Not only is this one of the most inspiring posts on this site, but the content is very interesting.
I got into buying real estate because I like real estate, but I also got into it because I want to make money and become a talented investor. I don’t believe that I am alone in my ambitions.
I have invested in stocks for years, and I have become less involved in stocks lately. My stock positions are long, and I do not want to use options (except maybe to hedge) until I have a formula that works WELL. I have made money in stocks, but not the kind of money that I want to make. I could probably make more handing my money to a fee for service financial planner. I have read quite a few books regarding securities analysis and day trading and I think I know the basics, but technical analysis seems volatile and random, and fundamental analysis doesn’t seem to produce a desirable return on investment. Definitely, what is good for Wall Street is not always good for the small investor and vice versa. Wall Street investment banks want to herd the people like sheep into their crappy investment strategies in what often amounts to a zero sum game.
I don’t think that this needs to be an either or argument. I completely agree that whether this site is a real estate site or a site about farming earthworms it all comes back to what works to make money. Also, beginning investors would be well advised to have a war chest of reserve capital before they run out buying properties on some kind of proverbial road to riches. So where will they keep this money? And isn’t the strategy of any investment, including real estate, being able to use money to make money? In that sense, stock investing and real estate investing are essentially the same.
Nice kitchen, NICE FLIP.
I love these posts. Because I’d not been moving fwd with REI, I had taken a hiatus, but I had to chime in on this one.
- Colors for women. FDJAKE is absolutely right and very shrewd.
I bought my house last year. It isn’t as large as the others I’d seen, but when I walked in, I felt the house was WARM. I’m not talking thermostats here ppl. The flippers, or the owners b4 them, painted this house in warm, neutral colors… white trim. NOthing fancy. But this house faces south, so I get daylight pouring in. Sunshine on pale honey yellow = love & cozy.
when ppl shop for houses, they are excited and tired. you walk into that ‘warm and cozy’ environment, you want to buy.
- Someone posted to FDJAKe, 'how do you know what to buy ’ regarding stocks… or 'i’m not smart enough to know what to pick…"
some such…
It’s elementary. Where do you shop? what do you wear, eat, drive? what’s the world around you? start there. what shoes do your kids wear? If everyone’s in nikes, who is their competition? they still sell shoes don’t they? they may not have brand recognition, but they are selling shoes. look at their historical charts.
Everything has a pattern. Seems like depression’s cycle is about 70 -75 years. Snowflakes have patterns, housing bubbles, ugly christmas sweaters… my point is find the pattern.
Remember in the 80s when “quality is job 1” pulled Ford out of the trash? everybody was singing that jingle and feelin 'American Proud" … see a cycle?
What do you watch on Tv? the simpsons? bringing you any value?
Take some time and get some books from the library… do what the others won’t do, and you can have what they can’t.
When ppl ask me if I watched (insert show) I say: "Oh no, I missed that episode, tell me what happened? "
I get a 5 -10 minute recap, and I’ve saved 30 - 60 minutes of my time …refocused it on something else that’s enabling me to retire earlier.
Here’s a freebie too… About a year ago, Chicos -CHS - was selling about $20 a share. It hadn’t quite recovered from a purchase another retailer called "white house, black market. "
fast forward… july 2008 and some gossip-y type news show that comes on after the 6 oclock news decides to profile the Obamas. They happened to get the children in the interview as well…
the reporter asked one of the children how they felt about their mommy being a fashion icon… (comparisons made between Mrs. O -Obama and Mrs. O {ok, couldn’t resist} Jackie Kennedy. )
THe child replies. THe interviewer asks Mrs. Obama where she got her dress… wait for it…
She replies…: white house black market! DING
This isn’t rocket science.
I know the retailers are taking a hit. But given the chance to have a “camelot part 2” what woman in america isn’t going to buy their wardrobe at WHBM, owned by CHS?
Forget the politics. Focus on the profits. People are greedy - see housing meltdown - and they have short memories. Ergo - cyclical. Figure out where we are in the cycle, and act accordingly.
fdjake, I have to say… you’re posts are extremely beneficial and are motivating me to also start learning about stocks/options.
