Why invest in real estate??

General Real Estate Investing
21

Hi Kris,

Very nice to meet you.

My short answer would be “Why Not” :smiley:

I have a passion for Real Estate and Love what I do.

Any really serious full time investor will tell you just like me the money is not important. It is what we love to do and the money is just a by product of what we enjoy doing.

I also feel Real Estate is the most IDEAL investment.

Here is a good way to remember that.

I = Income from your tennants

D = Depreciation for taxes

E = Equity Build up

A = Appreciation of your property values

L = Leverage of other peoples money, effort, and brains

Now, its time for you to Take Action and get started! :slight_smile:

22

Jump in kid! Go buy the first thing the nice Realtor lady shows you! It can only go up! The market is different here! They aint making anymore land! Real Estate never goes down! Having Tenants are great they pay on time, keep the place clean, everything is wonderful! So what do you say kid? I have a nice duplex that went up 200% over the past five years, it can only go up!It’s a great bargain, because it will go up another 400% in two years, hurry this deal won’t last! Don’t have the cash, take out a pick-a-payment loan, they are great!

Everything looks great through rose tinted glasses!

23

Jump in kid! Go buy the first thing the nice Realtor lady shows you! It can only go up! The market is different here! They aint making anymore land! Real Estate never goes down! Having Tenants are great they pay on time, keep the place clean, everything is wonderful! So what do you say kid? I have a nice duplex that went up 200% over the past five years, it can only go up!It’s a great bargain, because it will go up another 400% in two years, hurry this deal won’t last! Don’t have the cash, take out a pick-a-payment loan, they are great!

Everything looks great through rose tinted glasses!

Wow, Dan.

I hope you are not telling Kris this as being serious.

What you are saying is not all true.

First: Investors most times do not buy from a Realtor and pay retail.

Real Estate can as does go down, which does not matter if you are educated in REI. You make money when you buy and get paid when you sell.

Tennants are only as good as you or your Property Manager screens them. Don’t manage your own properties.

As far as your duplex you are selling, what the NOI and ROI on it and full details on it, and I will let you know my opinion on it.

Also, good deals are like the bus, if you miss one there is another comming.

Dan, “Education does not cost it pays”

Mine is paying me everyday. I suggest to get all you can and learn all you can.

If you are serious at all about being a Real Estate Investor you may consider becomming a member of a local REI club.

You don’t know what you don’t know.

I do wish you to you Good Luck and hope you are a success. :wink:

Always Expect Success,

24

Wallace,

You don’t read many of Dan’s posts, I guess…this was sarcasm…

Keith

25

Keith,

Thanks, at the time of my response I did not know that.

You never know what people believe. I did not want Kris to think it was as roses, but I did not want to cripple Kris with fear either.

After reading the last 10 post from Dan, I see the sarcasm. ::slight_smile:

Which I repsect his right to say what he wishes.

After 16 yrs in the Army, I have protected the freedom of speech and the press many times.

Thank for your feedback and I always look forward to your post. :slight_smile:

Expect Success,

26

Hello, Wallace!

Sounds like you know Peter Fortunato and Jack Miller with that “IDEAL” thing.

Real Estate does have many advantages over stocks that Dan may be overlooking, as you and the others have been trying to point out to Kris.

Everyone needs a place to live, but nobody needs to own a stock certificate. Housing serves a basic survival function that is not easily outsourced to China.

Real Estate is about the only investment that I know about that will pay for itself, if you buy it right.

Real Estate is also an inefficient market. That is, each property is unique and the values are in many ways subjective. It is sometimes possible to find a bargain purchase in real estate because the information on values is not precise and widely know. Try that with listed stocks.

Negotiation is the highest paid skill in the world. Use this skill in real estate, and you can make thousands of dollars per hour wagging your tongue. Try that with listed stocks.

PS: Thank you for your service to our country!

27

Wallace – thank you for your service to our great country!

