How are you investing?

[miniwhinny]

There's some awesome investment ops out there. The return on cash in the markets is pitiful at the moment so we're making our money work in other ways. We had a small account with a credit union in a high yield interest account that we've had for 30 years. Last month we got our statement and they were giving NO interest..NONE, zippo, zilch not one penny! We took it out pretty fast. We're buying our 20 year old and 16 year old some houses.

Take this...a 5 year old almost pristine townhouse with a renter paying $725 a month. Purchased for $21,000. Total payments including HOA, utilities and taxes = $275 a month. That's $450 PROFIT a month ($5400 a year) on a $21,000 cash investment. I don't know of ANY investment returning that kind of profit AND at the end of it all the kids own a house that will eventually increase in value

Gosh, my car cost twice that and I lost 1/3 of it's value the day I drove it off the lot.

Just wanted to share...there ARE great ways to invest out there

 

[Jill]

How am I investing? I'm investing personally and professionally (for clients) managing what most people would consider "A LOT" of money. My investments are doing great as are my clients'. However, since I'm a professional investment adviser / money manager and believe you must know your client before passing along advice, it's not something I can go into on a message board

Plus, I get paid for my advice

My family once held a real estate portfolio of about 20 residential rental units (mostly townhouses). Trust me, you EARN that money and your property is often disrespected by tenants

It would probably be hard to find any professional that would hold out your example because even most lay people know what has happened to real estate values in the past 5 years -- they have plummeted and speculation is it will be a long and slow road back to even

Additionally, the geographic area where you can still buy a $21,000 townhouse has got to be small. You couldn't touch a low budget one in my area for less than 5x that figure.

 

[miniwhinny]

However, it would probably be hard to find any professional that would hold out your example because even most lay people know what has happened to real estate values in the past 5 years -- they have plummeted and speculation is it will be a long and slow road back to even

"it will be a long and slow road back to even". "Even" if you purchased higher. Then of course if you have an investment that you purchased at $100,000 and it's now worth $50,000 you have a heluva long wait to get "even". You don't have far to go on $21,000 ! This is purchasing at bargain basement prices. There are real estate opportunities with the crash of the housing market that we haven't seen in years and it's way from even starting to be over.

That's exactly why this is a good time. This one unit I've mentioned here sold when new 5 years ago for $270,000 now it's $21,000 ! It's an incredible time to find properties for long term investments. With a renter locked in to a 24 month lease and a MONTHLY profit of $450 over expenses you can't go wrong. I also wouldn't dream about putting a renter into a property without references from previous property management companies concerning their payment schedule and how they left the property so that's not an issue. This isn't about wanting the house to go up in value at $21,000 who cares if it drops to $10,000 or $5000 that's only relevant if you're looking to sell the property in a short amount of time - I mean you're talking less money than a half decent car !!!! This is about getting $450 a month in profit on a tiny investment of $21,000. Heck you only need to rent for 4 years to re-coup your entire investment and then you have a free house and nice monthly income. If the housing market goes lower - which it will - scoop up some more

 

[Katiean]

Let me tell you Houses are NOT the way to go. When I was younger we had 2 rentals. The first one was a small house in a quiet neighborhood. The house was '30's era. We had 1 renter that piled used cloth baby diapers here and there on the hardwood floors. Can you say refinish? Same house we had someone ask if they could have dogs. They put the dogs in the second bedroom and would bring the garden hose in the back window and hose down the room and then sweep it off into the floor furnace. Once again, can you say refinish? That time we had to get a new furnace too. Our second property was a 4 bedroom 2 story house on 10ac. We went to clean it after the people moved out. They took the furnace, stove and refrigerator, toilet and all of the knobs off the kitchen cabinets. They tried to take the water heater and could not get it out of the utility room. In addition to the theft they stored hay in the small 4th bedroom that was down stairs. If that wasn't bad enough there was about 4"-6" of mud and hay caked on the floors throughout the down stairs. Would I rent out another house? NEVER!! So, if you think real estate is a good way to go for an investment, I say good luck and I wish you well.

 

[Jill]

Miniwhinny, let me know when you are experienced enough to turn pro and earn your living by providing investment advice to others... I've been doing it for a long time

Also, educate yourself about how the IRS allows you to account for the passive income from residential rentals, how depreciation of residential rental property effects your bottom line, and the changes in capital gains rates and regulation as it applies to your situation. It's important to understand the full picture.

