"You have to buy real estate!" Now how many times do you hear that during a real-estate bubble? If you take this advice, it may be wise to ask yourself if you have too much money tied up in your home and not enough in savings. With all the talk of a diminishing social security system, the need to save more for retirement seems inevitable. So, let’s look at some of the options for building that million you need to retire in style.
Where Are Our Savings? If you have a great deal invested in your house, remember, listed homes and other property can take anywhere from two weeks to more than a year to sell. Ask any agent who sold homes back in the 1980s, when prime interest rates were averaging over 11%! Still, property seems to be priority. In 2004, the household savings rate averaged a meager 0.8% of disposable income (the rate was 7% over the three previous decades). This 0.8% is the lowest level since the Great Depression (Business Week Online, "Our Hidden Savings", Jan 2005). Is this because Americans are putting too much of their savings into their homes or are we just bad at saving money?
So exactly how much should you save annually for your retirement? Although there is no correct answer here, most financial planners will tell you that you should be saving around 15-20% of your annual gross income. This figure may sound unattainable for many, but suppose your employer matches contributions of up to 6% of your salary - now you need to save only 9%!
Sizing up the Options Let's look at how some retirement savings vehicles can help you reach your goals:
401(k), 403(b) and Other Company Retirement Plans These are perhaps the best savings vehicle for most of the working population. You need to take advantage of your company plan if one is available. Not only do the earnings in the account grow tax-deferred, but a simple contribution of 6% can help reduce your tax bill since employee contributions are not reported as gross income for income tax purposes.
Traditional, SIMPLE and Roth IRAs Individual retirement accounts are available to those individuals with qualified compensation. Traditional and Roth IRAs are funded with after-tax dollars, and if your income level qualifies, you can receive a tax deduction for your contributions. The major difference between the two IRAs is that earnings in the Traditional IRA grow tax-deferred, while those in the Roth IRA grow tax-free. The SIMPLE IRA is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of themselves and their employees.
Simplified Employee Pension (SEP) These are plans that can be established by the self-employed or those who have a few employees in a small business. The SEP lets you make contributions to an IRA on behalf of yourself and your employees. The SEP IRA is popular because it is simple to set up, requires little paperwork and allows investment earnings to grow tax-deferred.
Taxable Brokerage Accounts These allow you to invest additional funds after you have maximized all of your retirement account options. Brokerage (cash) accounts can serve also as good savings vehicles for a particular goal such as a home or yacht. Be aware, you’ll need to pay taxes on the income generated in these accounts in the year that it is paid.
Getting Disciplined So you know about some of the powerful savings tools, but you may be wondering where you get the extra cash to invest. Well, there can be a number of places - it first starts with your budget. Match up your monthly income with your expenses for the month. Can you cut back on your dining out? Do you really need that manicure once a week? Can you save money on your current insurance? Try shopping around for other carriers for better rates. Do you really need permanent life insurance (whole or universal life) when you could be saving hundreds with term insurance?
After you’ve skimmed down the budget, there are three keys to making your million dollars. First, as we already mentioned, you must take advantage of any type of employer match program. If you have a 401(k) plan at work and the employer matches up to 6% of your pay, you should contribute at least 6% of your pretax income to the plan. Second, set your accounts up on automatic investment plan, so each month income goes to forced savings. And lastly, invest in the best savings plans first and weed out the bad.
Reaching $1,000,000 with Ease To take full advantage of your retirement savings vehicles, try to contribute the maximum limit. In 2005, you can contribute up to $14,000 to a 401(k) plan ($18,000 if you are over age 50); you can also contribute $4,000 to a Traditional or Roth IRA of your choice ($4,500 if you are over age 50). (Keep in mind that the eligibility to contribute to a Roth IRA has some income limitations).
Let's take a look at how an average person, let's call him Joe, can reach this million-dollar goal by the time he retires at age 67 (27 years from now). Joe (single, age 40) has an annual gross income of $50,000, and his employer has a 401(k) plan and matches contributions up to 5% of Joe’s salary. Joe is also committed to saving $4,000 a year in a Roth IRA. We'll assume his investments have a 10% return.
Joe takes full advantage of the employer match and defers 5%, or $2,500, of his salary each year. His employer will then contribute $2,500 each year as per the matching agreement. (Assume Joe’s salary remains the same until retirement) Here's the breakdown of his savings over the 27 years.
401(k) Roth IRA Annual contributions of $5,000 Annual contributions of $4,000 Compounded at 10% for 27 years Compounded at 10% for 27 years Equals $605,500 Equals $484,400
Grand Total of $1,089,900. Welcome to the Millionaire Club!
If Joe had started his plan at different ages, here's what his results would look like:
Starting Age Annual Investment Annual Return Value at age 67 25 $9,000 10% $4,838,732 30 $9,000 10% $2,970,355 35 $9,000 10% $1,810,239 40 $9,000 10% $1,089,900 45 $9,000 10% $642,624 50 $9,000 10% $364,902 55 $9,000 10% $192,458
At younger ages, you still have the time to be a little more risky with your investment selections and seek out investments that have the potential to get you that 10% return or more. If you're looking at certificates of deposit and money-market investments think again - you need to consider other investments such as equities to achieve returns that can outpace inflation.
The chart above also demonstrates the value of compounding interest, one of the most valuable tools to accumulate significant wealth - the key is to start while you’re young and stay disciplined. Stick to your plan! The ride may be slow and boring at times, but you’ll be pleased with the long-term results.
Posted by turbokid on :
yeah but i wanna be a millionaire.. now.. when i can still use the money to have fun with, not just give 90% of it away after i die 7 years later.. Posted by BT on :
Great post Brad. In a simplified way:
Own 7 properties: Collect rent on all 7 of them lets say for $1000.
$1000 x 7 = $7000 per month. After 15-30 years when the mortgage is paid off, that $7000 a month is pure profit! Not to mention the value of the property which you can sell for a lump sum.
Now 95% of people say, "well you need money to invest in real estate". ABSOLUTELY NOT!!
