Rental Property Investor · Houston, TX · Member since 2019 · 30 posts · 6 votes
Lots of noise in the market, making me nervous.
Noise 1 ) bye bye dollar, buy buy gold.
* Gold has hit 5-year high.
* Will dollar continue to weaken? I see quite a few propellants fueling it: oil dollar position is being challenged, a few countries ( Russia, China, Iran ) have started to settling trade in local currency. This is a challenge to the US dollar dominated world currency system since 1972. The US Central bank has managed to print money and exported crises to the world and saved home country economy. Will it be able to survice this round? for how long?
Should I buy gold or should I keep buying rental? What will be the rental/housing market look like if the US dollar loses its world currency position?
* Will dollar continue to weaken? I see quite a few propellants fueling it: oil dollar position is being challenged, a few countries ( Russia, China, Iran ) have started to settling trade in local currency. This is a challenge to the US dollar dominated world currency system since 1972. The US Central bank has managed to print money and exported crises to the world and saved home country economy. Will it be able to survice this round? for how long?
Should I buy gold or should I keep buying rental? What will be the rental/housing market look like if the US dollar loses its world currency position?
Depends. Are you an investor or are you a speculator?
Rental Property Investor · Chandler AZ and Sylvania, OH · Member since 2009 · 708 posts · 561 votes
7y
@Helen De la rosa hasn't the dollar continue to weaken the last 40 years? It probably will continue to lose purchasing power until it goes to 0.
We thought about buying precious metals over real estate, however every time my wife reminds me that it's easier to go buy food with money we collect in rent than it is with a gold coin in America.
@Helen De la rosa hasn't the dollar continue to weaken the last 40 years? It probably will continue to lose purchasing power until it goes to 0.
We thought about buying precious metals over real estate, however every time my wife reminds me that it's easier to go buy food with money we collect in rent than it is with a gold coin in America.
Bottom line, I am not sure if now is still the good time to invest in real estate? I am not sure I can find a better alternative investment if I don't ?
As for gold, yeah, looks like we missed the best years to get into gold. If we bought gold in the last real estate melt down in 2008, just sitting on it would have made 50% gain. Compared to 1972 when the world switched from gold pecked currency to US Dollar pegged currency system, the return is very handsome...
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
7y
Physical gold isn't speculating, it's insurance. I count our sailboat as insurance too ;) And we're still buying rentals when we can find decent cash-flowing properties.
@Helen De la rosa hasn't the dollar continue to weaken the last 40 years? It probably will continue to lose purchasing power until it goes to 0.
As for gold, yeah, looks like we missed the best years to get into gold. If we bought gold in the last real estate melt down in 2008, just sitting on it would have made 50% gain. Compared to 1972 when the world switched from gold pecked currency to US Dollar pegged currency system, the return is very handsome...
1) You’re going to want to find a forum with no real estate investors if you want to brag about a 50% return from 2008-2019. (Roughly A 3.6% annual return, before you pay over spot to purchase and receive under spot when you sell.) Sure the stock market tripled from 2008 - 2019 performing 6x better than gold (not including dividends). But real estate has doubled or tripled, with 20% down so between returning 10-15x your initial investment not including rents, or 20-30x better than gold.
2) The table is horrible as it shows positive %’s yoy even when the price went down.
A weakening dollar does just as much for income producing real estate as it does for non-income producing gold. In fact, just a 30 year mortgage does that, so you get a double. People used to sell you gold as the answer to when “civilization/governments collapse”. Wouldn’t you be better off with food and guns? I wouldn’t sell you 1 gun and 1 bullet for a ton of gold in that situation.
Feel free to sell your real estate and buy gold, more power to you. Maybe find a gold forum and start posting so you can get a lot of that a boys, and thumbs up.
San Antonio, TX · Member since 2019 · 930 posts · 836 votes
7y
There was a news article yesterday talking about how NASA is sending a probe to an asteroid they previously found that has enough gold in it that if it were on earth, gold would start being used in soft drink cans instead of Aluminum.
