Search found 333 matches

by tomtoms
Wed Apr 07, 2021 1:32 pm
Forum: Personal Finance (Not Investing)
Topic: Landlords: How are you doing this year?
Replies: 163
Views: 24351

Re: Landlords: How are you doing this year?

tomtoms wrote: Wed Jul 01, 2020 10:04 am My brother and I own close to 10 rental properties...all single family homes just outside of a big city. We have been very fortunate. Rent collection is 100%. Surprisingly, no one has asked for any maintenance or repair work.

How is everyone doing this year? Do you see yourself buying more rental properties?
I heard from a lot of naysayers when the pandemic hit. A year later, rent collection is still 100%. Appreciation is up 11% year-to-year. By far, single family rental properties have outperformed virtually all other assets.
by tomtoms
Sun Dec 20, 2020 9:09 pm
Forum: Personal Finance (Not Investing)
Topic: Paycheck Protection Program
Replies: 14
Views: 1512

Re: Paycheck Protection Program

I think you would qualify. Use bluevine. You need your 2019 tax return and you need your business’ bank statement to show you are still in business (like Amazon transferring fund to your bank).
by tomtoms
Wed Nov 25, 2020 10:30 pm
Forum: Investing - Theory, News & General
Topic: 2008 vs. 2020
Replies: 41
Views: 5652

Re: 2008 vs. 2020

Housing prices spiked during the 2020 pandemic. This is great for landlords. Feel bad for those people who keep on thinking index funds is the only way to make good money.

https://www.google.com/amp/s/www.cnbc.c ... ember.html
by tomtoms
Fri Nov 20, 2020 12:52 pm
Forum: Personal Finance (Not Investing)
Topic: Prop 19 CA Inheritance Property Implications
Replies: 204
Views: 16810

Re: Prop 19 CA Inheritance Property Implications

Winner: people who want to buy an expensive house

Loser: people who want to buy an affordable house.
by tomtoms
Fri Nov 20, 2020 11:34 am
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

Record high home prices. Congratulation to all the single family home landlords. Great return especially if you bought the house mainly with bank’s money.

https://www.npr.org/2020/11/19/93664297 ... g-shortage

What do you think will happen in 2021?
by tomtoms
Thu Oct 22, 2020 9:27 am
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

Home price is up 15% YTY. If you had put down 20%, you made 5 x 15% = 75% return just on the appreciation.

Why wouldn’t you want to put in some extra landlord work for that kind of return?
by tomtoms
Sat Oct 17, 2020 12:08 pm
Forum: Personal Finance (Not Investing)
Topic: Investing in real estate - what is your opinion?
Replies: 53
Views: 6873

Re: Investing in real estate - what is your opinion?

How many properties are you planning to buy? If it is just one property then I don’t think it is worth the hassle. I recommend: - see 50-100 properties before buying - study the neighborhood and know how much rent you are going to get - find a competent and honest property manager - I prefer properties that cash flow (rent pays for all expenses including repairs, vacancies, property manager) - I prefer single family homes with decent schools Real estate investing is a bit of an exclusive club. A lot of money on the line. You have to know your risk tolerance and more importantly, you need to have a plan in mind for unexpected things. Would you consider a 3D tour a reasonable visit? No, I don’t. You are talking about investing $50-80 k into ...
by tomtoms
Sat Oct 17, 2020 12:03 pm
Forum: Personal Finance (Not Investing)
Topic: Investing in real estate - what is your opinion?
Replies: 53
Views: 6873

Re: Investing in real estate - what is your opinion?

People need to define what is considered a second job?

Is working one hour/week a second job? How about communicating with a property manager here and there?

If you buy a bad rental and rent it out to bad tenants, then you are going to have to put in more work but don’t think that is the norm. There are way more good stories than bad. You just don’t hear the good ones as often because frankly, they are pretty boring.
by tomtoms
Sat Oct 10, 2020 6:36 pm
Forum: Personal Finance (Not Investing)
Topic: Investing in real estate - what is your opinion?
Replies: 53
Views: 6873

Re: Investing in real estate - what is your opinion?

