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Follow up to Lakebum's question: Real Estate pros and cons?
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Follow up to Lakebum's question: Real Estate pros and cons?


Oct 31, 2018, 1:57 PM

So this is an area APM just has not gotten into. I am NOT a handy guy (don't want to rehab) and looking for real estate buys and reselling to make a profit just doesn't interest me very much. Being a landlord does not interest me at all.

That said, I know a lot of middle class folks get to the next level by dabbling in real estate. I've looked at various options for jumping in, but just haven't ever done it.

Questions for the Lounge:

1) If getting in to real estate, how would you advise doing so? Least involvement, most reward options are what I'm interested in.

2) What are the pros and cons for those of you who do it? What do you wish you'd known before jumoing in?

TIA. APM.

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you need an expert. A real tycoon.


Oct 31, 2018, 1:58 PM

henry®

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Indiana is just not my jam. Sorry.***


Oct 31, 2018, 2:01 PM



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would never had done it here


Oct 31, 2018, 2:31 PM

houses we bought for 25k up there and rehabbed
would have been close to a 100k here

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Just call your local Ramada Inn to see when Than Merrill


Oct 31, 2018, 2:00 PM

will be in town.

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no thanks - some guys from some show were here recently


Oct 31, 2018, 2:01 PM

not my jam

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if only there were an ex Clemson player that wrote a book on


Oct 31, 2018, 2:04 PM

how to retire early by investing in real estate....





That would be Awesome

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yeah, if only...***


Oct 31, 2018, 2:05 PM



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99% sure this was happening in my hotel last night***


Oct 31, 2018, 3:57 PM [ in reply to Just call your local Ramada Inn to see when Than Merrill ]



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ROH


Buy HIGH, sell LOW


Oct 31, 2018, 2:01 PM

this will probably happen....

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One of my fears...for sure.***


Oct 31, 2018, 2:02 PM



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Clemson football player dood wrote a book***


Oct 31, 2018, 2:06 PM



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"something in these hills..." -joe sherman


Seems to me the biggest attribute you can have in real


Oct 31, 2018, 2:06 PM

estate is the patience to deal with bullshid. I, for one, do not possess this trait. I will traffic drugs before I venture into real estate.

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Real estate pro:


Oct 31, 2018, 2:09 PM




Real estate con:



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It's not something you "dabble" in and make millions


Oct 31, 2018, 2:12 PM

Some people flip houses, etc. And that's a lot of work. Some people have apartments. And that's a lot of work. My parents tried the dabbling thing. They had 14 apartments at one time. A quadraplex, 2 triplexes, and two duplexes. The plan was to use the rent over the years to pay off the mortgages, have some income, and eventually a nice retirement.

Well, first lesson, PROPERTY TAXES. In 1977 when they started buying apartments, property taxes were very low. They went up 10 fold over the years. At retirement, my parents had an obligation to pay $20K a year or more in property taxes. So there's a chunk. Second, maintenance. They cost a mint to maintain. One month security deposits were almost always used up and sometimes FAR more work was needed. Another chunk gone. Then you had the mortgage payments. Then you had the problem of finding and keeping renters. I always told mom and dad to require a TWO month security deposit. Not only to pay for repairs, paint, etc. when they leave, but because if they stop paying rent, you will eat at least two months rent evicting them. So someone stops paying. At one month the eviction process begins. You have to file for an eviction in the magistrate court. They have 30 MORE days to pay up. THEN they can be evicted as long as there is less than a 20% chance of rain. Then you have to find a new renter. 14 apartments. two or more were vacant at any given time or n the process of eviction and not making income. The sheriff raided one apartment for drugs and literally destroyed it. Had to be leveled. Dad was never reimbursed for the damage.

They eventually sold them all.

Maybe flipping is better. Don't know. I imagine with rates climbing that's going to be a thing of the past eventually. Anyway, I'm not getting into it just from experience. If you do, make it your full time job. No "dabbling".

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Had a co-worker that ended up in the "nervous hospital"


Oct 31, 2018, 2:26 PM

because of just that.

This was back at the height of the housing bubble. He was living high on the hog. He would buy the house cheap and mortgage it to the hilt, then would live off the "profit"...the extra borrowed money.

That worked until the day that a house you bought for $70k that was appraised for and mortgaged for $120k now sells for $70k.......you owe "somebody" $40k.

He lost everything.

