Angel!
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Post by Angel! on Oct 11, 2012 14:26:45 GMT -5
I don't want to own houses and have people live in them, and decide who is worthy and if they don't pay, kick them out and make them homeless. I don't want to deal with my own toilet, much less the toilet of 20 other people. I'm not desparaging landlords, just stating it isn't something I'm interested in. But, it appears to be the only idea. You could always use a property manager for all those things. I read RDPD when I was around 20 & still in college. I honestly can't quite remember what I thought of it, but it can't have made too much of an impact because here I am over a decade later & just a working shmuck with no rentals. I think it all sounded good in theory, but seemed out of reach in reality. Honestly I have gotten way more out of my 5 years on YM that I ever could have gotten from a book. I still go back & forth on wanting rentals. For a while my plan was to buy something & rent my current house. But now watching my neighbors do that, I don't think I could take watching the house I spent years fixing up ruined by renters. Of course I think the neighbors have made less than ideal decisions when accepting renters also, so that may not be a common experience.
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2kids10horses
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Post by 2kids10horses on Oct 11, 2012 19:20:11 GMT -5
I don't have 10 horses any more. I'm down to 4. But I used to have 10. Almost had 11!
Here's an advantage to rental houses: You can get in without having to pay all cash. A 20% down payment let's you buy an asset worth 5 times as much as the cash you have to invest. So, you "leverage" your cash.
With stocks, on a margin account, you can buy twice as much stock as you have cash. So, the leverage is much less. In way, however, margin leverage is more dangerous. How? Lets say you bought stock, and fully margined so you have twice as much stock as you had cash. But, the price of the stock after you bought it declines. At a certain point, the stock broker, will "Call" your account. Which means you have to either add more cash to the account or they will sell your stocks. Which means they can force you to take a loss. A bank who loans you money to buy a house will not foreclose on you, or force you to sell it if it declines in value as long as you continue to make the payments. So, if your rental house is rented, and you make your payments, you don't suffer any consequences if the value of the house drops. You can wait it out.
Ok, so margined stocks isn't so great.
One other way to create wealth is to use options instead of stock. Options put leverage on steroids. OMG!!! The RISK! Well, it can be managed. But, it does take quite a bit of study and discipline.
Then there's Commercial Real Estate. The trick here is the financiang. Usually done by banks, and each one is a custom deal. The primary benefit is the tenant is a business, and the lease is usually long term. I have one tenant that is a Payday loan business. I own the building, they run the business. They love the location, we renegotiate the lease every 5 years. They've been there 20 years, and they'll probably be there another 20. I have a commercial real estate agent handle this one, I know nothing about it.
I had a friend who got into owning laundrymats.
There's all kinds of investment opportunities.
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Mardi Gras Audrey
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Post by Mardi Gras Audrey on Oct 12, 2012 0:55:41 GMT -5
The only problem is that everyone always gives the same advice - "Be a landlord." Isn't there any other way to have money? I don't want to own houses and have people live in them, and decide who is worthy and if they don't pay, kick them out and make them homeless. I don't want to deal with my own toilet, much less the toilet of 20 other people. I'm not desparaging landlords, just stating it isn't something I'm interested in. But, it appears to be the only idea. So, I work - because I don't want to landlord. And then everyone tells me I'm a chump. Not really. A friend of mine is a landlord, and they are in serious trouble right now because they bought all the way up the bubble. Half their properties are underwater. And they are having trouble finding renters they are comfortable with, because so many people have lost their shirts in Phoenix. The "old rules" about who to rent to are out the window. They feel like they are starting over. I'm glad I didn't take the only advice ever given 10 years ago, because we would be in pretty bad shape right now. I have a relative who wants to be a landlord. I say wants to be because she has the purchasing part down, she doesn't have the tenant part down. She is constantly losing money because she lets people move in when they have some sob story (she feels bad for them). She then is delayed on action when they don't pay rent or trash the place. Then they won't move out (Gotta love tenant friendly state laws) and she is so busy working regular job (to pay the mortgages on homes she "owns" and isn't getting rent for) that she doesn't have time to take them to court to evict. It seems like an endless cycle and a lot of grief. I prefer to put my money in the market and let the business growth take care of my return....
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resolution
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Post by resolution on Oct 12, 2012 8:50:51 GMT -5
I still go back & forth on wanting rentals. For a while my plan was to buy something & rent my current house. But now watching my neighbors do that, I don't think I could take watching the house I spent years fixing up ruined by renters. Of course I think the neighbors have made less than ideal decisions when accepting renters also, so that may not be a common experience. I did this and went through a management company that does a lot of screening and high requirements for tenants. They still warned me that once it becomes a rental the house will never be the same again. It has been a good experience so far and I go back and forth on whether I want to refinance this one and buy another.
