Post: #26

Some great points being mentioned here. I would like to include financing in this discussion as well. I know that in the South, places like LV, prices have significantly dropped and it might be possible to find sub $100K houses, however up here in the Northeast that is still tough. So having some solid financing is critical.

Financing – Community Banks

I am working on establishing a relationship with a local, community bank. I have opened a checking account, met with a few loan officers – basically introduced myself. I am going to be using them for financing because:

1. They know the local area
2. Their balance sheets are still better than the big boys like Bank of America and Citizens and
3. I can go back to them for additional financing.

Strategy: Buy and Hold

Much respect to Dash, but I have limited time after work, so I can’t be working on flipping properties. I am looking for cash flow, gaining some RE experience. As I mentioned earlier, I am targeting the older mill cities in New England, and looking for 2-4 unit houses in solid blue collar neighborhoods preferably with tenants in place. I might pay a few dollars to do some maintenance work and maybe something cosmetic like a paint job, or landscaping but definitely not renovations.
If the first deal goes well, I’d like to buy a few more similar type properties in the local area. This will help me by:

1. Consolidating the investments, since I have to make that 1-2 hour drive, I might as well see all the properties.
2. Build a local area team. Besides the property manager, I’ll need a local lawyer, RE agent as well as good handyman.

I am looking at this like formal business, so I am working on getting my financial documentation together, checking my credit report for errors, and discussing financing options.

Post: #27

HooliganHarry,

Quote:How do I know what the renovation costs will be?

You evaluate the property and the repairs that will be needed. Then have it inspected. Then develop a budget for repairs based on the renovations needed (always budget more because some things always seem to pop up) Ex: If you know it needs new dry-wall then determine how many sheets and the price per sheet.

Quote:How do you know what sale price you will get?

You take the selling prices of comparable homes over the last 6months - 1yr within a one mile radius of your property

Ive been studying REI over the last 2 years HEAVILY. What makes you think im just using the website I posted?

Like anything in life it all comes down to how much work and dedication you put into something.

Post: #28

BostonBMW,

How many properties do you see yourself buying?

Without buying dirt cheap and doing a ton of renovations your profit margin is gonna be pretty low if you only have a few properties.

People making bank from renting / buy and hold are cats with A) lots of properties or B) properties paid off making straight profit.

Not sure what your budget is but id look at multi-family homes / complexes

Post: #29

(08-31-2011 12:34 AM)Hooligan Harry Wrote:  But surely, out of all those guys chasing down a quick payday, even a minority would exist that would pick up these bargains and use their unemployed asses to flip homes.

The jump from contractor to developer is small. One renovates your home or builds your office, the other buys and renovates property they own for resale or rent. The market awash with cheap homes, and with their ability to source cheap materials and their own labour, they could be buying and selling reno's at double speed if there was a sizeable market for it. They would do it at a cost far lower than you can.

They are not doing it though, are they? They were buying up lots of land and building homes to sell 5 years ago though. In droves when the market was pumping. This though, they avoid like the plague.

There is a basic principle at work here. You lose money when over capitalise. Investing money into renovations with the current oversupply of housing, along with no realistic chance of capital appreciation over the next few years, combined with interest rate rises that are looking very likely, is not what I would call identifying a gap in the market.

I would call that stupidity.

The banks have stopped moving on foreclosures. They cant afford to have more bad debt on their balance sheets and they can even sell the stock they have. This is why you have people living in homes they have not paid a cent for in the last 2-3 years and the banks are just leaving them there. So there is more stock coming and supply is not going to be an issue for a very long time.

Where is the gap here? People with jobs and bad credit records after they were burned. That, together with quality property at lower than replacement cost prices. Its not that they cant afford those cheaper homes, its that the banks have closed shop for most of them. By providing rentals to those people, using dirt cheap property, your returns are higher. Most importantly, stable and requiring far less management

My 2 cents.

+1 on the RE Fundamentals.

Hypothetically speaking: Could Dash add an "at fault - reduce payment clause" when dealing with the contractors? By asking the contractors to deliver within a X amount of days or else their payment will be reduced by X% must be a great motivating factor in getting the job done? I guess the question is whether contractors would agree to such an arrangement.

Also regarding flipping, it can still work in this market, if you are buying based on the intrinsic value of the property and adding some real value, not just slapping on some paint and re-doing the kitchen.

