Dude I'm missing something - Facebook v Real Estate - You kiddin?

Buying & Selling Real Estate
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Dude I'm missing something - Facebook v Real Estate - You kiddin?

Account Closed
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes

I was looking at the returns of Facebook vs Real Estate and I was well, surprised. . . .

I bought a property in Phoenix using "Subject To" (very little down, & taking over the loan) and turned around and sold it for a very large down payment and owner financing. I cash flow it every Month at $1,000 for $12,000 per year positive cash flow.  

If I had bought Facebook in 2012 in it's IPO and put in $1,000 I would have . . . "$1,000 investment six years ago would be worth more than $4,300 as of Wednesday, according to CNBC calculations."

Whaaa????

Pathetic!!!!

Investors had to Chance $1,000 into an unknown company, that wasn't making a profit in 2012 (Facebook) to wind up with only $4,300 . . . 6 years later???? And that is GOOD?

Investors know (or should know) better than that!

I take on investors as Joint Venture Partners and we put Facebook to shame!!! AND, we don't don't sell people's information! 

https://www.cnbc.com/2018/04/11/if-you-invested-10...

"Popular social-media platform Facebook may have gotten even more popular this week as founder and chief executive officer Mark Zuckerberg testifies to Congress about the company's potential misuse of user data and privacy: Its stock price actually increased.

"Let's face it, they're a revenue juggernaut," Carol Pepper, chief executive of asset-management firm Pepper International, said on CNBC's "Squawk Box Europe."

While the platform's shares fell 11 percent after the scandal began, they rose during the initial hearings, reaching their biggest daily gain in two years and adding nearly $17 billion to Facebook's current market cap.

If you invested in Facebook in 2012, when it made its initial public offering, that investment would have seen an increase, too. A $1,000 investment six years ago would be worth more than $4,300 as of Wednesday, according to CNBC calculations."

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Eric James
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
8y

No offense, but this post looks like it's from someone in the 'investor education' business, selling advice on how to get rich quick with my program. A pretty slick message, format, and title.

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  • Eric Delcol
    Investor · Tampa, FL · Member since 2016 · 334 posts · 215 votes
    8y
    Interesting comparison. I agree with you that RE can be much better than stocks. Let's also play devils advocate - We just picked up FB during said price drop and made 12% in 7 days. You could say "why would anyone buy RE when you can make huge returns like that in a matter of days! Try turning around a house in that amount of time. You have to rehab it, market it, sign a bunch of paperwork, hope deal actually closes, etc etc" I think you make a good point in that you should be looking at all of your investments as vehicles and ask "do they suit your comfort level and help you achieve what you're trying to do?" It's also a good idea to compare what you can achieve with what vehicle. Whether it's RE, stocks, gold, or collector troll dolls - does it fit for you?
    2Reply
  • Rachel H.
    San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
    8y

    @Account Closed Guess it's the risk people take. Just like playing the lottery. ;) 

    2Reply
  • Bill F.
    Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    8y

    @Account Closed Congrats on a home run of a Subject-to deal.

    However, I don't see the point of the comparison. Its a bit of a strawman. Picking one stock and comparing it to one specific property in hind sight seems like a waste of time.  

    I bought Ford in for a $1.80 in Jan 2009 and sold it at $15 a few years ago. How does that compare to a subject-to deal? It paid a dividend starting in '12 I think. To me it doesn't matter because I can't go back in time and buy more or sell at a different time. The deal is done and I'm on to the next one. 

    Stocks and RE have similarities, but also difference. A major one is that for most people there is nearly an unlimited supply of shares to buy if they see an undervalue stock. The same can't be said for home run subject-to lease option deals.

    3Reply
  • Account Closed
    OP
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Bill F.:

    @Account Closed Congrats on a home run of a Subject-to deal.

    However, I don't see the point of the comparison. Its a bit of a strawman. Picking one stock and comparing it to one specific property in hind sight seems like a waste of time.  

    I bought Ford in for a $1.80 in Jan 2009 and sold it at $15 a few years ago. How does that compare to a subject-to deal? It paid a dividend starting in '12 I think. To me it doesn't matter because I can't go back in time and buy more or sell at a different time. The deal is done and I'm on to the next one. 