 

[miniwhinny]

Additionally, the geographic area where you can still buy a $21,000 townhouse has got to be small. You couldn't touch a low budget one in my area for less than 5x that figure.

Oh Im sorry, guess there won't be any unbelievable deals like this then. Yup, Bend Oregon has been hit hard. We're a destination resort/retirement area and there are people around here in trouble. The construction industry has really been hit hard. People from all over the States were buying up properties here 5 years ago because this was one of the hottest markets in America. Everyone wanted a home in the High Desert. The Wall Street Journal and Forbes Magazine had us as one of the "IN" places to live. Ours was one of the top 5 housing markets in the US. Now people going into foreclosure from all over are loosing their luxury vacation/retirement homes here too. The market is awesome if you want an amazing house for an even more amazing price. My primary care physician just lost a 2 million dollar home to foreclosure. It's now bank owned and on the market for $450,000. It's immaculate!

Katiean, don't worry about my renter. They've lived in the home for two years already and it's spotless. No diapers no dog washing

Thanks for the concern about taxes too I appreciate the advice but my accountant is taking care of all of the "trivial details" like taxes.

 

[Jill]

Thanks for the concern about taxes too I appreciate the advice but my accountant is taking care of all of the "trivial details" like taxes.

I'm going to have to figure your accountant hasn't made some substantial information clear to you because if she or he had, you would not find the details trivial -- even when we're only talking about a $21,000 investment. Good luck with your new venture, though.

 

[wildoak]

We've had rental property for a long time and sooner or later, you will have a tenant who - despite good references and good intentions (maybe!) lol - falls on hard times & can't pay rent, has to keep his son's 3 big dogs who aren't housebroken, etc etc. Stuff just happens and bottom line seems to be, it isn't theirs to fix so they don't. There is money to be made in real estate though, despite a down market, if you are savvy and can find the right buys, and don't mind doing the maintenance. Wish I could find the $21k townhome here but fortunately our market hasn't been hit so hard down here. My daughter is selling real estate in Dallas and keeps telling what a steal these $300k downtown condos are, since they sold in an inflated market for $450-600k. All depends on your perspective.

Jill is right in that the tax situation is not always straightforward - I'm far from an expert on it, but I know enough to know I need expert advice on taxes lol.

Jan

 

[miniwhinny]

There's a 5 acre property here that has a brand new house, new guest cottage AND a brand new INDOOR 150' x 200' arena. It was over half a million (as a distressed price) ...it's bank owned and dropping like a rock in water. Also got my eye on a bare 5 acres...was $250,000, $200, $175, $150, $125, $100...now $90 and still dropping the owner is having financial problems so it will be going lower. I have a "mental figure" that I'm waiting for it to hit

Three of the condo units have come up for sale and investors have purchased every one of them. They all received offers with 24 hours of hitting the market.

 

[~Lisa~]

For those who have money there is money to be made in real estate right now. Many are taking advantage of the poor market and buying some very high dollar properties for pennies on the dollar. House flipping well houses are not flipping now however if you have the resources and can wait it out you betcha you can make some money with the real estate market as it is now

 

[Sonya]

I too bought a forclosure for dirt cheap end of last year in a touristy area. We bought it though for personal use...weekend/vacation get a way...we plan on keeping it for ourselves and go there on our weekends...I almost feel like I stole it being as some of these properties going for so low are being subsidized by the bailout...I felt guilty making out at the taxpayers expense if that was the case with my property.

 

[chandab]

You mean there's supposed to be something left to invest after paying bills and buying groceries, who knew?

 

[Miniv]

It does take money to make money........

Both Miniwhinny AND Jill are correct in my opinion. It's a good time to purchase real estate, if you have the money to do it........BUT when figuring out your bottom line be sure to remember that our taxes are due to go UP with the beginning of 2011. And anyone with investments is going to get slammed. So, check with your accountant on which tax bracket you fit in and how the new rules are going to affect you.

 

[miniwhinny]

I don't do anything without my accountant

It's very exciting. We haven't had opportunities like these for years and it may never happen again in our lifetime! The thing is to be patient and wait for exactly what you want.

