Lucky,
Please try to make valid points about the topic at hand without talking down to other members. This type of petty crap is not needed and does NOTHING to help the original poster. In your short stay here half or your posts have been edited, you have personally SPAMMED me with unsolicited junk mail trying to sell me deals thousands of miles from my home, and are now resulting to name calling. Reread the rules and follow them or leave: http://www.reiclub.com/forums/index.php/topic,1187.0.html
So if you put more money into an investment FDJAKe then your debt service is lower but the ratio of rent to price is still the same. In the end isnt not cash flowing and puting money into an investment every month the same thing as putting money down? I am not trying to argue just trying to get things straight and create discussion. If that guy makes 5200 a month off of his job, then is loosing that 200-300 dollars all that bad. I mean atleast he is not wasting the 200 a month and putting it towards his investments. What is wrong with loosing money per month. Doesnt this constitute as an investment. thanks a lot.
That’s a good question.
I think a lot of new real estate investors buy into the NO MONEY DOWN hype that’s out there.
Can you buy with no money down??? Sure you can, IF your willing to move to areas in the country where this is possible. Try buying a postive cash flowing rental in New England with no money out of your pocket. Let me know where you find them because I’ve been looking for 20 years and still haven’t found one.
That’s why it’s called an INVESTMENT.
If I put $25,000 of MY money into a property that is WORTH $200,000 but I BUY for $125,000. It pays for itself at $1500/month, does it cash flow? Nope, probably not. But here’s what your missing. In 15 years that house will be worth $300,000 (that is based on housing appreciation rates going back 100 years) and I put exactly $25,000 of MY money in it, plus we’ll say $1000/year for shortfalls. Let’s say in 10 years I owe $30,000 on it. I can then take out an equity loan for $100,000 or more and not pay a SINGLE CENT in income taxes on that money. Now I don’t know where you are but I like that kind of investment. Some months it might cost me a few hundred dollars (Vacant) some months I make a few hundred. the pay off is down the road.
In some markets THIS is the ONLY way your going to own rentals. rents do rise and over time the property becomes profitable.
In my area I would have to buy homes for $50,000 to get the numbers Mike uses. the problem here is the LOT the home is built on is worth $75,000. It just not happening. So you either adapt or you open a coin laundry I guess.
Ok thanks for the help. (is this what you are trying to say?) Essentially it takes some sort of money to make money. You should have reserves to bear the costs if vacancies happen. You make money off of your REI’s whether the person pays for the full amount of your expenses and then some or just 3/4ths of the expenses because they are paying for it.
My only question is will the value of land always incraese? Only 100 years ago we were in the industrialization era and now havent we moved on, while China and other countries will see huge increases in the value of their land? As a REI should I even worry about things like this?
Also havent the value of properties increased in the last 20+ years because more females have been going to work. As a result, families can bid more on houses and over time houses have somewhat artificially increased in value or gone to where they should be.
Find yourself a U.S. forrestry Service map of predicted housing growth in the U.S. These guys use sophisticated computer models to predict where future building will take place based on available land, current business trends, infastructure, ect. The first time I saw their predictions for the next 50 years my jaw fell on the floor!! Your kids WILL NOT BELIEVE what you paid for your properties when they reach your current age.
As far as WHY real estate continues to appreciate?? We could spend the next 12 months on that. Look at the homes built after WWII, Small, 900 sq.ft. Capes and ranches. People make more money today, they want their homes to reflect their self image (right or wrong) Why do you think no one builds 900 sq. ft. ranches anymore??? Land costs too much sure, but people just want bigger better homes.
Those WWII homes will always be a starting point, and eventually, as has already happened in California, the very LAND they sit on will become more valuable than the home itself.
I wouldn’t loose too much sleep worrying about the future of real estate in this country. If it ever gets THAT bad your real estate investments will be the LEAST of your worries, believe me.
You hit the nail on the head… It TAKES MONEY to MAKE money. I’d love to know where the thought came from that THE most expensive purchase most people EVER make (a HOME) could be purchased as an investment with no capital. Come on, it’s ridiculus.
As far as China goes…want to see a BOMB waiting to explode?? Take a look at the Shanghai Stock Market. The last time I saw a chart THAT straight up was the U.S. Housing market price charts from 2005. We all know how that ended. Google search the following…Maids in China quitting jobs to play stock market… Mark my words…when, not if, this thing blows it will be as ugly as anything markets have seen. China will be a force to be reckoned with but I think it’s over hyped.
Want to make a million dollars??? Start a catalog toy company that sells AMERICAN MADE TOYS ONLY!! Nothing like giving your 2 year old a lead paint covered Chinese toy to play with. Anyone smart enough to get a one stop shopping catalog together for petrified parents with good old “Made in the USA” toys for sale won’t be able to fill orders fast enough this Christmas.
My son is 7 years old. His CUB SCOUT…Let me repeat that…CUB SCOUT…badges had to be recalled because they are LOADED with LEAD PAINT!!! ALL MADE IN CHINA!!!
What the hell are you talking about? You’re seriously delusional.
fdjake,
You’re dead on with the Chinese stock market. I play a fantasy stock game all the time and my Chinese stocks have made a killing. The prices are going straight up on many, they look just like tech stocks in the late 90’s. They are a bubble ready to pop, the prices just have no basis in reality. Look at the 1yr chart for BIDU: http://finance.google.com/finance?client=ob&q=BIDU