Cash flowing Real estate (as contrasted with fix & flips) is an investment that doesn't care if the asset value goes up or down over time. It's producing cash flow. Kind of like Warren Buffet's railroads.
Physical Gold however doesn't produce cash flow and is therefore speculation. You hope/assume it will go up but it has to go up a lot to cover the costs associated with it and it has the risk of it being stolen, lost or confiscated.
Paper Gold, isn't really gold at all. It's the promise that when you want to exchange your "promise to pay" that there will be money/gold to cover your call. It is said that there is 6 times as much "Paper Gold" as there is physical gold. That means that 83% of Paper gold is backed by, wait for it . . . Nothing!
So, stating you are an investor I would suppose you would go with cash flowing assets.
Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
7y
@Helen De la rosa I bought silver during the Obama years because I thought the U.S. was headed for the ditch. It was $35 per once. We survived Obama, thank God. Now the economy is booming under Trump, thank God. Silver is $15 per once. How is my investment doing? Not too good. Metal is not an investment. It doesn't produce cash flow, only appreciation. It only goes up based on fear of the unknown. This is not a good investment strategy. Luckily, I only bought about $5000 in silver and it's worth half that now. This is speculation, not investing. Buy real assets, like real estate. It is a hedge against inflation, like precious metal, but it also produces cash flow every month in the form of rent. Metal is just metal. If you think the economy will crash, buy chickens, guns, and ammo.
Rental Property Investor · Houston, TX · Member since 2019 · 30 posts · 6 votes
7y
@Account Closed still trying to figure out what to do...yesterday and today, I did pick up some BAR ( one of the gold ETFs ) and SIVR ( one of the silver ETFs) in my portfolio when the market dipped...
On the real estate investment, my option/vision list keeps growing , lol
option 1 - get a few more SFR and rent to S8
option 2 - how about multi-family units?
option 3 - how about getting some land and build a fourplex?
option 4 - how about just jump into the crowd-street and pool in there?
...
Do I draw a 2-hour driving radius within Houston so I can go check on my property?
Do I venture out to San Antonio? How about Austin?
BTW, did you get a chance to read the June 25th CBO The 2019 Long-Term Budget Outlook?
Good news is that 2019 deficit forecast would be under $1 trillion , bad news is the forecast was showing starting in 2022, the deficit will be above $1 trillion ( $1,000,000,000,000, yeah, 1 with 12 zeros) and keep growing.
Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
7y
If you look at the performance of gold as an asset class over the last 100 years, you will see that it has increased about 4% on average. Inflation over the same period of time has been about 4%. So, if you invested in gold 100 years ago, you would be break even today. Congratulations on that, except you didn't buy gold 100 years ago. You bought it, like I did, in the crash as insurance. Since then the stock market has quadrupled and gold is keeping up with inflation.
Investor · Columbus, GA · Member since 2014 · 2k+ posts · 1k+ votes
7y
@Helen De la rosa if your goal was to own physical assets like precious metals, an EFT doesn't accomplish this. An EFT is paper asset, not real silver. If you offer someone a choice between $1,000 worth of gold or $1,000 of U.S. currency, most people would choose the cash over the gold.
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
7y
"Chicken Little" people make me laugh. Random statistics about the budget, silver to gold ratio, what Warren Buffet said in an interview, this "Noise in the Market" makes you nervous??
You can worry yourself to death about everything that is going on in the world. Yet, life goes on.
I have small gold bars that I would love to get rid of, find me a place that will take it without skimming 15% off the spot price.
I'll buy AT spot price. So will many private individuals. Because when I go and buy my gold, I'm always paying ~$40 over spot.
I've slowly built up a huge stockpile of gold and silver. I want as little $USD as possible. I keep enough $USD liquid to buy properties that come up, but no more. Any other "Savings" are in "stuff". Art, metals, property, hell even collectible old baseball cards. Anything should hold value better than paper currency.