How many properties are you planning to buy? If it is just one property then I don’t think it is worth the hassle.

I recommend:

- see 50-100 properties before buying
- study the neighborhood and know how much rent you are going to get
- find a competent and honest property manager
- I prefer properties that cash flow (rent pays for all expenses including repairs, vacancies, property manager)
- I prefer single family homes with decent schools

Real estate investing is a bit of an exclusive club. A lot of money on the line. You have to know your risk tolerance and more importantly, you need to have a plan in mind for unexpected things.
by tomtoms
Sat Oct 10, 2020 10:34 am
Forum: Personal Finance (Not Investing)
Topic: Buying second house - dilemma
Replies: 46
Views: 6755

Re: Buying second house - dilemma

But my experience in real estate investing is that the largest return almost always comes from price appreciation , and the tax advantages of depreciation is another large contributor to the overall return. But, that is on properties chosen to be rentals from the start. I do not doubt that at all, especially if you've purchased homes in HCOL areas over the last twenty years. But that still doesn't change the fact that price appreciation in real estate is speculative. Real estate, whether a specific plot or in general, is not guaranteed to outperform or even match inflation over any given period of time. The real estate investors I personally know who have been successful focus entirely on the returns generated from cash flows when evaluati...
by tomtoms
Fri Oct 09, 2020 9:39 pm
Forum: Personal Finance (Not Investing)
Topic: Buying second house - dilemma
Replies: 46
Views: 6755

Re: Buying second house - dilemma

But my experience in real estate investing is that the largest return almost always comes from price appreciation , and the tax advantages of depreciation is another large contributor to the overall return. But, that is on properties chosen to be rentals from the start. I do not doubt that at all, especially if you've purchased homes in HCOL areas over the last twenty years. But that still doesn't change the fact that price appreciation in real estate is speculative. Real estate, whether a specific plot or in general, is not guaranteed to outperform or even match inflation over any given period of time. The real estate investors I personally know who have been successful focus entirely on the returns generated from cash flows when evaluati...
by tomtoms
Fri Oct 09, 2020 9:36 pm
Forum: Personal Finance (Not Investing)
Topic: Buying second house - dilemma
Replies: 46
Views: 6755

Re: Buying second house - dilemma

Stocks and rental properties are so disparate from each other that such a comparison is not practical or meaningful. A big portion of stocks' long-term returns have come from capital appreciation. That's not been the case with most rental properties. Yep. Shiller examined that. Here's what he found. https://www.pragcap.com/robert-shiller-dont-invest-in-housing/ Therefore, betting on higher appreciation than that is just that, betting (i.e. speculation). Even if we take Schiller as the absolute truth (remembering that the data analyzed stops in 1990), all it really says is that buying outright or being underleveraged is not going to be helpful. If I buy with 20% down, the leverage will give me a nominal return of 5 times inflation, a real r...
by tomtoms
Fri Oct 09, 2020 12:15 pm
Forum: Personal Finance (Not Investing)
Topic: Buying second house - dilemma
Replies: 46
Views: 6755

Re: Buying second house - dilemma

...How much price appreciation will the house experience? That's an unknown. Cash flows, on the other hand, are known. The OP mention a purchase price and a current value, this determines a CAGR. Sure there are unknowns in projecting it into the future, but cash flows for stocks didn't come down the mountain engraved on Moses' tablets. Lots of unknowns there also, but most of us put money into stocks. Stocks and rental properties are so disparate from each other that such a comparison is not practical or meaningful. A big portion of stocks' long-term returns have come from capital appreciation. That's not been the case with most rental properties. Actually, CAGRs for real estate are documented for longer than stocks, probably much longer. ...
by tomtoms
Thu Oct 08, 2020 9:22 pm
Forum: Personal Finance (Not Investing)
Topic: Should Dad sell highly appreciated home?
Replies: 50
Views: 5703

Re: Discouraging Dad from selling highly appreciated home

Another factor you should consider is...long term care. If the condo is still in his name, the government might cover his care but when he passed away, they would take the condo and sell it.
by tomtoms
Thu Oct 08, 2020 8:16 pm
Forum: Personal Finance (Not Investing)
Topic: Should Dad sell highly appreciated home?
Replies: 50
Views: 5703

