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Re: Is it really worth buying a real estate?
Old 11-15-2004, 07:31 AM   #21
 
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Re: Is it really worth buying a real estate?

I count on making money from the appreciation, even if
I don't hold the property a long time. But, I try real
hard to buy so low that I have appreciated property
in a sense at the closing. Carlton Sheets and others
teach this stuff. It's really not that hard. I call them
"no brainer" deals and see them everywhere. Oh to be
50 again

John Galt
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Re: Is it really worth buying a real estate?
Old 11-15-2004, 09:07 AM   #22
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Re: Is it really worth buying a real estate?

Quote:

Ok, so you might have a reason that you think will cause housing prices to go down in New York. *Why do you also think that they will go up in somewhere else? *Much of the real estate in much of the US just keeps up with inflation (or at least the land does - the buildings depreciate) unless there is some factor that is in demand - i.e. lakefront or oceanfront property. *I wouldn't want to be buying some house in a big flat town in the praries and then be expecting to make money off the appreciation when it's just too easy to go another 300 feet and plunk down another new house. *If you're buying it to live in the small town that's one thing or you expect to make money off the rental income but making money off the appreciation?


Right on the money with that observation.
Historically, the property in Las Vegas has been dirt cheap compared to Calif.
The population increased to well over l,000,000 from less than 200,000 over about a 10 year period.
Along with the influx, and the demands of the infrastructure, with that type of growth, they tightened up their areas of buildability. The property has doubled in value in last two years alone.
The high rollers in real estate understand this, and even though the original cost of admission may appear out of whack with what's going on in the middle part of the country, the fact is that as long as the demand exceeds the supply, (Bay Area of Calif. for instance), there may be periods of flatness, but the general trend will exceed most of the country. (Of course a major earthquake would have an unsettling effect)
As Hyperborea pointed out, if you are looking for appreciation, you'll have to pony up. If you are looking for a quality of life area, with minimum upside, as many are, nothing wrong with treating your house as a paid up security blanket.
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Re: Is it really worth buying a real estate?
Old 11-16-2004, 08:57 PM   #23
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Re: Is it really worth buying a real estate?

Quote:
I count on making money from the appreciation, even if
I don't hold the property a long time. *But, I try real
hard to buy so low that I have appreciated *property
in a sense at the closing.
Right, so you are buying special property with certain special restrictions or problems that bring it below the current market price and then you remove or alleviate those problems to allow the property to sell at market price. *That is much different than there being general price appreciation in a market nor does it mean that the average home buyer is going to be able or willing to do it. *There's also a limit to the amount that this returning to market value brings and the longer that you hold the property the less the annualized return it brings because you are spreading this jump back to "normal" price over multiple years.

When I purchased my home I was able to get the place below the current market value but that was due to the ineptitude of the seller. *There were a few problems. *None of them were serious but generally cosmetic and I was able to look past them and was also willing to accept the place as not "move in ready". *It really helped that I'm reasonably handy and *just about all of the work was done by my wife or myself. *Even with that the bulk of my gains in the property have been due to the increasing market prices rather than my work to return the property to "market value".
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Re: Is it really worth buying a real estate?
Old 11-17-2004, 05:36 AM   #24
 
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Re: Is it really worth buying a real estate?

Hello Hyperborea. Good post!

You are correct that I was talking about special
circumstances (seller ineptitude, seller desperation,
divorce, foreclosure, etc) as opposed to normal
ppreciation over time. Also, I have a lot more time to
find these deals since I no longer work. Ironically, now
that I have the time and knowledge to take advantage of this,
I no longer want the hassle nor do I have the energy
to deal with it (irony?). Anyway, a younger person with
some knowledge and drive can make a fortune. It's
no pipe dream. I don't know if those Carlton Sheets
success stories are overdone or not. I do know those results are entirely possible to achieve, and having
"appreciation at closing" is a good start.

John Galt
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Re: Is it really worth buying a real estate?
Old 11-17-2004, 07:30 PM   #25
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Re: Is it really worth buying a real estate?

[quote
Ok, so you might have a reason that you think will cause housing prices to go ink down in New York. *Why do you also think that they will go up in somewhere else? [quote *

I think real estate and property values will rise in many areas of the US in the future. It is a matter of finding the "new" hot areas for whatever the reason may be.
General Electric can build a major plant in Kansas and watch how prices in that area fly.
Alot of the country has seen hardly any appreciation at all while others have trippled.
Also buying fixer uppers will allow for a profit but that is a job as well as an investment.