My personal opinion is inline with Dan’s: everyone should diversify their investments. I worked for an elite money manager for years and I traded everyone else’s millions for a living. I took the time to learn what these managers were doing and put my money where they did. That took care of the mutual fund/stock aspect. Then I went to work for a huge corporation, investing as much as they would allow in their 401k and purchasing their stock at a discount for five years until they laid off my entire department.

Then I had to make a decision, and I knew in my heart, I couldn’t achieve my financial goals working for someone else. I’ve always been interested in Real Estate, so that is where my heart went. Before I was laid off, I took some classes, got my RE license (which I did not activate it, but aced the test) and then got myself back into the RE Investment world. (We were doing this fifteen years ago and stopped because we were too busy working for everyone else.) And believe me, you can lose money in real estate, lots of it. I’ve been there – a downturn is ugly if you aren’t leveraged properly.

Why invest in real estate? You have to want to do this business. If you LOVE real estate before you start, you are patient, know your market, know what you are doing with rehabbing (or very willing to learn fast), you can make some money – but be prepared for it to be work. I agree with everyone here who has posted that it takes time. If you choose to go into Real Estate you will be earning your money. We are watching TV shows and hearing constantly about thousands of dollars being made overnight (or in 12 weeks instead of six LOL), that isn’t the norm.

You can definitely make money – but you will be earning it – and, a passion for what you are doing is required. If you don’t have it, stay away – it can get away from you very quickly.

Just my two cents.

28

I wanted to add that we also need to pause and clarify here. With Real Estate there are many ways to make money. So it is not right to see that investing in RE is always better than X. For example, investing the X way might be better than say trying to rehab old duplexes in poor areas of the country. Not sure you would even bother.

I think too many people suffer from the IN THE BOX syndrome. They see RE from where they live and assume it is that way everywhere.

Buying stock for dividends is one way to go. Again, you need money. Let’s pick a random stock we all know, GE. They paid a dividend of 22 cents per quarter so far this year. At the end of the year, that makes 88 cents per share. The stock is currently at $35 and fluctuated between 31 and 37 over the year. If you bought at $35 and held, you are making dividend money only. 88 cents comes out to a 2.5% gain on your investment. Now, if you had 100k in CASH, you would have 2,857 shares. Your gain for the year would be $2,514.16.

If you owned the GE stock at $35, and it goes to $34, you lose $2,857. Don’t forget, you have $100,000 of your cash in the investment–100%.

So, if I own $1,000,000 in GE stock, again it will take me going full boat basically, I will make a cool $28k a year. Why not just buy a CD?

In stocks, to make real money, not the 10’s and 20’s, you either need to increase your risk (IE day trade) or have a lot of capital to begin with (IE Warren Buffet).

Still, to each his/her own. I think when you are talking about very small amounts of money (IE $20k or less annually), there are many ways to make that in many markets. As you step up, Real Estate starts to stand out on its own, especially when you are talking about building wealth and not just making money.

29

THE REAL ESTATE BUBBLE OF 2005?

‘What Donald Trump has to say about the latest business
opportunities found in Real Estate Investing.’

Have you ever wanted to become a millionaire?

If so - and, if you live in the United States, there is now a
very REAL chance for you to enjoy the same opportunities
as Donald Trump.

You don’t need to invest in real estate to be wealthy. But, by
and large it is the easiest, most leveraged way to build real,
sustainable wealth. With mortgage rates at an all time low and
tax laws favoring real estate holdings, now is an ideal time to
profit from the greatest real estate gold rush in history.

Marriage, job changes, divorce, new families, death – the
average American moves every five to six years. And with that
constant stream of movement across the United States, more
than 12 million homes are bought and sold every year. Many of
these will be great deals that you, yourself, could be profiting
from.

The very same principles that make Donald Trump a fortune
with New York City skyscrapers will work for the average
investor, no matter what size the property.

