OH YEAH MIKE!!

We can all burn through the dough!

Some of us are pretty lucky. I MAKE more than I can spend... well -- I can spend it with the best of 'em... but most people would be damn lucky if they retired with 500K --- and even luckier if they had 1MM... and trying to live off the interest - and Social Security if you only have 500K is going to be a long tough haul. Even 1MM is only going to earn 50 or 60K -- and that's GROSS so you've got 20% taxes out of that... So then most folks are going to be dipping into that capital for little things like the roof on the house - or the 50th Wedding anniversary -- or the loan to the kids for a house downstroke...

With INFLATION - property taxes go up almost every year - auto insurance - medical insurance - just STUFF.... and suddenly what seemed like a massive amount of dough - isn't.

My buddy lived off his union pension - and SS.... and it was TIGHT! He had to watch every nickel if he wanted to be able to do anything other than just pay his bills. BUT == BIG BUTT == he'd invested in land many years ago -- and just sold it. That was his piggy bank. Now -- he's a comfortable guy and invested for dividends he can now sport an extra 7 or 8K per month gross... pretty dang nice for a guy that was just getting by. The point is -- I don't car how you do it - land - rentals - stocks - savings - whatever.... ya got to have some for down the road. Ya don't have to be Charlie or Greg. We're the exception. But ya gotta get busy and do SOMETHING. There's no magic bullet.

Greg, I do agree with you. I have a saying I've sead since my twenties that I'm kinda tweaking today, basically " It's either be here making it, or out there spending it...". But I m finally beginning to see the light of some investing advice I received a while back, is to have your money making money while your sleeping, which is totally contrary to my bisness.

So at 8% and I have 1.2, does that translate to 96,000 before taxes? Less 15% for taxes (probably 20% of that 1.2 will be from my Roth)...bout 6800 a month. Or bout 1700 a week. You can see where it starts to get thin...

Mike

Yes -- if you can SAFELY make an 8% cash flow off your investments. I've yet to be able to make that kind of return. You can get that in TOTAL return - capital growth and dividends -- but to consistently, safely earn 8% you'd have to be seeing mortgage rates in the 9's and 10's -- and treasuries would be yielding 6% or more.

Of course that's the issue isn't it.... we don't really know what the future holds for rates etc.

A more conservative estimate would be to earn a steady 5%.... if you get more --- then we're in a highly inflationary period... which of course ALL retirees hope for!! :lol:

So basically tread lightly and pay attention (or you won't be paying anything...hahaha)

Well...... once you start living off the cash-flow -- and you're "older".... it's not the time to be risking what took you years to achieve. So MOST people take a step back and invest a bit more conservatively. At retirement you're goal is to have a steady rock solid cash flow you can count on for many years. You don't want to be gambling - suddenly loose a quarter mill - and then have the market be down too.... and all of a sudden you're in hot water.

Now -- if you have 5 or 10 or 20 million.... then you can take a bit more risk because if you have 10 million -- and it's spinning off 500 to 600K in cash... (5 or 6%) -- you're probably okay regardless. :lol:

I do believe we will see that Inflation at some point in the future..

That is why locking in on the present rates is critical..

Having a long term fixed loan at sub 4% and Investments that will yield double or more ? :thumbsup:

Well put.

People get mad at me when I say I'm hoping for raging inflation... and that I'd love to see 10% CD rates. Actually if truth be known - anyone that is living off their money would love to see a return to these kinds of rates. In retirement you're most likely (key statement - MOST LIKELY) not buying as much "stuff"... Your mortgage is most likely locked in or non-existent. Even if you have one - like Mike pointed out - paying 4% and making double that - is a good thing.

While nobody really actually wants inflation, it's good for retirees. It's just a no brainer for folks to be able to put money into super safe bonds or CD's or Treasuries and make acceptable returns. High return rates actually RAISE the buying power for these folks... but, of course, at the expense of those that are still working and trying to raise families and buy homes and cars etc. That's why inflation and high rates are "bad". But the historic low rates on these same investments have been really bad for the retiree for several years now. This is particularly true for those with the lowest amounts to retire on. The difference between making 7% on 300K and making 3 or 4% on that same amount is just huge to that family.

Greg, I almost blew coffee all over my Monitor laughing so hard.. I know, it doesn't sound good saying we welcome High Inflation... But in all honesty, I think it is inevitable and not our fault..

