[2007 Thread] Any Real Estate investors out there?

[pwrshift]

Interesting report on DR Horton:

http://www.bloomberg.com/apps/news?pid=20601109&sid=adFsGVxspArw&refer=home

 

[Steamboat Bill]

This thread is starting to remind me of a quantum physics documentary I just saw "What the Bleep Do We Know"...this is an interesting movie that I reccomend renting from Blockbuster.com, but the title is "What the #$*! Do We Know?!"

http://movies.yahoo.com/movie/1808578904/details

Part narrative, part documentary, and part animation, What the #$*! Do We Know?! was filmed with the intent of expressing the neurological processes and so called "quantum uncertainty" of life.

With the help of a directorial triumvirate consisting of Betsy Chasse, William Arntz, and Mark Vicente, Marlee Matlin stars as Amanda, whose uninspired daily routine is abruptly altered into a chaotic, Alice in Wonderland-style reality, complete with quirky characters and wildly different perspectives on life. As Amanda falls deeper into the experience, she's forced to drastically reconsider her perceptions of interpersonal relationships, men, and the fundamental principles of life.

What the #$*! Do We Know?! is supplemented by a host of mystics and scientists, who are interviewed intermittently throughout the film for their wisdom and knowledge concerning religion, science, the thin line between them, and the consequences of blurring that line.

I am the ONLY person I know who actually saw that movie as people in Boca are not interested in topics like this. But it does star Marlee Matlin and awesome computer graphics.

 

[Tedpilot]

BB - Send me an email, I am more than curious now what you have up your sleeve.

The beauty of real estate is that you can leverage OPM and reap the rewards from it without depleting your basis all while your checkbook gets bigger and you write off more come tax time.

Ted

 

[saluki]

I am the ONLY person I know who actually saw that movie as people in Boca are not interested in topics like this.

That's funny. They're too busy cocktailing @ the yacht shows, huh?

 

[Steamboat Bill]

I actually met BocaBum99 for lunch at Houston's in Boca Raton a few weeks ago and he is a "very sharp guy" and I am interested in some of his ideas.

Here is an interesting article about the housing market in Detroit.

http://news.yahoo.com/s/nm/20071007/us_nm/detroit_housing_dc

 

[PerryM]

I think this forum is "Non-traditional interval ownership." Maybe you are confused? As far as I know, investment in the stock market is not a "non-traditional interval ownership", unless you consider buying into the stock market is non traditional and is only interval. But based on your posts, it is traditional and you take a buy and hold position, so not so on both counts. Maybe a new forum should be started?
I just think that if a forum is started, the threads should be true to the forum, not go on tangents of who thinks that their investments are better than others. I think that your comments were rude.

Listen, BB has been bitten by the seminar bug - I've been there too. Instead of getting into all kinds of real estate schemes I presented an alternative which requires NO decision making - just buy and hold and the results will probably equal or out surpass any real estate scheme in existence.

I simply answered your question you posed.

I see you have more questions but they don't have anything to do with this forum or thread - police yourself.

 

[vivalour]

Hey everyone,
I am looking for good reasons to buy both an all-season vacation condo (2 hours from our home) AND a lower-end HCC membership. This is not so such about the investment wisdom, but maybe balancing out potential risk in having a DC. We are not interested in TS or fractionals, just would like to have additional real estate equity beyond our house, which is mortgage-free.
Any tips/experience to share?

 

[PerryM]

Hey everyone,
I am looking for good reasons to buy both an all-season vacation condo (2 hours from our home) AND a lower-end HCC membership. This is not so such about the investment wisdom, but maybe balancing out potential risk in having a DC. We are not interested in TS or fractionals, just would like to have additional real estate equity beyond our house, which is mortgage-free.
Any tips/experience to share?

Diversification of ones net worth is a worthy goal. However, many things get thrown into the mix:
1) How long before retirement
2) College educations to pay for
3) Risk tolerance
4) How long to hold an asset before selling it

Real estate is a semi-liquid asset that is subject to all kinds of outside forces – buy it to use it would be my advice. If you can get rental income to help defray debt servicing and MFs that’s icing on the cake.

