What he said.
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What he said.
lingcod, the difference between MD9 and the guys you've seen on TV is the guys on TV are trying to sell you something. MD9 isn't peddling a "Make Money in Real Estate" DVD. And it's not like he's telling people to go out and get a shitload of interest-only loans. He's just giving some advice.
I'm pretty sure MD9 isn't really telling us anything you can't get from watching 'Flip This/That House' on the DiscoveryHGTVTLCChannel on cable. Seems to me that he's just saying that there's good things to be had with a reasonable amount of sack, luck and good research. That doesn't seem too different from nearly any investment strategy.
I think it's awesome MD9. If you've found your calling, run with it.
My cousin is 50 now, he started buying, reovating and renting properties in the Boston area when he got out of college. At one point he owned 36 properties. The market was good, he got sick of being a lnadlord, he sold them all, he hasn't had a job in 10 years now and he's rich. He watches his investments and pulls together little property development deals in his spare time, but mostly he coaches his kids' sports teams, sails his big ol' sailboat and skis.
That's great and all, and I'm sure there are many people out there like that. OTOH, I would bet that there's 2-3x as many people out there like this poor sap:
Bad Times for Leo in SW FLA
LIngcod, hey nobody is putting a gun to anyone's head. We all come from different walks of life, MD9 is obviously a nice enough guy to share what he does for a living with us. Real estate is about numbers, him not bullshitting us, like the rest of the world, is of value. Obviously the guy does the grunt work, soemthing most of us would not do, and thus would not prevail as easily as he does. Additionally, using a 15yr is not only an alternative to just playing the appreciation game, but also stiffens up the equity requirements.
Likewise, for the avergae schmuck like me, your words of caution are noted in this enviorment.
Uh... because that guy made the mistake of getting himself in over his head doesn't really indicate anything other than his own stupidity. All investing is a scary game. Markets are not friendly places.Quote:
Originally Posted by Tin Woodsman
If someone were to lose their money playing something like blackjack in vegas where there roughly equal odds over time, people don't feel sorry for them. I don't understand the 'woe is the borrower' sentiment.
Buyer beware. The value of good research is unquantifiable.
Quote:
Originally Posted by Tin Woodsman
I'm a particpant in the SW FLA RE market and know this area fairly well.
The guy in that story is typical, and the lesson is applicable of any investment, which is, "know the market".
What MD9 is doing is completely different. He's buying undervalued properties and through his own sweat, bringing them to market value.
People like the guy in the story are very common down here. They don't have the skills to do "fixer uppers" and instead invest in new construction. and hope market appreciation bails them out. This worked well for about three years, but not anymore.
If you look at the numbers, MD9 has a positive cash flow off his properties. He's not depending on appreciation at resale for his profits. Sure the R.O.I. may not be great measured against the acquisition cost. However he did the bulk of the work himself to bring them to market value. This means no increase to the acquisition basis.
Unless I'm wrong, I believe his intent was to share something that has worked well for him. How many people do you know that hate their jobs or feel under challenged, under appreciated, or just feel that they were meant for more in life?
If you have a good income and do what you want with your most valuable resource ( your time) Isn't that the real american dream?
Nicely said.
That's cool. Feel free to interpret my sharing of information however you will. I'm glad you think I'm headed for a fall (maybe due to skiing or drinking, but not due to work). In a few years we'll be able to look back at this thread and what's happened in the meantime. I don't "have it ALL figured out", but I do have this little niche figured out. When someone asked about commercial I think you'll see that I said "I don't know much about it". And I've always encouraged everyone to "do their homework".Quote:
Originally Posted by lingcod
If this were an idea that needed patenting I'd obviously keep my mouth shut, but there's no shortage of homes in rough shape that need help. Hell, even if this were the ad biz (where I've earned the money to invest in Real Estate) there's no way I'd tell you who my client contacts were and what I'm charging and how I'm making money there. There are some businesses where that just doesn't work and you could risk future earnings.
There are a lot of shitty landlords that let places go to waste, lazy home owners, elderly who can't handle the upkeep. Two houses I've bought were an inheritance to a family member and they wanted cash rather than a beat-up old house. Another two were from shitty landlords who slum lorded. They didn't put any money into the houses and didn't maintain the properties. They just worked the cashflow as hard as they could until they fell apart. These places need to be put back together and there's no shortage of them.
My dad retired in his 40's and now mountain bikes most days in the summers and skis most days in the winters. While he was working towards an early retirement he told all of his friends about what he was doing, gave them books, etc... None of them took his advice. They all still work and none of them really hang out that much anymore. I'm sure he'd much rather have them up on the hill with him. Most of what I learned I learned from him and he's been willing to share info with anyone who's ever asked. I know of numerous maggots who've asked for his advice on financial matters.
http://www.nytimes.com/2006/10/03/ny...0ee&ei=5087%0A
"While many of the highest home values were on the coasts, in places like Southern California and Manhattan, many of the biggest jumps in the percentage of people paying a burdensome amount of their income for housing occurred in the Midwest and in suburbs nationwide, making it clear that the housing squeeze has reached deep into the middle class."
