expenses however, with maintenance, insurance, taxes etc is $3,300.

You go to file taxes in April. You do the math and you realize the total you spent on mortgage interest was $16,800 during the tax year.

To be able to take the mortgage tax deduction, you have to itemize. To itemize it means you can’t take the $6,300 standard deduction every single person in America is able to take.

So you deduct $16,800 from your gross income instead. (which is more)

Assuming (to make this simple) you are taxed at a flat 25% on your then taxable income of $58,200, the total taxes you owe are $14,550 for the previous year.

Guy B

You make $75,000 per year.

You pay $1,600 in rent each month.

You didn’t sign up for a mortgage, so when you file taxes, you take the standard $6,300 deduction leaving you with $68,700 in taxable income.

Your taxes paid for the year are $17,175 based on a simplified 25% tax on your income.


Guy A pays $39,600 per year for the ability to pay $14,550 in taxes.

Guy B pays $19,200 per year for the ability to pay $17,175 in taxes.

Who has more money at the end of the year?

If guy A’s house appreciated at the national average of 3% ($12,750) would the answer change?

If you factored in the $150/month in gas saved for Guy B living closer to work and/or school, would the answer change?

If you factored in the downpayment being invested in the market instead ($12k) as well as the difference in the amount Guy B doesn’t have to pay in real estate expenes each month ($1,700), who has more money over 5 years?

(Note: guy A would have paid down his mortgage by $52,500 and possibly have $63,750 in appreciation in year 5. $1,700/month + $12k initially invested becomes $155k in 5 years in a low cost index fund.)

What about over 30 years?

(Note: over 30 years the $425k house would become an asset worth $1,031,586 vs the renter’s portfolio of $3.6million)

Assuming everything above stayed constant and Guy B paid an additional $800k in rental increase over those 30 years, who would have more money?

If Guy B used his higher cash flow to start a business that began netting him $260k/year during his 3rd year in business, then bought a similar house to Guy A in year 5, assuming the price of the house went up 3%/year, who would have a higher income?

Which one is likely to translate into a higher net worth to pass on to his kids?

Filed under: things Black folks don’t want to discuss.


(Don’t worry, we know you wont do the math on any of these. Its why you still think Jordans are investments lol

Black people love using words and feelings in place of math when making “investment” decisions.)

All about Holding Costs 

Why in the sam hell do black people think they can buy a house and become Warren Buffett? “We gon neva have to work again now that wees got this mortgage!”
If, in a rising market, a house is sold in 2010 for $595k and then resold for $800k in 2015, you didn’t just make $205 thousand dollars, dude!
It costs $4,900/month in whats called “holding costs” for you to have gotten from point a to the point you’re only focused on, the sale. And you can only take that number down by $100/month for every $10k increment you place down on the property.
So how much did you spend to carry a property from point A to point B over those 60 months?

How in the f*ck does this type of math make you rich, let alone wealthy?
And you haven’t even paid your real estate agent yet, champ.
But you sure did just get a plaque from the national negro league for “not paying rent” lol
Meanwhile the future business owners in the community see this and with limited resources, go to the “uncle Jody made “$205,000 just by buying a house!” camp even with all the $1 calculators available to them in the world. Because the truth is if that potential business owner doesnt fall in line, they’ll be made fun of for “paying rent all of their lives”. And with limited resources you have pretty much one of two options early in life – overhead costs at home or overhead costs in business.
And so it continues. Kids getting shot by their peers in the highest homeownership cities in America (which also happen to be the lowest income areas in America —> ). Adolescents being locked up for robbery and drug dealing because there are no economic opportunities. Local police who are funded by property taxes with their hands caught in between it all.
But hey…if only you had that mortgage, your life would be set!
Its the businesses that are the economic hub and job providers in any growing community. Any house appreciation is a RESULT of business owners creating economic opportunities. This is why black houses don’t appreciate (really no houses appreciate but thats for another math discussion).
If you have no businesses (or nothing but liquor stores and fish frys on every block) you have no economic opportunities.
But you got a whole lotta fish though.
Don’t just have a whole lotta fish.

