Investing 102

[GregWeld]

Originally Posted by WSSix

Sweet! I own KO. That definitely makes up for my choice of OXY over Conoco Phillips when I missed out on that division.




I had a well I was doing some work on a couple months ago. I told the company man his well smelled like dog $hit because it really did small that way. He laughed, breathed in deeply, and said it smells like money to him.

If you pick 10 stocks -- 3 will carry the entire account -- 3 will be "okay" -- and 3 will suck... it's just the law of the jungle. There's no way you're right 100 or even 50% of the time.

[WSSix]

Yeah, I'm not worried at all. Conoco was just a doh! moment since I was deciding between them or OXY. It'll all work out in the end I'm sure.

[Vegas69]

Originally Posted by realcoray

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$.

You are absolutely right. I'm not counting on pocketing $400 per month. I've already owned 5 single family rentals in my days. I really shouldn't have said it's all cash flow but it is a nice margin on a property that will offset the costs. I have a spread sheet set up factoring in a one month vacancy factor, repairs, home warranty yearly, hoa fee, etc.....

I am factoring in the principal reduction and will depreciate the properties as Greg said with the thought of a 1031 down the road into a more lucrative investment or residual income when I have the deed.

[Flash68]

Originally Posted by GregWeld

#1 Todd -- talk with someone qualified to answer your question -- I'm almost positive that PROPERTY is not allowed in a SEP/IRA/401 investment vehicle.

It is allowed but it is complex. I was more familiar in the past with it when I was seriously considering doing it with my IRA, but the restrictions and red tape kept me from doing so.

Here's a quick overview I found on that subject.

http://money.usnews.com/money/blogs/...te-in-your-ira

[GregWeld]

Originally Posted by Flash68

It is allowed but it is complex. I was more familiar in the past with it when I was seriously considering doing it with my IRA, but the restrictions and red tape kept me from doing so.

Here's a quick overview I found on that subject.

http://money.usnews.com/money/blogs/...te-in-your-ira

Yep -- READ POST #1732


NOT WORTH IT! Not one bit...

[Sieg]

Today should prove to be opportunistic for those of you considering KO since Greg and I both bought yesterday you should be able to buy in at $77 or less today.

[GregWeld]

I just read an article "dissing" the future of owning dividend paying stocks. The argument was proffered that WHEN (not IF) the current 15% tax rate on QUALIFIED DIVIDENDS (there's a difference between Qualified and Ordinary) is changed back to the pre Bush era tax rates ---- that it will kill the market for these stocks.

Yeah -- there's some argument to be made... that there's a huge difference between a 15% rate and a top rate of 39% and blah blah blah.

I've been doing this for awhile now... I've seen the ups and downs of the market and lived through some boom and bust cycles.

I will state this - as I have to my accountant (doing this same argument but over the difference of long term vs short term capital gains)....

IF I MAKE ONE DOLLAR --- and I OWE 40 cents to the government -- I still get to keep 60 cents. Isn't it better to make 60 cents than it is to worry about paying a percentage to the government? My point to him was that it's better to make a huge pile of money.... and who cares about paying some of it out. TO ME -- I'd rather owe the government a fortune... because that means I made out HUGE (I kept 60 cents of every dollar!).

My personal income tax bill for 2011 was 1.7MM --- ask me how sad I was to have to pay that...

[GregWeld]

Originally Posted by Sieg

Today should prove to be opportunistic for those of you considering KO since Greg and I both bought yesterday you should be able to buy in at $77 or less today.

Thanks for buying! I added another 1000 shares this morning.

[GregWeld]

All you "terbacky" share owners --- PM and MO --- you got your nice MO dividend today -- and tomorrow you'll get the PM dividend.

God bless America!


And thank you Europeans and Asians, for being large consumers of this nasty product! I'll spend it in good health!

[toy71camaro]

Originally Posted by GregWeld

All you "terbacky" share owners --- PM and MO --- you got your nice MO dividend today -- and tomorrow you'll get the PM dividend.

God bless America!


And thank you Europeans and Asians, for being large consumers of this nasty product! I'll spend it in good health!

Got my $13.75 dividend payment from MO yesterday.