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Old 09-21-2007, 12:28 PM   #41
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Small nitpick: no, it's not.
LOL

Reminded me of my early days programming and having to debug those pesky "div by 0 errors"

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Old 09-21-2007, 03:04 PM   #42
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Well I'm not an econ teacher but that was my major. I invested in two properties recently, one in 2003 for $200K+ and again in 2004 for almost $300K. Together they are worth over $800K turning my almost $100K into $325K for a profit of $225K. If I'd invested that same amount in the market and got 12% returns I'd have less than $75K profit. That's leverage.
That reminds me...none of my friends or colleagues have gone to Vegas and lost money. I wonder how the casinos stay in business?
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Old 09-21-2007, 03:08 PM   #43
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Can you explain how this is similar to leveraged real estate? I can't be forced to sell my real estate. No matter what the market does I still have the use of my purchased real estate and the terms for holding it (mortgage)can be set in stone or reasonably anticipated(taxes and insurance).

The risks of the stock market leveraging don't seem to compare at all to real estate.
If you have enough liquidity, you can't be forced to sell your stocks either.

You can get leverage of 95% on futures.
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Old 09-21-2007, 04:14 PM   #44
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My father retired without a pension and $100k in savings in 1953 and when he died in 1977, his estate was worth >$750k - after living well for 24 years on nothing but social security and the money he made from buying, renting, and selling real estate. Whenever I came home from school and smelled bread baking in the house, I knew that our house was for sale and Dad had prospects coming to look. Real Estate has always been a good, long term investment!
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Old 09-21-2007, 06:15 PM   #45
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... you should not attack someone simply because they challenge what you are saying. That is immature.
  • I do know the value of my properties at this time within 10%. I used the absolute lowest value in my computations to not over state my returns. Wouldn’t want to appear boastful. I could put both properties under contract within 2 days at the figure I used.
  • “Loss of rental income” Never had it but I know what it is. Didn’t you see the smiley face? If you read any of my posts you’d know that I have not had one day of vacancy in my rentals in over two decades. You’d also know that I advocate buying properties that are and probably will be in high demand for the foreseeable future. The people I see that fail in real estate buy “deals” and then find out why they were deals. I also pick tenants that are highly unlikely to default. I have high demand so I can be choosy and if there is any skill in what I do I’d say it was the ability to pick the correct tenant and live up to my contractual obligations. And if you didn’t get the smiley face I thought the “lost lease” was a knock on the head. My friends talk about starting up a secure storage business for leases since so many places go out of business when they lose their lease. Lose their lease. Rim shot please!
  • I posted some facts about my real estate experience to demonstrate leveraged returns in real estate against some hypothetical 12% market returns on the same amount of money invested. YOU came along out of the blue to ridicule my claims and to claim I’m a braggart and encouraged others to ignore me or anyone else who claimed to make money in real estate based on nothing.
  • And now you want to cry that I’m the attacker? Immature? My measured response, “Am not!”
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Old 09-21-2007, 08:24 PM   #46
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  • My measured response, “Am not!”
Am so! Sorry, it had to be said. I accept that you've done what you've said and that your values are correct. We also have way more in rental property than stocks & bonds and wouldn't be anywhere near where we are had we not done what we did - But you are in a good area - kinda hard to lose. We are in a slower growth area, but good - values are still going up, but we are way undervalued compared to Hawaii or SFO.
Glad that the rentals are so low maintenance for you - I need to call in the Voodoo priests and do an exorcism. After getting rent 20 days late from a new tenant the law called about to kick in the door - ON THE SAME APARTMENT they kicked in a couple months ago! New late paying tenant was choking out his pregnant girlfriend. Did a 24 hour notice, he will get served in jail. Sigh. whatnhells wrong with people?
I rent to lower income folks and figure most everyone is entitled to a decent place to live, but this sure does make me cranky and less than charitable in being willing to give people a break.
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Old 09-21-2007, 09:04 PM   #47
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[/list]Am so! Sorry, it had to be said. I accept that you've done what you've said and that your values are correct. We also have way more in rental property than stocks & bonds and wouldn't be anywhere near where we are had we not done what we did - But you are in a good area - kinda hard to lose. We are in a slower growth area, but good - values are still going up, but we are way undervalued compared to Hawaii or SFO.
Glad that the rentals are so low maintenance for you - I need to call in the Voodoo priests and do an exorcism. After getting rent 20 days late from a new tenant the law called about to kick in the door - ON THE SAME APARTMENT they kicked in a couple months ago! New late paying tenant was choking out his pregnant girlfriend. Did a 24 hour notice, he will get served in jail. Sigh. whatnhells wrong with people?
I rent to lower income folks and figure most everyone is entitled to a decent place to live, but this sure does make me cranky and less than charitable in being willing to give people a break.
Are you saying low income people are deadbeats, law breakers and wife beaters or just the ones you choose, or do you just open an empty apartment, throw some food stamps in and see what you catch?

