Real estate

[Menlaan]

Also I don’t know how much you know about the real estate market in San Antonio but we are actually very much UNDER VALUED.... OMG

I’m glad you are "diversifying" your portfolio. That’s a great thing to do to hold on to wealth and maybe even build a little. I do plan on having a very diverse investment portfolio but first I need to build up some real capitol (millions) so that it makes sense to diversify and create multiple streams of income.

I’m also glad you can “afford” to invest in real estate. Here is a news flash for ya bud.. anyone on this board can go out and invest in real estate with 20 bucks in their pocket and make 5-10k in under a month if they are motivated. You sir are thinking very much in the box and listening to financial planners whom get paid 60-100k a year, do you see how ironic that is?

Okay, before I completely jump to conclusions, tell me this: by what metric(s) are you saying that the San Antonio market is undervalued?

In terms of what I'm doing, I don't have a financial planner though I have studied Investment Management while getting my MBA. We learned that index funds were the way to go for most investors. Interestingly, we also learned that hedge funds are very much real, and that the best ones have statistically repeatable "alphas". I'm taking Real Estate next term, so we'll see how that goes (I'm in a Friday / Saturday program so that I can continue working while getting my degree).

Also, the arguments you are using are very similar to the arguments used to support the "Foolish Four" during its hey-day. For those of you unfamilar with it, it was an investment scheme that promised to deliver overwhelming returns to ordinary investors. Defenders of it did a lot of bashing of the "establishment" who were unwilling to "think outside of the box" and accept that ordinary people can make extraordinary money easily. Oh, it was discontinued after it failed miserably.

Menlaan

[Goose_Man]

Uuugh I opened a can or worms here.

I'll respond to all your questions in a while but right now I need to run out the door to talk to a lady about buying her house.

I'll be back in a bit.

[mappatazee]

i don't even know how to invest in anything

[Phlegm]

i don't even know how to invest in anything

Try that : http://www.fool.com/school/basics/basic ... urce=InvAg

[Goose_Man]

Let me preface this by making a few things clear.

First and foremost what I do is not easy money. It takes hard work, tenacity, and a willingness to take success with the failures. If you can’t handle the thought of losing some money than making large sums of money may not be for you. Let me stress again this is NOT easy money nor will you get rich quick.

Secondly, it takes a certain mind set that not everyone has or is willing to have. People with a lot of success in money don’t think like everyone else, if they did then they wouldn’t be rich. The only person who thought that what I was getting into was a good idea was a man whom already had millions of dollars. If I had listened to my co workers and neighbors I wouldn’t be where I am today.

Third, nothing about what I do is dodgy or illegal. If the feds came and audited me right now nothing would be found to be “shady” or “dodgy”. Other than a giant pain in the ass an audit would be I certainly do not fear one.

Now in my business model I focus on 2 main areas of real estate acquisitions. The first and the easiest is called “Wholesaling” and it deals with ugly vacant property and is very simple and only requires time, a car, and about 20 bucks. The second deals more in the pretty house side and is a lot more complicated than wholesaling, takes a lot more money out of your pocket but you can make a hell of a lot more money, there are also a lot more pitfalls to be aware of, the pretty house business is something you might want to look into later once you have cash reserves set aside.

Wholesaling is a simple concept, in a nut shell:

1. Find neighborhoods that are older and have some run down houses. But for the most part are not in a war zone. (drug dealing and prostitution constitute a war zone). In this neighbor hood there will be some nice houses where people show pride of ownership.

2. It’s my job (I now pay someone to do this for me) to drive around these neighbor hoods and find Ugly junked out vacant houses. They take down some info, take pictures then give it all to me.

3. I then track down the owner and find out if they are interested in selling their ugly house. (Out of 10 owners I’ll talk to about 3 or 4 will say yes and I will end up getting 1 or 2 under contract)

4. Lets say the house fixed up will be worth 150k in A-1 selling condition, it needs about 40k worth of work. I get the house under contract for 85k. I then take my contract to purchase for 85k and sell or assign the contract to a rehabber for 90-95k. (This is a lot easier than some of you think)

5. I sit in the middle and collect the difference between what I got my contract for and what I just sold it for. My total money involved is a tank of gas, locating the owner, earnest money (about 10 bucks) and putting an ad in the paper. These types of houses sell FAST

So you can see how any one can do this but it will take some effort and a willingness to talk to complete strangers and look like a fool every now and then.