    Stocks and RE have similarities, but also difference. A major one is that for most people there is nearly an unlimited supply of shares to buy if they see an undervalue stock. The same can't be said for home run subject-to lease option deals.

     Your comment: "I bought Ford in for a $1.80 in Jan 2009 and sold it at $15 a few years ago. How does that compare to a subject-to deal?" lol That's the Point. All that I do are Subject To and Wraps and Lease Options. There is NO comparison.

    Buying a house with 20% down using a bank and hoping to make $100 a month is silliness. Buying Ford or Facebook and hoping that I can beat the market (and get my trade in faster than the Hedge Funds when the stock tanks) is also silliness. On average it takes 17 years for a stock to recover after a crash. Crashes do happen. Try living in your Ford or Facebook stock. It's paper. When you buy Facebook or Ford you put 100% cash in. When I buy Subject To I put up maybe 3% cash. Then I turn around and sell to a tenant buyer and get $10,000 to $25,000 from them for the down payment and I cash flow for about $500 a month on average. Try doing that with Ford or Facebook stock. ;-) NO comparison, you are correct.

    0Reply
  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    8y
    Originally posted by @Account Closed:
    Originally posted by @Bill F.:

    @Account Closed Congrats on a home run of a Subject-to deal.

    However, I don't see the point of the comparison. Its a bit of a strawman. Picking one stock and comparing it to one specific property in hind sight seems like a waste of time.  

    I bought Ford in for a $1.80 in Jan 2009 and sold it at $15 a few years ago. How does that compare to a subject-to deal? It paid a dividend starting in '12 I think. To me it doesn't matter because I can't go back in time and buy more or sell at a different time. The deal is done and I'm on to the next one. 

    Stocks and RE have similarities, but also difference. A major one is that for most people there is nearly an unlimited supply of shares to buy if they see an undervalue stock. The same can't be said for home run subject-to lease option deals.

     Your comment: "I bought Ford in for a $1.80 in Jan 2009 and sold it at $15 a few years ago. How does that compare to a subject-to deal?" lol That's the Point. All that I do are Subject To and Wraps and Lease Options. There is NO comparison.

    Buying a house with 20% down using a bank and hoping to make $100 a month is silliness. Buying Ford or Facebook and hoping that I can beat the market (and get my trade in faster than the Hedge Funds when the stock tanks) is also silliness. On average it takes 17 years for a stock to recover after a crash. Crashes do happen. Try living in your Ford or Facebook stock. It's paper. When you buy Facebook or Ford you put 100% cash in. When I buy Subject To I put up maybe 3% cash. Then I turn around and sell to a tenant buyer and get $10,000 to $25,000 from them for the down payment and I cash flow for about $500 a month on average. Try doing that with Ford or Facebook stock. ;-) NO comparison, you are correct.

     Ford and Facebook are almost 100% likely to recover from a crash tho. What happens when the person buying the property stops paying, or the local market crashes. Its all different levels of risk tolerance with varying levels or reward. The intelligent investor diversifies.

    1Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y
    This is like comparing apples to oranges. I don’t really understand why people makes these sorts of comparisons. If you consider yourself a savvy investor you should have stock and real estate investments
    3Reply
  • Eric James
    Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
    8y

    No offense, but this post looks like it's from someone in the 'investor education' business, selling advice on how to get rich quick with my program. A pretty slick message, format, and title.

    6Reply
  • Bill F.
    Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    8y

    @Account Closed that comparing them seems like an exercise in futility. (Not to go down a rabbit hole, but you can trade on margin and use OPM to purchase equities btw. Should you do it is an entirely different debate)

    We obviously have fundamentally different understandings of how the equities market works and choose to invest differently. This isn't a my dad can beat up your dad debate. I wish you nothing but the best and if I ever need advice on a subject to deal, I'll reach out.

    5Reply
  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    8y

    1000 to 4300 in six years.....

    how many houses are worth 100K and then 430K six years later?

    I agree with @Bill F. (again today!) this post is either riddle with logical holes, OR it's a solicitation.

    .......just checked OP profile, it's a solicitation.

    [email protected]Podcast Guest on Show #301
    5Reply
  • Account Closed
    OP
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Andrew B.:
    Originally posted by @Account Closed:
    Originally posted by @Bill F.:

    @Account Closed Congrats on a home run of a Subject-to deal.