I have seen multi-family properties that being mismanaged or are vacant. You buy one, do enough rehab work t get it rented, find tenants and then try to sell -- I'm sure that you would get more interest that way.

Post: #30

^^^

An investor would be foolish not to have a time clause in their contract with a contractor.

Post: #31

(08-31-2011 10:04 AM)Dash Global Wrote:  BostonBMW,

How many properties do you see yourself buying?

Without buying dirt cheap and doing a ton of renovations your profit margin is gonna be pretty low if you only have a few properties.

People making bank from renting / buy and hold are cats with A) lots of properties or B) properties paid off making straight profit.

Not sure what your budget it but id look at multi-family homes / complexes

Great comments Dash. Ideally I'd like to be in the 10-20 (Multi-family) range. I agree that you need significantly more units to bring in that cash flow.

I'd like to do the renovations and then rent them out but my limitation right now is time and money. Working full time and taking classes, I know that I can't be on top of the contractors and monitor the progress. Money in the sense that renovation projects have a tendency to run over the budget and getting the costs finance would be tougher.

I would LOVE to be doing renovations and putting tenants in, though.

Post: #32

(08-31-2011 10:07 AM)Dash Global Wrote:  ^^^

An investor would be foolish not to have a time clause in their contract with a contractor.

Dash, I think one real estate guy said it best "flipping properties like a job, while buy and holds are the passive investments." Any successful Real Estate investor should be mixing between the two.

You just have to be opportunistic in the deals that you make.

Post: #33

(08-31-2011 10:09 AM)BostonBMW Wrote:  

(08-31-2011 10:04 AM)Dash Global Wrote:  BostonBMW,

How many properties do you see yourself buying?

Without buying dirt cheap and doing a ton of renovations your profit margin is gonna be pretty low if you only have a few properties.

People making bank from renting / buy and hold are cats with A) lots of properties or B) properties paid off making straight profit.

Not sure what your budget it but id look at multi-family homes / complexes

Great comments Dash. Ideally I'd like to be in the 10-20 (Multi-family) range. I agree that you need significantly more units to bring in that cash flow.

I'd like to do the renovations and then rent them out but my limitation right now is time and money. Working full time and taking classes, I know that I can't be on top of the contractors and monitor the progress. Money in the sense that renovation projects have a tendency to run over the budget and getting the costs finance would be tougher.

I would LOVE to be doing renovations and putting tenants in, though.

Not sure how much debt you have or how much money you have saved but you do not need alot of hard cash to get in the REI game.

Im gonna be jumping in head first within the nxt 2-3 years with only about 20K in cash. Looking to maybe partner on the first couple of deals until I get sufficient funds.

Good thing is you dont need alot atleast in my market where you can buy properties for 40-60K.

Even with zero money there is plenty of Hard Money Lendors you could use.

Post: #34

(08-31-2011 10:25 AM)BostonBMW Wrote:  

(08-31-2011 10:07 AM)Dash Global Wrote:  ^^^

An investor would be foolish not to have a time clause in their contract with a contractor.

Dash, I think one real estate guy said it best "flipping properties like a job, while buy and holds are the passive investments." Any successful Real Estate investor should be mixing between the two.

You just have to be opportunistic in the deals that you make.

Certainly. Once I build up a solid stack im gonna look into buying good rental properties outright to rent out. This is where my passive income will come from. Flipping for the short term isnt soo passive, unless you have a GREAT TEAM of people you trust %110 ir else your gonna have to be on the job site overseeing the work getting done.

Sometimes properties dont sell like expected so many Investors will resort to just renting them out until they find a buyer.

Post: #35

(08-31-2011 09:33 AM)Hooligan Harry Wrote:  Speculation almost sunk your economy dude, and flipping homes when you have to bring 3rd party contractors, sell at a profit and still finance all this shit is not investing. That is speculating.

It is not speculating if you purchase right. Speculation is when you purchase at full value hoping it will appreciate in time to sell for a profit. That isn't what we are talking about. We purchase low and sell low.

By your definition, purchasing a rental and hoping to rent it out a positive cashflow is also speculation. You will still have to bring in 3rd party contractors to fix any repairs on your rental. You will still have to finance the shit. You will still have to find good renters and make cashflow.

Some places, in the US, have more rentals then houses for sale thus killing the rental market.

Post: #36

(08-31-2011 10:25 AM)BostonBMW Wrote:  Dash, I think one real estate guy said it best "flipping properties like a job, while buy and holds are the passive investments." Any successful Real Estate investor should be mixing between the two.