The second way I do business is a lot more complicated so I wont go into a lot of details, if you are interested you can do the research your self or PM me with questions. It’s called buying a house “Subject to” the existing financing.

Basically the loan that is on the property stays on the property and stays in the original borrowers names. I just have them deed me over the house. It’s covered in a HUD1 under lines 203 and 503.

This way closing costs are minimal, only 500 bucks my attorney charges to do the paperwork for us. I can close in little as 24 hours, no other hidden fees or costs involved. It’s a VERY powerful way and my favorite way to buy real estate.

Before you get all wild eyed and crazy about this, I do disclose everything to my seller. I tell them EXACTLY what I plan to do and how I plan to do it. I even tell them my exit strategy. I also have it all in writing and have them sign and acknowledge that they understand and agree.

A lot of you might balk at the idea of someone doing this. But let me be the first to tell you that it works and works extremely well! I know when I first heard about it I thought someone would have to be nuts to just deed me their house. But after my first 5 houses I stopped questioning the why and just did.

Nothing shady or un-ethical about this: I can help a lot of folks out who need out right away or can’t afford to sell through a realtor and pay all the fees involved.

I then sell the house will seller financing using a wrap around mortgage or an all inclusive trust deed to my new buyers.

I collect a down payment, a monthly cash flow, and then a large lump sum pay off once my new buyers refinancing the house in 1-2 years.

Anyways there is my business secret. I’m more than free with telling anyone who is interested more about it. I don’t want to hide anything. But it does take lots and lots of work at first.

[Goose_Man]

Okay, before I completely jump to conclusions, tell me this: by what metric(s) are you saying that the San Antonio market is undervalued?

Arlos posted link earlier in the thread that helps support this: http://money.cnn.com/2005/12/29/real_es ... tm?cnn=yes

Fortune magazine also published some economic forecasts a couple weeks ago and San Antonio was at the top of the list for projected growth in 2006 and 2007. These are only projections I understand that but all indicators of a strong economy down here are right on.

We have major employers flocking here and building hubs for business. Toyota, WAMU, and Bio meds to name a few.

Anyhow, where else in the nation can you go and buy a brand new 3 bed 2 bath house in a great neighborhood for 140k? You might be surprised that wages here aren’t that far off from other places around the nation.

So the house market here has no where to go but up!

[Menlaan]

That is a very interesting write-up. I'd label what you are doing as taking advantage of market inefficiencies. That is, you are buying from people who don't realize the value of what they're selling or are somehow encumbered from getting the full value of it. From what you've said, it takes some leg-work to identify the opportunites, and you bear the risks that values fall out from under you or that you misjudged an opportunity.

Those risks are real of course, but while it lasts you should continue making money. I'd recommend not repeatably "doubling down" in the same market, and treat what you're doing as a job and invest your excess money elsewhere, hopefully somewhere that won't crash when the housing market does.

Also, I've read the money.cnn article and the fortune one and liked their methodology. I'm glad San Antonio is one of the few cities on the good side. My cousins ran a real estate investment company as well for the past two years, but they were purchasing and flipping or renting in Florida and the DC area. Those places are obviously not on the good side .

Happy New Year everyone,
Menlaan

[Tikker]

flipping houses that way sounds pretty good actually

[Goose_Man]

I do let them know what their property is worth. I’m ethically obligated to tell them not only because I have a Realtors License but I also wouldn’t feel right just out right trying to steal a house. Just FYI…

[Menlaan]

I didn't mean a negative connotation by saying "taking advantage of market inefficiencies". One way or another you're making a profit by buying below market and selling at market. There are plenty of people who do that all that time (market makers, hedge funds, etc.).

