Quote from fdjake?
"Stocks CONSISTANTLY beat real estate EVERYTIME! :banghead
I don’t even know how to respond to this myth. Are you a stockbroker or something
working off commission here? I stopped reading the post after I read this…
(note my wife stocks dropped over $6,000 this past week) :rolleyes
Wallace
what realtors charge 9% ?? 18k would be 9% of 199k
30% tax even on 67k is 20,100 but you havent taken out the expenses you have just mentioned !!!
your wifes needs to pick better stocks. tell her to buy SMN or DRYS.
Stocks have a higher yield than real estate if done right. About 3 weeks ago i read someone pushing airlines that they would double quickly they did in 1 WEEK !!! stocks are bigger risk bigger reward.
I am evicting two tenants this month. It’s a real pain in the ass, but I don’t have the brass balls it takes to flip properties.
One of my small banks told me the other day, no more investment loans. How much longer before they start saying no more real estate loans of any kind?? If they can’t finance it, you can’t sell it.
All the more reason to buy stocks.
Wallace,
If your wife got into a car accident would she also stop driving!! Your mentality is the single biggest reason people don’t successfully invest in the stock market. Just because you don’t understand something doesn’t mean it isn’t reality.
For anyone else here who chooses to continue reading (I know Wallace has stopped) just google search STOCKS vs REAL ESTATE. You can read it for yourself. I don’t pull this stuff out of thin air.
If it gets so bad that NO ONE can buy a starter home in this country… ALL OF US, even the slum lords are all done!!
where all here to make $$$ investing in real estate. anyone who is successful knows what will work in their market. some areas are better for buying holding (renting) and other places it’s better to buy and flip.
I’m still a newbie but I know that biggest key to making money in real estate is knowing your market your investing in. its not rocket science with secret formulas, you dont need to have a team all set -up before investing and you dont need to spend 1000’s on seminars and courses.
Amen liquidity!!
And no…I’m not, nor have I ever been, a stock broker. Just open your minds, that’s all it’s about. LEARN, LEARN, LEARN. Investing in stocks gets people freaked out!! There is absolutely no reason for it.
I’ll give all your guy’s a freebe here. Just for the sake of thought provocation…
CHINA…Over 1 BILLION PEOPLE RIGHT??? They were at one time pretty much an agricultural economy. People GREW/RAISED their food. Now those people have moved out of grass huts and into apartments. They work in factories. They come home from work and want to eat NOW!! Hard to grow rice and veggies in an apartment. So what are they doing??? They are eating like AMERICANS!!! FAST FOOD!! Kentucky fried chicken is the number 1 restaurant in that country!! COKE!!! McDonalds is on FIRE there!! Anyone see those earnings?? As a result, heart disease which was almost NON EXSISTANT in China is growing at 500% per year!!! Cancer rates are also on the rise at an unbeilievable rate.
Do you think it might be profitable to start buying PHARMACEUTICAL STOCKS over the next few years??? The worlds largest population will soon be taking meds for high blood pressure, diabetis, coronary artery disease, obesity and many more. These stocks will go CRAZY over the next 10 years. Don’t forget to add in all the FAT BABY BOOMERS in the U.S. entering their heavy drug maintainace years. PLUS>>> these stocks currently pay a 4-5% dividend!!
THAT’S how you make REAL MONEY. Money that can CHANGE YOUR LIFE!!
Jake, I’ve got to say that you continuely amaze me with your thinking concerning stock buying. I currently have stayed out of the stock market becuase I’m simply not knowledgable enough (for me) to dive in yet. But your thought processes seem very much in line with the way I would go about it and make very good sense. I hope that between you and Rookie, the people on this board that do invest in stocks listen. We know most won’t, but hope isn’t dead.
The kitchen redo is great. I’ll probably keep these as examples of before/after for all my new investors. In this market, it IS the little things that make a difference. And you still need to know your market. For example, if that property was in my market, I would have needed to install a flourescent light fixture, a microwave, and yes, a dishwasher. However, I’ve made a huge in-road to installing dishwashers in tight kitchens fast, easy and cheap (relatively speaking).
I again hope that newbies take this thread to heart and learn from it vs. learning from their own mistakes.
Raj
Thanks Roger,
Your 100% right, it’s all about knowing your market. Hey…please share any tricks you’ve learned about those dishwasher installs in tight kichens. It NEVER hurts to make it BETTER than they expect!
I post these investment ideas to get people to open their MINDS. I’ve been accused of trying to sell stock I guess??? Believe me…if EVERY reader on this board went out Monday morning and purchased 2000 shares EACH of Ford stock it would not put a DENT in the TENS of MILLIONS of shares that trade in Ford in a SINGLE day!! When I read comments like this I want to just give up. It really shows how little some people know about investing. The key to these investments is PATIENCE. None of this happens over night. I got into this style of investing because I got sick of saying “Why didn’t I see this coming?” After many years you LEARN to just watch the front page of the newspapers. The best investment ideas are RIGHT THERE.
The KEY to it is READING BETWEEN THE HEADLINES!!!