You just have to be opportunistic in the deals that you make.

I wouldn't consider rentals passive since you do need to fix repairs, collect rents, evict people for not paying and market for new renters.

It is more passive then flipping/wholesaling house but not entirely passive.

You can hire a management company but they can bleed your cashflow dry if you pick the wrong one.

Post: #37

(08-31-2011 01:35 PM)worldwidetraveler Wrote:  

(08-31-2011 09:33 AM)Hooligan Harry Wrote:  Speculation almost sunk your economy dude, and flipping homes when you have to bring 3rd party contractors, sell at a profit and still finance all this shit is not investing. That is speculating.

It is not speculating if you purchase right. Speculation is when you purchase at full value hoping it will appreciate in time to sell for a profit. That isn't what we are talking about. We purchase low and sell low.

By your definition, purchasing a rental and hoping to rent it out a positive cashflow is also speculation. You will still have to bring in 3rd party contractors to fix any repairs on your rental. You will still have to finance the shit. You will still have to find good renters and make cashflow.

Some places, in the US, have more rentals then houses for sale thus killing the rental market.

Good comments.

I dont think Hooligan fully understands the REI business. Some of his comments and questions where very "amateurish"

Post: #38

(08-31-2011 06:27 PM)Dash Global Wrote:  Good comments.

I dont think Hooligan fully understands the REI business. Some of his comments and questions where very "amateurish"

I believe Harry is Australian and they do things differently there. Financing isn't locked in from what I remember and has to be renogiated every so many years. I also know there was a lot of people buying properties for a loss just for tax benefits. I believe it was called negative gearing.

Post: #39

(08-31-2011 06:27 PM)Dash Global Wrote:  

(08-31-2011 01:35 PM)worldwidetraveler Wrote:  

(08-31-2011 09:33 AM)Hooligan Harry Wrote:  Speculation almost sunk your economy dude, and flipping homes when you have to bring 3rd party contractors, sell at a profit and still finance all this shit is not investing. That is speculating.

It is not speculating if you purchase right. Speculation is when you purchase at full value hoping it will appreciate in time to sell for a profit. That isn't what we are talking about. We purchase low and sell low.

By your definition, purchasing a rental and hoping to rent it out a positive cashflow is also speculation. You will still have to bring in 3rd party contractors to fix any repairs on your rental. You will still have to finance the shit. You will still have to find good renters and make cashflow.

Some places, in the US, have more rentals then houses for sale thus killing the rental market.

Good comments.

I dont think Hooligan fully understands the REI business. Some of his comments and questions where very "amateurish"

Bwhahahahahahahaha

Oh my fuck

Ok, now I have to roll up the sleeves a bit. I cant let that one go. Not from you of all people.

The real estate "business"? I cant take you seriously. This is why Real Estate agents put their portraits next to their adverts in the newspapers and on their business cards. Any old housewife becomes a "REI professional" with a 1 month course and a magazine subscription to a property magazine. The barrier for entry is so god damned low that everyone feels like a sky wizard because they knew how to register on an internet forum.

You have never owned property from what I gather. You are not even in a position to buy right now. You have never even gone through this process and your exposure to property is through nothing more than the books you have read and the websites you frequent.

All in all, this is still a pipe dream for you, and you are full of hot air.

You have a habit of making broad based assumptions on shit you have no direct exposure to. Just like every Asian girl is a fucking troll next to a Brazilian, so too will you make squillions by flipping homes.

You know this all because you read it somewhere. No hands on experience required. This is what gullible fools do Dash.

It just goes to show how low standards are when it comes to this shit if you could classify yourself as a fucking professional when you have not even owned a home and yet you are trying to pass yourself as an investor of some sort. This is why there are so many hucksters in this industry,

I own property. Residential and commercial, a mix of both rentals and my PPOR. Some I own outright. I have been through this shit enough times over the last few years to know that its not as simple and straightforward as the books you read and the websites you frequent tend to suggest it is. Most are so simplistic and geared towards selling you something.

You are talking about flipping homes in an environment where

* Interest rates are going to go up
* Inflation is around the corner
* Liquidity has dried up
* There is no shortage of homes or stock
* Unemployment is high and rising
* Bank regulations are going to change
* Futher bank troubles are looming (Fannie Mae, Freddie Mac, Bank of America etc)

But like a typical fucking property professional, this shit means fuck all to you and most of it you probably dont even understand. As a property professional, you with zero experience, no real capital and no understanding of the broader economy are going to make a fortune in the property game armed with your knowledge from property websites and magazines.