MD9 -
I'm psyched that you've found a niche that works for you. Obviously, ,you do a lot of research supplemented with your own sweat - always a good formula for success in any business. That said, much of this discussion has focussed on the state of the housing market as a whole. I think it's fair to say that your particular niche in the location of the SLC metro isn't exactly typical. Sounds like your approach will be successful in even flat markets as you are creating the appreciation by yourself instead of relying on the market lift. I hope for your sake that you don't pull the trigger at the wrong time b/c it's likely you've never seen a real deep housing slump when nothing is selling. Sounds like you've got some cushion stemming from your success to date though, which is good. You know your gig better than I ever could, but just be careful - this market can turn on a dime b/c, though the real estate industry would like you to believe otherwise, consumer sentiment/psychology plays a HUGE role and can easily overhwlem the alleged "fundamentals".
Your case is not typical, and a LOT of people are going to get hurt, some b/c they're stupid and greedy, and others b/c they just had bad timing.
Just got off the phone with a buddy who got a 4bdr house in 07043, multiple bids, payed over, has been watching the market for about 6 months here, kept losing out.
So is he sucker?
94580 Bay Area California anecdotal:
two houses directly across the street from me for sale. Both dumps. One is owned by a flipper. The other needs $50k work to be liveable and is currently occupied by retards.
No one has even looked at these houses in almost two months. The flippers price has dropped $30k so far.
Good houses continue to sell in the area.
Bernanke today:
"The housing correction will take 1 point out of GDP".
That's HUGE! The fed got what they wanted so this is good news. The bad thing, he said CORRECTION. That means lower prices ahead.
Stocks and bonds are going to rally.
Bernanke said it was "difficult to tell" how long the slump in construction would last, because both buyers and sellers have moved to the sidelines with uncertainty over prices. "It is a little difficult how the dynamics are going to play out," he said. "At the same time, I think there are some strong fundamental underpinnings that should help the housing market over the medium term, he said. These include: a good job market, strong income growth, demographics and continued low mortgage rates, he said. "Ultimately, the housing market is going to be supported by those factors," he said.
Bernanke said there was limited evidence that weakness in the housing market was hurting other sectors.
Flopper Casualty:
http://www.sfgate.com/cgi-bin/articl...carollloyd.DTL
I thought you'd be talking about this one:Quote:
Originally Posted by 4matic
http://www.latimes.com/news/local/la...home-headlines
Classic:Quote:
Originally Posted by 4matic
But he also exemplifies the way in which real estate has become a spin factory of hedging and hype. Serin bought eight houses in eight months in four states with no money down. [with mediocre credit and no job]How, pray tell, did he do this? By his own admission, he applied for and got no-money-down, stated-income loans by inflating his income, sometimes getting primary residence loan rates by claiming he would live in the houses himself. The offers, he said, often had "cash back" clauses, in which he would get money back from the seller after closing, which the bank didn't know about. (This means that a bank, thinking that the sale price was higher, was actually financing not 100 percent of the loan but, say, 110 percent.)
Holy crap. That's insane. It's amazing that kid pulled that many houses together on no real income in that amount of time. If he knew what he was doing he might have made a killing rather than be buried in debt and maybe on his way to jail.Quote:
Originally Posted by 4matic
This is a cool thread. My dad invested in real estate for along time and recently cashed it all in and retired. He allways tried to get me interested in it but I was too distracted by other things. Now though, I am old enough to understand what he was trying to tell me back in my 20's when I was too busy fucking off. I bought a condo 6 years ago and it has almost trippled in value. I just bought my first house and used equity to put down a nice down payment. So I am going to rent the condo and break even and hope for more appreciation and rents to increase,while I live in my new house. In 5 years I will see where both properties are at and hopefully do it again. They are both in a nice area of So Cal and there is no more construction happening. There is no more land to build on so in theory value can only go up. I guess if you play your cards right with real estate eventually you can retire with a nice lump in your back pocket. I hope I can do the same as my dad
...........................
Quote:
Originally Posted by LA Daily News
So where's all the money going?
Dow, baby. No maintenance costs or tenants in my 401k. 'Bout time for a little bull action.
http://www.nytimes.com/2006/10/20/re...e/20ski.1.html
"In her multiyear search for a mountain retreat, Anne Bodine-Cresci saw prices in Stowe, Vt., rise higher than the mountaintops. Her quest was framed by an increasing number of million-dollar-plus homes, pricey fixer-uppers and a limited supply of new listings. “Some places,” Ms. Cresci said, “were going for a lot more than they probably should have.”"
It's interesting to see people's opinions based on where they live. Case in point, what I'm seeing in Park City is vastly different than what md9 is seeing in the valley. Of course, we've tended to trend closer to the coasts as most of the people buying here are coming from there and doing 1031's.
Very interesting thread though.
btw, md9 has his shit together and I wouldn't worry about him getting too far over extended or over confidant in his dealings based on the conversations I've had with him.