The fact that it will benefit me the most is just part of life...I won't be the one causing it and neither will you..

I just see it coming and I am getting ready..I will benefit greatly from it...

Holy poo, If I can get double digits on CD's again, I will lock in those too and take some out of Stocks to diversify even more...

Right now we are seeing a lot inflation, but rates are being held way too low. So the while the cost of living is going way up, the SS checks are not reflecting that and rates are way too low for investments to keep up for the average retiree.

I was listening to this guy on the radio and to me, he knew exactly what game was being played and how to win it..

http://www.amazon.com/The-Boomers-Gu.../dp/1599322935

Greg!

I am now on my 4th audiobook on $Money$, and the Rich Dad/Poor Dad guy reminds me so much of you and this thread. It's like having GW in this thread and GW in my ear for an hour each day...is that a good thing? Haha

Here are the points from this thread and the book that I'm really eating up right now:

1) Learn to Make Decisions With Rationality As Well As Emotions - All of us make decisions emotionally, but the smartest people recognize and harness their emotions and learn to use rationality to make decisions. (I have started to do this and it changes your whole perspective on life, money, relationships, etc).

2) Don't Work For Money - Working for money keeps you desperate, and unable to think and be creative. Work for knowledge that experience brings.

3) Let Your Money Work For You - THINK and act on ways you can generate cash flow outside of the 'rat race'

4) Don't Play It Safe, Play It Smart - Most of us 'play it safe' and fear taking a loss. Making money requires not avoiding risk, but staying focused, and managing risk.

I KNOW that's not all, but my dimmer switch is sliding up. :idea:



GW I'm still doing more research on your post about housing prices vs. rates and I see what you're saying...in reality it's more complex than just an inverse relationship. I'll post about this soon too.


Thanks,
Steven

I could say "I feel sorry for you" -- but then I'd be lying... :poke: :lol:



I like the Rational/Emotional discussion with regards to investing. I've said it many times here -- that you MUST invest in things you feel good about... so that's "emotional". I've also said - invest in things you understand -- and that's "rational".

So when I hear a news story - let's say it's about "rising rates".... and that triggers -- "what do I have that is interest rate sensitive"? So the emotional side says "Holy crap! I've got a lot invested in that space!" and I jump to check.... THEN I try to suppress the emotional side -- search around -- read other opinions - gather some data - I go back to myself and discuss "WHY I BOUGHT THIS"... and "Where does this fit in my portfolio" etc. IF -- IF -- I decide to pull the trigger on either a buy or sale ---- I do so lightly. I may sell a 1/3rd -- or a half. I would do the same on a buy. This gives you time to settle down - think - and take the emotion out of it.

Investment Property #Deuce

Purchase Price: $155,000
Loan Amount: $124,000
30 Year Fixed/3.75%
Initial Investment: $39,520(Down Payment, Closing, Repairs)

Exterior Paint
Interior Paint
New Flooring
New Appliances
Misc....

Rent: $1295 (1 year Lease)
Monthly Payment:$734

Gross Mo. Cash Flow: $561
Principal Reduction(Mo. 1st year):$175
Monthly Appreciation(3% Yearly): $387.50

Gross Monthly Financial Gain: $1123.50

Now you know why I no longer own a 1969 Camaro. :lol: With all the costs, it ROI's 100% back in just under 4 years. I've decided to add $218 a month to reduce principal which pays off the mortgage in 18 years. Still cash flowing every month along the way. Yes, I'm building in 3% yearly appreciation along the way. I bought it for late 90's prices at 3.75% interest. Hell yes!

I fix them up NICE. I have the fringe benefits of being in the business. I received a 6% commission and manage my own properties. I had tenants beating down the door. I ended up with 5 that wanted it and picked a couple in there late 50's that had to short sale their home bought in the boom.

It's a prime location, backs to the community trail system with a private gate to the trail, two blocks to the community center, library, 3 blocks to one of the best elementary schols in town, walking distance to the hottest hang out spot in Henderson.

Four more to go.......:G-Dub:
http://i200.photobucket.com/albums/a...ps83bf0830.jpg
http://i200.photobucket.com/albums/a...pse113e897.jpg
http://i200.photobucket.com/albums/a...ps02fb8cce.jpg

Thank you sir...:cheers: As I said in my healthy 101 thread.... The pain of discipline weighs ounces, while the pain of regret weighs tons. I can play with cars later, it's time to set myself up for the future.

