Paper Gains Newsletter

by Matt Magee at mForce Capital

The above Tweet made me laugh. The topic I want to explore this week is rental properties. This is a question we get asked about probably monthly.

It usually starts like this. I am a high-income earner or business owner. I am thinking about putting money into a rental property to reduce my taxes and diversify.

The above Tweet is an entertaining example of what could go wrong. The more likely scenario here in Texas. Between property taxes, insurance, any debt payments, plus the cost of buying the property. These factors alone usually eliminate any meaningful return that you can expect. That is not to say it NEVER works.

I had a client in Houston who owned 10 rental properties. Many of them are AirBnBs that he eventually converted into long-term rentals for people doing 3-6 month work stints on the coast. The company was paying for their housing, and he could charge whatever he wanted. There was no debt. So, the income it produced was amazing. These are definitely out there, but they are the exception, not the rule.

Here are the things I would certainly consider.

1. Debt payments and the equity required to make the purchase.
2. Will you be managing the property or a third party?
3. Insurance & Property Taxes
4. Once you know these costs, plus whatever profit you want to earn. Can the house rent for what it needs to?
5. Those are the primary items to consider. If you get that far, it is also good to understand. Does it require renovation? Do you want to manage the property and what comes with it?

To summarize my point here. Those who have done this well either have scale (the ability to buy a lot of homes), cheap debt, or some sort of niche that they have found. The key attribute is that they had an edge and exploited that. If you don't know what yours is, that alone should be a pause before blindly jumping into the rental game for "passive income".

This Tweet by Barbell Financial went viral over the weekend, around paying off a low-interest-rate mortgage. My two cents, this goes way beyond what the numbers recommend.

If you have the financial ability and don't want to have a mortgage. Go for it. I've helped numerous clients do this, and I've never heard any regrets.

Food for Thought. The whole college sports landscape is fascinating to watch from a financial and business perspective. The Lane Kiffin story is one of the more interesting storylines. I found his quote on money decisions interesting. One could argue that is easy to say when you're already making $9 million annually and potentially going to $13 million plus.

Regardless, it will be interesting to watch, and we can all learn something from it.

Paper Gains Show

We help Texas business owners, within a few years of selling their company, turn potential liquidity into lasting wealth and simplify the financial complexity that comes with success.

What I've Enjoyed Recently

Cry Havoc by Jack Carr, an excellent audiobook for those who enjoy the Tom Reece books.

One of my all-time favorite shows comes back this weekend. Mayor of Kingstown.

Black Rabbit can cause significant financial anxiety. You've been warned! Exceptional new show on Netflix.

See Ya Soon

-Matt Magee

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Copyright (C) 2025 mFORCE Capital All rights reserved.

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Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC. Securities offered through Sanctuary Securities, Inc,

Member FINRA, SIPC. Advisory services offered through Sanctuary Advisors, LLC., a SEC Registered Investment Advisor. mFORCE Capital is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC.

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