Investing 102

[GregWeld]

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.

[Bucketlist2012]

[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.....

[Flash68]

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

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

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.

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

[Vegas69]

Originally Posted by XLexusTech

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.

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.....

Originally Posted by GregWeld

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.

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.

Originally Posted by Flash68

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

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

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.

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

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.

[GregWeld]

Originally Posted by Vegas69

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.

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.

[Tony_SS]

Nice going Todd... well done!

[slow4dr]

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.

[WSSix]

Originally Posted by GregWeld

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.

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.

[Bucketlist2012]

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.

[Vegas69]

Originally Posted by GregWeld

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.

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.

Originally Posted by Tony_SS

Nice going Todd... well done!

Thank you Tony!

Originally Posted by slow4dr

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.

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.

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