You are smart, everyone else is stupid.

I tried to add some perspective for you and I am trying to help you understand that you need to be very, very cautious with this and take a lot of what you read with a pinch of salt. The questions I asked you and you flippantly answer are the nasty surprises you have in store.

Please, keep us posted on your progress. You would have probably bought your first house in 2-3 years. I would have owned my own and rentals for over 10 years by then.

Come back to to me when you have two nickels to rub together.

@worldwide

Dude, there is so much stock on the market right now that you dont need to spend much at all. You can buy low, give it nothing more than a lick of paint, and it rent it for decent returns. Local market conditions make it quite low risk compared to buying, repairing and then trying to sell or rent for higher value than you know you can get on the day. Buying under the assumption that you will add value, in the areas Dash is talking about where homes are 40k-50k, is speculation.

You dont want to have to sell houses at the moment. Not in any market.

Flipping homes almost anywhere in the world right now is risky. Yes, markets within markets, blah blah blah. Heard all that shit from professionals like Dash before. The economy is in the shitter, its going to get worse. We are in the middle of one of the largest credit crisis we have ever seen, and you guys are talking about flipping PROPERTY.

Its one of the most illiquid assets you will ever own

Buying illiquid assets in market conditions like this, for purposes of resale?

Wahahahahahahahaha

I am amongst some serious business people here I can see.

This forum is probably not the place for this sort of discussion. Ill not try and shatter Dash's dreams any further.

Post: #40

Hooligan,

bro not trying to bust your balls but you asked me

1) How do you know what sells price you will get

2) How do I know what the renovation costs will be

No one is gonna take you seriously after asking those two questions......

Quote:I tried to add some perspective for you and I am trying to help you understand that you need to be very, very cautious with this and take a lot of what you read with a pinch of salt. The questions I asked you and you flippantly answer are the nasty surprises you have in store.

I appreciate your concern. But everything I do I do 100%. Im not getting into the game without knowing it inside and out. Which to any smart business person is common sense.

You cant read a few things on line and in 2 weeks go out and be some pro.

Shit takes TONS and TONS of research on NUMEROUS fronts. (Market Conditions both demographic & economical, Building a REI Team, Financing, Legalities, Renovations, Inspections, Dealing with Banks, Private Lenders, and RE Agents, Closing deals and the costs associated with them, Exit Strategies ect ect)

I mean the list goes on and on. Takes alot of fucking studying, research, and mentoring. Not to mention taking some bumps and bruises when first starting out.

Dash

Post: #41

(08-31-2011 08:37 PM)worldwidetraveler Wrote:  

(08-31-2011 06:27 PM)Dash Global Wrote:  Good comments.

I dont think Hooligan fully understands the REI business. Some of his comments and questions where very "amateurish"

I believe Harry is Australian and they do things differently there. Financing isn't locked in from what I remember and has to be renogiated every so many years. I also know there was a lot of people buying properties for a loss just for tax benefits. I believe it was called negative gearing.

You dont need to renegotiate finance every few years, you can shop your mortgage around though. Negative gearing is typical here, although we cant write a residence off to tax like you can in the USA.

I dont own just in Aus, I own abroad too. I have property in the UK and South Africa. I have been at this for a while

Post: #42

(08-31-2011 09:53 PM)Dash Global Wrote:  Hooligan,

bro not trying to bust your balls but you asked me

1) How do you know what sells price you will get

2) How do I know what the renovation costs will be

No one is gonna take you seriously after asking those two questions......

On the contrary son, no one is going to take you seriously when you think you know for certain what you will sell it for and you think you know for certain what your capital costs will be.

ITS AN ILLIQUID ASSET

Thats the whole fucking point I was trying to make to you.

But please, assume away. Thats one thing you are a genuine pro at it seems.

Post: #43

(08-31-2011 09:59 PM)Hooligan Harry Wrote:  

(08-31-2011 09:53 PM)Dash Global Wrote:  Hooligan,

bro not trying to bust your balls but you asked me

1) How do you know what sells price you will get

2) How do I know what the renovation costs will be

No one is gonna take you seriously after asking those two questions......

