Hello, everyone. I'm new here.
I'm 25 years old and I have about $250k in cash, and I want to put all of it into real estate.
I have no experience though. I'm just starting to learn the basics, like cap rates. I don't really have a mentor type of person to guide me along, so I'm learning as much as I can.
What should I do? How much property can I buy? (I have good credit.)
This forum looks like a treasure trove of information. I'll enjoy reading all of the old threads.
Lots of interesting threadbits here and I want to add some ponderables and hope for others thoughts on these:
Subject: RISK
Isn't investment about risk vs return?
Least risk for most return?
Threshold risk to acquire acceptable
return?
Probable risk of total loss at THRESHOLD?
What are you risking? Time or money or both?
Salient Facts:
Current real estate climate declining price trends indicates equity is
at HIGH RISK. Equity either acquired through TIME or CASH investment.
Leverage will no doubt increase the potential of future returns. But it concurrently increases your current RISK profile.
What other facts need to be considered to have all the pieces to this jigsaw puzzle on the table?
To your risk statement I only have one question...
Do you think it will cost more or less to buy a house 20 years from now?
Ajusting for inflation, I would say it will cost less. Why do I give that bizarre answer? Because I think we still have some falling to do over the next few years. Its likely we'll see significant inflation for at least a few years. The headline rate has already hit 5% in the US. So, in real terms, prices are falling even faster than they seem.
At some point we will resume the long term trend of housing prices tracking inflation. So, thanks to the falling we're seeing now, house prices in real terms will be lower than they are now.
Now, because there are short term fluctuations, the prices might actually be up or down exactly 20 years from now.
Nominal prices will likely be higher. Real prices will be lower.
Thanks Jon for the clarification on that point. I wholeheartedly agree with you.
Using the same metrics how would ones typical stock portfolio, savings account, or precious metal vault (or any other investment vehicle) compare in 20 years time?
Then which investing form seems to carry the least amount of risk?
-Michael
It's residential, not commercial so not exactly what you're looking for - and I spend a lot of time in the market cherry picking. That's hard to do without boots on the ground.
Right now as I'm sure you know
there is a huge buyers/investors
market going on, not just in this
country but globally actually!
Foreclosures are obviously a very
popular trend, and are going very
fast. FSBO's at this time are willing
to make amazing offers just to opt-
themselves out of property to stop
paying inflated notes.
Rentals are very good right now
since alot of people do not have down
payment money to put down on property
because it is very hard to get owner-occupied
financing.
A few questions for you though:
1. How much property are you trying to buy
right now? (You can buy in bulk or one at a time)
2. Where are you looking to buy? (Some states have
markets that are better than others)
3. Are you by yourself or do you have a partner? (Sometimes
going in it with someone else can relieve you of all of the responsibility)
4. How much are you interested in spending? (I would not suggest
exhausting your funds, so please take it slow and develop
a pattern of real estate investing that you find profitable and that works for you)
Keep in mind this is a business and if you go about it the right way, can make you very wealthy, or the wrong way , can cost you greatly, good luck to you!
I wrote this article last night and it will be posted in numerous newspapers and internet sites over the next week.
It is what I consider to be good advice to new investors. I'm not sure if it is applicable to you or your needs but you might read it over and get some ideas at least.
My opinion of Investing is that new investors usually need to earn higher rates of return when starting out and add cash flow properties along the way. Cash flow or rental properties let you earn as the home appreciates. The problem with this is the average appreciation of a home is generally under 5% annually. While this is considered by most to be a good return it is very easy to earn in excess of 100% annually.
Read the article and if you have any questions look my number up on my profile and give me a call.
Brice
Investor/Agent
Article that I wrote and is being sent out to publications over the next couple weeks. If You have any questions check out my profile and get in touch with me.
If you don't know how, find someone who does. We all learned what we know from someone else.
We learned to tie our shoes. Teachers taught us readin writin' and arithmatic. Your father taught you
how to drive in most cases. When it comes to our money most of us want to learn to handle it by our selves.