THAT is exactly what this thread is all about....

Vegas... I wouldn't ask this is the answer was not really important to me... did you get an investment or Traditional mortgage? I have a rental that is underwater and just about even..(income to expense annually). I cant refi because I haven't lived in in 3 of the last 5 years... Well I can but only as in investment loan which is not favorable... so if you know a way out i would love to learn...
I thought about putting the property into an LLC and letting it go.. I doubt it will ever be very heavy cash positive without a favorable refi...

That is a sweet deal. It's impressive to be so cash flow pos. without a lot of money down.

Is it common to find houses where the mortgage is significantly less than the rental market price? Do the renters of these places tend to be those that were put out by the housing crash?

I purchased the property with an investment loan. I did pay 2 points to get that rate. Your Loan to Value is your biggest problem. The higher LTV, the more risk the lender assumes. What type of loan do you have currently? FHA, VA, Conv (Fannie/Freddie or Private?) Does it adjust or have a balloon?

Depending on your financial position and negative equity, a short sale may be beneficial. I'd certainly do that before suffering a foreclosure. A talk with an asset protection attorney and cpa would be your first steps. The laws are different than Nevada. The LLC won't protect you as the loan is in your personal name. You can only change how you hold title. Then research an agent that has a proven track record of closing short sales.

It's really a unique recipe. Our market over corrected due to the bubble burst. Team that with all time low interest rates and displaced homeowners that have suffered a foreclosure/short sale and this is the result.

The margin between ownership and leasing can't be this wide forever. Our prices are increasing rapidly(21.5% in one year) and rates have been inching up. That will do two things: Reduce investor ROI and primary residence affordability. The margins will shrink and vacancy will rise as investors decide to move their money out of our market. I expect a rent decrease down the road but I have lot's of insulation and my properties are always at the top of the heap. I'll have then rented as long as the lights are on downtown. :D

I really feel like it's a once in a lifetime opportunity to capitalize on low prices AND interest rates at the same time. Investors agree as we(our market) have many hedge funds picking up 50 properties at a time all cash. While I feel our market is getting investor heavy, a majority of the sales over the last 2-3 years have been all cash, heavy down, or highly qualified. The foundation of ownership will be solid this time around. I do see a hiccup coming in 6-12 months when sale inventory increases and interest rates rise. I do see the individuals that have suffered short sales/foreclosures getting back in the market as buyers about the same time the investors start to wane.

I've been wrong before but these investments are no brainers over a lifetime.

Vegas.. I have 2 loans the ole 80/20 from the BS loan days... 80% conventional which is likley 90 LTV on itself.. 20% HELOC which I would consider paying off... if i did the Net cash flow would be about 300/month and the initial outlay would be about 35K.

I thought a short sale is as bad for you credit as a foreclosure? and since the HELOC would have to be paid in full it would be tough to impossible.

Thanks for any help... the advice is appreciated.

The key for INVESTING like Todd is doing -- is keeping the properties CLASS A... and investing in great neighborhoods where good people want to live. All the properties I've ever invested in were always class A apartments. You get a better tenant... higher rental rates... and less vacancy etc.

Todd -- I think your rentals should be unaffected by "down the road" events. You've positioned your self well. Great underlying price paid. Low fixed rate mortgage. You'll get good rents because the properties and management are nice. If anything - my guess is you'll be able to RAISE rates as housing prices firm because the prices paid for new purchases will have to be reflected in the rental rates. A rising tide floats all boats. The tighter the market gets with inventory absorption - regardless of who is buying the better it will be for everyone.

We just raised our rental rates 50% in one building I own (an LLC with other investors) and 35% in the one I just invested in (we're doing a major redo of units as they become vacant - raising the quality a long way). Over the next 10 to 15 years these units are going to make nothing but money.

Selling a depreciating asset to buy/invest in an appreciating asset with cash flow is the smartest move you'll have ever made in your entire life (other than marry Kelli). I'm proud of you for having the guts to make the move. :thumbsup:

[B]Selling a depreciating asset to buy/invest in an appreciating asset with cash flow is the smartest move you'll have ever made in your entire life

I am at that crossroads too.. I am in the middle of refinancing my Home and helping my MIL refinance hers..This should be done in 30 days or less.