If folks believe that a real estate bubble has burst and hell is about to freeze over you could find some folks who believe this and want to dump their home/condo at a fire sale price.

It always gets down to the deal you can negotiate for yourself.

I don't like DCs and don't recommend them. Condo-hotels are distressed in some areas and can offer a great deal - look at the management agreement and company very closely and call other owners and ask their opinion.

Good luck,

 

[vivalour]

Thanks -- good points -- I definitely agree with you on the vacation real estate issue: buy it, use it and rent it -- we're looking at that now. Prices still sky high around here (northeast) and I don't think it's a bubble -- IMHO more people with more money. We have seen some flattening but sure no bargains. In the vacation property market, Asian and European investors are also pushing up prices.

 

[short]

25 years later.

About 25 years ago my DH and I were thinking of buying forclosure property. We bought at least a couple cassette tape programs about buying forclosures and buying real estate. We tryed doing it for a while but eventually gave up because it was very competative which took out most of the profit and drove up the risk.

My step son who about 12 at the time listened to the tapes several times over the summer. At 22 just after collage he bought his first duplex. He now has 4 or 5 duplexes and at 36 has about 2,500 in positive cash flow.

Just like any investment program he has not gotten rich quick but is doing it slowly but surely.

Programs like Flip this House have made everyone think they can do that successfully. My cousin is holding 2 planned on Flips because the market is not condusive to a quick sale. He is planning to rent these out.

Short

PS I went to an intro of Rich Dad poor dad in Minneapolis this summer. I did not sign up for the next program. I might have if they had scheduled dates available in CA instead if MN. I was very interested Bocas initial post because I was wondering when and how much the real programs were going to be. This give me some reasonable knowledge about how expensive the end product will be.

 

[Steamboat Bill]

My step son who about 12 at the time listened to the tapes several times over the summer. At 22 just after collage he bought his first duplex. He now has 4 or 5 duplexes and at 36 has about 2,500 in positive cash flow.

Just like any investment program he has not gotten rich quick but is doing it slowly but surely.

You did a great job in helping raise such a smart investor....congrats.

 

[pwrshift]

For some reason, the majority of this forum's participants have not seen any value in spending $15 to be a TUG member, yet feel they should have a say in the direction any thread should take. It surely makes me take their comments about buying a DC membership with a grain of salt.

Brian

 

[BocaBum99]

It's not the seminar bug that I've been hit with as Perry states. What I've been hit with is the unending curiosity about Vacationing and various ways that people offer and create vacation products. That is what I've been pre-occupied with over the past 3 or so years.

When I first started timesharing, I initially thought it was just a fixed week you purchased to use or to trade. What I didn't realize was that timesharing is just a very slow moving emerging market that exhibits all the characterstics of a new economy under development. It's so inefficient that it's easy to travel for very low cost or for free. Figuring out all those ways to arbitrage the system has been fun.

This forum, more than anything, got me interested in taking a look at the general real estate market. I wondered what the alternatives were to create a DC. Then, I heard Robert Kiyosaki talking about 1031 exchanges like trading in the green houses in the game Monopoly into hotels. I thought it would be cool to use flipping and 1031 exchanges to constantly trade up to the point I had 20 of my own vacation properties that I owned without debt. After all, that's what I do with timeshares. Buy and flip them to the point that what you own is free.

After taking a peek at Real Estate investing, I've learned that it is an amazing marketplace with very rich possibilities. I have completely ruled out my original idea of trading up for 100% equity because I've learned that is not the optimal usage of the asset. You pull the cash out and invest it in other projects.

I reviewed my idea with an expert in Real Estate investing yesterday and found that about 1/2 my ideas had merit. In other words, it was only half baked. So, I'm back to the drawing board. There's just something really cool about the types of deals that can be made in Real Estate aside from buying a home to live in or to rehab. What I find cool are the numbers of ways any investor can approach the market to add value to it.

I'm sure I'll do something. Not sure what it is yet. It will be fun trying to figure it out. Just like it is to figure out timesharing.

