Hello-retired with Real estate

[Oz investor]

REITs are still real estate ( property ) at the heart ,

and from the sounds of it you understand something about property investing

i am guessing residential , as opposed to say IRM which are moving towards computer server farms .

think of REITs as big property managers ( some develop the land as well , and some just build and lease )

you should also understand the joys of maintenance and rent collection ( and vacancies )

at the moment ( in Australia ) REITs are luke-warm some fear the property bubble bursting and some a credit squeeze and some chaos in retail shop space ( more vacancies ) ..... BUT they are also paying currently steadying returns beating most good quality bonds , so the prices haven't plunged yet

AND some ETFs focus on the sector so if two go down heavily the ETFs computers also tend to sell down the good ones as customers leave the funds ( the ETFs must keep a close balance of the stocks in the portfolio )

so say you are interested in a REIT focused on multi unit dwellings but shopping malls take a big hit , you suddenly have a better chance of getting your target price

you will have to crunch the numbers on the US REITs in Australia the numbers are unexciting to me but i entered 2011 to 2016 as good prices showed up so i expect more than 6% on my investment capital some close to 10% ( before tax )

 

[Aslowdodge]

REITs are still real estate ( property ) at the heart ,

and from the sounds of it you understand something about property investing

i am guessing residential , as opposed to say IRM which are moving towards computer server farms .

think of REITs as big property managers ( some develop the land as well , and some just build and lease )

you should also understand the joys of maintenance and rent collection ( and vacancies )

at the moment ( in Australia ) REITs are luke-warm some fear the property bubble bursting and some a credit squeeze and some chaos in retail shop space ( more vacancies ) ..... BUT they are also paying currently steadying returns beating most good quality bonds , so the prices haven't plunged yet

AND some ETFs focus on the sector so if two go down heavily the ETFs computers also tend to sell down the good ones as customers leave the funds ( the ETFs must keep a close balance of the stocks in the portfolio )

so say you are interested in a REIT focused on multi unit dwellings but shopping malls take a big hit , you suddenly have a better chance of getting your target price

you will have to crunch the numbers on the US REITs in Australia the numbers are unexciting to me but i entered 2011 to 2016 as good prices showed up so i expect more than 6% on my investment capital some close to 10% ( before tax )

The thing about reits is I have no control on what they buy -that could be good or bad. I also like the depreciation write off and mortgage deduction I can get.
I have about $750K into the rentals over the last 3 years and they are worth about 1.5 million now, so that alone has outperformed reits as far as I know. I also get about a 14% roi on that $750k each year in net rental income.


On 2 of the houses I have I put in about 60K each and was able to cash out refinance 70%LTV ( they appraised in mid $90K) which gave me back about 65K each after closing costs.
So on those 2 houses I have no money of my own invested in them, $5k to pocket after paying myself back the $60K I put into them each, about $2400 a year in cash flow after expenses and mortgage, and about 30K of owner equity. The depreciation pretty much cancels out the $2400 a year in cash flow so there's no income tax. I'm using that money to buy another and repeat the process.
If I did reits I couldn't do any of that. On the 2 I did this with the ROI is unmeasurable since there is no money invested of mine.


I'm in the process of trying to do 3 more cash outs and hope to get 3 more houses this way. That would bring me up to 20. I also have 5 rentals I own in my ROTH SDIRA but haven't counted that income yet as I am not drawing from them yet.


I know Australia is tough because everything is so expensive. It's like investing in Coastal California.

 

[Oz investor]

not that tough here if you are brave and differ from the crowd .

once you come to grips with the concept some folks now NEVER want to own there own house , investing becomes easy

i differ in the family home ( which i inherited ) was awash with bad memories for me , but NOW in a yuppie area that will soon be a multi-unit district , the first impulse was to bulldoze and sell as a cleared block , but then i thought if i renovate ( but NOT turn it into a palace ) put a big solar array on top , rent it out and wait for the local government to allow multiple units , then either sell ( more likely with my health issues ) or develop the land myself and rent out the ( probably ) three , double bedroom units BUT the area is also good for single bedroom units so 4 or 5 of them are possible .

currently in Australia, many lack ( or don't want ) job stability and that house is not far from a military base but also 6 miles from the state capital CBD ( traffic is a pain , but if you work odds hours not that big a problem )

the second property ( where i hoped to live the rest of my life ) i bought in 1975 for $17,500 , 5 acres 3 bitumen road frontage ( a walk in the park to cut into 5 x 1 acre lots ) too far from the hospital for me ( currently ) but the real estate spin doctors tagged it millionaires cul-de-sac to sell some nearby property

that land ( unimproved ) is worth around $750,000 , but i set up a solar array some temporary buildings and had an aquaculture project ( which is now going feral )

i was looking at sub letting a portion for phone towers and set up a ( computer server farm ) but that project is on pause ( at least ) plan B was to turn the acre facing the main road into a small string of businesses and rent them out

but i was looking for other rural properties circa $200,000 near rural towns ( especially before the mining cycle turns up again ) but again that is one pause , i prefer cash on the table , i don't have much trust in banks i would rather have it in the 'shark tank ' ( the stock market )

looks like you have a plan

i have little choice but to take it very quiet , probably shouldn't even watching the share market

i hope it all works out well for you ( i am not dead yet , and i have been sicker than this before .. 30 years ago )