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raeoflyte
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Post by raeoflyte on Oct 12, 2012 10:30:18 GMT -5
I've converted 2 of my previous homes into rentals--a condo and a triplex unit. That was always the intention with them, and I've never had a real emotional attachment to any house I've lived in as an adult so I've never worried about a tenant trashing it (and neither has actually been trashed which helps too!)
The thing that always amazes me is how much work we do when we move out to make it nice for the new tenants. I can't figure out why I can put that much effort in it for other people, but not for myself.
I can't wait to be able to move and convert our current home into a rental. The mortgage is low enough that it should break even from the start.
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thyme4change
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Post by thyme4change on Oct 12, 2012 11:11:17 GMT -5
Again - everyone always has this trite advice. But in reality, rental rates in our area aren't so high that there is a huge profit margin, so you could easily not be able to get into the market if you need to use a property manager - just because you would lose money on the property. Also, now I have to make sure I trust the property rental place, and they are doing what I want, and getting good tenants. If they pick a loser that doesn't pay, I'm out the money - not them. And, how do I really know that the tenant needed a plumber 10 times last month - they could be billing me up the a-hole for visits never made. Either way, there is work - trusting and managing tenants, or trusting and managing a property manager.
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resolution
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Post by resolution on Oct 12, 2012 13:22:24 GMT -5
It has an impact on whether you can claim passive losses, depending on how actively you participate in making the management decisions for the property.
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Deleted
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Post by Deleted on Oct 12, 2012 17:29:01 GMT -5
" How many successful people do you know who never had a vision of what being successful would be like? I bet none. People who can not envision success, who always see themselves as downtrodden, do not achieve great success. Either financially, or in their lives. Successful people are rarely as successful as they would like, but they know that what they consider success is just around the corner. All they have to do is figure out how to get there. And they are confident that they are capable of figuring out how to achieve their definition of success. So how are you going to live your life? Convinced that the world is keeping you down? Or with a vision of success and the confidence that you can achieve it? " I think this definition is important. Believing that you will have success and having optimisim that you will get through the tough periods is important. What I think chafes people is the arogant attitude that if you don't do things my way you're a loser. My opinion is different. There are many paths to the road to wealth or financial freedom. It would be a terribly boring world if we are all alike.
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2kids10horses
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Post by 2kids10horses on Oct 12, 2012 20:41:59 GMT -5
I think the reason many people suggest becoming landlords is that it is something they can at least conceptualize. After all, they live in a place. They either own it, or rent it. So, they have some idea of what's required.
Not everyone owns stocks. So, since they have no experience with stocks, it's really hard for them to believe they can make you wealthy.
The same goes in spades for Options. Even though you can make money faster with options, and it actually takes less money to get started, you basicly have to understand stocks first. And since they don't understand stocks.... well, you get my drift.
So, it really comes down to ignorance. Not lack of intellegence, just plain lack of knowledge. Old WindyCityPaul aka PalmBeachPaul used to go on about people's lack of drive or ambition, and that plays a part, too. I think people might find some drive/ambition if they were less ignorant of their options... (sorry... poor choice of words - let me rephrase...) less ignorant of the opportunities that are there.
Part of that is culture. If you were raised in a household that didn't know anything about the stock markets, for instance, then you would not have any knowledge of it, and therefore no "belief system" in it. Oh maybe they'd hear about "Wall Street" and such thru the news, but how realistic is that? They would think that everyone is a crook, a swindler, and a hedge fund manager! Or those are the ones who get wealthy. Not so.
As Exhibit "A", I'll call myself to the stand. My wife wanted to get into rentals. I resisted. I said, "How could it be possible to buy a house, and then rent it out for enough to pay the mortgage, the taxes, the insurance, the maintenance, and still make a profit? You'd have to charge a fortune! If they have a fortune to pay in rent, they wouldn't rent, they'd buy!" That was my arguement, and it's perfectly logical.
What I didn't understand, I didn't know (Read: I was IGNORANT!) was that you make your money in real estate when you buy. You have to buy below market. True, if you pay full retail for a rental house, it's hard to get enough rent to cover expenses. "Oh! I see, I just have to buy a house for less than it's worth! It sounds so simple. Now, please explain why any rational person would ever sell me a house for less than it's worth?" Again... that's me from the outside, thinking logicly. Again, my IGNORANCE was showing. You see, while I was an experienced homeowner, I had never rented out a house, so I was imagining what it was like.