Voodoo priest? Again a wrong choice, IMHO, I had a Chinese blessing ritual done on the unit with my 7 year tenant. Voodoo bad juju!

The OP was wondering if there were better returns possible in real estate. I know there are in the areas SF/Hono/Las Vegas where I invest. Don't know where he is but planes fly all over the country. My methods are easily reproduced and are actually very low risk. You seem to be making enough to put up with all the sh*t you complain about. There's a guy in my neighborhood who was written up in the paper because he's made a bundle in multi-family apartments. He keeps them very nice but collects the rent in person carrying a baseball bat. He's a high school dropout and worth way more than me but it's not the type of real estate activity that I would do or encourage anyone else to copy.

Why are you p*ssed at me? I know people who have problems with tenants/toilets/trash. My way has pretty much eliminated that. I'm not charging anything or trying to dispute your results in your situation or in your area. Yet some people need to vent on anyone who shares a way that works! I know misery loves company but didn't realize the intolerance level.

What have I done to deserve your wrath? You seem to be taking your frustrations with your tenants out on me. Maybe your inability to deal with the source of your problems is part of your problem. Just suggesting.

I empathize with your problems and realize it's possible I could get a bad tenant at some point. I'll deal with it in a professional manner and hopefully learn from it. But to your attack and name calling, "Whatever"!!
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Old 09-22-2007, 12:06 AM   #48
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Originally Posted by honobob View Post
Are you saying low income people are deadbeats, law breakers and wife beaters or just the ones you choose, or do you just open an empty apartment, throw some food stamps in and see what you catch?

Voodoo priest? Again a wrong choice, IMHO, I had a Chinese blessing ritual done on the unit with my 7 year tenant. Voodoo bad juju!

....
What have I done to deserve your wrath? You seem to be taking your frustrations with your tenants out on me. Maybe your inability to deal with the source of your problems is part of your problem. Just suggesting.

I empathize with your problems and realize it's possible I could get a bad tenant at some point. I'll deal with it in a professional manner and hopefully learn from it. But to your attack and name calling, "Whatever"!!

Hey Honobob - no wroth on my part at all - I was just funning you with the "Am so!" remark. Poor judgement on my part - ought to have realized you'd be a bit testy after people calling you out on the things that you've actually done. To be clear: all respect to you - well done on your choice of properties and tenants.
We've been dealing with low cost single bedroom units mostly, and it may well be the case that people in a lower economic strata have greater basic financial stressors, which may result in more disharmony at home. Could be that we are dealing with 51 units and the odds favor us getting more duds in a decade. Could be the VooDoo i was kidding about just isn't the right tack - one of my AmerInd tenants actually has offered to burn some sage and do a water ceremony (?) to clear that apartment of whatever bad energy might be there. Probably is the case that I'm a mutt and rent to more good story people than i should.
Bottom line though - real estate has been very good to both of us. Peace.
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Old 09-22-2007, 10:31 AM   #49
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I am sorry. I did read it wrong. In SF the funning back response is "Are to! Am not! Are to! Am not!" "
"Am so" is as bad an insult as calling the City "Frisco". No wonder we Californians aren't appreciated in Oregon.
And I probably wasn't in the best space to enjoy the joke as it did go over my head.