    However, I don't see the point of the comparison. Its a bit of a strawman. Picking one stock and comparing it to one specific property in hind sight seems like a waste of time.  

    I bought Ford in for a $1.80 in Jan 2009 and sold it at $15 a few years ago. How does that compare to a subject-to deal? It paid a dividend starting in '12 I think. To me it doesn't matter because I can't go back in time and buy more or sell at a different time. The deal is done and I'm on to the next one. 

    Stocks and RE have similarities, but also difference. A major one is that for most people there is nearly an unlimited supply of shares to buy if they see an undervalue stock. The same can't be said for home run subject-to lease option deals.

     Your comment: "I bought Ford in for a $1.80 in Jan 2009 and sold it at $15 a few years ago. How does that compare to a subject-to deal?" lol That's the Point. All that I do are Subject To and Wraps and Lease Options. There is NO comparison.

    Buying a house with 20% down using a bank and hoping to make $100 a month is silliness. Buying Ford or Facebook and hoping that I can beat the market (and get my trade in faster than the Hedge Funds when the stock tanks) is also silliness. On average it takes 17 years for a stock to recover after a crash. Crashes do happen. Try living in your Ford or Facebook stock. It's paper. When you buy Facebook or Ford you put 100% cash in. When I buy Subject To I put up maybe 3% cash. Then I turn around and sell to a tenant buyer and get $10,000 to $25,000 from them for the down payment and I cash flow for about $500 a month on average. Try doing that with Ford or Facebook stock. ;-) NO comparison, you are correct.

     Ford and Facebook are almost 100% likely to recover from a crash tho. What happens when the person buying the property stops paying, or the local market crashes. Its all different levels of risk tolerance with varying levels or reward. The intelligent investor diversifies.

     Your comment: "Ford and Facebook are almost 100% likely to recover from a crash tho."

    Haven't heard about the Tech Bubble, eh? Lol

    "The obsession with dot-com stocks in the late-1990s has been replaced today by a fascination with FANG stocks," said Jim Paulsen, chief investment strategist at the Leuthold Group. Mon, 19 March 2018 (Facebook, Apple, Netflix, Google)

    Also, Do you mean "likely to recover" like:

    Here are our picks for the 15 most memorable companies that no longer exist.

    Compaq- It was one of the largest sellers of PCs in the entire world

    EF Hutton - "When E.F. Hutton talks, people listen,"

    PaineWebber - had 161 branch offices in 42 states and six offices in Asia and Europe

    Merry-Go-Round - the darling of Wall Street

    MCI WorldCom - Long Distance Discount Services

    Eastern Airlines - largest airline bankruptcy in U.S. history

    Enron - 22,000 employees and claimed revenues of $111 billion

    Woolworth's - the model for five-and-dimes throughout the U.S

    Pan Am - an international airline

    Standard Oil - dominant oil company in the world

    Pullman Palace Car Co - company had a long and illustrious business

    Arthur Andersen - resulting in the loss of 85,000 jobs

    General Foods Corp. - the makers of Kool-Aid

    TWA - declared bankruptcy

    DeLorean Motor Co. - went into receivership and bankruptcy

    Along with:

    • Lionel Corp.
    • Adelphia
    • Pets.com
    • Bear Stearns
    • Beatrice Food Products
    • Digital Equipment Corp. - 3rd largest computer company in the world
    • Kodak - largest producer of film
    • Circuit City
    • Block Bluster
    • Tower Records
    • Polaroid
    • and on and on and on . . .
    1Reply
  • Scott Shuster
    Investor · Wilmington, NC · Member since 2016 · 11 posts · 9 votes
    8y

    What about buying Apple in '98 at approximately $6 a share?  I mean if we are just picking random companies out of thin air....

    2Reply
  • Account Closed
    OP
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Bill F.:

    @Account Closed I am honestly confused as to what point you are attempting to make. 

    -Is it that the Facebook IPO was a bad investment? A 27% CAGR is good in my book, but to each their own. 

    -Is it to preach the good news about Subject-To? If that's the case, more power to you. It's a great niche. One flaw is the lack of ability to scale easily. If I gave you $500k, how long would it take to deploy?