Encourage undercover employees who should be entrepreneurs to play their part, today.
Its time to “unveil some of these b…”
Oh and please fall in love with a calculator…
Recap: A house does not make you wealthy. The business you started to BUY the house does.
Are you ready to avoid the math on that?

Living in Your Birkin Bag in Retirement


“I don’t need no 401k.. I got these Birkin bags n^%”

filed under #thingsbrokepeoplesay

There’s some crackhead article running around trying to confuse broke people into having even less money in life talking about a Hermes bag is a better “investment” than x, y & z.

Namely, they compare the return of one type of hard to find Birkin bag to an investment in the stock market OVERALL since 1980, claiming the bag had a 14.2 percent annual return.

Since it is in fact so easy to fool broke people, specifically when its on something they actually want to believe or on things to help with their own desires, few will realize the article glosses over one glaringly obvious point:

…Any crackhead can compare an ASSET to an **asset class**.

An asset is anything you own of value. An “asset CLASS” is a group of similar assets that contain a majority of like characteristics.

Keurig stock (the manufacturers of the Keurig coffee machine) has had an annual growth rate of **200%** over the last 10 years. That is 200%. Averaged and annualized. Every.single.year. (overall total is about 4,000 % rate of return)

The overall stock market’s growth rate on the other hand is about 9.7% annually over the last hundred years with dividends reinvested. —> .

This means that Keurig stock can become one asset taken out of an overall asset class (the stock market) and used as an example to prove whatever you want to prove.

Other examples:

A house on the water in Manhattan beach had a 15%  compound annual growth rate over the last 20 years. The average annual appreciation of housing in America is 3.1% annually. (technically its pretty close to zero when accounting for inflation)

A 1972 Ferrari 365 has had a total price appreciation of 300% since 2008. The automobile overall (an asset class) in ADDITION to classic cars bought after the fact, has had a negative rate of return since the beginning of the Automobile. —>   

Bitcoin had a 400% rate of return in 2012-2013. Then it dropped 70% and cratered. The market for all currencies overall doesn’t even have a positive return at all.

Again, one is an asset, the other is an asset class.


So lets look at bags overall as an asset class, shall we?

For the purchaser of 12 thousand bags (similar to a market of stocks), you will have a negative 80-90% return over any 10 year span.

Basically you will lose most of your money when you’re forced to try to resale them on craigslist.

For the purchaser of 100 LUXURY bags, if unused, you will have a negative return of 30%-50% over any 10 year span. This doesn’t include the credit card interest payments you’re making on that balance. This doesn’t include the cost to clean and maintain them if you DO use them.

You literally can hope for a best case scenario as returning half your money over 10 years with your luxury bag scheme.

Thats not even a savings account.

And to do better than that you’d have to get lucky. But finding a lottery ticket with the correct numbers scratched off is only obvious AFTER those numbers have been confirmed.

Stop looking for lottery tickets, pyramid schemes, one off comparisons and flukes.

You thought Beanie babies were investments when they were rising in price but never realized stuffed animals (the asset class) were not investments. –>

This logic you, your family and those around you have used for decades is what got you in the current financial position to have to consider using a purse as a retirement vehicle to begin.

You know a whole lot about the world but your credit report says otherwise.

Don’t be foolish. Just because you want something to exist as a rule doesn’t mean it will.

Stop gambling, start investing.