On the contrary son, no one is going to take you seriously when you think you know for certain what you will sell it for and you think you know for certain what your capital costs will be.

ITS AN ILLIQUID ASSET

Thats the whole fucking point I was trying to make to you.

But please, assume away. Thats one thing you are a genuine pro at it seems.

I dont recall ever saying I knew for CERTAIN. (Anyone that says this is ignorant and living in a fantasy land)

You study the market.

-What types of homes are selling in your area

-How long are they sitting on the market

-How much are comparable homes selling for recently within a 1mile radius

All this and more will give you an idea of what your house will / can sell for and how long that will take.

Generally if you have the best looking house on the block for a good price it wont sit for long.

Nothing in the RE or Stock Market is ever a %100 lock. Hell this is true for most any business.

Maybe we should fax your memo to all the cats out their making a good living of REI that they are just "lucky" and they will soon be out of a job and littered with debt.

All im saying is there is money to be made in the real estate game NOW for anyone that puts in the work and time.

Dash

Post: #44

(08-31-2011 09:47 PM)Hooligan Harry Wrote:  @worldwide

Dude, there is so much stock on the market right now that you dont need to spend much at all. You can buy low, give it nothing more than a lick of paint, and it rent it for decent returns. Local market conditions make it quite low risk compared to buying, repairing and then trying to sell or rent for higher value than you know you can get on the day. Buying under the assumption that you will add value, in the areas Dash is talking about where homes are 40k-50k, is speculation.

There is more inventory that isn't even for sale. Banks won't release all their foreclosures because that will bottom out prices even more.

With that said, in some markets you will have a tough time renting out your house. You see, there are a lot of investors buying up properties to rent. You have a lot of home owners trying to rent out their houses instead of losing them.

If you purchase low enough, you don't need to add more value. It can be done but takes a shit ton of work.

I have had many people sign over their houses to me and leave the financing in place. I have had many, many more that I wouldn't take because I didn't like their current financing.

There are a lot of ways to purchase a property besides getting a loan.

There are a lot of ways to sell a house besides your buyer getting a loan.

Quote:You dont want to have to sell houses at the moment. Not in any market.

I wouldn't have a problem doing that. In fact, I am thinking about getting back into the rei game. I got out of the game when everyone and their dog started buying multiple houses hoping for appreciation.

Now, I can sit back and cherry pick.

I used to do a lot of short sales back in the day when banks weren't so easy to work with.

Quote:The economy is in the shitter, its going to get worse. We are in the middle of one of the largest credit crisis we have ever seen, and you guys are talking about flipping PROPERTY.

People get rich in bad times. Very rich.

Quote:Buying illiquid assets in market conditions like this, for purposes of resale?

Wahahahahahahahaha

I am amongst some serious business people here I can see.

It is only an illiquid asset if you purchase at full retail. Not everyone has bad credit and refinancing a house can be done to pull money out.

Besides that, I can owner finance the thing for money down and more money per month. Like I said, I have had many people give me their house with existing finance in place.

I guess you just know everything my man. We are just glad you took the time to put it down for us.

Listen, this stuff isn't new. People were doing the same thing when interest rates where in the double digits. I guess everyone making money back then should have come to you for advice.

So how many properties you got in the US. We are talking about this market and not Australia, South Africa or UK.

Post: #45

What? Of course its a 100% lock in the stock market. You sell at the value of the second. ITS LIQUID. Just like Gold or oil. You can dump it, even if you are taking losses, you can dump it. You can sell immediately.

Illiquid assets, when a market is unstable, are high risk. It becomes a serious personal liability. You cant dump it, you are stuck with it until you sell it or rent it. Given the state of the economy and we are merely going through a slight lull at the moment, further volatility is coming. Thats over and above the minefield that property is in the first place.

As a young investor or a guy who has to put the majority of what he has into something, putting it into illiquid assets when the economy is so unstable and headed for another downturn is not the smartest idea is it? Its gambling, but those cats making all this dosh from flipping homes wont tell you that will they? 90% of them dont understand it themselves. Its why you wont see many of them living in mansions or driving sports cars. The guys like Kiyosaki are driving the sports cars, and the guys like me who understand basic fundamental differences between asset classes and risk based on market conditions.

And you want to talk amateurish?

*sigh*

Best of luck in your endeavours Dash. You are stubborn and in for a rude awakening I am afraid. I wont bother responding to any further posts from you when it relates to this subject matter.

