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Re: 22 Years Old and wanting more...
Old 06-21-2005, 12:43 PM   #21
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Re: 22 Years Old and wanting more...

Quote:
Originally Posted by moghopper
Your parents charge rent?

Are they looking to adopt?
Haha, no rent.
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 12:53 PM   #22
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Re: 22 Years Old and wanting more...

Like most others here, I agree that getting into flipping probably isn't a wise move for you. *With so many people in the game now (and probably 98% of them are more experienced, and better financed than you) I would think there's really not much more "low-hanging fruit." *That means even more risk for you. *I'm no expert on the real estate business, but it seems to me that even working as a realtor these days is a lot more competitive than ever before.

What I've learned in the mere seven years since I was in your shoes is that if you want to truly make a lot of money, and escape the 9-5 grind, you need to be an entrepreneur. *But again, more risk. *There are a lot of very smart, very business savvy people in this country who have poured their hearts and souls into great business ideas, and they've failed regardless. *

On the other hand, I have to admit that there is also a disturbingly high number of average Joes who took some risks and bumbled into some good luck, and now they're driving shiny new 911s. *As a lawyer, I'm a paid servant for them, working by the hour to help them build their empires.

You're clearly willing to take some risks. *But my advice to you would be to take reasonable steps to try and minimize those risks. *Consider getting an MBA from a well-respected program before starting up your own business. *You may find it makes more sense to go to work for a big company, get some great experience, network, and build connections with people who can help you, and then set out on your own when you've built a strong foundation for success. *All the while you'll be living below your means and saving your money so that you can make smart investments when opportunities present themselves.

Don't buy a car unless you can pay cash or only need a tiny loan.* Don't try to keep up with the Joneses.* You'll end up an indentured servant to lending institutions.

My last piece of advice is to listen to this guy:
Quote:
Originally Posted by Mountain_Mike
Geeman,

Keep working, keep saving, buy some houses and fix them up if you want to---but stay away from places like this until you're about 45 years old. Otherwise, you'll end up dreaming your life away.

-Mike
As for me, I'm hooked on this board at too young an age, and it's making it hard for me to concentrate on building my career. I've got to be careful that I don't end up dreaming my life away!

Good luck.
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 12:54 PM   #23
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Re: 22 Years Old and wanting more...

I watched that show this weekend. They had two women who made $17,000 on a 4 month flip. In small print they mentioned this was before realestate fees. The math they did....

$117,000 sale price - ($52,000 purchase price +$50,000 upgades) = $17,000

Real math

$117,000 sale price - ($3000 closing cost + $52,000 purchase price +$50,000 upgades + $6000 sales comishion) = $8,000

Not to mention split two ways, the time they spent, taxes, and to happen to be doing this during an incredible real estate boom.

I am not saying people can not make money flipping properties but it is not as easy as a TV show tries to make it look.
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 01:32 PM   #24
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Re: 22 Years Old and wanting more...

That $8,000 is still not a realistic amount. You have the insurance, property tax, and mortgage to pay while you own the house. For 4 months, it would probably be $3000 or so. So you may net $5k to be split 2 ways. Do some sensitivity analysis on the deal. If the sales price was 5% lower ($5850 less) then you would net $2k. Or, if the time on the market to sell the house was 4 more months, you would net $5k. What if you discover that an interior load bearing wall is rotten after you start fixing it up and have to shore up the house structurally then cosmetically fix the wall. Thousands of $$ down the drain. Those last 3 what ifs could easily have happened. Bottom line, you aren't going to make a lot of money. But you will have a very hectic life for the 4 months you own the house till you sell it(or 6 months or 10 months...).

You could probably get a second job and work 10 hrs/wk and make more money than you would with house flipping. Or become an entrepreneur. Sell your services on the side and make some quick cash. Bottom line, I don't think there is an easy way to make a lot of money quick. But it sounds like you are on the right track. Heck, live with your parents for a few more years and save, save, save.
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 01:39 PM   #25
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Re: 22 Years Old and wanting more...

Quote:
Originally Posted by geeman
I need more $$$.* I don't want to be old and driving a Porsche, I want to be 23 and driving a Porsche * I am thinking about investing in some real estate.* Possibly flipping a couple homes and supplementing my current 9-5 job.* There is no reason why I couldnt get an extra 30k, 40k, 50k a year doing this on the side...*

My question is has anyone done this and what can you recommend me to do?* Possible first steps.* Any advise is appreciated.
Here's my opinion, maybe will offend but I'm not feeling in a diplomatic mood.
You don't need more money, you need to rethink your priorities.