I don't mind anyone calling me out, I support everything I say. It's just frustrating when people make statements about real estate that they can't back up or use generic graphs without any analysis of what it actually represents or the story of their friends sisters brother-in-law who lost BIG.

It's strange how all the people who are negative about real estate investing most always insist they made a deal on their purchase but anyone buying after them are certain to fail.

In my over 20 years of experience I've seen friends who sold their $200,000 homes cause the $100,000 equity was burning a hole in their pocket. They were convinced prices who drop back below $100,000 and they'd rent in the meantime only to see prices jump to $400,000 and rents increase so much that their $100K would only cover a few years rent. Now we're over $600K and new friends think this is the top and they want to sell cause they think their $300-400K equity has them set for life.

To see people who keep posting that you'll be able to buy properties at 50% off "if you just wait" just seems ignorant to me. I don't think they're doing anyone a favor on this board who are contemplating adding real estate as a component of their portfolio to reach FI. Does anyone have proof of a property selling at 50% less of a previous market value? Texas?


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Bottom line though - real estate has been very good to both of us. Peace.
In the spirit of peace and rituals I'll "burn one" in your honor tonite.
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Old 09-22-2007, 11:58 AM   #50
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To see people who keep posting that you'll be able to buy properties at 50% off "if you just wait" just seems ignorant to me. I don't think they're doing anyone a favor on this board who are contemplating adding real estate as a component of their portfolio to reach FI. Does anyone have proof of a property selling at 50% less of a previous market value? Texas?

Yes... mine... and the house that I had bid on before my house...

First, I had bid on a house that had sold for over $200K back in the early 80s.. I had told the realtor that I could only afford maybe $75K... well, this house was just forclosed and it was NICE.. big yard, big house and cheap... they said I could get if for maybe $115,000... I said I could not go over $90K.. they did not want to put in such a low bid, but I insisted... well, they agreed to $90K... but, I could not get financing so it went down the tubes...

The house I am in I am not sure how much they had paid for it, but the closing docs said the existing mortgage was more than double what I was paying for it... maybe $1 or $2K more than double....

Now, will this happen again... I doubt it very seriously... from what I understand Houston had the worst drop in history in the 80s...

For another example... but this is condos.. my friend had bought a condo for $45K.. when the bottom fell out, they kept going down and down.. nobody wanted to lend money to someone buying a condo.. the prices actually dropped down to $5K... yes, you read it right FIVE thousand for a condo... but, it was in a bad part of town where you could hear the automatic gun fire of the drug dealers a mile or so away...

Again.. will it happen in the middle of SF.. not a chance... Hawaii not a chance... Vegas.. well, maybe.. there is lots of land there to spread out.. that is the problem with Houston.. but if you are in a good location.. not a chance...
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Old 09-22-2007, 08:36 PM   #51
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Many people like to brag about themselves, their looks, their health, their wealth, their power, their spouse, their kids, their job, their money... that's probably true with this professor. however, i somewhat do believe with what the professor said. There are plenty of people that i know makes good money in real estate investing. Heck, in my neighborhood anyone bought their house 7-8 years ago is now double their money, can you just imagine if they bought 5 units, even at full price 8 years ago, they still have a lot of equity.

my baby sister never broke $40k salary has almost 1/2 mil in real estate equity (here you go bragging again..) and it's all luck that did it for her. if this professor is smart which i think he is, he probably done twice better.