Post: #46

^^^

When I mentioned %100 it wasnt in reference to liquid or illiquid assets.

It was in reference to that investing in anything comes with its risks.

They / It is apart of the "game"

Sorry if that went over your head, my bad lol

Post: #47

(08-31-2011 10:46 PM)Dash Global Wrote:  ^^^

When I mentioned %100 it wasnt in reference to liquid or illiquid assets.

It was in reference to that investing in anything comes with its risks.

They / It is apart of the "game"

Sorry if that went over your head, my bad lol

Dash, you can reduce your risk by building up buyers lists for neighborhoods. You will know what people want, how much they can afford and how fast they can close before you even purchase a property.

Most buy and hold guys think they know best and are not willing to think outside the box.

Post: #48

@ Boston - Our House over on Com avenue has closed

@ Boston - Our House over on Com avenue has closed
Some wisdom got posted here – but not that much. An older real estate lawyer told me the rule for real estate is that everything is a scam. If you have never purchased land/house – dealt with tenants – dealt with tenants receiving gov’t rent checks – performed home repair yourself, have become familiar with what good construction entails – and how to hire and supervise contractors when you need them – or can otherwise perform most repairs yourself – can perform public records searches yourself, and can deal with real estate salespeople – you will be taken advantage of.

You can thank me for this later – but real estate prices in general are continuing to decline overall. Also, Section 8 and other housing assistance programs are being cut down wholesale – I personally know landlords that took tenants with 4 figure disability rent money vouchers where the landlord got a letter stating the program was terminated and that this would be your last check with 14 months to go under a lease. Now you try evicting a disabled person for non-payment of rent. The advice to look at property in Buffalo is insane. Buffalo looks like Hiroshima after the blast. Buying your first property 12 hours away from your home with the expectation of putting government tenants in it – who will wreck the place – in a jurisdiction like Buffalo is madness.

Do yourself a favor and spend 6 months looking at properties within an hour’s drive of your home because prices will continue to drop in general – If you buy something in a hot market – like a 20 unit apartment building in Brookline – you are still going to pay year 2006 prices in the millions of dollars. If you are starting off with a nice 2 to 4 family home that needs some repair work – play a little game. If you see a listing – set up an appointment with a salesperson and look at the place – then do a public records search. Learn how to research when the home was built – how many owners – what the sales history of the property is. See if the electric or utilities have ever been updated. Then go into another real estate office and ask what is costs to rent ½ of a 2 family home – pull the tax records. Then computer some figures and follow the property – see who buys it and if the contract price becomes a public record – see if you can find out how far below the asking price the property sold for.

Then – see if you can find or get recommended a handyman who you can tell what to do – get a book or two from the library on home repair – see what it takes to repair plumbing lines, etc. –
Do that for 6 months before you make a buy and see what the market does and then run your numbers. Another route – buy a three family and you move into one unit – that way you can get an FHA loan with almost no money down. Do the renovation work yourself on the other units – then rent one unit while you do the next – and then rent 2 units while you work on your own. See what tenants ‘bite’ and how much you can get. After a year – move out and rent your unit. You will have learned the maintenance side by then. Move into your next 3 family and do the same thing – if need be – have a handyman do the renovations – tell him exactly what to do, etc.

Post: #49

(08-31-2011 10:29 PM)worldwidetraveler Wrote:  

Quote:Buying illiquid assets in market conditions like this, for purposes of resale?

Wahahahahahahahaha

I am amongst some serious business people here I can see.

It is only an illiquid asset if you purchase at full retail. Not everyone has bad credit and refinancing a house can be done to pull money out.

Besides that, I can owner finance the thing for money down and more money per month. Like I said, I have had many people give me their house with existing finance in place.

I guess you just know everything my man. We are just glad you took the time to put it down for us.

Listen, this stuff isn't new. People were doing the same thing when interest rates where in the double digits. I guess everyone making money back then should have come to you for advice.

So how many properties you got in the US. We are talking about this market and not Australia, South Africa or UK.

Of course, I forgot.

"Its different there"

Property is an illiquid asset. Not based on what price you bought it or what you think the retail price is, its illiquid. Not based on the conditions of the market. ITS ILLIQUID. Whats worth 50k to you is worth 45k to someone else. Its not a "product" that has a fixed retail price, its an asset that has a value based on sentiment alone. This is why the valuation industry exists in the first place. This is a basic, save your lecture until you understand it yourself please.