 

[thinze3]

Housing Bubble

FYI

Here is a link about similarities in the housing market today to the housing bubble (that burst) of the eighties in Texas.


Quote:
"The Texas template tells us we could be in for a 14 percent to 25 percent decline and an eight-year to 14-year wait for recovery."

 

[Steamboat Bill]

Come on LT, don't let a opinionated bully keep you from posting. I have enjoyed your contributions to this forum.

What I find interesting is that this thread has 68 replies and over 1000 views in 2 days...and the only other thread started yesterday has 2 replies.

I agree that LT should stick around....come on....PerryM has been much tougher on DCs than anyone else...yet I really enjoy his posts as it challenges my thinking.

I don't always agree with Perry or others, and that is fine. Just like many people don't agree with me.

These forums are a great LEARNING place and if we go off on a tangent...then as the moderator, I feel it is fine as long as it does not get personal.

I have been kicked off DISboards for starting an unpopular thread and I have received several warnings and several PMs from other TUGers from some of my unpopular posts on other TUG forums.....this forum is pretty tame compared to the others.

The Spice of life makes things interesting....

 

[PerryM]

It's not the seminar bug that I've been hit with as Perry states. What I've been hit with is the unending curiosity about Vacationing and various ways that people offer and create vacation products. That is what I've been pre-occupied with over the past 3 or so years.

When I first started timesharing, I initially thought it was just a fixed week you purchased to use or to trade. What I didn't realize was that timesharing is just a very slow moving emerging market that exhibits all the characterstics of a new economy under development. It's so inefficient that it's easy to travel for very low cost or for free. Figuring out all those ways to arbitrage the system has been fun.

This forum, more than anything, got me interested in taking a look at the general real estate market. I wondered what the alternatives were to create a DC. Then, I heard Robert Kiyosaki talking about 1031 exchanges like trading in the green houses in the game Monopoly into hotels. I thought it would be cool to use flipping and 1031 exchanges to constantly trade up to the point I had 20 of my own vacation properties that I owned without debt. After all, that's what I do with timeshares. Buy and flip them to the point that what you own is free.

After taking a peek at Real Estate investing, I've learned that it is an amazing marketplace with very rich possibilities. I have completely ruled out my original idea of trading up for 100% equity because I've learned that is not the optimal usage of the asset. You pull the cash out and invest it in other projects.

I reviewed my idea with an expert in Real Estate investing yesterday and found that about 1/2 my ideas had merit. In other words, it was only half baked. So, I'm back to the drawing board. There's just something really cool about the types of deals that can be made in Real Estate aside from buying a home to live in or to rehab. What I find cool are the numbers of ways any investor can approach the market to add value to it.

I'm sure I'll do something. Not sure what it is yet. It will be fun trying to figure it out. Just like it is to figure out timesharing.

My wife and I have been watching a series of seminars on TV - I don't know the name of the series but Rich Dad, Poor Dad is one of the 3 guest lecturers - the other guy reminds me of a blackjack dealer at Vegas and the third one a slick lawyer.

Robert is a great speaker but most of what he said I just didn't believe in or didn't happen. My opinion of him is that I would not pay any money for his advice. But that's just me.

They all said pay off your highest interest loans first and to never declare bankruptcy - good advice. However much of what Robert then said I completely disagreed with. He was basically pitching that the American dream of owning your home and a great paying job was all wrong - then tried to convince folks to chuck the job and use other peoples money to make yourself a great life.

Selling his courses, I believe, makes him a lot of money.

P.S.

I know the blackjack dealer guy has declared bankruptcy many times and I believe the slick lawyer guy too. I can't remember if Robert did or not.

 

[Steamboat Bill]

Ok back to the topic at hand...

It looks like they are having a RICH DAD seminar in my town on October 17th and I am SURE this place will be sold out.

http://www.myeducationnetwork.com/learn_to_be_rich/FL/west_palm_beach/15121/

 

[travelguy]

RE Investing!