In general the biggest negative factor contributing to real estate appreciation is interest rates. If they become high, prices will not rise as quickly (almost everywhere).

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Re: Is it really worth buying a real estate?
Old 11-18-2004, 09:46 AM   #26
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Re: Is it really worth buying a real estate?

If I read John Galt and thebacchus correctly, then what they are saying is that by developing a few specialized skills and investing a good chunk of your own time, you can make money on real-estate by finding problem-properties an fixing them.

Hmmm... I also have a technique for converting specialized skills and time into money by solving other people's problems. I call it a job.

How is this any different from any other kind of work? How is it an "investment" if to profit from it you need to get up every morning, put on your ratty old blue-jeans and start a long day of sanding/painting/fencing/roofing or whatever else? I'd rather be at the office having a coffee at my desk and reading this forum!
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Re: Is it really worth buying a real estate?
Old 11-18-2004, 11:42 PM   #27
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Re: Is it really worth buying a real estate?

Quote:
How is this any different from any other kind of work?
Its just like any other type of self employment. Some people contract out the management, but it gives you lower profits. You need more units to earn a living this way. If your desire is to lay on the beach all day, stick to passive investments in retirement. Fixer upper rentals can be a good way to amass money for retirement, but they are a lot of work. You either enjoy that type of work, or you don't.
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Re: Is it really worth buying a real estate?
Old 11-19-2004, 03:52 AM   #28
 
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Re: Is it really worth buying a real estate?

GDH is right. No matter how you do it. Outside management , fixer-uppers, seller don't-wanters,
it is still work. In my case, when I was young I enjoyed it more than any other income producing activity I tried.
Never made the jump to full time real estate
investing but I sure thought about it a lot. Anyway,
it's not for everyone. Alas, my time has now passed.
If I buy more real estate it will likely be raw land.
Probably no cash flow, but no hassle either. An aside.
Yesterday I was fishing nearby a hunting club I once owned and sold off. Got a bit wistful thinking about all the good times we enjoyed there.
Taxes were low and no real hassles other than an occasional trespasser. Anyway, I moved the money
into other real estate so that now I get some cash flow.
Even with hired management it can be PITA.

John Galt
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Re: Is it really worth buying a real estate?
Old 11-20-2004, 04:45 PM   #29
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Re: Is it really worth buying a real estate?

GTM, my brother is a multi-millionaire. His net worth is approaching five million and his monthly income from positive cash flow on rents is about $10,000 a month.

All his RE is in San Diego, CA and is appreciating about 25% a year--minimum!

He bought back in the early seventies. He was then and he is now a barber in a one-chair shop. His income from that has NEVER been over $25K.

Every couple of years for the last 30 years we have had the following discussion:

Me: Sell now there is no way real estate prices can go up!

Him: They will go up, so why sell?

Every time, he has been right and I have been wrong.

He has sat in his shop and made more money from appreciation than I made working for a living with my five degrees!

Is real estae really worth buying? Are you kidding?

Check this out:

http://roqc.tripod.com/whatcolorareyourhandcuffs/
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Re: Is it really worth buying a real estate?
Old 11-21-2004, 05:23 AM   #30
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Re: Is it really worth buying a real estate?

I think that link would be better in the No work and No brains Category.
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Re: Is it really worth buying a real estate?
Old 11-21-2004, 06:56 AM   #31
 
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Re: Is it really worth buying a real estate?

HI bruce. I agree that post is in the wrong category.

The old juices are still pumping through my somewhat
constricted arteries. Last night I am taking a late stroll
down our lane with my black Lab. We normally do our
exploring elsewhere as the lane is only half a mile long and deadends either way. Anyway, the real estate
has been flying out of here all summer. As I pass
what little is left for sale, I am thinking about how cheap I might buy it and what I could do with it. My brain just kicks into autopilot on this stuff, and I read the paper
and all of the real estate booklets and flyers
religiously. Deals abound but I don't want the hassle.
When I was younger I didn't have the time to work on
these deals much. Now that I have the time, I have neither the energy nor am I inclined to mess up
my freedom to loaf and wander at will. That's irony folks.

John Galt
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Re: Is it really worth buying a real estate?
Old 11-21-2004, 07:47 AM   #32
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Re: Is it really worth buying a real estate?

Quote:
GTM, my brother is a multi-millionaire. *His net worth is approaching five million and his monthly income from positive cash flow on rents is about $10,000 a month.