Menlaan

[The Kizzy]

Tiker, what is your experience in this area, I mean other than sucking Gooses's cock on a message board.


LEARN REAL ESTATE BY OSMOSIS

I've bought and sold 15-20 houses myself

friends of the family, as a business, hunt out wrecks to fix and flip

2 of my other friends have tried to get into the real estate market and have crashed and burned cause they didn't know wtf they were doing


etc, etc


now you tell us Kizzy, how many houses have YOU actually bought and flipped?

So you just basically said that some people can make money buying and selling houses, while others crash and burn. Thank you for supporting what I have been saying this whole time.

Oh, and I have never sold and flipped any houses, I have seen to many people crash and burn, and choose not to do the same myself.

[Tikker]

Tiker, what is your experience in this area, I mean other than sucking Gooses's cock on a message board.


LEARN REAL ESTATE BY OSMOSIS

I've bought and sold 15-20 houses myself

friends of the family, as a business, hunt out wrecks to fix and flip

2 of my other friends have tried to get into the real estate market and have crashed and burned cause they didn't know wtf they were doing


etc, etc


now you tell us Kizzy, how many houses have YOU actually bought and flipped?

So you just basically said that some people can make money buying and selling houses, while others crash and burn. Thank you for supporting what I have been saying this whole time.

Oh, and I have never sold and flipped any houses, I have seen to many people crash and burn, and choose not to do the same myself.

what I'm saying is that you have no experience yourself doing this, so everything you're saying is 2nd and 3rd hand

ie, you're a glorified clerk or a bystander

take your pick

[Captain Insano]

Goose, you think 2 years in real estate during the biggest housing market boom ever means you're more qualified to give advice than anyone else? Good luck this year.

I'm not sure what the next best thing to invest in is, but I'm not buying real estate for 6-12 months at least (and I can afford to). I'm currently investing in a diversified equity portfolio. I'm not expecting, nor am I, making a killing. But I'm also not following the herd and investing in an area recommended to by taxi cab drivers and get-rich-quick books.

Night,
Menlaan

Thanks for clearing that up... Basically you're saying you aren't taking much risk and aren't making any real money, sooo your opinion on investments means jack and shit?

Did I get that right?

Your little speech sounds like something ripped right out of a Charles Schwab, "How to Someday Retire on a Little Bit of Money" handbook.

No offense, but any fucking moron can have "a diversified equity portfolio" and make 7-12 percent over the life of their investments and bank a couple mil when they are 60 years old. Then there are the elite few who strive to maybe educate themselves a little more, take a little bit more risk and basically rule the fucking world.

[Menlaan]

Thanks for clearing that up... Basically you're saying you aren't taking much risk and aren't making any real money, sooo your opinion on investments means jack and shit?

Did I get that right?

Your little speech sounds like something ripped right out of a Charles Schwab, "How to Someday Retire on a Little Bit of Money" handbook.

No offense, but any fucking moron can have "a diversified equity portfolio" and make 7-12 percent over the life of their investments and bank a couple mil when they are 60 years old. Then there are the elite few who strive to maybe educate themselves a little more, take a little bit more risk and basically rule the fucking world.

And what's your sage advice? I suspect I'm quite a bit more educated about investments than you. Want to compare? Oh, are you counting attending a seminar as your "education" too? Nevermind, I can't compete with that!

Menlaan

[Captain Insano]

Thanks for clearing that up... Basically you're saying you aren't taking much risk and aren't making any real money, sooo your opinion on investments means jack and shit?

Did I get that right?

Your little speech sounds like something ripped right out of a Charles Schwab, "How to Someday Retire on a Little Bit of Money" handbook.

No offense, but any fucking moron can have "a diversified equity portfolio" and make 7-12 percent over the life of their investments and bank a couple mil when they are 60 years old. Then there are the elite few who strive to maybe educate themselves a little more, take a little bit more risk and basically rule the fucking world.

And what's your sage advice? I suspect I'm quite a bit more educated about investments than you. Want to compare? Oh, are you counting attending a seminar as your "education" too? Nevermind, I can't compete with that!

Menlaan

You really just got to the point I was really wanting to get at...