Read the article here:

Settling Federal Student Loans

student loan give back
Federal student loan settlements are difficult to get, but are possible in some cases. The Department of Education can settle (also known as compromise) FFEL or Perkins Loans of any amount, and suspend or terminate collection of these loans. It will be difficult, however to negotiate a “good” deal. The Department of Education has not given out much guidance on what they are likely to accept but understand generally always, you’ll need a lump sum.
The Department has Standardized Compromise and Write-Off Procedures for use by guaranty agencies. These are for negotiated agreements between borrowers and guaranty agencies to accept less than full payment as full liquidation of the entire debt.
To summarize the guidelines:
Collection costs can be waived.
30% of principal and interest can be waived. If a guaranty agency chooses to compromise more than 30%, it cannot waive the Department’s right to collect the rest.
WARNING: These agreements will only stop guaranty agency collection activity, but you will still owe the debt. You can negotiate harder and try to get the Department or guaranty agency to cancel the debt. Also, guaranty agencies are permitted to accept these settlements, but they are not required to do so.
The Department has also issued the following guidelines for compromising Direct Loans:
Type of Compromise: Borrower Pays: Account Eligibility:
1.Waiver of Fees Principal and Interest All Debts
2.50% Interest + Fees All principal and 50% interest All debts
3.10% P&I 90% P&I All debts
4.Discretionary All debts
The Department also discusses general guidelines for compromises in its 2009 Private Collection Agency manual (see chapter 7). Note that there is an updated version of this manual, but the Department has not made it public.
Schools may also write off very small Perkins Loan balances.
There may be tax consequences if you get a student loan settlement. It is a good idea to consult a tax professional for more information.


The Difference Between Credit Scores & Credit Reports

When people talk about “fixing credit” you must understand that they’re actually speaking of two different things at once.

Your credit REPORT is not the same as a credit SCORE.

The latter is only useful in struggling. Its what we call a “broke masker”. You may think you’re getting wealthy but you’re just shuffling other people’s money around until you realize you’ve become other people’s property.

Your credit REPORT on the other hand (read: not your score) along with the cash you save because you refuse to pay interest to scam a$$ banks is useful in what youre trying to do.

Trying to get an apartment? A clean credit report with no entries (positive or negative) plus your cash deposit.

Trying to get car insurance? A clean driving record, credit report and if you’re smart, paying the year in advance and in full (its refundable).

Trying to get a car? If you can not afford to pay cash for a car, you can not afford that car. Period. But when you stop playing around with debt, you’d be surprised at how powerful your cash flow becomes allowing you to save for these things.

Trying to get a job? There is no employer in America who A. checks “your credit score” and B. has the legal authority to check or use that credit score in hiring decisions. By law, only your credit REPORT can be used.

How do you get a credit report that will allow you to get hired anywhere? STOP PLAYING AROUND WITH DEBT AND FINDING YOURSELF IN DEBT WITH PAST DUE BALANCES AND DELINQUENCIES.

Its the largest source of misinformation on credit scores and reports there is in America. You are not applying for a loan, no one cares about a credit score in hiring. They’re looking (mistakenly) at whether or not you’re ALREADY in financial trouble which will put you at risk of doing illegal or immoral things at work. (according to some employers)

The cycle is all tied together yet you keep letting these internet credit repair clowns convince you that you need to pay them $500-$5,000 to “fix your credit” (boost your credit score). They do this by temporarily clogged the dispute process  system until one or more of your negative accounts are removed for a small amount of time. Then your credit score will go up temporarily allowing you to sign up for some more debt bullsh*t you shouldn’t have been signing up for in the first place. However, since the method is fraudulent, in about 60 days, those negative items pop back up on your credit report and now you owe twice as much – the old debt and the new debt.

Now if you’re trying to “fix your credit report” more specifically, you need to understand that there is no legal way to do what you are speaking. By law only time (7 years) can remove accurate items that are negative from your credit report. You can not “pay-for-delete” to any company, debt collector or otherwise and think your argument will stand in court once you find they’ve taken your money.


The only thing you can do is change the designation from “unpaid charge off” to “paid charge off”.

Its still delinquent. Its STILL a charge off whether you paid it or not.

Your credit can only repair itself. There is nothing you can physically do to change that. It takes 7 years from the date of initial default for most negative items to fall off your credit report.

