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Mike-TWA
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1 year ago
in The Number One Mistake that Would-be Real Estate Investors Make on WealthBoy
Wealthboy,
There is no question that, in real estate, you make money when you buy. Ultimately, I tend to shoot for around costs at 80% of below of improved value. My 80% figure would include rehab/improvement costs and transaction costs. Another related mistake is to consider cashflow as rents minus the mortgage payment. New investors seem to frequently forget taxes, insurance, and maintenance costs. Good article.
In response to Ian's comment, I have heard this opinion often, but it seems to apply only to real estate and not other investments. I have never understood this. A stock market buyer who purchases in a down market and who resells at a profit is never deemed to be "taking advantage" of the seller. Even in the context of sales of goods, the analogy applies. To borrow from your article, WalMart has purchased at a price below what it sells those goods. WalMart is not "taking advantage of" its buyers by doing so.
To the extent that any investor, real estate or otherwise, uses deceptive or unethical means in a transaction, it's wrong. To the extent they don't, it's what we call "the market."
There is no question that, in real estate, you make money when you buy. Ultimately, I tend to shoot for around costs at 80% of below of improved value. My 80% figure would include rehab/improvement costs and transaction costs. Another related mistake is to consider cashflow as rents minus the mortgage payment. New investors seem to frequently forget taxes, insurance, and maintenance costs. Good article.
In response to Ian's comment, I have heard this opinion often, but it seems to apply only to real estate and not other investments. I have never understood this. A stock market buyer who purchases in a down market and who resells at a profit is never deemed to be "taking advantage" of the seller. Even in the context of sales of goods, the analogy applies. To borrow from your article, WalMart has purchased at a price below what it sells those goods. WalMart is not "taking advantage of" its buyers by doing so.
To the extent that any investor, real estate or otherwise, uses deceptive or unethical means in a transaction, it's wrong. To the extent they don't, it's what we call "the market."
1 year ago
in 2017 is the year of the bimillionaire on brip blap
Well put--particularly the explanation of why this isn't about money. In many ways, money ends up having little to do with the reason and the goal, just one of those necessary steps along the way. Now get ready for the "you can't do it that way" reactions to your alternative income ideas--then do 'em anyway.
1 year ago
in the myth of the parent that NEEDS to work on brip blap
I have to agree that, for many, it is an available choice. It certainly involves some self-sacrifice. But so does both parents choosing to work. The difference is that the sacrifice is imposed upon the kids.
My sister manages the stay-at-home choice with her husband making a very middle class salary. They're managing to raise four kids in the process. I admire the parents who make the choice that your wife and you have made.
My sister manages the stay-at-home choice with her husband making a very middle class salary. They're managing to raise four kids in the process. I admire the parents who make the choice that your wife and you have made.
1 year ago
in a building mental storm on brip blap
@FourPillars-Mike
My comments are certainly not intended to be a judgment on choices, more of a thinking out loud (or, um, "out typed"?) about some of the struggles that I go through in looking at what I "have" to do now to get to what I "want" later. For instance, you mention your wife is a stay at home parent--a choice that I great respect and imagine based on your values is pretty close to "have to". But then there are choices like the big mortgage or living in an expensive area that I wonder about. I have many of my own similar choices. And, I guess my point is that sometimes I wonder about being in a race that we don't particularly want to be in for many years for sole purpose of finishing. And maybe sometimes, we could just decide to move the finish line a little closer and take the silver rather than the gold.
Well, the discussion helps me think about it anyway, so thanks all.
My comments are certainly not intended to be a judgment on choices, more of a thinking out loud (or, um, "out typed"?) about some of the struggles that I go through in looking at what I "have" to do now to get to what I "want" later. For instance, you mention your wife is a stay at home parent--a choice that I great respect and imagine based on your values is pretty close to "have to". But then there are choices like the big mortgage or living in an expensive area that I wonder about. I have many of my own similar choices. And, I guess my point is that sometimes I wonder about being in a race that we don't particularly want to be in for many years for sole purpose of finishing. And maybe sometimes, we could just decide to move the finish line a little closer and take the silver rather than the gold.
Well, the discussion helps me think about it anyway, so thanks all.
1 year ago
in a building mental storm on brip blap
Man, but those two lists of five look familiar.
From your description of your financial state (debt free, savings, educated, marketable) and your financial interests (real estate, investing), it seems that your choices are many and and that maybe you're tied to this path for only one reason--geography.
With respect to FourPillars and acknowledging that our choices are bound by real constraints, I still can't accept that our (or maybe just my) choices are only so much sacrifice now to reach a final destination of retirement. Rather at some point, if the endgame as we've defined it only allows it to be achieved by waiting until 60, maybe we've got the wrong endgame.
Holy cow. I guess you struck a chord with me.
From your description of your financial state (debt free, savings, educated, marketable) and your financial interests (real estate, investing), it seems that your choices are many and and that maybe you're tied to this path for only one reason--geography.
With respect to FourPillars and acknowledging that our choices are bound by real constraints, I still can't accept that our (or maybe just my) choices are only so much sacrifice now to reach a final destination of retirement. Rather at some point, if the endgame as we've defined it only allows it to be achieved by waiting until 60, maybe we've got the wrong endgame.
Holy cow. I guess you struck a chord with me.