I honestly feel bad when someone like Wallace say’s they stopped reading after a certain comment. This guy is a VERY SMART investor. I’ve read his posts, he consistantly brings up great topics and ideas. With a little open mindedness I KNOW he could be rolling just SOME of his real estate earnings into BIG numbers with well placed investments in stocks. I’m not telling people they should NOT invest in real estate. I’m just noticing a LOT of real estate investors swear off stocks, those stocks can earn you GIGANTIC returns over the years. Appreciation COMBINED with those 4-5% dividend returns add up. You’d be surprised!!
The thing we all need to remember is money invested in stocks is almost as liquid as CASH. If your buying something at say $20/share and you have $50,000 worth, if you need to tap those funds you have OPTIONS. You can BORROW against that stock (while STILL collecting the dividends) or you can sell it for a short period of time, make your short term real estate investment (let’s say a quick flip) and just buy the same stock back a few months later!!! And…it’s all done with the click of a mouse!!
fdjake. I like your investment ideas both in RE and stocks. My problem with stocks is that I can’t seem to spot the common sense things (Like the China subject) and see the opportunites that you see. Only when you spell it out does it make sense to me. Are there any books, magazines, etc… that you could recommend that would explain the basics of investing? If I feel that if I had the education to invest, I’d feel better about it. In RE, I can wrap my mind around the concepts easier than stocks. I’d like to know more about stocks but I don’t know where to start.
Dave Dremans books on stock investing are some of the best ever written in my opinion. Just enter his name oon Amazon. He has 2 great books.
Just to give you some idea of how smart this guy is I’ll use an example of his. In the early 1980’s UNION CARBIDE was trading at over $100/share. This is a GLOBAL company. They sell chemicals all over the PLANET! One night at a plant in India a valve was mistakenly left open on a cyanide holding tank. A cloud of cyanide gas escaped and killed hundreds of people in a nearby village. UNION CARBIDE stock got hammered all the way down to $9 from $100. This company STILL sold chemicals to businesses all over the world, they still earned PROFITS. What DID change was PEOPLE SOLD THE STOCK because of PANIC!!! This ties into my… Do the OPPOSITE of what everyone else is doing theory!!
Dreman looked at the average yearly income of the people of India (the stat is available instantly now a days). He KNEW Union Carbide was going to pay settlements to those families. What he found was the average yearly income in that region of India was about $400/ year. That wasn’t a typo…$400 PER YEAR!!!
Carbide paid relatives of those victims what amounted to $200,000 EACH or about 500 YEARS worth of annual income. EVERY SINGLE FAMILY SETTLED. Union Carbides stock was back over $100 after 2 years!!
This is EXACTLY the type of thinking that CONSISTANTLY makes money.
It has nothing to do with picking the next Apple computer or Dell. That’s like picking lottery numbers. Look at stocks that are absolutely KILLED, BEAT UP, DEAD…but for reason that can be FIXED. Do you think these home builders stocks will be in the single digits forever???
THEY WON’T…and anyone who buys them with a 5 year time horizon will make a PILE of money. It’s not that hard. You literally have to do the opposite of what the crowd is doing.
Its a control thing for me. When something goes wrong at my properties, I can throw out the slobs. If I can’t rent the place, maybe I can change out that stained carpet or just lower the asking rent. There is a degree of control.
With stocks, all I can do is throw stuff at the tv when things go wrong. And then my wife doesn’t let me drink for a week.
How can a person plunk down thousands to buy a beat up stock, then forget about it for 5 years? Thats just not my controlling nature and I don’t know how to change that.
just change your way of thinking about it. Do you have a savings account ?? think of your stocks as your savings account or retirement fund.
you mentioned your rentals and control. Well your rentals appreciate or depreciate in value which is mostly Not in your control. you have some control like making improvements but you cant change the market by yourself. Its basically like your appreciation on properties or atleast try to think of it that way.
What you haven’t seen is that money go from let’s say $25,000 to $250,000 in that 5 year period.
Your looking at this all wrong. The money you invest this way should be
“DEAD MONEY” Dead money is gravy, it’s just there. Maybe your not at that point yet, but you WILL be at some point. At some point in your investing future your going to want to get the hell out of those scum bag apartments. I am in no way knocking those investments. From what I have read of your posts, you do an excellent job and MAKE MONEY. Think about this…Can you see a point in your future were if you spent time NOW learning about these investments, that TIME could pay off for you later???
What I suggest you do is start THINKING about these scenerios. Take SMALL amounts of money and BUY the stocks. Then WAIT and WATCH. These events occur OVER and OVER, these are not once in a lifetime investments. At some point what will happen to you is the same thing that happened to me years ago…Those scenerios will play out…your investments will grow…and putting larger and larger amounts into those investments won’t take the intestinal fortitude they now require.
Ask yourself a few questions…
Why did I buy my last stock???
Did it work out???
Was it profitable???
Why wasn’t it???