Wife, job, kids, sanity, money

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That's very sad.


Oct 31, 2018, 2:32 PM

About the money, I mean.

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Wow. I'm satisfied in knowing how to make a living


Oct 31, 2018, 2:44 PM [ in reply to Had a co-worker that ended up in the "nervous hospital" ]

straight up providing a service rather than playing with money. There's just a sense of security running your own business, working for yourself, and doing a specific job you know you can do well and will always have work to do. Also nice knowing if I got $40k in any hole I'd be out in a year or less and still making money. As long as you're earning and working and making money helping people, doesn't matter about the other stuff. Love you job, what you do, and never forget why you do it. If it's just to make money, you're in trouble. I literally wake up every morning trying to help people in a bad situation. Just knowing that, and having that as your goal, makes money secondary and not important. You help people, you will always make money.

Oldest son the other day said "When I grow up, I want to get PAID!!!" I pulled the car over and we had a chat. I said when you grow up, if that's what you want, you'll be broke. Instead, try and find a way to help people. Provide a service. And make the point of your job to help people, no matter what it is. Make your goal every day to do the best job possible helping others. That's your goal. That's what you drive for. When you're done, they're helped, and you did a good job, go help someone else. Forget money. Drive to help, not to earn. And always keep an eye on your product. Never be satisfied with it. Strive to make your service help others MORE, and more and more.

We drove off and I think he got my point. I hope he did anyway. Point of ANY job is to help people. Period. Money happens on its own.

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"If it's just to make money, you're in trouble"... lol


Oct 31, 2018, 2:49 PM

just..lol

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Spot on assessment, Tiggity.


Oct 31, 2018, 2:55 PM [ in reply to Wow. I'm satisfied in knowing how to make a living ]

That's EXACTLY why I started my murder-for-hire business...I'm good at it, and it provides a service that helps people who are in a bad situation.

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Every job. Even yours.


Oct 31, 2018, 3:01 PM

Prostitutes even. #### stars. Burger flippers. Garbage man. Stock trader. Real estate agent. Slum lord. Doctor. Heck even a drug dealer.

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I agree. That said, Money Makes the World Go Round


Oct 31, 2018, 3:32 PM [ in reply to Wow. I'm satisfied in knowing how to make a living ]

https://www.youtube.com/watch?v=PIAXG_QcQNU

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I kind of see it a little differently.


Oct 31, 2018, 3:55 PM

Money is nothing more than an arbitrary unit to quantify labor at it's very basic level (something Karl Marx was right about). As such, people's labor makes the world go round. A dollar or an ounce of gold, a diamond, or a car, or whatever, is only worth the amount of labor someone is willing to exchange for it.

Not a big distinction, but important conceptually. "Money" can be paper, yams, diamonds, stocks, currency, whatever. Before currency, "money" was beads for the native Americans, rum for slave traders, yams for many in Africa, or other items with intrinsic value. Anything someone wanted and was willing to exchange their labor for. Key concept to understand. Key to understanding why the government doesn't start printing off $100 bills and giving every American $1 million. Do that, and the value of the dollar collapses. With so many dollars in supply, demand will drop. Labor levels concurrent for the transfer of a dollar drop.

Also a key concept in understanding nothing is free. When you win $500 million in the lottery, I'd wager absolutely no one understands the money they now have represents the value of the work that millions of people did to earn the dollars they spent on their tickets. The total sum of labor expended by others to get you that $500 million check is more hours of labor than you could imagine. With that $500 million you can then spend that labor on other people's labor. Stocks, houses, yachts, whatever. You're just spending that money and transferring the labor that went into all the lottery tickets to boat builders, accountants, lawyers, investors, your new yard guy, builder of your yacht, your new house, etc.

So few people see money this way.

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Re: I kind of see it a little differently.


Oct 31, 2018, 4:02 PM



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pass dah kouchie mon!


Oct 31, 2018, 4:36 PM [ in reply to I kind of see it a little differently. ]

Me tinkin' on what you sayin'...

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That happened to quite a few people. I bought my primary house


Oct 31, 2018, 3:06 PM [ in reply to Had a co-worker that ended up in the "nervous hospital" ]

On stated income with 5% down during the housing boom. Two rentals are paid for. Never wise to finance on potential

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For relaxing times, make it Suntory time


In the upstate a house that needs some work in the 40-60k range is the sweet spot imo.