I bought all my properties with nothing coming out of my pocket. Not many 31 year olds can say they own 4 properties.
I found a lender who was willing to give me 100% financing plus incorperate the closing costs into the loan. My hard part was to find a seller that was willing to accpet an offer from me.
Key: offer asking or more. Get "approved", tell seller you can close in 3 weeks. DONE.
So nice to have my tenants pay for my mortgage every month!
Posted by BT on :
Ok, the above was not a way to become a "millionaire" but dam close. In fact, sell 2 or 3 after years go by and there's your million.
That $7000 a month is cash and you get many tax breaks owning real estate.
I'll be selling one of my properties next month. Bought last year for $80,000, accepted an offer last week for $132,500. $52,500 profit!
BUT WAIT......... the mortgage was being paid down every month so it's not $80,000 that I owe, it's more like $75,000...so it will be $57k cash profit, FOR DOING NOTHING.
Posted by tyria Trey Resources on :
Tyria. Everyone needs to be looking for earnings being posted this week for 2004. They have had incrememtal sales in numerous products. This is a very strong buy before the release. I have been following this stock for 4 months. I am buying up to .031. It an beauty ready to soar. I am very confident this stock will hit a teen at some point this year. There are too many big names working with Trey. Early Merry Christmas!!
Posted by acharm on :
BT-Thanks for all the info on real estate!
Posted by turbokid on :
quote:Originally posted by BT: Great post Brad. In a simplified way:
Own 7 properties: Collect rent on all 7 of them lets say for $1000.
$1000 x 7 = $7000 per month. After 15-30 years when the mortgage is paid off, that $7000 a month is pure profit! Not to mention the value of the property which you can sell for a lump sum.
Now 95% of people say, "well you need money to invest in real estate". ABSOLUTELY NOT!!
I bought all my properties with nothing coming out of my pocket. Not many 31 year olds can say they own 4 properties.
I found a lender who was willing to give me 100% financing plus incorperate the closing costs into the loan. My hard part was to find a seller that was willing to accpet an offer from me.
Key: offer asking or more. Get "approved", tell seller you can close in 3 weeks. DONE.
So nice to have my tenants pay for my mortgage every month!
good stuff, but the hard part is ok lets say you have 7 properties all with mortgages, what if you have two vacancies and have to pay them out of your own income, this can eat you up fast if you are unable to get them rented. You may have to lower your rents to remain competitive, and this can be a downer. Im not saying that its a bad idea because i currently am a landlord but i only have 1 house on a lease option contract, so far no problems but if the renter didnt pay i would be hard pressed to cover my current mortgage and the other mortgage at the same time. thats the tough part because ive been tryin to think of a way to expand into more rentals but i couldnt cover the mortgage in the event of a vacancy. BTW i just turned 23 and am renting to a family that is older than my parents.. how many people can say that. Posted by JoeMillion on :
Renting is a tough business so much headaches and worries. Sometimes its not worth it. It also depends on location too. Not too many banks will give you 7 mortgages. Too much of a risk. What about the taxes! lol
Just put 90% of you cash into step latter cds. Use the remaining 10% to invest/gamble in penny stocks. Each time you make money use half of the profits to buy a long term cd. Low risk = cd and high risk = peny stocks a perfect balance. You'll make millions! lol
Joe
Posted by JoeMillion on :
Well in NY, you have to pay an additional 25% tax on rental income if you don't live in the same house.
Joe
Posted by Art on :
Big bubble bust coming in housing.
People have been buying houses as investment, they may need to sell off soon.
Values may drop.
Sell now and buy later.
Posted by Ramius on :
BT i'm with you on the real estate option. I'm 29 and have a home in VA and a Condo in FL. Right now I'm renting the condo at break even and gaining 9% a year appreciation...so that one's working out nicely.
How did you find such a sweet deal on the lender? I'm in the market now for another property and am having a little trouble with the lending situation--I don't have 20% to put down.
Feel free to PM me if you have any tips. Thanks!
Posted by Ramius on :
quote:Originally posted by Art: Big bubble bust coming in housing.
People have been buying houses as investment, they may need to sell off soon.
Values may drop.
Sell now and buy later.
Anothing thing too...I work with tons of ppl who bought houses that they really can't afford using 5 or 7 year arms. In 5 or 7 years they will all be crying.
Posted by glassman on :
sooner than that.....
Posted by BT on :
Ever wonder why people just dont do it? They end up having more excuses not to then excuses why they should.
The tax advantages of owning a piece of property is phenominal. Did you know you can write off your gas mileage? How about interest you are paying the bank? How about maintence fees? Or points paid per mortgage? Or even depreciation. The list goes on and on.
Of course real estate all depends on the area you live in. Example. Bought a condo for $242k in 2003. Now appraised at $325k. A 35% increase and that's AFTER the market was in full bloom. That condo was worth $200k in 2001!!
So lets forget the fact that your property is appreciating while you're going about your everyday routine. As your tenant is paying for a place to live (your mortgage), your in turn building equity and in turn owe less to the bank over the years.
Now,... want to get technical? If you don't plan to own the property for more then 5 years and want to flip it for the quick thousands... Get either an interest only loan, or a 5/1 arm.
Rate & monthly payments are lower. So in turn the rent should cover and then some. Remember, all interest is a tax write off. The lower your monthly payments, the more profit you can have per month, or the easier it is for you to maintain.
Quailfy your tenants and you'll be glad you did down the line.
Posted by hcain on :
HEY RAM... Try getting a 80/20 mortgage. no pmi
Posted by Ramius on :
My problem is that for most banks you need 20% down to buy and investment property. I don't have that much cash. I have decent income and a low debt/income ratio, just not a "chunk" of cash to up front. I'm looking for a lender that will work with me. The search goes on...
Posted by njs300zx on :
100% Financing on investment properties. Take an 80% first and ask the seller to hold a 20% second. You may even be able to get a seller's concession if the appraisal comes in high enough. I do this all the time myself and for my clients.