Also, you need to pay your parents rent, market value. *Doesn't matter if your parents don't need the money or don't want your money. *And if you're Asian, then you really should be insisting to pay your parents rent. *If they return your checks, set up an account in their names and deposit monthly, giving them the statements. *

And yes, I have done this, bought first property about 25 miles south of you in Chevy Chase at the age of 20. *What motivated me was not making money, but having my "own" place, someplace to fix up. *Parents walked me through it, but I used the money I saved from a summer job to pay the 20% down and closing costs. *

Read every book on real estate investing at your local library. Keep saving money. *And when you're done reading, if you still want to do RE investing, then do it the proper way, none of this interest only mortgage garbage etc.
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 01:44 PM   #26
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Re: 22 Years Old and wanting more...

Tell me how you really feel
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 03:24 PM   #27
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Re: 22 Years Old and wanting more...

geeman,

Where about's do you live? I live in Gambrills, MD [just moved]. Having just purchased a house in the area, let me be the first to inform you that it is quite a sellers market out there. Lot's of buyers, very few sellers. None of the houses we looked at were anywhere close to below market value. I'd say about 1/2 were ridiculously priced for the condition of the house [like carpeting in the bathrooms and kitchen - ewww].

A hot real estate market always brings out the "flipping loonies" with stories of how so and so made gobs of money. Unfortunately, those people that didn't make as much money, or complain about the hard work in fixing up houses, etc., are conspicuously missing from those "paid advertisements."*

I would certainly take the recommendations and do some more research before you go enter the world of real estate.* There were a whole lot more fees than I had anticipated.

There's nothing wrong with being young and ambitious. But don't get caught up in the get rich quick schemes [like penny stock trading, etc.].* At one time I wanted a cool car as well, but the costs and insurance were much too high.* Not too mention that I figured people would think too much about what I was compensating for.* I didn't want to be that guy.

Keep on saving, maxing out Roth + TSP, and self-educating on investing, real estate, etc.

- Alec
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 03:35 PM   #28
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Re: 22 Years Old and wanting more...

Your asking for opinions so here's mine. *If your interested in real estate investing then invest in your own house first. *If after a couple of years if the market is still good then sell and buy better. *Of course you will have to save your rear off while owning your house. *

The DW works for a mortgage company and has seen several people do this and live in very nice houses many quit thier jobs and do this for thier income. *Those who have quit typically have several million in assets. *The down side to this is having to move every couple of years. *If the market goes south you don't sell and you still have a decent place to live.

My expirience has shown that the best deals are in old rental houses. *The lanlords typically keep the houses just up to standards so they can keep renting it. *When they go to sell they have to discount the house. *If it is not in knockdown condition you can live in it while fixing it up. *So far the most inconvienent fix was remodeling the kitchen. *We wound up removing the ceiling and most of the drywall.

To sum up...Don't buy the new car until your old one breaks and it is more cost effective to buy a new one, don't invest in real estate until you own your own house, pay cash for all consumables, use credit only to purchase appreciating assets.
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 04:10 PM   #29
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Re: 22 Years Old and wanting more...

Hey I got blasted over my age when I signed on so blast away*
geeman I think you need to change your mentality.* Being driven is good but being obsessive is not.


Oh yeah I have one for you that fits your criteria. Fly to Vietname, open a savings account and then brokerage account. Buy Vietnam stocks as it seeks potential economic deals with the US and others. Might make a fortune or might lose every friggin cent or you may have trouble getting money out. How does that sound?
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 07:43 PM   #30
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Re: 22 Years Old and wanting more...

Alec: I live in Owings Mills, MD
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 09:01 PM   #31
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Re: 22 Years Old and wanting more...

hey I live right up the street in Reisterstown
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Re: 22 Years Old and wanting more...
Old 06-21-2005, 09:20 PM   #32
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Re: 22 Years Old and wanting more...

Oh, ok. I'm up in Reisterstown all the time.
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Re: 22 Years Old and wanting more...
Old 06-22-2005, 07:40 AM   #33
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Re: 22 Years Old and wanting more...

I have my 401K information infront of me now. It says...

*an annual variable asset charge of 1.20% is calculated and deducted daily as a part of the unit value of each of my variable investment options.

* your employer matches 1% of your contribution. The employer matching contributuion does not apply to applicable contributions that exceed $1,000.