The market determines the price of any asset, but property is a double edged sword in that you cant sell in a hurry if you have to. Taking on illiquid assets FOR THE PURPOSES OF FAST RESALE is only lower risk when the market is stable or seeing growth. When the market is unstable, the only time you buy it is if you intend to hold it for a long time and it generates some sort of revenue for you. Either directly or indirectly.

I posted in another thread that I am headed out to Florida to buy in June 2012. Im buying property in the USA bro after almost two years of personal and paid for research. Its a steal for me and the returns are higher than almost anything else I can get in a developed economy at the moment.

But my situation is vastly different. Its a small chunk of what I am worth and its low risk for me, not to mention incredibly easy for me to finance with very little liability. Its also something I will hold long term because I believe that even with more shit to come, the USA will eventually claw its way back. I think inflation is coming in a big way and the dollar will devalue, but I also think that the dollar will get stronger again and that inflation will see good exchange rate benefits for me.

My risk is minimal. The rental returns cover the finance costs double quick and Ill own the assets outright within 6-7 years, which includes all my costs and 3rd party property management. So I am not suggesting that buying property is a waste of time at all, I have intentions of doing it myself.

I am saying that FLIPPING RESIDENTIAL PROPERTY given the current state of the global economy, and in particular given the state of the US economy in particular, its incredibly high risk for someone who

1 - has never done it before and has no experience with it
2 - has to invest the majority of what he has to his name
3 - clearly only knows enough to be dangerous to himself.
4 - obviously has not the slightest inkling of what is over the horizon.

How is this not high risk for someone like Dash?

Guys like Dash are a dime a dozen and if you are as experienced as what you say you are and not some huckster like the vast majority of "REI professionals" you would be advising some level of caution too.

@Dash,

If you are going to be serious about this and you are going to plow everything you have saved into this, do yourself a favour. Get a job at a real estate agent for a while and study the PROCESS inside out. You need exposure. Dont hang out on property forums where bored housewives and guys with a portfolio of two properties give you advice. Dont listen to the bullshit in magazines or all the property books that have been printed alone. Take that crap with a pinch of salt.

Study up not on property finance, but asset finance as a whole. Its more important than anything else. Leverage through finance makes you money, not the actual buy or sale like everyone preaches. See what mistakes your clients make and what they do right. You can never, in your personal capacity, ever cover a market efficiently. Not unless you you intend for this to be pocket money only or a hobby on the side, which is what the genius @123flip is making. That is not money, that is a job.

I have brokers for everything and spend more time finding the right broker than I do on actual research on a few choice properties. It took me years to before I understand that and you would be best served establishing relationships with the right people, seeing how it fits together and actually understanding the risks instead of just thinking you do.

Post: #50

(08-31-2011 11:32 PM)Hooligan Harry Wrote:  This is a basic, save your lecture until you understand it yourself please.

Ha the only lecture is coming from someone who hasn't purchased a property in the US but thanks for setting me straight. Not all of us purchase at the current FMV.

Quote:The market determines the price of any asset, but property is a double edged sword in that you cant sell in a hurry if you have to. Taking on illiquid assets FOR THE PURPOSES OF FAST RESALE is only lower risk when the market is stable or seeing growth. When the market is unstable, the only time you buy it is if you intend to hold it for a long time and it generates some sort of revenue for you. Either directly or indirectly.

It is only risky when taking over ownership of the property and hoping to find a buyer.

Quote:I am saying that FLIPPING RESIDENTIAL PROPERTY given the current state of the global economy, and in particular given the state of the US economy in particular, its incredibly high risk for someone who

1 - has never done it before and has no experience with it
2 - has to invest the majority of what he has to his name
3 - clearly only knows enough to be dangerous to himself.
4 - obviously has not the slightest inkling of what is over the horizon.

Yeah, we heard it many times in this thread.

Quote:How is this not high risk for someone like Dash?

I never recommended anything to Dash besides finding buyers or renters before purchasing anything. Dash is a big boy and will do what he wants.

Quote:Guys like Dash are a dime a dozen and if you are as experienced as what you say you are and not some huckster like the vast majority of "REI professionals" you would be advising some level of caution too.

Ha. Save the lecture matey. I am not here to pursuade or talk anyone into doing anything. I will help if they ask a question I can answer but they need to decide their own risk. You are basically commenting on a business you know nothing about.