Re: Discouraging Dad from selling highly appreciated home

I would greatly appreciate anyone's comments on the course of action DW and I are recommending for her dad. - Dad's age: 80 - He lives in a Condo bought in 1980 (California / HCOL); 100K adjusted cost basis'; 90 mins from my home - Condo's estimated worth is 900K, can clear 850K after closing costs. - He has a 350K mortgage on this condo; he did cash out refi's over the years. $1550 / month mortgage payment - He was single when this was bought; so 250K capital gains exclusion if he sells - If he sold the condo as above, tax software says he would owe ~150K in additional state and federal taxes in that year. - Though he is mostly healthy and not needing assisted living, he needs to move closer to us and is ok to downsize - We can rent out t...
by tomtoms
Thu Oct 08, 2020 3:59 pm
Forum: Investing - Theory, News & General
Topic: Is this the worse time to FIRE?
Replies: 20
Views: 2120

Re: Is this the worse time to FIRE?

austin757 wrote: Thu Oct 08, 2020 3:54 pm
tomtoms wrote: Thu Oct 08, 2020 3:49 pm
McGilicutty wrote: Thu Oct 08, 2020 3:46 pm
tomtoms wrote: Thu Oct 08, 2020 2:59 pm It seems like the stock market has peaked. Investors are going to have to take more risk for better return. What if there is stagnation for the next 10 years? What is your option if your living expense depends on the stock market?
Imagine if instead of the stock market you were a landlord and your retirement was dependent on collecting rent from renters. I can't imagine a worse scenario than trying to collect rent in the midst of a pandemic with 15% unemployment. At least stonks go up everyday.
Rent collection has been very steady during this pandemic:

https://www.calculatedriskblog.com/2020 ... s.html?m=1
That didn’t take long
By pointing out something that is factual?
by tomtoms
Thu Oct 08, 2020 3:49 pm
Forum: Investing - Theory, News & General
Topic: Is this the worse time to FIRE?
Replies: 20
Views: 2120

Re: Is this the worse time to FIRE?

McGilicutty wrote: Thu Oct 08, 2020 3:46 pm
tomtoms wrote: Thu Oct 08, 2020 2:59 pm It seems like the stock market has peaked. Investors are going to have to take more risk for better return. What if there is stagnation for the next 10 years? What is your option if your living expense depends on the stock market?
Imagine if instead of the stock market you were a landlord and your retirement was dependent on collecting rent from renters. I can't imagine a worse scenario than trying to collect rent in the midst of a pandemic with 15% unemployment. At least stonks go up everyday.
Rent collection has been very steady during this pandemic:

https://www.calculatedriskblog.com/2020 ... s.html?m=1
by tomtoms
Thu Oct 08, 2020 3:48 pm
Forum: Investing - Theory, News & General
Topic: Is this the worse time to FIRE?
Replies: 20
Views: 2120

Re: Is this the worse time to FIRE?

austin757 wrote: Thu Oct 08, 2020 3:45 pm Oh, it's tomtoms. Give it a few more posts and you'll hear about how successful he is by investing in real estate.
A big portion of my asset is in index funds. I am a big advocate of index funds.
by tomtoms
Thu Oct 08, 2020 3:44 pm
Forum: Investing - Theory, News & General
Topic: Is this the worse time to FIRE?
Replies: 20
Views: 2120

Re: Is this the worse time to FIRE?

“John Bogle’s formula says 1% real stock returns likely over next decade”

https://michaelritger.com/2018/11/30/jo ... la-decade/
by tomtoms
Thu Oct 08, 2020 2:59 pm
Forum: Investing - Theory, News & General
Topic: Is this the worse time to FIRE?
Replies: 20
Views: 2120

Is this the worse time to FIRE?

It seems like the stock market has peaked. Investors are going to have to take more risk for better return. What if there is stagnation for the next 10 years? What is your option if your living expense depends on the stock market?
by tomtoms
Thu Oct 08, 2020 10:07 am
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

Before I invested in rental properties, I kept on hearing how tenants won’t pay their rent when there is a recession.

