The Cashflow Chick is in the Wall Street Journal!

The Cashflow Chick is in the Wall Street Journal!

It’s so exciting for the Cashflow Chick to be mentioned in the Wall Street Journal! After all, this news magazine is one of the largest newspapers in the United States and is read daily by over 2 million people!

Below is the excerpt:

“Paige Panzarello of Simi Valley, Calif., organizes workshops for aspiring investors, charging $697 to attend. In a session at one of her conferences in Costa Mesa, Calif., people role-played conversations with real-estate agents to get comfortable gathering intelligence about local markets.

Ms. Panzarello, who calls herself Cashflow Chick, got into nonperforming loans after nearly two decades in real estate. “For me, angels sang, honest to God, when I got into this space,” she said.”

– By Ben Eisen and Cezary Podkul (WSJ)

Read the entire article HERE or view the article in the Wall Street Journal.

The Truth about Downsizing

The Truth about Downsizing

Years of rising house prices in some parts of the country have given a lucky group of retirees an asset they probably never expected to have. Here’s the truth about downsizing. Research by Prudential suggests downsizing your home can raise as much as £85,300 or $109,629. So perhaps it’s not surprising that a fifth (22%) of the soon-to-be-retired population are considering moving to a smaller property, according to research by Saga. These 50- to 59-year-olds will join the thousands of pensioners who sell their family home and downsize each year to fund a new life in their retirement.

Heating cost is lower – In winter, one fellow who downsized with his wife, said “Our electricity bill comes to less than £200 or $257. I was paying that every six weeks in our old house.”

Life is simpler – Without a mortgage, expenses are low. There is less stress; life is slower. There is more time for creative work, more time with your spouse, and more time for travel.

More time walking. If you choose the right place where you can walk most places, you can walk, and there’s no need for the expense of a car. You will find yourself walking to and from restaurants, walking to the parks, walking to the square where friends gather, walking to the store.

You will be healthier. With regular walking, you will be in better shape and healthier.

Many find their standard of living improves. Some places allow you to have a housekeeper and a gardener. You may find property taxes lower, along with cheaper medical care. Don’t limit yourself to the U.S. There are some great places to live outside the U.S. Investigate alternatives via International Living. This month the magazine had a great article titled Eco-Friendly Living That’s Good for the Soul.

Downside of Downsizing

Friends and Family. You may give up the nearness of your family and friends. You may give up the ability to just drop in or to see grandchildren as often as you did before. If you move outside the U.S. it is expensive to travel and tiring.

The language may be a problem. Without expats to help, you may feel isolation you hadn’t known before. It is tough to get what you want in simple services like telephone, cable, electricity, water, and propane if you don’t speak the language.

Adventure may not be your thing. People who move to another country may feel out of their comfort zone. Soon, they will want to go back to what they know or will wish this place was like that place.

Your furniture may not fit. Downsizing brings you face to face with the realization that you can’t bring all your stuff to the new place. You will have to get rid of precious pieces. Keep telling yourself it is just stuff. You can get more stuff if you want. Or you can get a storage box and pay money to store your stuff. Eventually, you will visit your stuff and decide this is silly.

I have a friend who downsized three and a half years ago and moved to San Miguel de Allende.  He and his wife say it was the best decision we ever made. Life is wonderful.

Selling a Rental Property

Selling a Rental Property

Owning a rental property has its perks. Done right, you can receive a regular revenue stream that covers the mortgage and provides you with a respectable profit each month. Assume you bought a Los Angeles property ten years ago for $400,000. In addition, to the regular income, you were able to take $10,908 annual depreciation expense deductions on your tax return (3.636 percent X $300,000) for each full year you rented it. You can’t depreciate the dirt under the property equaling $100,000. But what about selling a rental property?

Selling a Rental Property

Now if you are interested in selling a rental property that income-generating machine can cost you when you sell. That’s because you will pay taxes on the capital gains (profit) when the property sells. For 2018, the long-term capital gains tax rate is 15% if you are married filing jointly with taxable income between $77,201 and $479,000. If your income is $479,001 or more, the capital gains rate is 20%.

If you bought the rental property for $400,000 and now want to sell it for $500,000 and pay no real estate commissions, you would think that you have a gain of $100,000. As Harvey S. Jacobs,  a real estate lawyer with Jacobs & Associates Attorneys At Law in Rockville, explains it in the Washington Post, “Although you state that your net cash profit is $100,000, your taxable long-term capital gain is $209,080. Assuming you are in the 15 percent capital gains tax bracket, your capital gains tax liability would be $31,362.  You can calculate this number by starting with your net sales price of $500,000 and subtracting your adjusted tax basis of $290,920 (the original cost of $400,000, minus accumulated depreciation, $109,080). The result is your $209,080 capital gain. At the 15 percent tax rate, your long-term capital gain tax liability is $31,362.”

Wait, there’s more.

IRS regulations generally require that you depreciate your rental property over 27.5 years, or 3.636 percent per year. To calculate your depreciation deductions, let’s assume that your $400,000 purchase price consisted of land valued at $100,000 and the improvements valued at $300,000. Remember, you were able to take $10,908 annual depreciation expense deductions on your tax return (3.636 percent X $300,000) for each full year you rented it. This non-cash tax deduction reduced your taxes on an annual basis. But now that you are selling, this non-cash tax deduction must be paid back in part, as depreciation recapture tax.