It turns out that I was totally wrong. People DO sell stuff for less than it's worth. Every day. Think: Pawn Shop. They don't want it. Or they don't know it's true value. Or they think it will cost more to fix than it really does. Or they really, really, need the money more than the house. Or it's got bad karma for them. They're motivated to get rid of the house quickly. Whatever. Maybe it's a bank that has several hundred REOs (foreclosures) that it needs to get rid of.
These problems give us investors an opportunity to solve their problem (or at least make it better) while letting us aquire property for less than market value. Right now, I typically am able to buy houses for 1/2 what they sold for in 2008. Around here. Back in 1995, 1996, I bought houses for $10,000. I spent some money fixing them up, and eventually sold them in 2001, 2002 for $100,000 to $115,000. Rented them out while I waited for the appreciation. Don't get the wrong idea... I wasn't "lucky". We, my wife and I, worked hard to fix them up. We worked hard to find those deals. We worked hard finding handymen to fix them up, sources of materials (carpets, HVAC, lighting, roofing, etc.) we could get at closeout prices.
And, we invested in education. We started with the Carlton Sheets "No Money Down" course sold on late night TV. $189. Yes, believe it or not, it works. We used many of the methods described to aquire some houses. (I don't do them now because I've generated the cash to "Pay cash". But I didn't have it then.) One thing Carlton taught us was to join the REIA. We did. More great education. We bought books, borrowed more from the library. The REIA had a lending library of books and audio tapes of semiars and workshops. Many an evening I can remember being at a fixer upper putting together HomeDepot cabinets and listening to a tape of some real estate guru giving another motivational speech or seminar on "creative financing". Creative financing... HA! To me! I have an MBA in Finance of all things! But, I was IGNORANT about owner financing! Buying and selling notes. I learned a lot from those tapes...
One author/lecturer was Wade Cook. He had a saying, "If you will do for 5 years what others won't do, you will be able to do what others can't do for the rest of your life." I didn't really belive him when I read that.
I am living proof that it's true.
Oh, I read "Rich Dad, Poor Dad". I felt some of it was BS. It IS fiction. There was no Rich Dad. But sometimes you DO have to think outside the box. Get out of your comfort zone. Open your mind to new possibilities.
There ABSOLUTELY ARE opportunities out there. Find them.
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Deleted
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Post by Deleted on Oct 12, 2012 22:17:03 GMT -5
I really disliked the Rich Dad, Poor Dad book. I thought he showed great contempt for the poor dad and seemed that he was preaching that life is only about money. And, that one is only successful if one is a financial success while neglecting to see that true success has nothing to do with money but of ones' contribution to our families, friends and those around us. Yeah, making more money would be great and better use of one's money. But, to make that the singular focus of my life, no. The book left a very bad taste in my mouth and i was never a fan.
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DVM gone riding
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Post by DVM gone riding on Oct 14, 2012 21:17:53 GMT -5
one of his businesses being bk and him being bk aren't exactly the same thing. But it is interesting! Thanks for posting
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Nazgul Girl
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Post by Nazgul Girl on Oct 15, 2012 8:08:42 GMT -5
Again - everyone always has this trite advice. But in reality, rental rates in our area aren't so high that there is a huge profit margin, so you could easily not be able to get into the market if you need to use a property manager - just because you would lose money on the property. Also, now I have to make sure I trust the property rental place, and they are doing what I want, and getting good tenants. If they pick a loser that doesn't pay, I'm out the money - not them. And, how do I really know that the tenant needed a plumber 10 times last month - they could be billing me up the a-hole for visits never made. Either way, there is work - trusting and managing tenants, or trusting and managing a property manager. What I don't get, Thyme, is what do you want 2kids or any other landlord to write ? They write about what makes money for them. If you don't want to be a landlord, that's fine, but the advice from landlords isn't "trite." It's advice about being a landlord. If it was that easy to think of other ways to make money, or to start a business, we'd all be starting a new business every month. Making money is hard, and getting some rentals is easier in some ways than other choices, because the landlord is providing a basic service which everyone needs. There may be a millionaire out there that manufactures tortoiseshell pocket combs or combination pajamas/dress pants, but those enterprises would serve a more limited market, so their advice would actually be less apropos than a landlord's, in my opinion.