That didn’t happen in 2008. Rent collection has been steady during this pandemic (unchanged vs Oct 2019):

“NMHC: Rent Payment Tracker Shows Households Paying Rent Unchanged in October”

https://www.calculatedriskblog.com/2020 ... s.html?m=1

That being said, I do encourage landlords to put away 10% of rent for vacancy.
by tomtoms
Wed Oct 07, 2020 10:21 pm
Forum: Personal Finance (Not Investing)
Topic: Buying second house - dilemma
Replies: 46
Views: 6755

Re: Buying second house - dilemma

onourway wrote: Wed Oct 07, 2020 9:38 pm
tomtoms wrote: Wed Oct 07, 2020 9:37 pm
JBTX wrote: Wed Oct 07, 2020 9:31 pm Keeping and renting current house would be something like $15000 income on $500k of equity if mortgage were paid off. That's a pretty poor return on investment. About 3.0%.

What is the motivation to keep 2 properties?
You are not counting appreciation.
Nope. And we aren't counting depreciation either.
Because there is going to be a housing market downturn? What would happen to stocks if something like that happen?

Assets from real estate to stocks tend to go up over a period of time. Like stocks, there is nothing wrong with assuming real estate will go up over time.
by tomtoms
Wed Oct 07, 2020 9:37 pm
Forum: Personal Finance (Not Investing)
Topic: Buying second house - dilemma
Replies: 46
Views: 6755

Re: Buying second house - dilemma

JBTX wrote: Wed Oct 07, 2020 9:31 pm Keeping and renting current house would be something like $15000 income on $500k of equity if mortgage were paid off. That's a pretty poor return on investment. About 3.0%.

What is the motivation to keep 2 properties?
You are not counting appreciation.
by tomtoms
Wed Oct 07, 2020 7:57 pm
Forum: Personal Finance (Not Investing)
Topic: Buying second house - dilemma
Replies: 46
Views: 6755

Re: Buying second house - dilemma

You should check with a lender and see if you would qualify for two mortgages. Lenders typically count "rent" as income only after 1 year of renting it out.
by tomtoms
Wed Oct 07, 2020 6:23 pm
Forum: Personal Finance (Not Investing)
Topic: How do people buy $2.4M house with annual income of $122 k?!
Replies: 3
Views: 2024

How do people buy $2.4M house with annual income of $122 k?!

The median home in Newport Beach is $2.4M. The median household income is $122 k/year. How can they afford $2.4M home? Generational wealth?

https://www.zillow.com/newport-beach-ca/home-values/
https://www.census.gov/quickfacts/newpo ... california
by tomtoms
Wed Oct 07, 2020 11:30 am
Forum: Personal Finance (Not Investing)
Topic: Applying for mortgage with "no income"
Replies: 39
Views: 5620

Re: Applying for mortgage with "no income"

So far the banks we have called are not playing ball. They want to see some record of verifiable income. The sale agreement and expected payments from that doesn't qualify apparently. We have a house picked out and want to go under contract but this is holding us up. I may have to cosign... Again, do not cosign . Have you contacted local, independent banks? What about credit unions? The latter are more likely to 'play ball' than banks, especially large banks. Yes we're trying banks big and small. I will make more calls tomorrow. Why is cosigning so bad? I understand I would be legally liable if my parents defaulted but that's not going to happen. They have enough savings to make the monthly payments. I also get that my credit score would t...
by tomtoms
Wed Oct 07, 2020 11:13 am
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

“Home prices have climbed 14% compared to a year ago, the fastest growth rate since 2013”

https://www.google.com/amp/s/www.mansio ... ays-220062

I feel bad for some of my friends who keep on waiting for prices to drop. They could have purchased a property last year and refinance it this year (record low interest rate).
by tomtoms
Wed Oct 07, 2020 12:08 am
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

