All Forum Posts by: Jason Barnett

$15K loan
20% annual interest rate
1 year

$15K * .2 = $3000 in one year. Not a huge return, but solid.

There are lots of ways to go, but bsodders05 is right. If you are just starting out then you are probably best served by getting a mentor in your local area and asking them for some advice on how to proceed. Bird dogging is a good way to get your feet wet (if you have a mentor). If you want an "easy" way to make money then you could become a private investor and loan out the $15K to other investors.

I wouldn't put a dollar $ to a bubble, because value is relative. $250K in my area (Dayton, OH) could get you a very nice home in a very nice area or an apartment building with 8-12 units.

I think the areas that will feel the biggest pinch are the areas where people are using ARMs.

I know nothing about pre-construction deals. That being said... if I was looking for these then I would get friendly with someone down at the city planning office. I'm 90% sure investors have to get permits before they can build so just find out who hands out the permits in your area(s).

Another idea: try to find out when someone wants to change the zoning for their land. Maybe they are trying to re-zone the land to be single family / residential.

Here is what you need to consider:

- When you say expenses, do you really mean cash flow? You might pay a $1000 mortgage, but your interest expense might only be $250 (since you have so much equity). If you rent your expenses will (probably) include mortgage interest, property taxes, and any utilities that you plan on paying for a renter.
- Is your neighborhood a buyer's market or a renter's market? It will be difficult to rent if everyone moving into that neighborhood is buying.
- Don't bother with the major fix ups.

If you can sell it outright then that would be my suggestion. If the house doesn't sell then you can offer owner financing / land contract for the property. This is kind of like renting, but it appeals to people that want to be property owners and don't have a lot of cash / credit that is good enough for a conventional loan.

I'm not an expert on this subject, but I'll get the ball rolling.

The "and/or assigns" clause is needed for a contract that you intend to assign to someone else. Bird dogs use it so that they can re-market the property to another buyer and give the buyer the exact terms that you have negotiated on the property.

I doubt that most owners would even notice such a clause in the contract, but savvy investors / realtors will know what you intend on doing. I would always put it in a contract because it gives you flexibility to assign the contract. If you intend on being the ultimate buyer of the property then you can always remove that clause later as part of the negotiation process.

Even if you want a flat tax, you still have to figure out what will count as taxable income (e.g. would charities pay tax on "contributions" that they receive?). Flat tax would only eliminate the incentives that are built into the tax system.

Some economists advocate a modified flat tax and it goes something like this:

Every person pays X% of their taxable income to the government.
Every person receives $YY,YYY FROM the government.
There is no minimum wage.

For argument's sake, say that X is 25% and $YY,YYY is $10,000. If you don't work, then you receive $10,000. Say you earn $10,000 from your work... you would pay $2500 to the government and receive $10,000 from the government for an effective income of $17,500. If you earned $1M per year then you would pay $250K to the government and receive $10K for an effective income of $760K.

Actually, the system that I just described is already in place today (sort of). It is called the Earned Income Tax Credit (EITC) for the poorest Americans. It was put in place to encourage more Americans to work at least a little bit (and IIRC it has worked very well).

http://en.wikipedia.org/wiki/Income_tax_in_the_United_States

Forget about tax law for a minute and consider this: Few people truly understand what income is and what it isn't.

Cash flow is money coming in (or going out of) your pocket.

Net Income is an accounting term that shows how much increased equity (wealth) you gain in one year. (e.g. buy a house for $200K, rent exactly equals expenses for the building, yet the value of the house increases to $250K so you are now wealthier after a year)

In practice... IRS tax law falls somewhere between these two extremes. Some of it is good (you don't pay income tax on the increase in equity of a building until you sell) and some of it is bad (you pay income tax for partnership profits that are reinvested in the partnership). Some of this is so that we can make taxes more "fair" and some of it is incentive to encourage people to make certain choices (get married, have kids, own a business, etc.).

If a worker earns $500 per week and goes for unemployment then they can get $250 for doing nothing. If they go out and get a minimum wage job (regardless of what it is) then they might bring home $250 in a week. Why work for the money when you can get it for free? Not only that, but taking a job for less than you earned before makes some people feel like they are "worth" less.

I'm not sure what to think about Bush's unemployment reform. You can now get unemployment for an extra year if you are pursuing a degree.

Some forebearance issues are legitimate, but you are also right that some of the people are just abusing the system. With so many options for repayment out there it is very easy for someone to minimize the amount that they have to pay back each month. 10 year term, 10 year with increasing payments, income-based payments... the list goes on and on.

The only other thing that I would add is that we need to help kids figure out where the jobs are going. Yes there is information out there telling you where the demand is, but I don't think every college bound student looks for these and some of them get bitten HARD by reality when they get out of school. "Oh, what do you mean I can't find a job using my degree in Ancient Sanskrit?"

I would say to college kids... if you don't have a plan, then just go into accounting / finance / marketing. These undergraduate degrees will open a lot of doors for you and will give you a lot of options.