All Forum Posts by: Anthony Gayden

Originally posted by @Ryan Valdez:

@Anthony Gayden How do I find these properties where nothing breaks or needs to be replaced?  Looking at my standpoint, I just bought a brand new house for 1/3 of the price.  By helping my family to get back on their feet, I didn't have to find tenants or a property manager.  Thankfully I can afford to be a little riskier with this "investment" right now with my current job that I just started, and I don't plan on quitting anytime soon. 

@Thomas S. I think my plan of action will be to use the money on other investments rather than paying down the mortgage. 

 Stop calling it an investment. It is charity plain and simple. That is fine since I would help my family as well. But whether it is cash pay outs or free rent, it is not an investment and treating it as such will not benefit you.

Instead I would look at it as merely an expense and start investing elsewhere like you are thinking.

Ryan Valdez So you bought a house as your first “investment” and allow family to live there cheap. The result is that you lose money every month. That is a poor investment. What happens when something expensive breaks? After losing hundreds of dollars a month for a few years imagine paying several thousand for a new roof. You said you would hold it long term, why? Do you expect your family’s income to never increase and them to always need you to give them discounts? What happens if you lose your job? This is a very bad idea.

Originally posted by @Kyle Jones:

200k is definitely enough to get you rolling. I started with creative lending myself. 40k in personal and some hard money guys to get going in the rehab game. I WISH I had 200k to start lol. You're in a better position than most. :)

 Sometimes those who struggle and have to be more creative when starting out end up farther ahead because they had to hustle harder.

Yes, you may save money over the long run through energy costs, but that means absolutely nothing to a person trying to qualify for a loan to buy the house initially if there is an additional $15,000+ tacked onto the purchase price.

Housing is extremely expensive in California, to the point where in many parts of the state it is totally unaffordable for people at the median income levels. California has a multitude of regulations that have literally driven the price of housing to astronomical levels and made it nearly impossible to build housing. This will only exacerbate the problem, making housing even more expensive and adding another rule that developers must follow.

The result will be an even tighter and more expensive housing market with even less housing.

Originally posted by @Petra M.:

This was posted by a respected member on the reddit real estate investing sub:

https://www.reddit.com/r/realestateinvesting/comme...

https://www.mauldineconomics.com/frontlinethoughts...

One of the comments describes the "Minsky Moment", basically a collapse in asset value due to excessive loans being taken out, similar to the 2008 GFC.

"That being said, I feel like we’re going to be coming up on another Minsky Moment in the near to moderate future. Considering the fact that household debt levels are coming back to 2006-7 levels and retail is in the process of going down the drain, I think we’re going to see a reckoning in R/E and associated securities."

Interesting read.

 There are huge differences between now and the events that led to the recession 10 years ago. Just as an example, a lot of the sub-prime lending practices have ended, there are far fewer new homes being built throughout the country, and the people buying homes are using cash more than ever.

When I hear about a wealthy person living in a subsidized apartment (that was written in the article) or about how she didn't even tell her deceased husband about the money (also in the article) I am left astounded.

Like it or not, I do not agree with her choice to hoard the money (Yes, she did hoard the money if she chose not to even share it with her spouse).

I am not at all inspired by the story of someone who hides and keeps their money secret from even their own family. I personally am a frugal person and live far below my means. I don't have fancy clothes or any of the other trappings of wealth, however I do not keep it a secret from my fiancée or family my income or wealth.

Daniel B. Investing in real estate in places like NYC or other high cost markets is a game exclusive to the upper middle class and wealthy. The barriers to entry for a person making a median or lower income are very high. Cash flow is not nearly as important as appreciation in these markets. Forced appreciation is a big factor as landlords improve their properties and raise rents or just flip. We all play a similar game in lower cost markets but the barriers to entry are lower, the appreciation is lower, and the cash flow is higher, allowing smaller investors the opportunity to get in the game. If I was very wealthy I probably still wouldn’t invest in higher cost markets because I lack the knowledge to be successful. That doesn’t change the fact that there are many extremely wealthy and successful people who still invest in these markets.

Lillian Hurtarte You aren’t on the lease. The landlord doesn’t know who you are. They don’t know if you live there or are just squatting. The landlord doesn’t know your name. The landlord is not psychic. Merely seeing you at the property does not mean that the landlord knows you live there. If you want to be on the lease, you have to apply to live there on a lease, otherwise the landlord could act to remove you at any time.

Every year or so we hear another story about a person who passed away and had secretly amassed quite a large sum of money. In this case a legal secretary who had a net worth of $9,000,000. http://m.newser.com/story/258891/secretary-lived-frugally-for-96-years-then-donated-millions.html The truth is that I don’t find this story motivational. In fact I think it is quite sad. I think a lot about the reasons I want to build wealth. Safety, security, opportunity for myself as well as family/friends, leisure, free time, etc. When I read this story I imagined some super cheap penny pinching person who even though she was wealthy still lived in subsidized housing. She never shared her wealth even with her husband who had already passed away. Why build wealth if you and your family never enjoy the benefits? Why bother? Donating the bulk to charity seems like even more of a slap in the face to family. This person seems more like a hoarder of money than an investor and I am not impressed.

Jeff Kelly That sounds like a horrible rental property. The returns are too low to be worth the effort. Why not sell it? They obviously need to sell it and the only real thing holding them back is emotions. The equity would be better deployed elsewhere than in an expensive SFR.