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Old 09-22-2007, 08:54 PM   #52
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Tonight I was chatting with tennis buddies over cold ones and asked one of the guys who teaches econ what he thought of the interest rate adjustment. Talk turned to money market returns, the bump today in the market and prospects over time. After awhiie of this, the econ prof looked at me, chuckled and said, "You need to stop worrying about five percent, six percent, seven percent. That's nothing . . . that's other people using your money. You should be in real estate and looking to double your money every couple of years." When I asked who does that, he said, "I do. It's a matter of leverage." Apparently he has been buying and selling a lot of local properties over the years and has done well. But, was he blowing smoke? Are there really lots of people out there who constantly and inexorbably get rich by buying up with borrowed money one 100 k property after another and then double their out of pocket when they sell it off? My assumption would be that for every person who does that successfully, many do not. I drove home feeling like a chump thinking maybe I should have been trolling for properties the past few years rather than agonizing over money market and index fund yields.
More power to the professor if he did it. I'd have asked him to pick up the tab afterwards though
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Old 09-22-2007, 11:32 PM   #53
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my baby sister never broke $40k salary has almost 1/2 mil in real estate equity (here you go bragging again..) and it's all luck that did it for her. if this professor is smart which i think he is, he probably done twice better.



enuff
That's mostly prevalent in areas such as the Bay Area and Southern Cal. Practically anyone who purchased a house 10 years in those areas is doing quite well.
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Old 09-24-2007, 03:43 PM   #54
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In Columbus, Business First reports, the median price of housing fell in the first quarter. The latest statistics from the National Association of Realtors show the median price, or the midpoint in the price range of homes sold in the region, declined to $148,100 in 2006 after peaking at $152,000 in 2005. The decline was the first since at least 1979, when the median price was $47,100.

WoW Columbus OHIO?! That's an annual average appreciation rate of over 4.5% over 26 years! So my 20% down on a $47K home ($9,400) and 25 years of positive cash flow is looking pretty good!
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Old 09-24-2007, 08:06 PM   #55
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Bonnie and Clyde also had a get rich fast plan and they also did not have to worry about outliving the money. Don't think I would recommend following either the econ prof's or B and C plan. Both plans could have very undesirable outcomes.
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Old 09-24-2007, 10:03 PM   #56
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There is one thing to remember. People tell you about their successes not their failures.
Absolutely right.

I don't know your friend, and have no idea whether he is telling the truth or not. But I wonder why, if he has many years experience of doubling his money bi-annually, he would stick it out as a professor all the way to a full pension. Actions usually speak louder than words.
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Old 09-25-2007, 07:21 AM   #57
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Absolutely right.

I don't know your friend, and have no idea whether he is telling the truth or not. But I wonder why, if he has many years experience of doubling his money bi-annually, he would stick it out as a professor all the way to a full pension. Actions usually speak louder than words.
Sticking around for a full pension is not a bad deal (complementing his wealth from real-estate deals). His workload and schedule is probably pretty flexible or light. It's also a very secured job with almost zero chance of getting fired.
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Old 09-25-2007, 07:46 AM   #58
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Does anyone have proof of a property selling at 50% less of a previous market value?
Absolutey ... in MA (Lowell, Lawrence, Worchester) any Boston suburb: peak 1987/1988 to bottom 1993/1994. Bought a dozen units for a dime on the dollar (but these were RTC/HUD auctions). 50 cents on the dollar was a bargin for any bank holding dozens of REOs/OREOs. Most were selling for 30-40 cents on the dollar (that's where I made the second half of my wad).

Note these values are computed from the foreclosed note (purchase price may be higher if a deposit was made or lower if closing costs were rolled into the sale).

Where there is chaos there is opportunity.
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Old 09-25-2007, 08:15 AM   #59
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Never argue with a business professor, just nod and say "that's great", and move on............
What's the expression?

"Those who can, do. Those who can't, teach?"
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Old 09-25-2007, 09:41 AM   #60
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Sticking around for a full pension is not a bad deal (complementing his wealth from real-estate deals).... It's also a very secured job with almost zero chance of getting fired.
Yes, fair enough ... but if he has the ability to consistantly double his money every two years, the miracle of compounding says that his employment income and pension entitlements would quickly become chump change, hardly worthy of notice.

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His workload and schedule is probably pretty flexible or light
Well, maybe. In my limited experience of academe, there are pointless committee meetings to attend, papers to grade, students to counsel, lectures to prepare, seminars to give, boring articles and books to write ('publish or perish'), etc. Like all jobs, it has its fair share of tedium ... it is not all beer and skittles at the faculty club.
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