I’ve avoided stocks entirely, because about 98% of the people I know have lost money in stocks. It’s like they go gambling. One night they’ll come back a winner, but overall they’ll be at a loss and it’s the “thrill” that keeps them going back. It’s actually really pathetic…
Anyway, the way you’ve been breaking things down makes total sense… keep the good posts coming… I’ll look into some of Dreman’s books
For all of you about to read Dreman…
Almost the first half of his 1st book is devoted to showing ordinary people WHY so many of the CONVENTIONAL stock buying advice just plain DOESN’T WORK!!
The second half of his book goes into detail about his CONTRARIAN methods for buying stocks.
Right now as mentioned in a previous post. Pfizer is laying there at around $20/share. This stock (which I own) pays a 5% annual dividend and with the Chinese eating their way to looking like Americans, Pfizer will be selling TON’S of drugs to these people in the coming years. Add to this our own FAT, AGING popuation, and someday a few years from now all your friends will be saying…
“HOW ON EARTH DID I NOT SEE THIS COMING”
This is CLASSIC Dave Dreman investing. Buying what everyone else has written off, and NOT looking at what is coming down the road!!!
Do several of you simply respond without READING the posts, or merely skim them and jump to your own conclusions?
I ask because the replies don’t relate to the posts at all in many cases.
I don’t buy stocks. Not a stock guy, yet I can firmly grasp what FDJake is saying. You buy what others aren’t. That is also what you do in real estate. It does relate.
Everyone is talking about losing money in stocks, no control, etc. I could argue that point to a finish (and again, not a stock guy), BUT the real point here is what Jake has already said: You “play” the stocks with money you can afford to lose!
Compare it another way. You plan on taking a large cruise for $5K. That’s money you can afford to lose because you WILL be losing it. It is buying you please and nothing more. Instead, take a shorter trip for $2K and invest the other $3K in stocks (if you’re trying to get in the game).
Raj
Would you mind going over the buying of the property in some detail. Did you find the property then mail to it, or do you mail everyone in a target neighborhood? What was the sellers situation and how did you negotiate the price?
Thanks, Mike
Obit mailing to address listed in paper, house needed complete interior updating (1970’s time capsule)
Owner passed (obviously) Son was from out of state, (says so right in the OBITS folks…Leaves a son from “pick a state” Again… Are you LOOKING at what’s right in front of you???) The son just wanted out! Offered to buy it AS IS, close in 5 days, all he had to do was pick up a check.
I handled everything including the clean out. He left the entire contents (all junk) except a few minor things which he took.
Made my offer based on approx. 50% of the after rehabbed value and he took it.
Rehab took exactly 4 weeks from start of cleanout till ready for showing.
DONE!!!
FANTASTIC POST!!! Great viewpoints on both sides, the content is professional, and educational. Thanks fdjake and keep up the great work!
Mahalo from Hawaii
wow it looks really nice, great job!
Fdjake,
Just curious, since you do well with real estate and your stock investing, why do you still work as a fireman?
I can’t afford to lose any money. And it’s highly unlikey I will change my position on this. Can you send me the money you can afford to lose? I will put it towards real estate (not stocks)
Here’s a quick break down of the costs involved in this kitchen rehab. First let me start by saying I almost NEVER rip out the old kitchen cabinets. Most of these homes have “built in place” birch plywood kitchen cabinets
Chomoski,
I’m not speaking for fdjake because he’s very capable himself. However, I happen to be friendly with a couple of professional firefighters. Through them I’ve met dozens of firefighters and even gone on a whitewater rafting trip with a large group of them.
These guys enter dangerous and toxic environments and see alot of severe injuries and death. And guess what, even with this crap they love thier jobs. They get to do something good and make a living. They have a comaraderie or better said a “Brotherhood”. Some of the more tangible benefits of the job are a flexible work schedule and sometimes a pension. Does anyone in the private sector even know what one of those is today :biggrin?
JP
First off…
Being a Firefighter is, in my opinion, THE best job on this planet. Case in point…
Last night during diner at the Station, the door bell rang. It was a women whose husband we pulled out of a burning, wrecked car a few weeks ago. This guy had a heart attack prior to the crash. We cut him out of the car, started CPR on him, defibrillated him 3 times, and got his heart beating. THIS GUY WAS DEAD.
The woman told us she had someone with her…In walks her husband!! He looked great. She starts crying, her daughters are crying. They thanked us at least 20 times. Not a bad night at work!!
The funny thing about this job is when we got back to the station from this run no one was talking about it. It was just another wreck. Yea, it went well, we don’t always get 'em back. My Department does 15,000 calls a year. We do this stuff a LOT!!