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Oct 15, 2012 8:37:04 GMT -5
There may be a millionaire out there that manufactures tortoiseshell pocket combs or combination pajamas/dress pants DH thinks pajama jean are brilliant and wishes he'd come up with the idea.
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Deleted
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Post by Deleted on Oct 15, 2012 8:58:55 GMT -5
Again - everyone always has this trite advice. But in reality, rental rates in our area aren't so high that there is a huge profit margin, so you could easily not be able to get into the market if you need to use a property manager - just because you would lose money on the property. Also, now I have to make sure I trust the property rental place, and they are doing what I want, and getting good tenants. If they pick a loser that doesn't pay, I'm out the money - not them. And, how do I really know that the tenant needed a plumber 10 times last month - they could be billing me up the a-hole for visits never made. Either way, there is work - trusting and managing tenants, or trusting and managing a property manager. What I don't get, Thyme, is what do you want 2kids or any other landlord to write ? They write about what makes money for them. If you don't want to be a landlord, that's fine, but the advice from landlords isn't "trite." It's advice about being a landlord. If it was that easy to think of other ways to make money, or to start a business, we'd all be starting a new business every month. Making money is hard, and getting some rentals is easier in some ways than other choices, because the landlord is providing a basic service which everyone needs. There may be a millionaire out there that manufactures tortoiseshell pocket combs or combination pajamas/dress pants, but those enterprises would serve a more limited market, so their advice would actually be less apropos than a landlord's, in my opinion. Nas, I feel, you and I think the same. Only hero in my books is , my hard working Husband. ;D
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Deleted
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Post by Deleted on Oct 15, 2012 8:59:43 GMT -5
There may be a millionaire out there that manufactures tortoiseshell pocket combs or combination pajamas/dress pants DH thinks pajama jean are brilliant and wishes he'd come up with the idea. Ditto.
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Nazgul Girl
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Post by Nazgul Girl on Oct 15, 2012 10:10:53 GMT -5
There may be a millionaire out there that manufactures tortoiseshell pocket combs or combination pajamas/dress pants DH thinks pajama jean are brilliant and wishes he'd come up with the idea. Tell him to go for it, and then when you guys are billionaires, I can sue you for patent infringement !! LOL
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Deleted
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Post by Deleted on Oct 15, 2012 10:39:26 GMT -5
They already make PJ pants Nasgul
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NomoreDramaQ1015
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Post by NomoreDramaQ1015 on Oct 15, 2012 10:40:52 GMT -5
Yep. Pajama jeans already exist. I am pretty sure that is one of the seven signs of the apocalypse. DH wants a pair. I told him that they are grounds for a divorce. Especially if he wore them in public. Yes they make dude pajama jeans now too, I saw them in one of those mail order catalogs.
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Wisconsin Beth
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Post by Wisconsin Beth on Oct 15, 2012 14:23:09 GMT -5
I'm not cut out to be a landlord. While I could probably acquire the DIY skills needed, I have no desire, no interest and no ambition to be a landlord. Pretty much the same deal for starting and running a business. I miss MTL too. He did live in Atlanta or thereabouts. And I think he did get the house he wanted, eventually. I have a vague thought he was here for a week or so and then stopped. I think when I asked about him a while back, someone said he's on a different financial board.
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Wisconsin Beth
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Post by Wisconsin Beth on Oct 15, 2012 14:58:17 GMT -5
I've never read Rich Dad, Poor Dad but I am enjoying the link, so thanks for that.
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thyme4change
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Post by thyme4change on Oct 15, 2012 15:06:33 GMT -5
If I wrote that the BEST way to make a college degree worth it is to get a finance degree or go to law school, I would get chewed out by 75% of this board. But, say that the BEST way to make money is to become a landlord, and anyone that dares to say "Nah, not my thing" gets told that they should keep their mouth shut, because we have several successful landlords here.
I'm just saying that there are other choices. RDPD showed absolute contempt for those other choices.
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2kids10horses
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Post by 2kids10horses on Oct 15, 2012 20:28:16 GMT -5
thyme,
To be perfectly honest, I don't LIKE being a landlord either! But it is profitable, and if there were an easier way, I'd do it.
I do trade stocks, and I do flip houses occasionally.
My wife is the one who likes rental houses. She likes the monthly income.
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Nazgul Girl
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Post by Nazgul Girl on Oct 15, 2012 20:37:22 GMT -5
Yes, but are there pajama/dress pants that can be worn into the office ? You guys just haven't thought out the concept to its final incarnation. But, I diverge from my real concept of sock/shoes.
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