Posted by blueranger on :
realestate is difficult, i got a notice on one of my properties where i am going to be fined like 100 or 1000 bucks a day... over some things...
and another one of my houses my mortages is 1800 bucks per month and i get 1500 in rent..
and i dont always get that...
so realeaste is really tough...
daytrading is much better.
Posted by turbokid on :
real estate is difficult but if you are going to rent you have to make sure you get a good deal on the property in the first place. If your renting out $500,000 dollar homes odds are you are going to be vacant and never get your mortgage covered. The fact is you have to rent cheaper homes because most renters are either young people just starting out or old jokers who have no idea how to manage money and will probably rent forever. Either way they cant afford 1500-2000 rent payments.
Posted by KarateBoy on :
7000 dollars a month in 30 years is pretty conservative don't you think? Economic growth + inflation can easily bring that number up.
30 years a lot can happen but I don't see it out of the question to get 20K a month from 7 houses in 30 years.
Posted by blueranger on :
the most successful realestate deal i ever saw was a trailer park... i helped a fellow build one and he did it one lot at a time and within a year he was taking home 40k a month...he gave them each a half acre and charged 200 bucks a month lot rent...
Posted by Realm007 on :
quote:Originally posted by blueranger: the most successful realestate deal i ever saw was a trailer park... i helped a fellow build one and he did it one lot at a time and within a year he was taking home 40k a month...he gave them each a half acre and charged 200 bucks a month lot rent...
Hey, I'm just wondering about the start up cost on at trailer park, mainly septic? Tell me about the ****! Realestate is very different from region to region, I don't see it dippin to much here in Tampa simply because of the surroundings (Ocean, lots to do and growing population). I'm wondering if you personally go with the 15yr/30yr? I've read up a lot on this and many go with 30 and keep payment down and just move the rest into 403b/401k.
Posted by blueranger on :
I was in the navy and there was a guy retiring as a first class looking forward to about 600 bucks a month... he was despondant and had no idea what to do... So i told him he had his health and wife and i started listing the good things he had and then he told me he owned 100 acres upon the york river in virginia...probably around newport news..
and I said you could build house and so on and he said he did not have any money... so i said what about a trailer park...
so we devised a plan to put in lots one at a time.. and so he put in one plowed and dug and did most of the work himself and started a road all for very little money...
I came back and saw him at the end of the summer and he had 200 trailers on this piece of land and each one had a 1/2 acre lot... and he was making 40000 big ones a month..
the trick is to get into a rural county that is probably 30 minutes away from a large city.
Posted by Realm007 on :
Awesome story Blue Ranger. So basicly your friend did a lot of the work on his own??
My father grew up during the time when 401ks just did not exhist as they do today. He was an excellent carpenter, he would move into an older home, fixer up and move onto another and in the process rent out the home he moved from. When it got time for him to retire he got tired of dealing with bull from renters so he started selling off the homes. It's an awesome income for him. I think he ended up with 7 homes and a farm, and lots of land.
We did deal with some dirtbags time to time, youngins Motley Crue style living..people that would throw garbage down into the cellar instead of taking it to the corner and rats would come out of the wood work! We had the druggies that would trash the house get in trouble and move and leave all belonging behind. Some poor people that where way out of control with stupid spending, actually some of them he helped.
I think more than anything he got tired of people that would want him to fix small things that they could fix in a second..ohh the fawcet drips funny, light bulbs need changing, etc. They would always call on a friday night when we were heading out the door to get some grub.
Getting rid of the bad people was difficult with the nasty winter, you just can't throw someone out in the cold but at least my dad had a cane he could wackem with if they got too far outta line.
Now I seen all this and was always hesitant about accumulating and renting but now hmm, maybe a trailer park?? That would work. Just rent out the land.
Now I wish I could make the money I make working in Tampa and live in Upstate Ny, housing can be found cheaper up that way and the fixer upers I'd feel more good about fixing. Maybe someday soon with the computer advancing and people dialing in to work from home. That would be awesome and I could pay off a home rather fast and maybe build up a trailer park. Awesome idea.
Posted by blueranger on :
i own a house right now the city is going after me and some sort of daily fine which could be 1000 bucks a day... I also own one I am struggling with the mortage...
I think the best way to make money is right here in these stocks.... look at siris and the stun gun company...
but the trick is not to become a long...
Posted by blueranger on :
buy cnes right now at its low... 1000 bucks..
then it will pop to .003 and sell...
then rebuy and just keep doing that... learn the charts and understand when a stock is going to fall off.... make money on the cycles...
Posted by JoeMillion on :
Blue, why are you investing in penny stocks. First clear up your problems with the city fines and mortages. You should not be investing at all!!!!!!!!!!
Honest advice :-)
Great story about your friend. Why didn't you invest with him and become his partner. You made him rich so ask him to help you now.
Joe
blueranger Member
Rate Member posted April 08, 2005 20:12 -------------------------------------------------------------------------------- i own a house right now the city is going after me and some sort of daily fine which could be 1000 bucks a day... I also own one I am struggling with the mortage...
[ April 11, 2005, 11:28: Message edited by: JoeMillion ]
Posted by JoeMillion on :
2 ways!
1) Marry rich
2) Win the lottery
;-)
Joe
Posted by blueranger on :
Joe, the problem around here is that you all don't like to here the truth... everyone thinks realeste is easy and will make you rich quick but there are tons of problems associated with it as well.. and you will be in court every week... once you have 40 or 50 houses you will have to learn how to do sit outs.. and of course its a lot of fun praying every week "oh God I need 50,000 bucks by friday" at best landlording is a get rich slow scheme if you can survive the vacancies...i don't invest in penny stocks i gamble with them...no body in there right mind would call this investing
Posted by JoeMillion on :
blueranger,
I agree with you that real estate isn't easy. I should know since Im a lic. real estate salesperson. lol imho the real estate boom is about to burst. Im advising my clients not to buy houses now.