Seeing that woman and hearing her tell us about her kids and her family REALLY drives home the point. Not many jobs in this world can impact peoples lives as directly as my job does.
Combine that with a TRUE Brotherhood that not only extends to the guy’s you work with, but to ANY Firefighter in the country and it’s like nothing else out there.
I do have a pension from the Fire Department. I stay “on the job” because I love it. I have NEVER looked at my schedule and thought…“ARGHH, back to work tommorow” I actually look forward to getting in there and seeing what the new tour will bring.
Real Estate and other investments keep me interested. It’s fun.
Being a Firefighter is on a whole other level.
Fdjake,
Thank you for the response. I really appreciate it. FWIW, I wasn’t trying to be argumentive, I was generally curious. The reason why is because so many investors think they’ve arrived when they are able to quit their full-time jobs. I enjoy hearing your dedication to your fireman job as well as your investment insight.
Best Regards,
John
John_in_NC:
With all due respect, that’s complete bull. EVERYBODY has money that they can afford to lose because they do it everyday.
One example is the one I gave. If you are planning a $5K (or $1K, $100K or $100) vacation, then you CAN afford to lose that money, because that is essentially what you are doing.
You have no money you can afford to lose, yet I’d guess that you, like everybody else, either buy a cup or three of coffee everyday (add major bucks for latte/etc), smokes, McBurger’s or any of a number of other vices that people have.
You rent/buy movies, go to the movies, eat out at expensive diners, etc, etc.
All of this is money you can afford to lose, otherwise, you wouldn’t be going/doing them because you couldn’t afford it.
The difference between these things and investing in stocks (or any other thing for that matter) is that you don’t THINK about it being throw away money. The vacation is a WANT that you fill and the day to day spending isn’t even thought about. Now, if you don’t even think about spending the money, it’s obviously money that you CAN afford to lose, because not a care is given to it being spent.
Raj
fdjake - I did check the lakesidemoulding.com for the cabinet doors. I loved the fact that they can even drill the holes for the hinges. I will definitively use them the first opportunity I have.
I called and they confirmed that they usually ship 10 business days after they receive the order. I guess you need to order the doors as soon as you start your project so you will get them by the time you are ready to install.
I was checking Pete Youngs Rehab 101 course (this was the first (and only) course I bought back in 2006 when I first thought about getting into real estate investing). Pete has a recommendation for painting cabinets - (1) wash with white vinegar; (2) prime with Kilz Oil base Primer; (3) paint with Sherwin Williams Pro Classic latex paint. He showed it in the DVD and it looked nice. Have you ever done that? Or something similar? Just thought about sharing this approach.
Have a nice day!
What you detailed here should work perfectly. Good prep (like in the dvd you mentioned) will result in a really nice finished product. Kilz is about THE best primer I’ve ever used. It’s really tinted shellac, It completely covers water stains, or any other discoloration and it takes paint beautifully.
I’m a BIG fan of Sherwin Williams paint. Do yourself a HUGE favor and go down to your local store and open a COMMERCIAL ACCOUNT. Tell them your a real estate investor and that you rehab houses. The price difference between a homeowners account and a commercial account is BIG!!
I usually send lakeside my door measurements before I do ANYTHING else. You can get a LOT done in these houses while you wait on the doors. I ALWAYS do the install on the new doors LAST. Paint the cabinet boxes and interiors BEFORE the doors arrive, have the counter tops installed, and then dry fit (before you paint) the cabinet doors the day they arrive. By fiiting them BEFORE you paint them you don’t have to handle them very much once they’re painted. I predrill my hardware and hinges BEFORE the finish paint goes on. Then I paint them. By this time the houses are usually completely finished. I use a drop cloth and some boxes to paint the doors. I also pay lakeside to PRIME the doors for me. They use a white primer and I paint the inside of the cabinets white. Because of this I only paint the outside of the new doors. It’s a HUGE time saver and it looks GREAT when buyers open the doors, (everything matches) Let them dry a few days then all that’s left is getting a few screws started on each hinge and then you don’t have to even touch the doors again.
I got a discount card when I joined my local REIA… :O)
I have a commercial card at Home Depot and a regular card. The only difference that I noticed was that you can’t charge $300 for no interest for 1 year like you can with the personal one.
I tried to get a contractor’s discount card ( yeah, maintenance on 45 houses) but I had no luck because I don’t have a contractor’s license.
Furnishedowner