When you apply the 3.636 percent annually against your $300,000 depreciable basis for your 10-year holding period, you have taken $109,080 in accumulated depreciation deductions. That amount will now be “recaptured” and taxed at the 25 percent tax rate. So, in addition to your capital gains tax, you will incur $27,270 in depreciation recapture tax.

Because this is an investment property, you are not eligible to use the $250,000/$500,000 capital gains exclusion available when you sell your primary residence. Internal Revenue Service publication 544, available online at, contains detailed instructions for calculating capital gains and depreciation recapture for the residential rental property.

At this point, you might consider using The 1031 Exchange

Working Smarter Not Harder – What Does it Truly mean?

Working Smarter Not Harder – What Does it Truly mean?

Forbes wrote about Working Smarter Not Harder – What Does it Truly mean?  “Work smarter, not harder,” is a phrase many workers have heard throughout their careers. A phrase that often conjures the image of a high-level executive on a beach with a smartphone and cocktail in hand.  The phrase touches on an individual’s emotional and intellectual desire to “have it all,” but doesn’t really tell anyone how to go about working smart, not hard.

I knew a stockbroker who was told that if he called 200 people every day, for two years,  he would live like no one else for the rest of his life. That was working harder. He became a success. However, another young stockbroker by giving seminars found a way to reach many people at one time. Thus working smarter. Too many of us stick to the old ways instead of how to make it easier.

One year I was taking skiing lessons. I liked to go fast downhill, and I crashed a lot. I figured that crashing meant I was working harder than everyone else. What I missed was the smarter part. It would have been better to work to learn the basics rather than go faster. My goal was to go fast; I put little effort into learning the basics.

There are investors who want to retire on the beach in their chase lounge and a cocktail in their hands. They want a passive income from real estate to support their lifestyle. It all starts with a goal, doesn’t it? There are many ways to achieve passive income. Paige Panzarello helps to educate people on the importance of Passive Income, deal evaluation, money management, how to wisely interact with money. Our goal is to show you how to achieve your goal smartly.

Working Smarter Not Harder – What Does it Truly mean?

It means to have a goal, be smart about achieving the goal, and then put your passion into the work to be a success. I suspect many start with the work and through trial and error get smarter.

EP 38: Building Wealth Through Note Investing with the Cash Flow Chick, Paige Panzarello

EP 38: Building Wealth Through Note Investing with the Cash Flow Chick, Paige Panzarello

Paige Panzarello is the “Cashflow Chick”. Having been a Real Estate investor and entrepreneur for over 20 years, Paige has been successful in completing over $150 million in real estate transactions to date. Her experience includes founding and running her own residential and commercial construction and acquisition companies, Buy and Hold residential and commercial real estate investing, Tax Deeds/Liens, and she currently focused on Non-Performing Notes that she purchases all across the United States.

Listen to the podcast HERE.



Is Real Estate A Good Investment?

Is Real Estate A Good Investment?

Real estate has proven over time to be a great inflation hedge. Investopedia says, “An inflation hedge is an investment that is considered to provide protection against the decreased purchasing power of a currency that results from the loss of its value due to rising prices (inflation). It typically involves investing in an asset that is expected to maintain or increase its value over a specified period of time.

Many believe they need a hedge against inflation. TIAA-CREF points out reasons for these fears: “Rising food and energy prices, coupled with federal debt levels and low interest rates, have recently fueled new inflationary fears. These concerns are understandable given the Federal Reserve’s determination to normalize interest rates at higher and higher levels. As a result, some investors may be looking for ways to protect their portfolios from the ravages of inflation.

Is Real Estate a Hedge Against Inflation?

The Daily Reckoning writes: What makes a good inflation hedge? The answer to this question requires an understanding of the two basic types of assets: real assets and financial assets.

Real assets have intrinsic value. They have value of their own. People value them for their direct or indirect usefulness. Examples include books, TVs, cars, wheat, gold, real estate, land, etc.

Financial assets, on the other hand, are a claim on the income or wealth of a firm, family or the government. Their typical form is a certificate or a receipt. Examples include paper money, stocks, bonds, mortgages and exchange-traded funds. All money market and capital market instruments serve as examples.

In general, real assets hedge better than paper assets. By definition, real assets have a value of their own. Inflation does not erode their value. Thus, any real asset can be an inflation hedge. It follows that real estate is also a hedge, but it’s not the best.

Good hedges have a few key properties.

  • One key property of a hedge is that it holds its value. It should lose little value over time. Cars and eggs lose value over time. Land, silver, and wine do not.
  • Another key property is marketability. This means that it is easy to sell. Other people will easily take it for payment. Hence, it is good for barter. Chairs and clothes do not sell. Corn and gold do. Real estate can fluctuate from a buyer’s market to a seller’s market.
  • A third key property is divisibility. This means that the asset splits into smaller parts without a loss of value. Houses, cars, and cows are not divisible. Rice, wine, gas, and gold are. Land is divisible in most cases.
  • The last key property is financing. It is vital. Experts prefer to fully ignore it. Investors buy assets with either cash or credit. Cash-based hedges are good. Credit-based hedges are bad. History repeatedly shows that assets bought on credit are prone to speculation and bubbles. The hedge might be already overvalued. In this case, investors should avoid it. Credit clearly drives real estate.

Bottom Line: Is Real Estate a Good Investment? Real estate can be a great hedge against inflation over time. However, short-term real estate is subject to the laws of supply and demand and credit availability.