However on the long run real estate is the best investment out there other than the stock market. People should invest in both real estate and stocks to beat inflation.
glta
Joe
[ April 13, 2005, 10:09: Message edited by: JoeMillion ]
Posted by Ramius on :
Blue, you said it yourself, these pennies are gambling. Investing in real estate is not. Year over year on a national aggregate real estate has never gone backward.
Last year my rental condo appreciated $2,500 renting at a break even expense level. I'm down $1,000 on pennies in the last 9 days.
Posted by Ramius on :
Hey BT,
I found a lender that will let me buy an investment property as a "second home", which has differenct rules. Basically, with decent credit I can buy a second home with 5-10% down. They don't seem to care If I rent it out during the times I won't be there, which in this case I'll never be there.
Posted by ranger10 on :
I personally thin that dealing in pre-forclosures is the way to go. Buying a house for under market value and quickly re-selling it for a profit(flipping). This way you dont have to deal with collecting rents and all the other stuff you have to deal with while being a lanlord. There have even been 2 occasions where i have taken a house to double closing. Buying and then selling the house in the same day for quick 40k and 65k profits.
Posted by cruehead20 on :
Ranger10, how do you find "pre forclosures"?
Posted by ranger10 on :
you have to go to the countly clerks office(or their online website...although only a few countys have the info available online) and search the computers for lis pendens. When a lis pendens is filed it means that that property currently has a lawsuit against it.
Posted by ranger10 on :
if anyone else want to know about pre-forclosure let me know and ill try to type up a how to
Posted by dilemma25 on :
What is pre-forclosure? And how do you do it?
Posted by JoeMillion on :
Being poor is better.
Joe
Posted by turbokid on :
its not better just easier because 99% of people are to lazy
ranger: i think alot of people would benefit from a how to on pre-forclosures, im one of them Posted by bond006 on :
the way to get rich is the way my great grand pa did when he got involved in a gold rush he was selling the picks and shovles.
Posted by dap123 on :
The way to get rich is invest in ctglf now.
Posted by jordanreed on :
Write a book on how to get rich
Posted by JoeMillion on :
Winning the lottery.
Joe
Posted by GVMOORE on :
Better shot than this market. Where can I buy ticket.
Posted by JoeMillion on :
marry a rich lady
Joe
Posted by andrewAAB on :
get married.. put a big policy on your wife and kill her!!! muhahahah!
Posted by MinDFreeZ on :
Hey Ranger, I'd like to know more about pre-forclosure.. if you write it up, or have written it up.. please share -although I think you shared some pretty useful info already.
Posted by JoeMillion on :
Start your own penny stock company!!!!!!! LOL
Joe
Posted by TalonSin on :
a little pre-foreclosure info:
Years ago I almost lost my home to foreclosure during my divorce. I learned first hand what foreclosure is like and what the options were. Now I offer free advise to people who are going through it. I dont give them any legal advise I just come over and sit down with them and I listen to their situation and I explain all the options they have.
One of the options I present is selling the equity they have in their home, (usually by the time I sit down with them they have received over 10 letters from other real estate investors offering money for their equity).
Here is an example of how it works. Your home is worth 100,000 if you sell it with a realtor, problem is it will cost you 10% in realtor fees and closing costs and there is no guarantee you can sell it before the foreclosure. You only owe 80,000 on the home but with late fees and legal charges the bank says you owe 82,000. I offer you 90,000 for the home which gives you the 8,000 you would have gotten if you sold through a realtor. I get you to sign a contract saying you give permission for me to negotiate with the bank on your behalf.
The bank does not want to own your property. Banks lose money on 95% of foreclosures so they would deal a bit to get out of foreclosing. I offer the bank 79,000 cash and they write off the closing fees.
In the end I get the house for 87,000 total and I have 13,000 equity in it already. The old owners save their credit by avoiding the foreclosure and they get 8,000 to go and start somewhere fresh. The bank writes off the 3,000 loss and gets a tax credit for it.
In the last year I have talked to roughly 30 people in foreclosure and I have only purchased one of their homes. Most people think they can find a way out of it on their own or they just ignore it until they lose the home. Many have no equity to even deal with.
There are many so-called real estate investors out there who are combing the legal notices and sending letters to people in foreclosure. Some even go to your door the first day it appears in the paper trying to get you to sign a contract to sell. They pressure you and try to scare you with legal talk about how the bank will be taking your home soon and you need to act right away. Dont be one of these clowns.
Posted by GVMOORE on :
100000 shares of NCDP @ .01 =$1000. 100000 shares @ 1.00= $100000. Who said pennies don't make dollors. IN and long. My pump for the day.
Posted by trading4life on :
lol
Posted by pick em low on :
CNR $10 in less than a year
Posted by PhoenixStockMaster on :
Get Rich quick? If there is such a thing. But the Phoenix Real Estate Market is HOT, HOT, HOT! (and so is the weather) Homes in Goodyear, a west-suburb of Phoenix, (and an east suburb of L.A. hahaha) have gone up 100% in the past year. Last year, I bought a 1,600 sq.ft. single family home for investment in Goodyear. Currently, I have this home on the market for 289,000. Bids came in yesterday-quick, 13 bids in all, day one -for full asking price the highest with a $20,000 escalation. Looks like the home will close foraround $300K
Posted by bond006 on :
right in phoenix goodyear is project as the highest growth rate in the area
Posted by PhoenixStockMaster on :
AMEN to that. Very hot market here. Homes are selling quick. It is impossible, literally, to purchase a new build in Goodyear. All of the land for new builds is a lottery and most builds are 1.5 to 2 years out. Purchase a new build now- it will be worth 200% more when you move in :-) that is if the market stays strong.
Posted by bond006 on :
phoenix a lot of our market depends on what the calif. market is doing and my last trip to santa barbara it was still hot as a pistol can't touch anything there for under a million and it goes quick. you can't loose in phoenix rigt now i live on cave creek rd and see new condo,s selling like hot cakes for $400,000. plus
Posted by Polarbear17 on :
The problem with all your figures is that they are unrealalistic. 1.) Lets start with income , I'm 45 years old and have worked since i was 18 yet i have never made more than $15k a year and thats working two jobs most of the time. My employer dosnt have a 401K. 2.) Whats left to save after my expenses, $15K - $8k Child support payments -taxs = $5,000 left to pay food rent and every thing else. So forget about saving any money. 3.) Then you mention real estate , but dont you need a credit rating to get a morgate. AT 45 years old i have never had a credit card and cant even get one let alone a car loan or moragte. So when you tell people that making a million can be uptained please be more real in your figures , Experince in the real world shows that average people dont make lots and are hindered by the same corprations and banks as every body else.