Apparently TUG became an investment oriented forum while I was off the board for a week while traveling! Anyway, after missing the entire conversation, here is a very abridged set of guidelines for real estate investing that I live by:

1. Put all you cash into equities (investment strategy of your choice) with the financial advisor arm of a real estate oriented bank. Then use the equities as collateral and finance all real estate at 100%+ at a great rate from that same bank. Have the bank release the equities as collateral once the property has consistent cash flow and positive equity (notice I didn’t say “positive cash flow”). Start this process again with a new property using the equities as collateral for the new property.
2. Invest only in high quality commercial properties, not residential. Specialty office is the best for consistency (ex: Medical office) but retail is the best for hitting a “home run” but has a significantly higher risk.
3. Only invest in first tier locations with significant upside for a decade to come. Go big or go home.
4. Old properties are a pain. I’m an investor, not a redeveloper!
5. The best commercial properties never make it to the market. They are purchased by insiders before they are ever listed.
6. Be a consistent networker (ugh!) in the business community OR have a great personal resource who is an insider.
7. Establish relationships with a GREAT real estate attorney. If your attorney “costs” you more than he/she “makes” for you, get another one. Real estate attorneys are some of the best insiders.
8. Establish relationships with multiple real estate bankers and with every top tier commercial real estate broker in your market area. Commercial is every broker for themselves, not like the multi-list in residential. Some of these individuals will also be great insiders. Make sure that you’re associated with the smartest guys in the room.
9. Plan your exit strategy BEFORE you buy the property. (ex: Sell at year 5 of a 7 year lease). You must know this to do a proper purchase projection
10. Always have a detailed 20 year projection including income, expense and cash flow BEFORE you sign the Sales Agreement. You can’t negotiate price unless you know where you are.
11. Never buy a property with a Cap Ratio lower than the current commercial lending rate plus 1% regardless of what the rest of the market is doing. Sit it out for awhile if needed.
12. The current lending crunch is the best thing to happen to prime borrowers in a long time! Make sure that you are a prime borrower and learn to demand MORE from your lenders. They need to replace the lending business from all those amateur “flippers” that went bust.
13. Don’t buy just for the sake of buying! Better to have an empty portfolio with cash assets than a losing portfolio and no cash!

Bonus Tip - Get long term, assignable lease-back Sales Agreements, that have easy opt out terms, with property owner/users looking for exit strategies. These are typically owners who have limited depreciation left on the property but will sign long term leases. Then shop those Sales Agreements to recent property sellers trying to complete a 1031 rollover. 1031 Clients will pay much more than market price because they are blinded by the prospect of not having to pay tax on the cash in their pockets. Even though the current cap gains rates are the lowest they will be during our lifetime!

 

[Kagehitokiri]

IMHO great stuff travelguy, especially 2>8

personally, i am also interested in high end residential as well. some of the same stuff applies.

 

[T_R_Oglodyte]

Proof that free advice is generally worth what you pay for it. I love the assurances in this thread from October 2007 that there was no real estate bubble that was about to burst.

 

[travelguy]

I agree on the issue of the free advice being worth what it is. Maybe the worst advice comes on the financial boards!

FWIW - I still live by my rules of real estate investing that I listed in post #43 in 2007. The world has changed considerably for the worse but opportunities have become better. At least I don't have to compete for properties anymore with foreign entities that have the advantage of a strong exchange rate to strengthen their cap ratios! (Until the feds kill the $ again!)

 

[thinze3]

Proof that free advice is generally worth what you pay for it. I love the assurances in this thread from October 2007 that there was no real estate bubble that was about to burst.

Steve, instead they should have listened to me.
Actually, I should have listened to me.

 

[robertk1]

I invested in small apartment buildings several years ago. 2 things I found that you can bank on:

1) Single female tenants want you to do everything for them (can you hang this picture?) but will stay as good tenants for years; single male tenants don't expect anything but will eventually move out to live with a girlfriend or something. Males are hassle free but short term. Females are work but stay.

2) If you find a good tenant charge them less rent than the going rate. They will cure the ulcers that are caused by bad tenants.

I've considered getting back in, I think in our area (Chicago) there is a definite market for seniors only buildings. Find a building near a grocery store and public transportation, kick the heater up a few degrees and you will have a waiting list of good tenants.

Good luck to everyone investing!