    -Is it REI vs equities? If so cool, but I'm with @Caleb Heimsoth that comparing them seems like an exercise in futility. (Not to go down a rabbit hole, but you can trade on margin and use OPM to purchase equities btw. Should you do it is an entirely different debate)

    We obviously have fundamentally different understandings of how the equities market works and choose to invest differently. This isn't a my dad can beat up your dad debate. I wish you nothing but the best and if I ever need advice on a subject to deal, I'll reach out.

     I have nothing against investing in the stock market if that is what one chooses to do. But I also know that drops in the market happen quickly. Most people invested in the market invest through their employer and have no real idea what they are invested in. When the market does drop, the hedge funds have very, very fast trades that happen before you can pick up the phone, leaving the small investor holding the bag. It takes an average 17 years for that small investor to regain his loss after a significant drop. 

    This is not yester-year's market. People used to invest in the stock market for dividends and cash flow. The invested money was to help the company grow and expand it's reach. Now, people speculate and hedge funds speculate better. Hedge funds are very good at the stock market with speed trading. Average Individuals are on the other side of those trades. Real people lose real money when the big guys win. I'm just saying the little guy should play in a field he can win in, like real estate. 

    Stay tuned for everybody screaming when the stock market corrects again. Lol

    1Reply
  • Account Closed
    OP
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Scott Shuster:

    What about buying Apple in '98 at approximately $6 a share?  I mean if we are just picking random companies out of thin air....

     You make my point for me. One *can't* just pick a winner stock at random. But, with wise decisions you can pick a good rental.

    1Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    8y

    @Account Closed if the market drops significantly I will be buying more.  The stock market is not some giant mystery only for Wall Street.  If you invest broadly for the long term (20-30 plus years) you’ll likely be fine.

    I know someone who has averaged 11 percent annually since the early 90s.  That’s through multiple crashes.  It’s very possible and much much more passive then real estate. 

    1Reply
  • Bill F.
    Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    8y

    @Account Closed I'll take option C, Both marketing and flawed logic.

    0Reply
  • Account Closed
    OP
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Bill F.:

    @Account Closed  Lets call out the elephant in the room:Logical Fallacies

    By my count we've seen. Strawman, attribution, proof by assertion, Red Herring, and cherry picking. 

    -Just because a stock price goes down, doesn't mean an investor lost money. You only loose when you sell. In the short run the market is a popularity contest, in the long run a scale. If that isn't good enough for you, set a trailing stop lose. Boom problem solved!

    -You've come up with this 17 year assertion twice now with out citing a source. I'd be interested to see it. Using the last downturn (only one data point, I know) If an investor had not sold and stayed in the SP500 they would be up 80% from 2007 levels, so I'm inclined to disagree with that 17 year number. 

    -if the hedge funds are front running their trades before the average joe how can the average joe also be on the other side of the trade? That would mean the average joe was both trying to sell and buying at the same time? (also hedge funds make up a far smaller percentage of trades than you would think and you are confusing high frequency trading with hedge funds. They are not one in the same)

    -I agree that the markets has changed dramatically and unless someone is passionate about equities, they shouldn't pick individual stocks. I'm also on a REI web site, so I've self selected like everyone else here to enjoy REI. I also agree with your position on the FANG stocks.

    However, none of this demands a dogmatic attack on stocks as not being as good as Subject-to deals with skewed, misrepresented, and blatantly incorrect facts. They are different, not better or worse. 

    So @Alexander Felice I'll take option C, Both marketing and flawed logic.

    Quoting you: "However, none of this demands a dogmatic attack on stocks as not being as good as Subject-to deals with skewed, misrepresented, and blatantly incorrect facts. They are different, not better or worse. "

    Good discussion, what you are missing though:

    is that I continue to buy (as I have for over 25 years) houses for 3% to 5% of their cost using Subject To and Wraps. When you buy Stocks you are putting up 100%. 

    You are putting 100% at risk for an asset that isn't cash flowing. 

    I am putting 5% at risk for a cash flow return of about 44%. I did the math. ;-) Plus the appreciation of the asset.

    0Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    8y

    Much of the advantage has to do with leverage, which when used right, is a huge advantage to real estate. 

    Podcast Guest on Show #121
    1Reply
  • Edward B.
    Investor · Midlothian, VA · Member since 2015 · 980 posts · 823 votes
    8y

    I guess you've never heard of derivatives.