Posted by glider on :
I've read the comments about trailer parks and would like more information on setting one up. It sounds like a much better proposition than houses. Blueranger, you seem to be the most knowledgeable on the subject, and to have firsthand experience. I'd appreciate if you could post some more information on setting up, requirements, maintainence and any problems associated with it. Anyone else who has any experience or comments, please post. Thanks in advance.
Posted by bmaxingout on :
hi all i was just reading on the idea of trailer parks.and i have one park and one small housing development the park currently has 27 trailers on a 10 acre lot the housing devlopment has ten ranch style homes each on a 1/4 acre lots and both are fully rented out the cash flow from the trailer is about 3x higher then the housing devlopment the housing devlopment after five years is now worth nearly 10x more then the trailer park per acre. the park did provide good revs and cash flow while building the homes.i will now be selling off the trailers and building more three bedroom two bath ranch style homes and renting them out.
what i learned is in the long run the houses are the better deal i went with trailers because of cash flow problems bmax,
Posted by bmaxingout on :
quote:Originally posted by GVMOORE: 100000 shares of NCDP @ .01 =$1000. 100000 shares @ 1.00= $100000. Who said pennies don't make dollors. IN and long. My pump for the day.
lol you would be worth 300 bucks now
buy amep,....lol
Posted by Ramius on :
quote:Originally posted by bmaxingout: hi all i was just reading on the idea of trailer parks.and i have one park and one small housing development the park currently has 27 trailers on a 10 acre lot the housing devlopment has ten ranch style homes each on a 1/4 acre lots and both are fully rented out the cash flow from the trailer is about 3x higher then the housing devlopment the housing devlopment after five years is now worth nearly 10x more then the trailer park per acre. the park did provide good revs and cash flow while building the homes.i will now be selling off the trailers and building more three bedroom two bath ranch style homes and renting them out.
what i learned is in the long run the houses are the better deal i went with trailers because of cash flow problems bmax,
I'm just getting into real estate. I agree probably the better deal, much safer anyway. I have a condo in Orlando that has a small positive cashflow(great appreciation though), and I just put a contract down on a townhouse in Richmond(where I live now). I'm in the real estate game for the long haul. It's fun.
Posted by Skyman on :
A friend of mine was dating a girl who had a rich grandmother. The girl would receive the grandmother's money when the grandmother died. My friend used to recite that same joke, "you can marry more money in ten minutes than you could make in a lifetime."
There was only one catch. The girl and the grandmother were Jewish and they wanted my friend to convert to the Jewish faith also. "Do I have to wear the bennie thing too?" Yes, they said.
He wasn't to swell on the idea. Now, he was a die hard Cubs baseball fan. So he replied, "can I just tear the bill off my Cubs hat?"
I don't know if they ever married. The girl had 300 pairs of shoes also.
Posted by Ramius on :
quote:Originally posted by Skyman: A friend of mine was dating a girl who had a rich grandmother. The girl would receive the grandmother's money when the grandmother died. My friend used to recite that same joke, "you can marry more money in ten minutes than you could make in a lifetime."
There was only one catch. The girl and the grandmother were Jewish and they wanted my friend to convert to the Jewish faith also. "Do I have to wear the bennie thing too?" Yes, they said.
He wasn't to swell on the idea. Now, he was a die hard Cubs baseball fan. So he replied, "can I just tear the bill off my Cubs hat?"
I don't know if they ever married. The girl had 300 pairs of shoes also.
I married a JAP...Jewish American Princess. Unfortunately not much in the line of inheritance came with her...but she's a mighty fine lookin woman.
Posted by airdoo on :
has anyone here actually become a millionaire from the stock market?? or how about realestate?? do we have any millionaires in here at all??
Posted by BuyTex on :
sure, but they're "too good" to post--NOW.
They don't write, they don't call . . .
Posted by macdrsirules on :
Quickest way to become a millionare. Have good credit. Buy numerous houses that are undervalued, finance for the full value of the house, pocket the rest, finance using minimum payment option or interest only, (you can make either one with this loan), rent them out, incur approximately 12-30 percent monthly cash flow from each property which should exist with an interest only payment and subtract approximately 10 percent for non-payment or non-rental annually.
Keep in mind that your property most likely will be increasing in value even though your principal will stay the same.
One question for anyone investing in real estate for the purpose of renting a property as well as homeowners. If you had 300 dollars or more every month would you put it in a safe deposit box for thirty years and bury it in the ground? Of course not, you would put that money to work for you and so it would increase. Well that is exactly what most of us are doing, (including myself with one property), when we pay off our principal on our property. That money that is paid toward principal is basically put in a hole in the ground until the property is sold. Think about it for a minute, I know it is contrary to the American way, but it really makes sense to not pay off your principal.
In effect what you are actually doing when you pay an only interest payment is putting your own money into your pocket instead of toward your principal so you can increase its value with other investments as opposed to paying off your principal of your loan and gaining nothing during the term of the loan.
It really does make sense once you think about it. I am in the process of pursuing this idea at this time.
This post is simply my opinon. I will receive no reimbursement from anyone. The contact that I will now mention is indeed paying for my fishing tournament season but in no way has encouraged me to make this post. It is simply my opinon.
For further info about a minimum payment, interest only, 15 year, or 30 year mortgage,(you have the option of making any one of these payments every month.) Contact Jeremy Louder at First Option Mortgage.
972-432-2900
Tell him that the guy with the boat sent ya please!!