If you are not paying these items for mental relief, there is nothing that will come of it for you.

The only thing you can do is change the designation from “unpaid charge off” to “paid charge off”.

Its still delinquent. Its STILL a charge off whether you paid it or not.

Focus on building wealth not credit and you won’t even realize the time passing.

But if you keep playing credit score tricks and signing up for new debt, that 7 year time frame will keep resetting and resetting and…

(all of this is assuming you are already past the statute of limitations to be SUED which is also different from credit reporting negative items – something that doesnt have legal consequence)

Don’t be dumb. Keep cash, investments and a clean credit report and you can do anything on earth.

You only use credit SCOREs to fall further into debt.


Difference between credit report credit score



The “Gentrification” Facade

All throughout “black cities” such as South Los Angeles, Washington D.C., Oakland, Brooklyn etc, as a community, we’ve become involved in a passionate discussion about gentrification. Yet what we don’t yet realize is that all along, our own affluence was a façade.
The truth is that you can’t “own” houses in a neighborhood without owning the businesses in that same neighborhood. And you can’t own a location dependent business without owning everything in regard to that business. If you are leasing your storefront for 30 years, you do not own your business. Period.

The economics otherwise simply don’t add up.

Think about this- if black middle class residents have to travel far and wide for their day jobs, because there arent enough viable businesses in their own community (no, a cashier or cook job at the local fish fry will not pay your mortgage), how can you really call it “their own community”?

Yes, it may be “their own houses” after 30-40 years, but owning a house or houses does not make a community. The economic self-sustained viability of a PEOPLE make up a community. You can not have economic self-sustained viability when others own your office buildings, commercial infrastructure, malls and land leases.

Its like providing a 40 year CD – someone gave you the land for 40 years, you paid interest on it and now at the end of your self imposed term, you have to give it all back.

It (the community) was never yooooouuurrsss.

Moral of the story: If over the last 30-40 years, view park, Liemert park, south L.A., the Crenshaw district etc, had one of the highest black homeownership rates in the country, how in the sam hell can it ever be gentrified?

Oh thats right – someone has to “voluntarily” sell their houses before someone else can move in and gentrify it.

And why do all of these black and hispanic seniors who tied their entire nest eggs to what are now $500k-$600k houses decide to sell to whites and asians every month?

BECAUSE THEY NEED THE MONEY. The local economy (the real economy) never was able to sustain the needs of these people. The jobs never paid enough. The businesses were never innovative and world reaching enough. The government jobs many were complacently dependent on dried up whenever that local government funding or project funding dried up.


DEBT does not equal WEALTH.

Most of the families I work with in South L.A. went into debt 4 times over on the “equity” in “their” houses to supplement an imaginary facade of affluence. It didnt exist.

Because of this, now you have the following:

  • Seniors in over their heads with 1st mortgages
  • Seniors in over their heads with 2nd mortgages
  • Seniors with Helocs
  • Seniors drowning in Credit card bills for living expenses
  • Seniors drowning in credit card bills from medical expenses
  • Chrysler 300 and Ford explorer car loans
  • Parent plus student loans to supplement their children’s student loans so their children can start off even more on the wrong foot.

Its all just one big shuffling of other people’s money around until it blows up in our faces.

First the businesses, THEN the houses.

You havent figured out the first thing they do when they return is redevelop the businesses before the community is even close to being “gentrified”?

You’ve got your beans above your franks, black people.

I hope you figure this out in Lancaster, Rialto, Palmdale, Moreno Valley and everywhere else near the edge of Mars that you’re being “displaced” to.

Not everyone has the inner workings of an entrepreneur however, far more actually do than we realize. There are far too many entrepreneurs masquerading as employees because they lack the information, encouragement and resources to do what they were put here to do.

Blacks made up 14% of the US population 3 decades ago. We make up less than 14% today.

We won’t survive another generation of this. | Excuse Level : Zero