Where were you when the S&P 500 dropped almost 40% in March? This is what I don't get...our gain in real estate is not your loss. Like investing in the stock market, there are things you should and shouldn't do in real estate. You can learn something if you stopped dismissing our success as an anomaly. You gotta pick your battles. Bogleheads is an echo chamber about many things, including the majority opinion here about real estate investing. I no longer try. There are just better things to do with my time than try convincing people here that, yes, I really do have rental properties with 37% cash-on-cash annual return. You can show BH the actual numbers, from real properties, and it will still be summarily dismissed. :oops: Nobody is d...
by tomtoms
Tue Oct 06, 2020 6:37 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

gwe67 wrote: Tue Oct 06, 2020 6:09 pm I'm sure those two landlords will be working more than "1-2 hours per year". :P
That is why I always recommend hiring a good property manager. The sad part is you find enjoyment from their failure.
by tomtoms
Tue Oct 06, 2020 6:06 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

gwe67 wrote: Tue Oct 06, 2020 5:49 pm Here are two landlord nightmare scenarios posted on Bogleheads today.

Rental Repairs
viewtopic.php?f=2&t=327154&newpost=5534180

Need Help Exiting Rental Property
viewtopic.php?f=2&t=327158&newpost=5534049
Where were you when the S&P 500 dropped almost 40% in March?

This is what I don't get...our gain in real estate is not your loss. Like investing in the stock market, there are things you should and shouldn't do in real estate. You can learn something if you stopped dismissing our success as an anomaly.
by tomtoms
Tue Oct 06, 2020 5:16 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

willthrill81 wrote: Tue Oct 06, 2020 5:04 pm
tomtoms wrote: Tue Oct 06, 2020 4:59 pm Home price is up 5.9% YTY. If you had purchased a rental with 20% down payment, you made 29.5% return on appreciation.

https://www.calculatedriskblog.com/2020 ... r.html?m=1
And if you had bought UPRO on March 23rd, you would now be up 300%.

Leverage works in both directions. And home prices don't typically increase much faster than inflation.
Not too many people have the gut to put $100 k on something as leveraged as UPRO on March 23. Know anyone who did?

Let’s say inflation is 3% and home price went up 3%. If you had put down 20%, you would make 15% return on appreciation.

Real estate protects you from inflation.
by tomtoms
Tue Oct 06, 2020 4:59 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

Home price is up 5.9% YTY. If you had purchased a rental with 20% down payment, you made 29.5% return on appreciation.

https://www.calculatedriskblog.com/2020 ... r.html?m=1
by tomtoms
Tue Oct 06, 2020 4:10 pm
Forum: Personal Finance (Not Investing)
Topic: Need Help Exiting Rental Property
Replies: 17
Views: 2444

Re: Need Help Exiting Rental Property

Jack FFR1846 wrote: Tue Oct 06, 2020 3:52 pm Sell. Get out. Next time someone tells you that real estate is passive income, punch them in the mouth.
How about don’t buy a rental in a bad neighborhood with an easement problem? That is like buying a used car with 300,000 miles and then complaining about the maintenance cost.

OP: if you decide to sell the house, you would have to disclose this issue. I would suggest talking to a local property manager and see what they can do for you. I am sure they have dealt with issues like this before. Paying him off seems to be a good option.
by tomtoms
Tue Oct 06, 2020 3:53 pm
Forum: Personal Investments
Topic: should I pay off mortgage or save for buying a new property?
Replies: 9
Views: 1562

Re: should I pay off mortgage or save for buying a new property?

BogleDan wrote: Tue Oct 06, 2020 3:44 pm
tomtoms wrote: Tue Oct 06, 2020 2:55 pm Another question you need to ask is...are you going to be able to qualify for another mortgage if you are not going to sell your current property? Banks typically want to see at least one year of rental income before they count your rent as “income”.
They can usually look at a lease agreement (although unlikely OP would have a lease by this time) and project pro-forma income based on that. Regardless, they only ever consider 75% of your rental income in their calculations. The other 25% they consider unreliable.
The lenders that I have been working with require one year of landlord experience before they count rental income.