 

[Aslowdodge]

not that tough here if you are brave and differ from the crowd .

once you come to grips with the concept some folks now NEVER want to own there own house , investing becomes easy

i differ in the family home ( which i inherited ) was awash with bad memories for me , but NOW in a yuppie area that will soon be a multi-unit district , the first impulse was to bulldoze and sell as a cleared block , but then i thought if i renovate ( but NOT turn it into a palace ) put a big solar array on top , rent it out and wait for the local government to allow multiple units , then either sell ( more likely with my health issues ) or develop the land myself and rent out the ( probably ) three , double bedroom units BUT the area is also good for single bedroom units so 4 or 5 of them are possible .

currently in Australia, many lack ( or don't want ) job stability and that house is not far from a military base but also 6 miles from the state capital CBD ( traffic is a pain , but if you work odds hours not that big a problem )

the second property ( where i hoped to live the rest of my life ) i bought in 1975 for $17,500 , 5 acres 3 bitumen road frontage ( a walk in the park to cut into 5 x 1 acre lots ) too far from the hospital for me ( currently ) but the real estate spin doctors tagged it millionaires cul-de-sac to sell some nearby property

that land ( unimproved ) is worth around $750,000 , but i set up a solar array some temporary buildings and had an aquaculture project ( which is now going feral )

i was looking at sub letting a portion for phone towers and set up a ( computer server farm ) but that project is on pause ( at least ) plan B was to turn the acre facing the main road into a small string of businesses and rent them out

but i was looking for other rural properties circa $200,000 near rural towns ( especially before the mining cycle turns up again ) but again that is one pause , i prefer cash on the table , i don't have much trust in banks i would rather have it in the 'shark tank ' ( the stock market )

looks like you have a plan

i have little choice but to take it very quiet , probably shouldn't even watching the share market

i hope it all works out well for you ( i am not dead yet , and i have been sicker than this before .. 30 years ago )

Sounds like you have it nailed down pretty well. Again I hope your health improves so you can enjoy your investments.

 

[wolf]

Check out new 2018 Tax rules. You may be eligible for 20% tax reduction on rental income. (not sure if OP, Roth IRA rentals qualify).

 

[Oz investor]

Aslowdodge,

i can't see my health improving to say that of 5 years ago

and the doctors are getting more confused as treatments don't go to plan and tests have unexpected results

once i stabilize , i can see if i can adapt

but 'very quiet lets me think more about investing and less time out spending

cheers

i had a thought ... how about financial services that cater for property investors , you should know a bit about that sector , is there anything in the sector you would invest in ??

 

[Aslowdodge]

Check out new 2018 Tax rules. You may be eligible for 20% tax reduction on rental income. (not sure if OP, Roth IRA rentals qualify).

Thanks. I have met with my cpa and addressed this issue. I am going to take advantage of it.
I don't think it will affect my Roth rentals since there will be no income tax to begin with.

 

[Aslowdodge]

Aslowdodge,

i can't see my health improving to say that of 5 years ago

and the doctors are getting more confused as treatments don't go to plan and tests have unexpected results

once i stabilize , i can see if i can adapt

but 'very quiet lets me think more about investing and less time out spending

cheers

i had a thought ... how about financial services that cater for property investors , you should know a bit about that sector , is there anything in the sector you would invest in ??

Not sure I understand.
Are you talking about notes and hard money loans?

 

[Oz investor]

whatever you understand best , you might have good insight into mortgage insurance

say the guys that fund new developments or even debt collection companies

corporate notes or bonds

the trick is not to plunge in as a complete novice ( understand what you are researching)

 

[Aslowdodge]

whatever you understand best , you might have good insight into mortgage insurance

say the guys that fund new developments or even debt collection companies

corporate notes or bonds

the trick is not to plunge in as a complete novice ( understand what you are researching)

I might investigate into note funds later. Right now I have a formula that meets my needs and seems to be repeatable, so I am going to stick with that. I have enough rental income to live very comfortably with a few luxuries. At this point I think I will just cash out refinance until the lenders say no more and continue to buy rentals and rehab them since it takes little effort on my part.
Everything is gravy and really unneeded, but I'm just trying to take advantage of low rate 30 financing while it is still here and I can make my margins.
This is what I know so anything else might be riskier since I don't know as much about those other vehicles.

 

[Bill55AZ]

Way back, eons ago, the smart people owned a few extra housing units to supplement their SS. 2 of them that I was aware of would buy enough income property in their immediate area for a bit more than just money, they wanted to control who their neighbors were.

I tried it, bought a 6-plex but still being apprenticed to Uncle Sam's Navy I had to pay 10% for a manager to basically do nothing, even what was really needed. I sold it at a small loss. The more people involved, the more headaches. 5 units were single bedroom, and number 6 was 3 br, 2 bath, as in an owners unit. So, potential for 5 bad tenants sharing a building with.

Enter the 3rd guy, Really smart. He sold all his housing units and bought light industrial property. No longer needing to manage/monitor as much, he went on several long vacations every year.

 

[Aslowdodge]

Well your mileage can certainly vary.In all areas of real estate there are people that do well and people that don't.