The numbers should look somewhat like this. Buy 20 houses for 110,000. Assume you have done good and bought these properties that are valued at 130,000. You now finance these properties for 130,000 and you pocket approximately 12,000 on these properties with no money down after fees,(this is realistic by the way). That is 240,000 bucks, we are almost 1/4 of the way there already! Now we rent out these 20 properties for 1,300 bucks per month,(or better yet for 650 bi-weekly, gets an extra payment per year hehe, we wont figure using this method but with monthly method). Your approximate payment for these properties will be around 850 bucks per month and that DOES INCLUDE escrow for insurance and taxes in most locations around here. Now lets assume you want someone to manage these properties for you at 10%. Your monthly cash flow is around 320 bucks per month for each property(management fees already taken out at 10%.) 320 bucks X 20 is 6,400 per month cash flow. Now subtract 15 percent for non-payment/non-rental/repairs. The net profit of all properties is around 5,440/month. Now lets make that annually for 10 years, (keep in mind that this does not include increasing rent ever 2 years). The grand total for 10 years is around 752,800 plus the 240,000 you made from the purchase of the properties. The total amount is around 992,800. You say, "but were not at a million just yet". Well now you can sell the properties that have grown in value conservatively from 130,000 to 160,000 and you sell for 150,000, which after fees will should net somewhere around 12,500 per property X 20 which equals around 250,000. So in ten years we could make over 1.2 million and have someone manage the properties to keep the headache to a minimum!!!!!
But wait there's more (lol), these numbers do not even include investing this money to make you more money!!(we dont want to bury it in the ground for these 10 years) Lets say you make 10 percent on this money and take away 35 percent for capital gains you now make around 21,000 more the first year. So after the first year you have about 336,000 instead of 315,000, I wont go into what the amount would look like from here as it is getting late and I need to get to bed but I think you get my drift. Your money greatly grows every year from the first year to the 10th year.
And yes I do live in a dream world, and I know for a fact that dreams do come true and this can become a reality.
Once again this is my honest opinion and I have every intention of pursuing this example I have given.
Nite all
Posted by Ramius on :
quote:Originally posted by macdrsirules: Quickest way to become a millionare. Have good credit. Buy numerous houses that are undervalued, finance for the full value of the house, pocket the rest, finance using minimum payment option or interest only, (you can make either one with this loan), rent them out, incur approximately 12-30 percent monthly cash flow from each property which should exist with an interest only payment and subtract approximately 10 percent for non-payment or non-rental annually.
Keep in mind that your property most likely will be increasing in value even though your principal will stay the same.
One question for anyone investing in real estate for the purpose of renting a property as well as homeowners. If you had 300 dollars or more every month would you put it in a safe deposit box for thirty years and bury it in the ground? Of course not, you would put that money to work for you and so it would increase. Well that is exactly what most of us are doing, (including myself with one property), when we pay off our principal on our property. That money that is paid toward principal is basically put in a hole in the ground until the property is sold. Think about it for a minute, I know it is contrary to the American way, but it really makes sense to not pay off your principal.
In effect what you are actually doing when you pay an only interest payment is putting your own money into your pocket instead of toward your principal so you can increase its value with other investments as opposed to paying off your principal of your loan and gaining nothing during the term of the loan.
It really does make sense once you think about it. I am in the process of pursuing this idea at this time.
This post is simply my opinon. I will receive no reimbursement from anyone. The contact that I will now mention is indeed paying for my fishing tournament season but in no way has encouraged me to make this post. It is simply my opinon.
For further info about a minimum payment, interest only, 15 year, or 30 year mortgage,(you have the option of making any one of these payments every month.) Contact Jeremy Louder at First Option Mortgage.
972-432-2900
Tell him that the guy with the boat sent ya please!!
The numbers should look somewhat like this. Buy 20 houses for 110,000. Assume you have done good and bought these properties that are valued at 130,000. You now finance these properties for 130,000 and you pocket approximately 12,000 on these properties with no money down after fees,(this is realistic by the way). That is 240,000 bucks, we are almost 1/4 of the way there already! Now we rent out these 20 properties for 1,300 bucks per month,(or better yet for 650 bi-weekly, gets an extra payment per year hehe, we wont figure using this method but with monthly method). Your approximate payment for these properties will be around 850 bucks per month and that DOES INCLUDE escrow for insurance and taxes in most locations around here. Now lets assume you want someone to manage these properties for you at 10%. Your monthly cash flow is around 320 bucks per month for each property(management fees already taken out at 10%.) 320 bucks X 20 is 6,400 per month cash flow. Now subtract 15 percent for non-payment/non-rental/repairs. The net profit of all properties is around 5,440/month. Now lets make that annually for 10 years, (keep in mind that this does not include increasing rent ever 2 years). The grand total for 10 years is around 752,800 plus the 240,000 you made from the purchase of the properties. The total amount is around 992,800. You say, "but were not at a million just yet". Well now you can sell the properties that have grown in value conservatively from 130,000 to 160,000 and you sell for 150,000, which after fees will should net somewhere around 12,500 per property X 20 which equals around 250,000. So in ten years we could make over 1.2 million and have someone manage the properties to keep the headache to a minimum!!!!!
But wait there's more (lol), these numbers do not even include investing this money to make you more money!!(we dont want to bury it in the ground for these 10 years) Lets say you make 10 percent on this money and take away 35 percent for capital gains you now make around 21,000 more the first year. So after the first year you have about 336,000 instead of 315,000, I wont go into what the amount would look like from here as it is getting late and I need to get to bed but I think you get my drift. Your money greatly grows every year from the first year to the 10th year.
And yes I do live in a dream world, and I know for a fact that dreams do come true and this can become a reality.
Once again this is my honest opinion and I have every intention of pursuing this example I have given.
Nite all
Mac,
Great enthusiasm, I too am very excited about my real estate ventures...I think my wife's almost tired of hearing about it.
I see six(if not more) major problems in your description above. On paper it all looks great, but here's a reality check for any noobs who may be getting all excited over what they've just read.