After that it is time to look at at purchasing at least one rental Property to start.

Vehicles are my only depreciating assets...I may sell one.

But I need to diversify even more from Stocks ,ect... and into some properties...

My Wife wanted to back in 2007 and I stopped her, and I was right...

Now she wants to again, and now she is right...

Todd and Greg...Thanks for the info and the push.....:thumbsup:

Nice work Todd. Your discipline here is inspiring and painful at the same time. :lol:

I have really tried to minimize my depreciating assets overall as well and I am down to just one. Yep, this stupid Camaro. :bang:

You are in a great position there with your craft and recognizing the opportunity. Congrats on capitalizing on it. That will be your Social Security (and then some) when the real one has nothing left in the coffers. :sieg:

The fire extinguisher in the kitchen is a nice touch. Not many LL's I know would provide that. Smart.

:thumbsup:

Rates will go up and that heloc will bite you down the road. I've had conversations with many of my past clients that we've closed short sales for and it can be easy on your credit depending on the rest of your profile. I have one that went from 830 to 810 and 800 to 750. (Approx.) A short sale is a settlement of debt, a foreclosure is a black eye on your credit and you forever. It's on a mortgage application, job application, home owners insurance applicatioin. You can get obtain a conventional loan in 2 years after a short sale, and 3 years for FHA. I've had good success with Helocs taking 6-10 cents on the dollar through a short sale and many times the 1st lien has paid it, not the homeowner.

Clearly, there are unlimited variables. From who your lien holder is, you financial position, State laws, on down the road. Find a competent local expert.....

I'll take wisdom over speculation anyday. It makes sense to me as housing prices and rates increase, rents will follow. I've always been floating around in the glass with it half full and empty at the same time. It's kept my nose pretty clean over the years. :)

It wasn't an easy deal but you have to grow up and be a big boy someday. :confused59:

You must have hobbies as an outlet. I pissed so much money away in this one and others. This hobby just happens to be the most expensive and time consuming I've every experienced. I'm enjoying the simplicity of hunting, fishing, golfing, fitness, etc.... for hobbies. In comparison, they are inexpensive and easy. Once I get where I want to be and the desire is back, I'll put a brawler together. Maybe I'll just buy yours when the Wife puts her foot down. :lol: :lol: :lol:

It always amazes me when discussing our hobby with people... how many people are trying to build a 100K car on a 75K salary. I shake my head to try to clear out the cobwebs hoping I didn't hear incorrectly. I just paid 15K to the upholstery shop for Rudys Camaro... and I wonder how long it would take for someone to "save" this amount... and how much it would EARN if put into something important vs upholstery!

I just read that people are once again using their homes as piggy banks... there were numbers to back up the claim.

I find this absolutely STUNNING.... apparently "we" never learn from our past mistakes.

Nice going Todd... well done!

Congrats Todd! How long had you been shopping/making offers before you found this one?

I would be all over doing another rental but the competition is fierce is my area. I can't compete with the cash buyers.

On a side note: I check Redfin daily for new listings. I have noticed a number of instances where I get an e-mail for a new listing but it already shows as "Pending" even though the actual listing date is old.

We are a materialistic society. I can understand it to an extent as I think we all suffer from it but I personally believe too many people have taken it way too far.

Today I just saw a new GMC Escalade advertised for $71k. I had no idea they cost so much. That's a stupid amount of money to pay for that vehicle yet they are everywhere. There's no way all the people owning them can truly afford them. But, we live in a gotta have it society. It's going to harm us all again.

Trey...

It is going to harm a lot of people...We have to be the smart one's and stay as debt free as possible...

Another bubble will form and burst and we need to be the one's that don't get harmed...

It is like chess, and we need to look a few moves ahead so we are ready..

Americans have a short attention span...They don't remember history and they live in an Internet, ATM, Drive through world....Now, Now, Now...

So just get ready and be smart..That is all we can do.

There are alot of folks in this country that are in for a real rude awakening. The grey poupon mindset of the average American that doesn't want to work for it spells some real touble in THEIR lives.

If you change, everything will change for you. Things have changed one hell of alot in the last 10 years. You have two choices, regress with the same mentality you had when things were to easy OR progress through adaptation, education, become more economical, better time management, and ultimately, separate yourself from your competition.