You are an MBA.

If anyone here should be making a killing on investments and recommending creative ways to make buku (lol buku sounds like bukake) bucks, it should be you.

I can't for the life of me understand why you would spend all that time and money on learning business only to turn around and use the same low return investment strategy any retard with 6 months of training at Morgan Stanley can produce.

You are supposed to have a comprehensive understanding of business and therefore should be making better, higher producing investments.

Now if you were the average joe, wife and 2 kids working at the local home depot as a manager with maybe a combined income of say 65k a year I wouldn't knock you so hard for doing the "diversified equity portfolio" ie: mutal fund/Roth Ira/401k bullshit that everyone else does.

Ok current investment advice...

Well me personally I am looking to take the money I am making in my business and find undervalued real estate markets, like San Antonio and get in to 5+ unit rental properties.

Personally I am highly interested in investments that net positive cashflow every month that I don't have to do a lot to maintain. My business takes up most of my time and don't want to spend it on maintaining my investments.

With the way real estate is going I am also beginning to research tax lien certificate and pre-foreclosure/foreclosure buy and flip strategies. Or possible buy and hold if the deal is good enough.

My prediction: All these dipshits who bought 450k+ homes on interest only loans and ARMS are going to lose their fucking ass when interest rates go up and will lose their homes. I will probably focus on the most overvalued markets as well as those markets in which the median home prices are high. Like California for example.

In the areas where prices are high those interest rate increases are going to be big fucking bucks to those people that didn't stay within their means when they originally bought. I think those areas will have foreclosure/tax lien business out the ass because of this.

As far as other investments strats... I'm totally against wasting my time and money with mutual funds and diversified portfolio's. That shit is lame. I want a better return than 7-12 percent over 40 years.

When I begin to invest in equities I am looking to buy a few select stocks that have a good chance of growth, hold them until I think that growth is met, sell and start over. There is this show on one of the biz channels I watch and the invester who hosts it is pretty wild but his investment advice seems to be panning out pretty well. I will probably follow his advice for my equity investments.

His basic strategy is to forget the huge diversification... Get into a few good stocks, hold em for a set amount of growth, put in some stop-loss strategies and then dump them as soon as you find the next best thing.

Next, oil. There are a lot of new young companies getting into the oil business here in the US. A business acquantance of mine is currently making a killing and will more than likely become a huge investor in my company. This is highly speculative and risky as far as investments go, BUT if the company does start producing even modest amounts of oil you can see some pretty insane returns.

Last, gold.

I said a long time ago back when gold was at about 405 an ounce that it was a fantastic investment here on NT...I think even at it's current price its a great investment and will continue to be one for another year or two.

There you have it.

I don't have an MBA or one of those valueable college edumakashuns but I make pretty decent cash and hope to make a hell of a lot more here in the next two years.

[Tikker]

As far as other investments strats... I'm totally against wasting my time and money with mutual funds and diversified portfolio's. That shit is lame. I want a better return than 7-12 percent over 40 years.

being able to count on 7-12% return per year, for 40 years isn't too bad at all

that being said


I would (and have) invest enough in the diversified mutual funds at 7-12 to guarantee you a pretty ok retirement, THEN take your left over moolah and try to make it rich

[Captain Insano]

I would say that taking your time to learn a little real estate and getting into some long term rental properties would guarantee you a much larger return with relatively low risk.

The thing about most real estate investing is that most risk can be greatly negated by careful research, training and guidance by those making huge cash in the biz.

[Kramer]

YOU PEOPLE ARE SIMPLE......

JUST WATCH THE GOSH DARN MIDGETS ON THE WB AFTER 2 AM.... THEY ARE THE SHOZBOT

[Menlaan]

There are too many people in real estate these days for my taste. The way people talk about it reminds me way too much about the way that people described investing in technology stocks in the late 90s. Smart money right now is not in real estate, it is in hedge funds. There are a bunch of crap ones of course, but the ones that have the secret sauce make continually high returns for low risk. I don't know enough to invest in them yet, but I am considering working for one in the summer. I've already had interest from them because my specialty is risk management, something that hedge funds need a lot of as regulation increases.