1. For a bank(s) to finance someone for 20 homes in a short period of time the individual would already have to be very wealthy. An average Joe making 40grand a year isn't going to be able to walk into a bank get financing on that many properties.
2. Interested only mortages are good, for now. You buy a bunch of homes on an interest only loan and when that interest rates jumps, which it will eventually, you are screwed.
3. Please tell me where you can rent a $130,000 house $1,300 per month. My experience up and down the east cost of the U.S. is that a $130,000 house rents for about $850 average.
4. It's not easy to find homes to buy which the rents will actually cover expenses, unless you put a lot down. Positive cash flow is almost a pipe dream in this town. I've been looking in Richmond for a year and haven't found one yet.
5. Managing over 10-15+ properties would be almost a full time job in itself. To do this someone would have to quit their "career" job, and their "career" salary.
6. Since in my case the purchase-to-rental price sucks I will need to invest in other cities, which means I will have to pay someone to manage my properties for me...another 8-10% expense.
I too have run through all of the best case scenarios. In practice I'm finding the reality to be much different.
Posted by macdrsirules on :
In answer to your perceived flaws I will answer them in the same order you asked them.
1. Call the man and find out if you have to be wealthy or not. You do not have to be wealthy to finance that many homes. Don't believe me? THEN CALL
2. The interest on the loans is fixed, period, no arms, no having to refinance in 5 years nothing. Current interest rates are not too high.
3. Houses around this area rent for that much and that is no joke. Check it out if you dont believe me. DFW area.
4. It may very well be tougher in Richmond, but here it is not difficult at all. The numbers I provided in my post are not faulty nor inflated. Those numbers are very real. Positive cash flow is very realistic here and the amount of positive cash flow with the loan I described is very realistic and not a stretch in any manner.
5. If you read all of my post you would have noticed that I did not manage the properties the properties were managed for me and I took out 10% of the cash flow for this purpose.
6. As stated in number 5. I have already figured in 10% for someone else to manage the properties.
You need to call the man and find out some info.
I have already financed two properties through them and believe me, what I posted can be accomplished. Of course it is still a dream, but it is a dream that can be accomplished.
Contact Jeremy Louder at First Option Mortgage. Ask him about options plus mortgage.
972-432-2900
Tell him that the guy with the boat sent ya please!!
Good luck to ya and I am sure it is more difficult in your part of the country than here.
Posted by airdoo on :
you do at least need a job that pays very well right?? i couldn't get a loan based on the money i would make off of houses that were already rented out that i wanted to buy. they wanted my income to be much higher. i have excellent credit but my $36k after taxes salary wasn't good enough to get a loan above $200k. and even if they approved my loan it would be at a much higher interest rate than my home was. investment property loans apparently need higher interest rates. i guess banks don't get enough money from normal loans err.... anyway....i didn't call that number above yet. but i will. but loans around here aren't as wonderful as the ones you speak of. i mean you claim above you were approved for a 2.1million dollar loan. what kind of money do you have coming in from your job?? it's not that i doubt you. i just find it hard to believe, due to my personal experiences.
Posted by airdoo on :
ok i looked up the tx branch of first option mortgage. they only approved me for $131,500 and that's with a 10% down payment at 5%. i'd really like to believe this man gave you a great deal. i really would. but according to their website they wouldn't do the same for me. but i will still call the guy. i just wanted to give you this update. here's your guy's contact info: First Option Mortgage 222 West Las Colinas Blvd # 858 East Tower Irving, TX 75039 Toll Free: 1-866-285-2900 Ph: 972-432-2900 Fax: 972-432-2901 email: loanofficer*firstoptiononline.com License 46722 Texas Mortgage Broker
Posted by macdrsirules on :
Airdoo, I am not sure what one has to make to qualify as I am not a loan officer. From what I understand is that you can take out one loan, and then that property is counted for you and not against you and your net worth is increased. That should enable you to take out another loan which in turn would increase your net worth more and then enable you to buy another property. Repeating the process.
You need to call Jeremy to find out mortgages with no money down. I doubt you will find it on the website. I am not there yet and have a long way to go but from my understanding you can do it. Give it plenty of study and talk to Jeremy as he is a wealth of information.
Good luck and keep me informed. Tell him the boat guy sent ya. Thanks
Posted by airdoo on :
i guess where i messed up was trying to get a big loan all at once. i never thought mortgaging a property increased my networth. i just thought it increased the amount of debt i had. hmmm. if this is the case then i've been going about it all wrong. but it really is too bad in my case anyway then. the loans i wanted were for apartment buildings. occupied with good rental histories and i had papers showing what money i would have to pay in and how much i planned to net and even put in a "just in case" fee every month. i always wanted to skip the single family dwellings because the cashflow is so much nicer on bigger apartment buildings. only one roof to fix all tenants in one place so one place to drive to etc... thanks for your time. looks like i got some research to do.
Posted by Ramius on :
quote:Originally posted by airdoo: i guess where i messed up was trying to get a big loan all at once. i never thought mortgaging a property increased my networth. i just thought it increased the amount of debt i had. hmmm. if this is the case then i've been going about it all wrong. but it really is too bad in my case anyway then. the loans i wanted were for apartment buildings. occupied with good rental histories and i had papers showing what money i would have to pay in and how much i planned to net and even put in a "just in case" fee every month. i always wanted to skip the single family dwellings because the cashflow is so much nicer on bigger apartment buildings. only one roof to fix all tenants in one place so one place to drive to etc... thanks for your time. looks like i got some research to do.
In my experience your networth= your assets-your debts. If you add a property, for which you have a mortgage, and that mortgage is for more than the value of the property, then you just went backwards from a networth perspective.
If you mortgage a property for $80,000, and it's worth $100,000, then you just gained $20,000 in networth.
Posted by Balttrader on :
and theres always the loto
Posted by Bill2Drunk on :
quote:Originally posted by macdrsirules: Airdoo, I am not sure what one has to make to qualify as I am not a loan officer. From what I understand is that you can take out one loan, and then that property is counted for you and not against you and your net worth is increased. That should enable you to take out another loan which in turn would increase your net worth more and then enable you to buy another property. Repeating the process.