All his RE is in San Diego, CA and is appreciating about 25% a year--minimum!

He bought back in the early seventies. *He was then and he is now a barber in a one-chair shop. *His income from that has NEVER been over $25K.

Every couple of years for the last 30 years we have had the following discussion:

Me: Sell now there is no way real estate prices can go up!

Him: *They will go up, so why sell?

Every time, he has been right and I have been wrong.

He has sat in his shop and made more money from appreciation than I made working for a living with my five degrees!

Is real estae really worth buying? *Are you kidding?

Check this out:

http://roqc.tripod.com/whatcolorareyourhandcuffs/
Consejo:

I was in the Marine Corps. in San Diego in 1954. San Diego was blessed with climate that would be well matched with any place on earth. The population then was about 100,000 people. It now has over 2,000,000
population.
To extrapolate your brothers experience with real estate
(at least on the appreciation side), is much like using an individual that bought Microsoft at the start-up price for
an idea of how well you can do in the stock market.
As far as appreciating 25% a year, commen sense, and
finding folks with the ability to pay, has stretched that rubber band about as far as it can go.
For a young man that has time on his side, can find an area that will have explosive growth (unexpected), he also will have stories to tell his grandchildren.
For the lions share of real estate investors, it is a tough, grinding type of hands on "work", that not many have a stomach for. (Been there, done that).
Regards, Jarhead

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Re: Is it really worth buying a real estate?
Old 11-21-2004, 08:17 AM   #33
 
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Re: Is it really worth buying a real estate?

Hello Jarhead! I agree with you that real estate investing can be "tough, grinding type of hands-on work
that not many have the stomach for". But, if it was easy
then everyone would be doing it. I loved it in my younger days, but let's face it, many people
(if not most) are very reluctant to be landlords and deal with tenants. Also, it takes a lot of knowledge to be
successful over time. I too have "been there- done that".
And, I do not intend to go back. I wish I could though.
I truly do.

John Galt
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Re: Is it really worth buying a real estate?
Old 11-21-2004, 08:54 AM   #34
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Re: Is it really worth buying a real estate?

Quote:

Hmmm... I also have a technique for converting specialized skills and time into money by solving other people's problems. I call it a job.

How is this any different from any other kind of work? How is it an "investment" if to profit from it you need to get up every morning, put on your ratty old blue-jeans and start a long day of sanding/painting/fencing/roofing or whatever else? I'd rather be at the office having a coffee at my desk and reading this forum!
Like I have mentioned before, this isn't for everyone, but I happen to enjoy it.

I don't mind the "work." Being a workaholic seeking ER, I find it relaxing compared to other work I do which is highly demanding. There also is a tremendous amount of satisfaction in taking on a project and turning it around. If I don't feel like working on a property, I don't. Try telling your boss that you don't feel like working! This form of income production also provides tax benefits that ordinary income will not.

Quite often though, the "work" is not done with our own hands. Often we will find a property that we will have painters and floor specialists go through and do very little ourselves other than write the checks. Depends on the property and our plan for it.

We also have been fortunate and have met a few other investors that we have become partners with in some larger projects that we would not have been able to get into otherwise. Most are land developments that have done very well for us with a minimal amount of management required. We have now gotten to the point that we have banks that watch for properties for us as they want a shot at providing the financing.

Bear in mind that this does not happen over night. Like any other business, it has taken several years to get to this point.

We all have our investment preferences. This is another diversification strategy for us, but as with all strategies, it's not for everyone.

-TB.
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Re: Is it really worth buying a real estate?
Old 11-21-2004, 03:06 PM   #35
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Re: Is it really worth buying a real estate?

Jarhead, your point is valid...except for this...in NYC a one bedroom apt in a coop is $1M!

Like I said, I didn't think it could go up any more 20 years ago! It defies the laws of gravity.

But you don't need the crazy appreciation rates we've been seeing for the last ten years to make residential real estate a great investment. The reason? Multiple streams of income all contributing to your bottom line:

Market value appreciation, obviously but there is also tax deductions including deprecation and rent appreciaition and principle paydown. Then when it makes sense, you refinance the lower balance on your mortgage to 30 years to create cash flow--buy and hold!

If you buy a house every couple of years, like the brief on the model at the previous link I posted, in 10 years you could be FI. Not to say it wouldn't be work but it would take less cash than many of us are contributing to 401s and Roth IRAs. And right now the payoff on those SUCK--RE, on the other hand is rocking?