That's cool to see others are gaining from this too

 

[miniwhinny]

It would probably be hard to find any professional that would hold out your example because even most lay people know what has happened to real estate values in the past 5 years

Miniwhinny, let me know when you are experienced enough to turn pro and earn your living by providing investment advice to others.

"Let YOU know", let me tell you Jill, the last thing I will EVER need is your permission to do anything!

Actually YOU'D be hard pressed NOT to find professionals knowing that there are unprecedented opportunities out there in the real estate market BECAUSE of what's happened in the past 5 years. The fact that you fail to see that - I'm sure glad you're not managing my assets

Next time you set out to be condescending make sure you pick on someone a) who cares and b) who doesn't have so much experience in the money/mortgage/lending and real estate investment fields that THE largest mortgage giant in the world uses that expertise to help them.

Sorry I upset you by not requesting your permission to ask how folks are making their money work for them. I guess I forgot I had to have your permission

:rofl

 

[Jill]

miniwhinny, all I can think to tell you is that it's a good thing your investment advice is being handed out for free. Lord, I'd hate to see the required disclosures if you were allowed to charge for it.

Clearly, since you dug up a statement I made yesterday before you made various other replies to me and others on this thread, you are just spoiling for some kind of continued discussion with me. Do you want to see my rate schedule?

 

[Carriage]

BUT when figuring out your bottom line be sure to remember that our taxes are due to go UP with the beginning of 2011. And anyone with investments is going to get slammed. So, check with your accountant on which tax bracket you fit in and how the new rules are going to affect you.

BOY HOWDY! You are a master of understatement with the exception of your accurate use of the word SLAMMED. Taxes will not JUST go up. They will sky rocket. The higher your "bracket", the higher they will go.

As to taxes being a "trivial" thing, words fail me.

If this type of "investing" is of interest, I might wait, save a pantload and "invest" after the market has gone MUCH lower. Until then, I would not consider it an investment so much as a parking place, in a very high crime area that awards drivers license' to blind people.

Holding an excess of cash (I know, "what is that") is a loser due to massive inflation AND massive depreciation which has only started in earnest. Buying real estate now with the "market" due to go much lower, will most likely loose your hard earned money as well due to the aforementioned depreciation. A quick study of depressions leads one to discover that residential real estate drops 80% and commercial drops 90% in value. These would be conservative figures this time around imo.

In our last banker engineered depression, the "common man" was coaxed into the market in a very big way. Can't recall the wealthy individual who said this but in paraphrase he said, "When the shoe shine boy is giving you investment advice, it's time to get out of the market. Also, good ol J.P Morgan, just prior to the crash point infused a HUGE amount of cash into the market to prop it up so that his fellow travelers could get their money out and then withdrew it some 48 hours later to precipitate the crash point. This of course left the "common man" ( including shoe shine boys)holding the bag. Problem was though that the bag was empty. The bright spot for the banker was that they were then able to come in and scoop up massive amounts of property at the aforementioned "pennies on the dollar" BUT being the engineer at the controls, they knew where the bottom was.

Question, no seriously! How can there be a recovery when NOTHING has been fixed? The phrase in the movie Monsters Inc., at the very end, comes to mind. One of the maintenance monsters chasing a run away machine screams, "You're making it worse!"

Us common peeps would be well served in investing in our ability to take care of our families and loved ones in the worst of financial times. Only after that would I consider throwing money, such as it is, in the fire. Markets are almost completely manipulated. Therefore if your in them, so are you.

Your gambling against the house. Not only do they hold nearly all the cards, they are changing the rules in their favor on a daily basis. In this scenario you are not gambling, you are being fleeced.

Bb

 

[hobbyhorse23]

I can't be the only one who caught that putting "trivial matters" in quotations indicated it was being said tongue-in-cheek.

I would happily buy up some property now if only I had money....

Leia

 

[chandab]

I can't be the only one who caught that putting "trivial matters" in quotations indicated it was being said tongue-in-cheek.

I would happily buy up some property now if only I had money....

Leia

I thought that's how it was meant, but I probably wouldn't have said it tongue-in-cheek or otherwise.

We'd be happy to buy a little more property, but there's no cash available right now.