    1Reply
  • Steve K.
    Honolulu, HI · Member since 2017 · 247 posts · 315 votes
    8y
    Originally posted by @Scott Shuster:

    What about buying Apple in '98 at approximately $6 a share?  I mean if we are just picking random companies out of thin air....

     I hear there are some people on this site that owe their entire retirement/real estate portfolio to that fruity company in Cupertino...

    0Reply
  • Account Closed
    OP
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Steve K.:
    Originally posted by @Scott Shuster:

    What about buying Apple in '98 at approximately $6 a share?  I mean if we are just picking random companies out of thin air....

     I hear there are some people on this site that owe their entire retirement/real estate portfolio to that fruity company in Cupertino...

     If that fruity company was such a great investment, why did they sell and buy real estate? Just askin' ;-)

    0Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    8y

    “Tech Company” Facebook basically boils down to scrolling through text, pictures, and occasional videos.  They are like the horse and buggy; when the sports car is invented they will be crushed.

    0Reply
  • Steve K.
    Honolulu, HI · Member since 2017 · 247 posts · 315 votes
    8y
    Originally posted by @Account Closed:
    Originally posted by @Steve K.:
    Originally posted by @Scott Shuster:

    What about buying Apple in '98 at approximately $6 a share?  I mean if we are just picking random companies out of thin air....

     I hear there are some people on this site that owe their entire retirement/real estate portfolio to that fruity company in Cupertino...

     If that fruity company was such a great investment, why did they sell and buy real estate? Just askin' ;-)

     they may have sold at an all time high in 2012 to buy real estate (all cash)

    and then again a few years later at an all time high in spring 2015

    then they thought they sold at another all time high in feb 2017, but missed that one- by 50 points LOL

    they still may have 2000 shares left...

    0Reply
  • Bill F.
    Investor · Boston, MA · Member since 2015 · 1k+ posts · 3k+ votes
    8y

    @Account Closed thanks for admitting to skewing and misrepresenting facts to suit your purpose. It takes a mature person to do that. 

    I'm glad you've found a niche in which you've thrived and generates such an obvious passion. You are correct that most stock trades are done without financing. You are correct that investing in RE allows you to use leverage, which drastically increases your ROI.

    You are also welcome for providing you a free opportunity to advertise your system and company without running afoul of BPs rules. Added bonus of making it to the trending discussions!

    I'll just point out to anyone that may partner with Mike that while you get high CoC returns with Subject-to deals the absolute cash value of your returns will be low due to the inability to invest large amounts of capital.

    Kinda makes me think that maybe, just maybe, each asset class has their own unique pros and cons and there isn't a one size fits all 'best way to invest'...

    1Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    8y

    I think EF Hutton was sold for millions or billions to Citigroup or JP Morgan I forget which one but one of those types,  so you might want to take off example list. Good luck!

    0Reply
  • Account Closed
    OP
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Bill F.:

    @Account Closed thanks for admitting to skewing and misrepresenting facts to suit your purpose. It takes a mature person to do that. 

    I'm glad you've found a niche in which you've thrived and generates such an obvious passion. You are correct that most stock trades are done without financing. You are correct that investing in RE allows you to use leverage, which drastically increases your ROI.

    You are also welcome for providing you a free opportunity to advertise your system and company without running afoul of BPs rules. Added bonus of making it to the trending discussions!

    I'll just point out to anyone that may partner with Mike that while you get high CoC returns with Subject-to deals the absolute cash value of your returns will be low due to the inability to invest large amounts of capital.

    Kinda makes me think that maybe, just maybe, each asset class has their own unique pros and cons and there isn't a one size fits all 'best way to invest'...

     You are a very funny guy. You Say "thanks for admitting to skewing and misrepresenting facts to suit your purpose."  Lol Anyone following the thread will question that comment of yours. ;-) I'm not here to get into an insult match, you would be out gunned I can assure you ;-). Please keep the level of conversation higher quality than that. 

    But my points still stand.  I let the numbers (and human nature)  speak for themselves. 

    Good discussion, what you are missing though:

    is that I continue to buy (as I have for over 25 years) houses for 3% to 5% of their cost using Subject To and Wraps. When you buy Stocks you are putting up 100%.

    You are putting 100% at risk for an asset that isn't cash flowing.

    I am putting 5% at risk for a cash flow return of about 44%. I did the math. ;-) Plus the appreciation of the asset.

    0Reply
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