Buying for appreciation

[dd564]

@Gabriel post:19

Furthermore, why would you tie up cash for a 4.74% return when you can put your money into an ING account at 4.5% with NO risk, NO work and complete liquidity. If you don’t mind giving up a little bit of liquidity, you can easily beat 5% with some CD’s and still have no risk and no hassles.

ROI over time increases to 11%-12%? Even IF your assumptions are correct, I wouldn’t want to tie up my money and take on that much risk for those returns.

I agree with you on this if you really believe 4.74 was what you would get. I’m of the belief that returns in this area on rent are higher because my belief is expenses in this area (due to higher rental values) are less than 45%. (More in the 25% area). So my return before appreciation would be higher than most CD rates. At the same time, my real return would increase after expense right-offs.

Keep in mind, for tying up that money, my lowest return would be around 4.74%. Upside would be tied to appreciation in a top 20 fastest growing county in the nation.

[Rich_in_CT]

@Gabriel post:19

ROI over time increases to 11%-12%? Even IF your assumptions are correct, I wouldn’t want to tie up my money and take on that much risk for those returns.

Heck, even my 401k easily beats that…

[Gabriel]

@dd564 post:21

I agree with you on this if you really believe 4.74 was what you would get. I’m of the belief that returns in this area on rent are higher because my belief is expenses in this area (due to higher rental values) are less than 45%. (More in the 25% area). So my return before appreciation would be higher than most CD rates. At the same time, my real return would increase after expense right-offs.

Keep in mind, for tying up that money, my lowest return would be around 4.74%. Upside would be tied to appreciation in a top 20 fastest growing county in the nation.

I would talk to active investors in your area and ask them about their real world expenses - make sure you take into account everything that would affect your cash flow. Additionally, I would make sure to do a thorough due diligence on expenses for any property I was considering.

[dd564]

@Rich_in_CT post:22

@Gabriel post:19

ROI over time increases to 11%-12%? Even IF your assumptions are correct, I wouldn’t want to tie up my money and take on that much risk for those returns.

Heck, even my 401k easily beats that…

What funds are you invested in?

[Rich_in_CT]

I don’t even remember, I just picked some that looked decent. Not a ton of cash in there so I don’t really pay much attention to it.

[jsstinson]

My S&P was at 12%+ last year and my wife’s international fund was up near 20%. If you want a real mover (with alot of risk) check out latin american index funds, china indexes, or india indexes…

~joshua

[dd564]

@jsstinson post:26

My S&P was at 12%+ last year and my wife’s international fund was up near 20%. If you want a real mover (with alot of risk) check out latin american index funds, china indexes, or india indexes…

~joshua

I agree… international has been hot, but I don’t know if it averages 11-12% over 6-7 years.

Also S&P, Dow, QQQQ - Historically average around 8-9%.

[jsstinson]

Well certainly over time, but if you move your money around to the right places you can keep up those 10-20% gains.

I follow the Burton Malkiel “A Random Walk Down Wall Street” idea of investing… S&P 500 all the way. My wife’s IRA is where I play other markets.

RE Investing is my “speculative” retirement strategy and my long term “safe” vehicle is my Roth in the S&P.