So precisely what can the small real estate investor learn from
a billionaire wheeler- dealer like Donald Trump?

According to George Ross, Executive Vice President and Senior Counsel for the Trump Organization (and, of course, Apprentice co-star), one of the cornerstones of Trump’s philosophy is
“Improve any location.”

And that’s just what Trump did in his very first real estate deal
on a foreclosure of a 1,200 unit apartment complex in Cincinnati,
Ohio. Without a penny invested, Donald and his father, Fred,
were able to turn the apartment complex around by doing some
remodeling and taking a tough stance on rent collection.

In the single most valuable lesson in Donald Trump’s real estate
career, he learned how the government would assist buyers in
purchasing property with little or no financial backing and how
to get such aid. His passion for real estate grew from there and
he went on to create the strategies and systems that turned his
business into an empire.

“Deals are my art form. Other people paint beautifully on canvas
or write wonderful poetry. I like making deals, preferably big
deals. That’s how I get my kicks.”

In New York City, the Trump signature is now synonymous with
the renowned Trump Tower, The Trump International Hotel &
Tower, The Trump Park Avenue and the Trump Building at 40 Wall
Street. He also owns golf courses in 4 states, and current projects
include the building of the biggest development ever approved by
the NYC Planning Commission .

Ranked #228 on Fortune Magazine’s list of the world’s billionaires,
Trump stated: “Real estate is at the core of almost every business,
and it’s certainly at the core of most people’s wealth. In order to
build your wealth and improve your business smarts, you need to
know about real estate.”

The most obvious problem that confronts many would-be investors
is lack of know-how and/or financial resources. Common sense
would dictate that wanting to make money in real estate is simply
not enough. Knowing how to get it is the real key to success. Like
any other profitable business, it takes a proven business system.

In Trump: The Art Of The Deal, ‘The Donald’ gives his own assessment:

“If you take care of the downside, the upside will take care of itself.
In other words, if you have a contingency plan for everything that can go wrong, you can’t help but succeed.”

Real estate represents a tangible asset that can not be deflated. Real estate will outperform any other investment over time.
again;

“Real estate is at the core of almost every business,
and it’s certainly at the core of most people’s wealth. In order to
build your wealth and improve your business smarts, you need to
know about real estate.”

30

“Everyone needs a place to live, but nobody needs to own a stock certificate. Housing serves a basic survival function that is not easily outsourced to China.”

Okay explain this, if there are too many places to live, than why would Real Estate continue to appreciate? Also what good are homes in the USA if all the jobs are in China? That is one heck of a commute!

31

IIt states that everyone NEEDS a place to live. Real Estate has a set point…you can’t create more land. So real estate will always be a good investment opposed to a stock certificate.

You Don’t have to commute to China???

32

My husband was an auto mechanic with NO benifits. We had to do something for our future. By investing in real estate, my husband retired at 40. All this and we have 6 kids and I was always a stay at home mom.

33

Dan, you should understand the basic principles of home ownership by now. Location location location.

Yes, there are MANY homes and land for sale around the USA, but I have no desire to live in Kentucky, Maine, Idaho, Montana, et al. I currently want to live in Las Vegas. That means, guess what, only the homes and land for sale in Las Vegas matter!

Who cares if there even homes in Indiana. I don’t want to live there. It is not just about finding a home, it is about finding a home in your desired area.

Why invest in anything? Why not just go to your safe job, oh wait, you were just outsourced . . .

34

Ever fly over this country? There is tons and tons of land that is not yet developed. That “they aint making any more land” is an old realtor saying. It is BS. Sure land is scarace in Manhatten, but other areas are loaded with ready to develop property.