Good luck on getting reliably greater than 10% returns on investments in the future. I think those days are over for conventional investments because it is so damn easy to invest these days all over the world.

Menlaan

[KaiineTN]

Typically in the past, the best thing to do for the future is the exact opposite of what the masses are doing today. The opposite of buying real estate and investing in stocks would be holding onto cash or cash equivalents, or purchasing t-bills.

In the future, when everyone thinks stocks are old news and the days of real estate appreciation are no more.. after a long decline, when people seem to forget that they were once a way to accumulate wealth.. When the thought of pouring your money into stocks and real estate makes people laugh at your supposed stupidity.. that it when you invest in it. When the masses think the opposite. Not when it is at or near its peak.

[Goose_Man]

The thing is that the vast majority of people whom are "investing in real estate" really don’t know what they are doing.

If I filled a room of 100 "real estate investors" and polled them to see what they were doing and how they were doing it maybe 2 would be doing it correctly.

That’s the thing. Sure there might be a lot of people in real estate but the truth of the matter is that if you really know how to do it and know your stuff then there is really no competition and very little risk.

Speaking or ROI. On my average investment on a house my ROI is no less than 85% and sometimes as high as 600% over 12-18 months. Now where else can you get that?

[Jay]

It won't burst like .com but it will burst, just not that badly.

[Menlaan]

The thing is that the vast majority of people whom are "investing in real estate" really don’t know what they are doing.

If I filled a room of 100 "real estate investors" and polled them to see what they were doing and how they were doing it maybe 2 would be doing it correctly.

That’s the thing. Sure there might be a lot of people in real estate but the truth of the matter is that if you really know how to do it and know your stuff then there is really no competition and very little risk.

Speaking or ROI. On my average investment on a house my ROI is no less than 85% and sometimes as high as 600% over 12-18 months. Now where else can you get that?

From what you've described, I'd say that you're not an investor in real estate as much as you work in it. If it's an investment, and you never get less than 85%, then you should start a hedge fund and leverage the shit out of the thing. But it's not. It requires effort to identify the opportunities and then careful negotiations and arrangements. If you think you could run a team of a dozen people working on it (to really be able to do enough to invest a lot of money in it), then I ask why you're not. Or are you?

Menlaan

[Captain Insano]

explain these hedge funds and your strategy to make money? I'm interested.

[Menlaan]

Hedge funds are basically specialty mutual funds without their hands tied. They are barely regulated, can invest in whatever they want (they can do short sales, invest in derivatives, take down foreign country's currency markets, etc etc). There are now over 8,000 of these. They charge a lot: 2% annual fee + 20% of returns over 0% (some charge even more). Only rich people and rich firms can invest in them because of the lack of disclosure (i.e. you have to be a "qualified investor": greater than $1MM in assets or earning more than $250K for 3 years in a row I believe). There are many types of these, and they tend to invest in "market neutral" strategies that work whether or not markets go up or down.

Example: a long / short equity fund would invest in NVDA and short ATYT. That way, they are covered if the general market goes up or down, but will make money so long as NVDA does better than ATYT. Of course most of them are much more complex.

How do you make money by investing in them? Well, the best way is to work for them b/c the people who do make a LOT of money. The other way is to identify a good one and bet big (This is tough to do, you can't find these on yahoo! finance; my Professor has made his money by being a consultant to them and has done a lot of proprietary research on them. His lecture was copyrighted by himself, not by my school like all of the other ones. He personally invests 80% of his money in hedge funds).

There is a lot I don't know about them, and I am still skeptical. But, my Prof's analysis of the industry convinced me they are worth a look. It's greater than a $1.3 Trillion dollar industry by the way.

Last thing: many think that we're at the top of a hedge fund bubble at the moment. There are definitely way too many of these funds, and I believe that most of them barely earn their fees. However, pension funds are treating hedge funds as a separate asset class now, which means they are planning on investing in them for the long run. Many will go away in the next year, but the industry is here to stay.

Menlaan