To many wish things were the same as they used to be. Not going to happen...
That's just my humble opinion. :D

Thank you Tony!

Both I bought this year were in house deals. Number on was a listing of my brokers that never hit the market. This one was a referral from a past client of mine and I bought it. We put all the paperwork in my team agents name and processed his short sale. He's extremely happy and so am I. :thumbsup:

I'd find a local agent that slings some business in a productive office and tell them to go shake some hands.

Damn, that pretty much sums up why I can't compete in today's market. When I bought in 2010 I had been shopping and making offers for 6-9 months. I was so fed up with the whole process that I almost got my license. In the process of making so many offers I probably used 15 different agents. I found a few that were very proactive that I really enjoyed working with and will use in the future.

Inventory levels are 25% of what they were in 2010 in my area so I don't even bother seriously looking right now.

Today is a perfect example of why I "scale" in or out of positions...


I had built quite a large position in the Junk Bond ETF (JNK)... some 60,000 shares. Remember that this, and a couple other names, are used to "park" cash until I want it for investing. This ETF pays a monthly cash flow of almost 13 grand on this amount of shares (.21 per share per month!)... so you understand why I don't just let this kind of cash sit in a Money Market account etc.

A couple weeks ago I decided I should cut this down and get busy buying some shares - so sold HALF the position. I never get "antsy" to just rush money around... so no need to sell ALL and then try to find suitable homes for it. These "employees" were very content and working hard in their current jobs there at JNK!! :)

So the reason for todays post.... JNK paid me a full dividend - because I always check to see what the EX dividend date is before I sell anything! No point in missing the EX date dividend (that would be just stupid)... and the full position had a paper gain of about 24K at the time of the sale. I sold half. With todays paper gain - the half that's left shows a 20K paper gain. BINGO! Gotta love that!

Remember -- we want TOTAL RETURN... that's the dividend stream AND the capital growth combined!

Obviously I'm well aware that most of you don't have these kinds of numbers to play with... However, the LESSON here is what needs to be focused on - it does translate regardless of the amounts involved. So REMEMBER to check the EX dividend date before a sale! And don't be afraid to take a profit! And don't sell everything all at once or buy everything all at once if you have "enough" position to be able to scale in and out (Unless the position has blown up and is heading down in a hurry - but that's a different discussion).

This article on Wal-Mart sums up why I don't investment in any business where the principal customer is "low end". They're (sadly) the most vulnerable to very small economic changes. A person making minimum wage -- is just barely scraping by --- hit this person with 40 or 50 bucks a month in decreased income (for whatever reason) and they're hosed!

NOW -- there's been no official announcement from Wal-Mart - but usually these types of "leaks" have some basis in truth.




http://www.telegraph.co.uk/finance/n...ed-emails.html

It's definitely possible to find solid investments right now, it isn't like the pros just throw their hands up, they are out there grinding and finding deals.

If you're looking for investments, I would suggest NOT using an agent to find you properties because in my experience most agents are not aware of what constitutes a good investment. Even if they have their own, they are often holding onto money losers.

You don't have to have your license, you just need an agent who is fine with you being in charge, picking out things to look at and operating at your pace.

This is why I work with very few investors. :D I'll take my clients that buy and sell and think they owe me dinner.

Guys, what would you do with IRA CD that isn't making squat? It will mature in Nov this year. Idea's?

My knowledge is very limited on all of these investment products.

This thread is full of "ideas" -- you just have to go back and read them to answer your own question. :thumbsup:

I am not arguing that there are plenty of solid investments out there. The problem is getting an offer accepted. I was very proactive in 2010 trying to find something, even offering 5%-10% over in some cases and ended up closing two days after Christmas. I fought tooth and nail for months and never gave up. It was an extremely stressful process and my wife was pregnant at the time so it is not a happy memory. The thought of going through that now with an 18 month old and a 5 year old just doesn't sit well with me. Especially given the fact that inventory levels are even lower now.

Every single house I looked at (which was hovering around 100 in a 9 month period) was researched and found by yours truly through Redfin. Never once did any of the agents call me about a house that fit my criteria, I was always one step ahead of them, which is truly sad.

CD, you mean certificate of depreciation. I would look at some of the annuity products on the market. You might want to visit my web site at www.capitaladvisor.info

LOL yes, that's it. Thanks, I'll take a look.