* In 2005 the before tax contribution amount is 100%, with a minimum of 1%, of your compensation or $14,000 whichever is less. The max contribution amount will increase by $1,000 each year through 2006 to $15,000 then it will be indexed in $500 increments.

* There is a benefit disbursement fee of $50.00

Then I have a list of investment options...

Is this worth investing in
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Re: 22 Years Old and wanting more...
Old 06-22-2005, 09:39 AM   #34
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Re: 22 Years Old and wanting more...

Your employer is offering you up to $1000 in free money... of course it's worth investing in (up to that $1000 limit).
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Re: 22 Years Old and wanting more...
Old 06-22-2005, 10:35 AM   #35
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Re: 22 Years Old and wanting more...

How do you figure it is $1,000?
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Re: 22 Years Old and wanting more...
Old 06-22-2005, 11:01 AM   #36
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Re: 22 Years Old and wanting more...

Gleeman, that description of benefits is about incomprehensible. Talk to your HR person and ask what it means, with real dollars as an example. It reads as if your employer doesn't have to contribute more than 10 bucks.
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Re: 22 Years Old and wanting more...
Old 06-22-2005, 11:33 AM   #37
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Re: 22 Years Old and wanting more...

Quote:
an annual variable asset charge of 1.20% is calculated and deducted daily as a part of the unit value of each of my variable investment options.
Ewww.. I'd check to see if this 1.2% is added on top of the expenses of the investment options. So, if one investment option charges 0.50%, the total fee is 1.7%. Sounds like you've got variable annuities in the 401(k), which are totally inappropriate in that tax deferred account. Yuck. Might be better off getting the match and then using Roth IRA + taxable accounts.

So, I take it you're not a federal employee, but a contractor (?).

- Alec
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Re: 22 Years Old and wanting more...
Old 06-22-2005, 11:41 AM   #38
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Re: 22 Years Old and wanting more...

When everyone thinks its a no brainer to 'flip' real estate, chances are pretty good the flare gun that signals the end of the bull market has been fired. You might have another year or two on that money maker, if you live in the right place and there are still people at the bottom of the buyer pile willing to sign up 75% of their gross income to afford the interest-only mortgage on their first home that pushes all the other property prices up a notch. Oh yeah, and a bank willing to write that mortgage.

When I was in my early 20's, I worked 3 jobs. That sucked. But there is a sacrifice and risk component to getting rich quick...
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Re: 22 Years Old and wanting more...
Old 06-22-2005, 12:21 PM   #39
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Re: 22 Years Old and wanting more...

Quote:
Originally Posted by ats5g

So, I take it you're not a federal employee, but a contractor (?).

- Alec
Yes, Govt contractor. Maybe they meant they will match my contributions up to 1% of my salary to a max of $1000 per year.
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Re: 22 Years Old and wanting more...
Old 06-22-2005, 01:27 PM   #40
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Re: 22 Years Old and wanting more...

geeman,

What I've been doing in real estate is a little different than the normal buy, rehab and sell, or buy wait a few months and sell.* The problem with buying real estate is how much you pay for it!* If you can buy with a little equity ie 15k or more in equity, then it may be worth a second look to buy.* To determine if there's any equity value in a house, there's websites out there that can run comparables for you at a minimal cost.* I always try to buy owner financing.* If owner financing isn't available, there are investment property loans available assuming the loan to value (LTV) ratio falls below the lender's set percentage (75% sometimes).*

Then I lease/option the home out to a new tenant.* The tenant puts down between 3K and 20K as an option deposit to buy the house at a price which is usually somewhat higher than current market value (allows for appreciation).* Then charge them rent which is around what your payments are.* The benefits are 1) the tenant treats the house as their own 2) the tenant pays for all maintenance - no phone calls 3) if tenant decides not to buy the house, the option deposit is non-refundable 4) if house sells, then your profit is locked in.* So, assuming you can find 1) find a house that meets the criteria and 2) find a tenant with a little cash to put down, you can make money doing this.* The risks are 1) not being able to find a tenant and being stuck with a large lease payment to the owner 2) miscalculating the equity (not a big problem if you have a tenant)* Make the lease term short ie 1 year so the option can be renegotiated if there's good appreciation in your area.

Also, get a vision statement of exactly what you want to do and how you want to make money in real estate.* If you don't have a game plan, you'll get too distracted by what's out there, and believe me, there's a lot of things out there to distract you.

Best of luck.*
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