Investing 102

[Vegas69]

That's a great idea that I'll put some serious though into. I'm limited to 5 single families due to financing restrictions anyway. That is, unless I find private financing at a higher rate. One way I may get around it is to have Kelli and I finance some separately.

I'll find out if there is any angle to gain access to SEP funds without a tax burden and post it here next week. My broker has a grasp on it as well so I'll pick his brain a little.

I can get my initial investment back in 5-7 years depending on vacancy, rental rate decline, and repairs. Then I'm still getting 20-25% return on my money based on todays rental rates. Even if it drops to 10-15%, hard to beat.

[Rybar]

Originally Posted by GregWeld

RE: Market question


There is no way anyone can answer a question like that... it's just GUESSING. And or "market timing" - which doesn't work. The market - like housing - just goes up over TIME.... You'll never get in at the right time. The minute you're in the little man in wall street takes everything you bought straight down.

Thanks Greg, I was going to ask you this question.

Todd interesting points. I would be doing what you are thinking for sure but crack shacks in my area $800k are an average home is a million bucks!

[GregWeld]

God bless SIN stocks.... (think TERBACKY MO and PM etc )


Every time we have a down day... I look and the down ain't a 1/3rd of what I think it might be... so you look at your accounts to figure out why. It's the SIN stocks holding like a foundation under a house.

I used to use them to park money - but in the last 3 or 4 years I've just seen the light and now use them for income and growth. AND they've turned into the stocks that go green on a red letter day. Gotta love that!

[realcoray]

Originally Posted by Vegas69

My only concern is putting to many eggs in one basket. I just consider low prices and low rates a genuine opportunity. I'm contracting a propert in a GOOD area of Vegas for 109,500. I can rent it for $1050 a month. The mortgage(PITI) is $612 a month. Cash flow $400 a month, principal reduction, and depreciation. Down the road I can realize the residual or 1031. The only fault I can find is if the **** really hits the fan.

This is the biggest pitfall of real estate investing, cash flow is not a function of rent - PITI, because what happens when you have to replace a water heater, or a roof etc?

In reality a property like that will over a longer period of time cash flow probably 150-200$ a month. Now as you mention you get the benefit of principle and possible appreciation so it can definitely be double digit returns.

Most of the hard core RE investors, like say from biggerpockets.com, would advocate rent be 2% of the purchase & rehab price, so 1k rent on 50k house but that would mean investing out of state (the south mostly) for many of us, and then paying a property management place (thus taking 8-12%)

I found that when looking at the numbers that anything less than 1% is not worth it to consider, and you have to assume that expenses will be about 40-50% over the long term, and that does not include PITI.

Again though, the deal you mention would not be terrible, I don't have my spreadsheets at work but I'm closing a somewhat similar ratio deal in 3 weeks, a 132,500 house that I figure will rent for 1300+ quickly. I projected making about 250$ a month, with PITI of around 690$.

[GregWeld]

Don't forget the tax benefits of depreciation. They can be substantial and especially for the "self employed" person.

[GregWeld]

Well good morning gents....


Any of you hear about the COKE (KO) TWO FOR ONE STOCK SPLIT?? Splits July 27th and you should see the shares in your account early August...


Does this mean anything? Well.... yes and no.

A stock split all by itself just means that you'll now have twice as many shares at half the cost per share. So there is ZERO value change. BUT.... at some point it becomes what I call the "law of large numbers"... so a .10 share price move is now multiplied by the number of shares you have... and any dividends etc - should they decide to raise them also see that same affect.

[mdprovee]

Originally Posted by GregWeld

Well good morning gents....


Any of you hear about the COKE (KO) TWO FOR ONE STOCK SPLIT?? Splits July 27th and you should see the shares in your account early August...


Does this mean anything? Well.... yes and no.

A stock split all by itself just means that you'll now have twice as many shares at half the cost per share. So there is ZERO value change. BUT.... at some point it becomes what I call the "law of large numbers"... so a .10 share price move is now multiplied by the number of shares you have... and any dividends etc - should they decide to raise them also see that same affect.

Since I do not have any Coke, would now be a time to start and grab some of the "law of large numbers"?

[Sieg]

KO looks tempting and I am a user.

Effective in 16 calendar days and it's currently at a historic high of $78.25........

[GregWeld]

Okay -- responding to the two previous posts....


Scott -- Apparently you don't look at the charts -- the long term charts.... 5 and 10 years.

If you do - I'll ask you this question. At what point would you have chosen to get in - pick a point - and then would you have asked me the same question about a "historic high"?

Total Return

1 Year
+17.3%
3 Year
+74.3%
5 Year
+72.1%



Mike -- A stock like this is a long term buy and hold and there is NO WAY to time the market. When you buy - it will go down - but look at the above historical return.... and I'll ask you the same question I did Scott. At what point was the right time to get in, in the last 5 years? Would down $1 on a bad day be the right time? Would that affect your performance?

[Sieg]

I looked at this one and should have said "near" historic.


Entry anytime between '62 and '95 or in '03 or '05 which is where it will be 7/27

Buy it now check back in 5 years is my rational with this one. I doubt Coke will go the way of Kodak.