You need to call Jeremy to find out mortgages with no money down. I doubt you will find it on the website. I am not there yet and have a long way to go but from my understanding you can do it. Give it plenty of study and talk to Jeremy as he is a wealth of information.
Good luck and keep me informed. Tell him the boat guy sent ya. Thanks
What he is saying is the same principle to getting better credit. A person with bad credit can fix his/her problem buy depositing $1,000 in bank "A". Then take a loan against principle of $1,000 and deposit that in bank "B" and do the same until they have 10-20 different banks. Now it looks like a lot of money that they owe ($19,000 + interest) but in reality.....they don't owe anyting but interest. Its a quick way to fix credit.
SECTION 8 is a great way to go. Section 8 works for the owner. You have to get your rental qualified for the SEC. 8 program. Then they assest your Rental and take notes of the homes status (broken sidewalk, stained carpet, broken window, etc). Then you get the option to fix all those things. They they make a determination as to "How much would this Rental RENT out for". After this is established and agreed. The city/state finds people for you to live in your Rental. The Renter doesn't pay the RENT......the city pays half and the state pays the other half. When the renter moves out.....the city comes in and inspects the home for damages and gives you money for any repairs. The catch is: You are the LANDLORD while its RENTED.
Here is a CURVEBALL that I'm sure none of you have thought of:
Life insurance.......you can take a policy of "Life Insurance" out on ANYONE!! Hmmmm.....scratching your head huh???? Well, say you know someone with bad health and is expected to pass away within the next 3-5 years. You can offer them a Life Insurance policy "FREE OF CHARGE" on them if they go and take a physical for the Life Insurance policy. You offer them the cost of the Physical, expenses occured, and $50,000 guaranteed when they pass away to be left for the family. In return you pay the premium on a life instrance policy for the duration of their life in hopes to cash in. My buddy's co-worker has been doing this for a few years. He cashed in on his 1st policy last year where he had a $300,000 policy on a lady and in return, he gave the family $50,000. I asked where he got the idea and he said he read it in a news article where a guy was doing the same exact thing as he was and had taken out a $1,000,000 policy on a guy who had HIV. The person was told he would die in 1-3 years and he ended up living over 7 years while the guy was paying a HEFTY Premium on him. He SUED the guy (HIV guy) for $1,000,000 and his premium for the extra years past his life expency. Some people are just WRONG!!! But if you were going to die and wanted to give your family something nice, wouldn't you get on this waggon??? Think about it for a while.
Ok....the Money in a HOLE is really making me think. Guess I never thought of it that way Blue/BT. I bought my house back in November 2002 and did a 80/10/10 loan. 10% down, 10% equity, 80% convential. The home was $123,000. I put $12,300 down plus closing costs. Took a equity loan of $12,300 at ARM and $98,400 6.25% fixed 30 years. The Equity loan interest rate has moved from 4% to 9.625%. I always paid more on both and paid the Equity down to $9,000+ last year before the JUMPS in the INTEREST RATES....Now I have made it a PRIORITY to pay off the Equity loan and down to $5,500 and the other loan, I have paid it down to $87,000-. At first the fixed loan seemed like the right direction to place the extra money, but the equity is a DEFINATE now. I had a goal of paying both loans off in 5 years, which I was on target until the wife got pregnant. But in reality, the money is just in the savings account in the bank. The house moves up in value no matter if I pay the house off or not, so in your thinking, I really have to agree with your ideas 100%. Would you still aim at paying the Equity loan off if you were in my shoes??? (I make $60-70K a year). Max out the 401k each year, no IRA's as of yet. Looking to buying into SECTION 8 property in the next few years.....2-4 family FLATS. What are your thoughts?????
(I'm only 28 with $74,500 in equity, $60,000 in retirement and $10,000 credit card debt locked at 3.5% for the lifetime of the balance).
Posted by Bill2Drunk on :
Nice story on the trailer park......might have to look into that some day. But what people don't realize is TAXES, Water, Sewer, Road/repairs, Electrical hook-up fees, snow removal and lawn care. Some Trailer homes share wells/sewers and some have City Water/City Sewer.
Posted by Ramius on :
Here's a loophole I found(I've used it twice) for you real estate investors.
Since the Richmond market where I live is priced way out my investment range, I've bought 2 houses in other cities. I bought both of these as a "second home" instead of an "investment". Many banks offer second home finacing options that are as good as primary residence options.
If the home is too close to your primary residence, or is just obviously an investment, then it won't work, but I've done twice now.
Posted by powr2dpeepl on :
quote:Originally posted by Polarbear17: The problem with all your figures is that they are unrealalistic. 1.) Lets start with income , I'm 45 years old and have worked since i was 18 yet i have never made more than $15k a year and thats working two jobs most of the time. My employer dosnt have a 401K. 2.) Whats left to save after my expenses, $15K - $8k Child support payments -taxs = $5,000 left to pay food rent and every thing else. So forget about saving any money. 3.) Then you mention real estate , but dont you need a credit rating to get a morgate. AT 45 years old i have never had a credit card and cant even get one let alone a car loan or moragte. So when you tell people that making a million can be uptained please be more real in your figures , Experince in the real world shows that average people dont make lots and are hindered by the same corprations and banks as every body else.
I feel that pain! And I'm in the same boat, except I have a newborn who won't move out until I'm 60, and 6 yo (the expensive gender) who I don't want to move out until I'm dead, and a 16 yo starting college next year, and a 28 yo who wants to quit work and go back to college full time to get that BA...(I promised she could when she married me - o so long ago)
Been working one of those hi pay hi risk jobs in Iraq over a year now, and everybody thinks it's a gold mine. I had to demand $1000 of my own money to start an Ameritrade acct.
I highly recommend finding that once in a lifetime oppty, and make sure nobody gets in the way of your goal - enough (at least in the market) that you have a good chance of making bills while you sit at your kitchen table in your underwear every day.
Good luck brother! Take the bold chance! Gamble big - gamble smart.
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