There was a news article yesterday talking about how NASA is sending a probe to an asteroid they previously found that has enough gold in it that if it were on earth, gold would start being used in soft drink cans instead of Aluminum.
Gold costs over $1000/oz to get out of the ground. Do you think it'll be easy to go and grab gold from a asteroid in space? Even the moon was made of gold, there is still an issue of getting it here just like there is tons of gold in the ground right below our feet. It's getting it that's the problem.
Rental Property Investor · Albany, NY · Member since 2019 · 33 posts · 33 votes
7y
Unless you have a significant net worth, there's no reason to hold gold. Buy real estate and invest in your business. Focus on growing your cash flow. Gold doesn't provide any cash flow. There's no reason to "insure" a 50k net worth that holds a couple SFR properties. $10MM is a different story. I'd be holding gold with a net worth like that.
I would consider myself a gold bug. Hyperinflation in this country is inevitable. I'm not going to be Peter Schiff and try to time exactly when it's going to happen, but it will. But again, your time and money is better spent chasing cash flowing opportunities than parking it in gold, unless of course you're already rich.
Rental Property Investor · Houston, TX · Member since 2019 · 30 posts · 6 votes
7y
@Cody L. thank you, Cody, for sharing your strategy. I admire you are in a position to protect your assets with non paper money already...
Do you have any more insights to share?
Balancing greed vs fear is the million dollar puzzle to solve at this July 2019 time point.
*Fear calls for switching into safety net of precious metals etc...look at Venezuela, one ounce of gold sells for 818,749 VES on 01/01/2019, and 9,796,679 VES on 07/03/2019. What kind of annual return is that once the paper currency start losing its charm...
*Greed says that the dollars will be okay for a few more years, so just focuses on growing cash flow/ return using real estate investment.
1/4 of my assets are tied up in mutual funds under 401K /kids 529 that I can not move around. Started 529k when my kids were born, thought it was a super great investment. Now they look like golden handcuffs with limited investment options to choose from.
Have a paid off house that I thought was an asset. After listening to the Rich Dad Poor Dad book yesterday, I now realize it is a Liability not an Asset - every year the house is draining cash through property taxes in addition to lost opportunity cost of the principle tied in the house. Just curious, what do you do with your main residence - get a home equity loan (at 5.5% ) to transfer the risk to the bank?
So having one arm tied behind my back, I am trying to figure out what I can do with the remaining 2/4. SFR's vs Commercials?
* SFRs? - Using 25% down payment, I can grab a few quarter million SFRs to put tenants in and hedge against dollar devaluation while benefiting from tax shield etc...
* Commercial ? Crowdstreet or Real Crowd? I don't know enough to get into the commercial space, so thinking online ones might be a safer bet to start with ...
Rental Property Investor · Houston, TX · Member since 2019 · 30 posts · 6 votes
7y
@Josh E. well said, being the middle class is not easy. now the July 4th dream is figuring how to grow to $10MM quickly then switch to gold/precious metal before hyper inflation kicks in ...lol...
@Helen De la rosa hasn't the dollar continue to weaken the last 40 years? It probably will continue to lose purchasing power until it goes to 0.
If you think the dollar is going to 0 than why invest in the US at all? And the dollar hasn’t weakened continually for 40 years. And a weaker dollar isn’t a bad thing. The dollar has been getting stronger not weaker.
Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
7y
@Helen De la rosa the fed is going to print money at a rate that will make QE1,2 and 3 look like they were just getting some snacks for a party. This will be a 7 course tasting menu with wine pairing. Add to that they're going to have to go to negative interest rates and all of that still won't keep us from the pain that is coming and I wouldn't keep a penny in dollars if it isn't required. On the bright side stocks won't take as much of a hit as they should because the dollar will lose so much value