Look the model has been around for a long time. In the 50s a book came out with the same model and now that book sells used for $100 on Amazon.

AND RE was making millionaires in the 60s w/o the appreciation rates of today just based on the multiple streams of income. R/
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Re: Is it really worth buying a real estate?
Old 11-21-2004, 07:02 PM   #36
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Re: Is it really worth buying a real estate?

Quote:
Jarhead, your point is valid...except for this...in NYC a one bedroom apt in a coop is $1M!

Like I said, I didn't think it could go up any more 20 years ago! *It defies the laws of gravity.

But you don't need the crazy appreciation rates we've been seeing for the last ten years to make residential real estate a great investment. *The reason? *Multiple streams of income all contributing to your bottom line:

Market value appreciation, obviously but there is also tax deductions including deprecation and rent appreciaition and principle paydown. *Then when it makes sense, you refinance the lower balance on your mortgage to 30 years to create cash flow--buy and hold!

If you buy a house every couple of years, like the brief on the model at the previous link I posted, in 10 years you could be FI. *Not to say it wouldn't be work but it would take less cash than many of us are contributing to 401s and Roth IRAs. *And right now the payoff on those SUCK--RE, on the other hand is rocking?

Look the model has been around for a long time. *In the 50s a book came out with the same model and now that book sells used for $100 on Amazon.

AND RE was making millionaires in the 60s w/o the appreciation rates of today just based on the multiple streams of income. R/
Consejo:

O.K., you talked me into it!
The next move will be finding a partner that has a good financial base and is young enough to do the grunt work.
I'll check with "Cutthroat", and get back to you

Jarhead
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Re: Is it really worth buying a real estate?
Old 11-21-2004, 07:51 PM   #37
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Re: Is it really worth buying a real estate?

[quote author=consejo Jarhead, your point is valid...except for this...in NYC a one bedroom apt in a coop is $1M!

Granted Manhattan apartments are very high but
No one bedroom co-op goes for a million bucks.
Actually a coop is not even real estate, it is shares of ownership in a corporation that owns a building. There are tons of restrictions.

Possibly a large modern condominium on 5th Avenue or in Greenwich Village may be close to the $1m but I would say a very small percentage.

Co-op's and condos can look exactly alike but are very different in the way ownership is structed reflecting in the price.
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Re: Is it really worth buying a real estate?
Old 11-22-2004, 06:43 AM   #38
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Re: Is it really worth buying a real estate?

GTM: Thanks for the clarification on co-ops. The only market I really know is the southwest. My point in my response to Jarhead was that I still think there is room for appreciation--even at existing prices--as hard as that is to believe.

The thing is, you don't need crazy appreciation rates to achieve REFI. Slow and easy will do it.

Jarhead: As I have written in other posts, I think I'm done w/RE other than my own house. (I think, it is hard to pass on the ROI.)

But like John Galt, if I could turn back the clock and knowing what I know now, if I were looking to get out of the rat race, I'd find some nice university town with a base of SFRs, 2 and 4 rental units and go for it.

The PITA factor can be managed by carefully screening your tenants, inspecting in and out once a month (when you go to personally pick up the rent), and evicting quick when necessary.

The way I managed was to think of myself as Conrad Hilton and the tenants as paying guests. I treated them well, kept the houses maintained, and provided them small reminders of my appreciation on holidays. I mean, after all, they were a large part of my successs!

You don't need 100 or even a dozen units, all you need is enough to be FI--after all that is what this board is about. REFI (real estate financial independence) can be achieved w/as few as 4 SFRs. 4 units can't cause you all that much grief and won't take 10 hours a month of your time. R/
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Re: Is it really worth buying a real estate?
Old 12-25-2004, 09:31 PM   #39
 
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Re: Is it really worth buying a real estate?

Real Estate is what allowed me to retire at 53, Not a get rich quick but 30+ years of putting up with rental property. Now I can sell a house every other year and get by until about 95.
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Re: Is it really worth buying a real estate?
Old 12-30-2004, 05:56 AM   #40
 
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Re: Is it really worth buying a real estate?

Someone said that "compound interest" was one of the true "wonders of the world". While giving that its due,
I think it is leverage. Using leverage and creativity alone, anyone can start right now and make a fortune
in real estate (I sound like Carlton Sheets)

It's true! You don't need anything
except what is between your ears.

JG
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