Or we let others who don't have any money tell us what is or isn't a good investment.
This article is about finding someone to teach you how to invest in Real Estate.
ARTICLE BODY:
Real Estate Investing is known by most people to be the best and safest
method of securing your financial future. It is for some but many get into trouble
trying to do it themselves while learning. There are many pit falls that we have heard of.
The money pit being one of them. Everyone has heard of sweat equity, It's a potential
pit for many. Creative financing is another pit that many people have fallen into recently, with
adjustable rate mortgages, balloon payments, hard money lenders and
Being a landlord can become a pit.
It's all about what you know about solving or preferably avoiding each of these potential problems.
If you don't know you should find someone who does know.
When I first started investing in real estate I learned one very important rule, DO NOT LOSE THY CAPITAL.
It seems obvious but it is the only way that you can lose in any knid of investing. You may have set
backs but if you lose all your capital you will be back at square one in a hurry and nothing to
show for all the sweating except an expensive education. I learned from the school of hard knocks and along
the way I found mentoring programs. I spent lots of money on books tapes seminars and mentors.
All the while learning a little at a time.
Mainly what I learned is that most of these programs teach you enough to get into trouble or they only give a
very vague knowledge of what to do. Many people walk out of high dollar seminars with a lot of excitement,
drive and a rudimentary knowlege. This leads many into trouble.
My favorite part of my Real Estate career is when I do profit share deals.
I do deals all over the country where I hold the investors hand thru the process of a deal.
I have one in closing right now that took $55,000 and turned it into $102,000 in about 45 days.
That is more than 53% in 45 days. Most people are happy if they get 12% in a whole year.
Lets look at this deal from the investors point of view.
$102,000 sale price
-$55,000 purchase price
=$47,000 in 45 days....................hmmmmm over $1,000 a day
The total actual hours spent on this deal were about 46 hours
But wait what do I get?
I got half of the profit. $47,000 split 50-50 is $23,500 ok so the investor made $500 a day
The beauty of this is that the investor/student gets an education while making money.
I don't charge the investor/student ANYTHING up front.
I only profit if the investor/student profits.
I guide the investor/student....all decisions are left ultimately up to the student.
The investor/student continues to learn with me as long as they wish to.
When they feel they are ready to go it alone they do so with the knowlege that
they can either bring me in for a split or pay me hourly for consulting.
To many, this would have seemed to be a very small deal with very little profit potential.
What I look at is the numbers. In this deal there is 53 percent profit in 45 days to the student after paying me my portion.
53% divided by 45 = 1.77 percent per day.
If this deal was followed up with another similar deal then another ...etc the potential is 1.77% X 365 days
in a year = 646.05 percent per year. So $55,000 could be 6 times itself or $330,000 in just one year.
If you were to split all the deals for a year, you would still have $165,000 plus all the knowlege that you
gained will help you continue earning your whole life. Can you put a value on that?
The point of all the numbers is
How much are you missing out on by not starting now.
The specialized knowlege that is most important in investing is having exit strategies.
Having a lot of tools in your tool belt gives you more options in each deal you do.
You can buy and sell to wholesalers, buy and hold (rentals), buy and rehab, buy from wholesalers and sell to
end buyers, buy notes on properties, buy on the courthouse step[s, lease options, straight options,partnerships,
commercial Real Estate,buy land to develop,buying foreclosures, short sales, tax lien sales, buying estate sales,
buying condemed properties, buying the right of redemption,inner city fixer upers, city and county programs,
grants, become a Real Estate Agent, or even become a lender.
The list of ways to profit in Real Estate goes on and on.
Many people spend months and years trying to learn the knowlege all the while
missing out on a lot of deals they could have profited from.
Who wouldn't be willing to do a deal with Donald Trump in a profit sharing contract.
What the Don touches turns to gold. He definately has the midas touch.
In conclusion if your a begining investor The best advice I can give you is find an experienced investor
and split to get the knowlege while earning.