Real Estate is only a good investment if it cash flows. If it doesn’t it’s not an investment. Appreciation is just icing on the cake. Everyone needs to eat, but farmers are not increasing prices 30% every year…

35

So tell me how does Real Estate keep appreciating when wages are staying the same or going down? Las Vegas has tons of land. Overdevelopment might actually end up hurting Las Vegas in the long run. Over the past 20 years, gambling has become legal in 48 states, 20 years ago it was only legal in two state, Nevada and New Jersey. A thirty minute drive out of Atlantic City takes you into the Pine Lands, acres of both public and private land, in one of the most sparsely populated areas in the North East. What’s thirty minutes outside of Las Vegas?

36

Dan the question is supply and demand!

How many people move to vegas per year?

How many move out?

How many new homes are being built there every year?

Back two years ago I was doing some deals in vegas and making 25k per deal just flipping the paper!

Has it slowed down there? Of course it has

will it pick back up? Of course it will

Its my understanding There is a ton of BLM/Public land all the way around vegas and that they only release so much per year!!

But back to the original question!
THE NUMBER ONE REASON TO INVEST IS WHERE ELSE CAN YOU MAKE MONEY USING SOMEONE ELSES MONEY?

37

Ok Dan, I will bite. Tell me. How much land is available around Las Vegas and where?

Please do not include the Indian land, unless you plan to take it back. Also don’t include the land for our AFB, unless you plan to close one of the most important bases and areas to our nation’s defense.

Aside from that I am game, tell me.

People come here not just to “gamble” but to gamble, party and be entertained. We are the entertainment capital of the world. When you get to be 21, take some time and come out here and see for yourself.

Manhattan is not the only place with limited land. You fail to understand the basic concept of LOCATION. A very nice master planned community has limited land. While there might be land outside of it, there is none inside and that is where people want to be–DEMAND.

Let’s look at Las Vegas. The demand is high. We have decades of solid growth. Land is running out, but you will show us otherwise in your next post I am sure. For now, I will go with this. Could you set up a home 40 minutes out of the city? Sure. However, people are moving to Vegas to be in and around Vegas, not an hour away, so that land is almost non-existant in their minds.

Also, can you tell me what people here in Vegas are making? You said wages are low and going down. Do you mean people who work at 7-11? I think they get a raise of a couple percent annually. This would be another case where someone not living here and knowing Vegas is in the dark. You can’t read some report somewhere to know the actual earnings for say a Valet at the Treasure Island casino. However, I would enjoy hearing the data from you. Always have an open ear to learn.

38

Well EVERGREEN we also know that a valet or waitress is going to be totaly honest about there tips to the I.R.S. right!! LOL also if you were to move to Vegas would you want to live 30 min. outside?

39

Ummm, that is what I asked you! To tell me what is 30 minutes outside Las Vegas, it sounds like a whole lot of nothing. Realtors have used the old “they aint gonna make any more of it” cliche for the past 50 years, and within those past 50 years the United States has yet to run out of land. People not wanting to live outside Las Vegas, well that will change too. Just look at Long Island, only poor hicks lived on Long Island, that surely isn’t the case anymore.

So ol’ Wise one, if wages go up 2% and Real Estate goes up 25%, how long can this trend last? I see the supply, but I don’t see the Demand.

40

Yea. It is the only place where you can make 50k annually in a job totally under the table.

I don’t want to live by myself so 30 min outside of Vegas is out :smiley:

The closes town is about 40 min. Once you go that far out, it is Land Ho. People have been buying land out there for ages waiting for it to go up but there is so much, it will take time. Also there is nothing going on out there so unless you build a bullet train to Vegas, it probably won’t happen.

They do have a Wal-Mart there :smiley:

Dan, ol simple one, if Real Estate goes up 25% and wages were already at a level to support this pricing and they go up 2% more, what then?

You assume that wages were on par with the home values. Not the case. Homes here were drastically undervalued for years.

But, maybe you know more than me about Vegas so PLEASE share the specifics.

Here is how I see it: Speculative.

Flippers: Go elsewhere
Renters needing immediate positive cash flow: Go elsewhere
Investors with decent speculative cash looking for a good place: Here
Rehab: Here