Hey…bottom line…you don’t have to invest in ANYTHING. I’m trying to get you to look BEYOND were you are right now. If you plan on getting to a point were your MONEY is making you MONEY…YOU BETTER LEARN HOW THIS WORKS…I did this…believe me…it makes real estate look like minor league baseball. Remember…BANKS LOVE USING STOCK AS COLLATERAL. They can liquidate a stock in 1 second!! The house you use for the same loan isn’t worth SH*T to banks now. Why do you think they told you NO MORE INVESTMENT PROPERTY LOANS??? Do you think those loans would be made available to you if you had say 50% of the value of that property in a stock?? Let me tell you from first hand experience…BANKS WILL GIVE MORE MONEY THAN YOU WANT if the property is backed by a large stock holding. Again, the bank only takes that stock IF you don’t pay the loan. It’s STILL your stock, you STILL collect the dividends and realize any appreciation. At some point you can have the bank drop the stock as collateral. (once they seem the property performing)
Terrific post, fdJake.
Do you ever put a microwave with built-in vent over those stoves in a small kitchen? I use them in really small 3-400 SF units. Frees up the counters. But I have to worry a lot about function, you get to get rid of the house.
What about changing out that little ornamental board with the scalloped edge over the window? I’ve got them in my kitchen and I hate 'em. Don’t know why, they just look country-cutesy. My eye went right to that little board in your kitchen.
Do you ever sell a house and carry the paper? Get a nice check in your mailbox for 20 years? If not, why not? You could sell the house for top dollar yourself, save Realtor fees, and get 8-10% interest. Just get a minimal downpayment, say $3,000-$5,000.
I am like John in NC, I don’t like what I can’t control. Stocks just can’t hold my interest, but I sure see your logic in investing in future Chinese consumption.
Furnishedowner
Wallace,
By my reckoning, if a property doubles in value every ten years, it will double three times in 30 years.
At that rate, each $100K property will be worth $800K at the end of 30 years. 60 of those in your portfolio will be worth $48 million. If only 40 of those doubled three times, while the other 20 only doubled twice in 30 years, then the portfolio will be worth only $40 million.
Great job FDJake on the kitchen. I don’t do granite but everything else you do I do and i always put in a dishwasher. Even if I need to do an 18". In my market it differeniates more than granite. I diversify into stocks, longterm holds and SFH flips. I do not hold SFH. Get rid of them. Not enough reward even in the lon term. Multi-family 3 units and above absolutely. Wallace seems to think the last 5-6 years are indicative of normal real estate appreciation. It isn’t. It typically barely keeps up with inflation. SFH investors here all are having a tough time and most are losing their investment portflios because they are over-leveraged. In multis you have money coming in when you have a vacancy, in SFH you do not. They are just bad investments long term IMHO. I flip about 4-5 houses a year on average also. In Ohio,l I don’t see the return you do. I’m happy to clear 15K after all is said and done per house. The problem I am running into is that my target buyers are almost always FHA and the 90 day seasoning period is hurting me. Why the banks got a repreive but I don’t really pisses me off. It just recently cost me a quick sale as they weren’t willing to wait to have the appraisal done on the 91st day of ownership.
I would not be surprised to see that rule dropped sometime soon. Anyone with common sense knows it’s people like US (investors) who will solve this housing problem. FHA has dropped the 90 day rule for BANKS. I think you’ll see them open it to investors eventually.
The original intent of the 90 day rule was to curb the predatory lenders and the fraudulent flipping activities of unscrupulous investors. Relaxing the 90-day rule for investors will just be opening the door to those abuses again. The bureaucrats won’t let this happen any time soon.
John, I like the way you think.
If FdJake or anyone else likes to invest in stocks here is a good link with
the top 10 stock forums to talk about it.
I googled it is all, I do not use these forums myself
http://www.toptenlinks.com/cat.php/Finance:Investing:Forums
OK, here is the simple reason stocks are not as good an investment for 90%
of the regular population IMHO.
If you have $10,000 how much stock can you buy?
I am not an expert on this by no means, but my educated guess is $10,000 worth?
(fdjake will have to confirm if this is correct or not as he seems to know stocks)
IF it goes up 5% in a year you have made about $500 right?
If you have $10,000 how much Real Estate can you buy?
OK, it really depends right?
When I have $10K I can most times control a $100,000.00 property
by putting down 10% or the $10,000 and getting a Bank Loan for
the other $90,000 right?
Now lets say the property goes up 5% in a year?
Do I earn 5% on my just $10,000 or on the $100,000 property worth?
I earn 5% on the $100K, so my return would be $5,000.
Plus like John said, and fdjake did I can spend a few thousand and re-hab
the kitchen and it may go up in value 10% to 20% or more. I can control
it with stocks I am at the mercy of some overpaid team of people.
I guess what I am saying is Levearge is a wonderful thing and in my
opinion this is why Real Estate makes more sense to the educated investor?
Anyone else think this way… or is eveyone buying stocks now? :cool
Hey FdJake,
If i may ask, how are you financing your properties? Are you buying cash? Or do you have relationships with banks? Im noticing alot of the banks are clamming up these days not wanting to lend till things settle down…
Thanks,
Karim