Oct 31, 2018, 2:12 PM

You can put a little time and money in it and either rent it or flip it. The only downfall to owning rentals is when/if you want to sell and cash out. After 5 years of owning a second property you get hit with capital gains taxes, which are 28% off the top of the selling price. You can get by that if you reinvest the money in another rental. But you'll face the same 28% if you want to cash out.

The last renters I had were apparently heavy into the meth, they actually turned my back porch into an enclosed make shift bedroom. Got burned on that one

You really need 10-15 rentals to make decent money unless you're just planning to flip them


Message was edited by: gville76


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For relaxing times, make it Suntory time


A possible avenue would be to find a partner(s)


Oct 31, 2018, 2:24 PM

and invest in commercial property. Start with a small office building, for example.
Look for one that has vacancies as your buying leverage should be greater. Then find leasors asap.
Pay off the property as quickly as possible and find next one....

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yes, this sounds good. The only downside I have heard is


Oct 31, 2018, 2:41 PM

that commercial real estate does not appreciate at the rate residential can. A friend of mine has made the argument that a good investment would be to buy my own office space, sublet, then after I "retire" continue getting passive income from my tenants. This sounds like as good a plan as I have heard, but I've been told to not count on a profit when/if I were to sell.

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Commercial real estate is an income play


Oct 31, 2018, 3:57 PM

unless you are in the development/construction game.

I would think an optimal situation is to invest in a private deal with a smaller developer that needs capital. I know of a people people who have done well because they invested in properties which were triple net lease and they are getting % of sales from the retailers every year or the developer sold the property to a property management company, butt you might need to be a accredited investor (high net worth)

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I recommend buying in 2008


Oct 31, 2018, 2:26 PM

so, you might have a chance soon.


there's also REITs, but i don't claim to know much about dat ish

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If you can't buy in 2008 then squatting in a vacant property


Oct 31, 2018, 2:30 PM

until the owner runs out legal recourse to evict you and abandons it might be a prudent strategy for 2019.

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Buy a house in 2008 for interest only


Oct 31, 2018, 2:46 PM

Take a 120% HELOC out, buy a second house for cash. rent it out.

Stop paying on the first house completely.

Wait 2-3 years until you get evicted, then kick out the 2nd house renters, move into that house.

PROFIT!

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I am no expert, but I have owned a couple dozen houses and


Oct 31, 2018, 2:32 PM

condos. Some were rentals. Some were flips. Most were profitable and easy. The ones that aren't haunt me.

My advice is put more towards your 401k/IRA.

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'preciate the honest wisdom***


Oct 31, 2018, 2:42 PM



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still holdin'?***


Oct 31, 2018, 2:55 PM [ in reply to I am no expert, but I have owned a couple dozen houses and ]



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I have 2 rentals now.


Oct 31, 2018, 3:23 PM

One, I would like to be rid of, but turns a profit. The other I will hold until I can retire off it.

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Better advice is to put less towards 401k then start livin'


Oct 31, 2018, 3:24 PM [ in reply to I am no expert, but I have owned a couple dozen houses and ]

real hard and not worry about retirement.

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You sound like my in-laws.


Oct 31, 2018, 3:38 PM

do YOU think you're moving in with us, too?

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Just go buy yourself that new TRD 4Runner


Oct 31, 2018, 3:39 PM

Tomorrow isn't guaranteed.

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You still have a rental or two?


Oct 31, 2018, 3:55 PM [ in reply to You sound like my in-laws. ]

Put them in one of those, and give them a "discount"

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dos


Oct 31, 2018, 4:14 PM

they'd have to take the smaller/no-as-nice one, because 1-floor, and they don't do stairs....plus it's further away, which is nice. for me.

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I mean, Sharkgirl may need a place to


Oct 31, 2018, 4:12 PM [ in reply to You sound like my in-laws. ]

stay once deaded.

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Hey...


Oct 31, 2018, 4:14 PM

wat?

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Once I deaded I mean. She cooks real good, which is going


Oct 31, 2018, 4:20 PM

to expedite my deadedness.

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Re: Follow up to Lakebum's question: Real Estate pros and cons?


Oct 31, 2018, 2:44 PM

https://fundrise.com/

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Might as well buy a REIT stock***


Oct 31, 2018, 3:59 PM



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I got some of that, I may be able to hold on to it for so


Oct 31, 2018, 4:12 PM

long that the dividends make my cost per share 0.

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