Anybody have a different experience?
by tomtoms
Tue Oct 06, 2020 3:05 pm
Forum: Personal Finance (Not Investing)
Topic: Rental Repairs
Replies: 7
Views: 981

Re: Rental Repairs

I own a SFH rental property and the tenants recently submitted their 30-day notice that they are vacating. Approximately 6 months ago, through negligence on the tenant's part, there was an unattended fire outside which spread and ended up causing damage to the soffit, flashing, and gutters. I have since secured an estimate for repairs to the tune of $980. The tenants are requesting to hire their own contractor (a friend) who can do it cheaper. I am not inclined to have tenants conduct major repairs such as this based on the liability and potential for quality control issues. I'm using the same contractor who installed the items two years ago to ensure quality of materials, color matching, etc. The lease verbiage is as follows: "Landlo...
by tomtoms
Tue Oct 06, 2020 2:55 pm
Forum: Personal Investments
Topic: should I pay off mortgage or save for buying a new property?
Replies: 9
Views: 1562

Re: should I pay off mortgage or save for buying a new property?

But I am not sure if we should keep the cash around. In 2-3 years, we are likely to buy another house in a better school district which might cost over a million. And we intend to make our current house a rental property instead of selling it. As a rental property, the mortgage interest can be tax deducted as rental expense at that time. That's one benefit I see of keeping the current mortgage. Also with the cash around, maybe it's easier to get another loan when buying that bigger house? Sorry that, I am totally a newbie on this. Any suggestions are welcome. Thanks! I am very much invested in my tax-advantaged account. Do you want to be an “accidental landlord”? Not all houses make a good rental property. Have you done the calculation? Wh...
by tomtoms
Tue Oct 06, 2020 12:42 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

I don’t even think my property manager spends that much time on my properties. It is a well run oil machine. If there is a roof leak, she calls Joe... I understand you have apparently found a good property manager, but that's like finding a good auto mechanic or financial adviser or whatever. If it was me, my property manager would call Joe, who would charge 4x to repair that roof vs. what you pay, and give a 30% kickback to the property manager. So I would fire the property manager, but the next one would charge 5x and give a 50% kickback. Sounds like a well oiled machine to me, no argument there. Ultimately the difference is that if you buy low cost index funds, there is really not the same variability in experiences. You can argue how m...
by tomtoms
Tue Oct 06, 2020 12:13 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

Real estate is part time job, even full time job sometimes. That's the beauty of passive investment, no work required. Stocks all the way. I talk to my property manager 1-2 hours per year. It is not 100% passive but I think it is pretty close. Many here have had very different experiences managing rental properties. The reason many say that it can be a part-time job is because that's been their own personal experience. Fair enough but to make a general statement like, “Real estate is part time job” implies working 20 hours a week. That is certainly not the norm especially when you can hire property management. I don’t even think my property manager spends that much time on my properties. It is a well run oil machine. If there is a roof lea...
by tomtoms
Tue Oct 06, 2020 10:29 am
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

sd323232 wrote: Tue Oct 06, 2020 9:51 am Real estate is part time job, even full time job sometimes. That's the beauty of passive investment, no work required. Stocks all the way.
I talk to my property manager 1-2 hours per year. It is not 100% passive but I think it is pretty close.
by tomtoms
Sun Oct 04, 2020 9:53 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

RJ5 wrote: Sun Oct 04, 2020 9:13 pm the last 6 months have shown the importance of diversification

i am a firm believer of doing everything

Having some form of W-2 wage income
Do Index investing either through accessible 401K, IRA, or Roth IRA, etc
Have some cash flowing real estate
Maybe even a side hustle that generates some cash flow
That is exactly right. I have all four - job (not affected), business (down 15-20%), stocks (up 7%), and rental properties (up big time). RE (single family homes) is the big winner this year.

I tell my friends...if I go bankrupt then that means the US economy has also collapsed.
by tomtoms
Sun Oct 04, 2020 6:43 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

You are going to find a lot of people here who are totally against buying rental properties. Some don’t even think you should make a living off rental properties. I don't think a lot of people here, definitely not me, object to making a career out of rental real estate, any more than we'd object to owning any other business. It's just that some people present it as an equivalent alternative to investing in funds or other passive investments, while they don't consider owning a convenience store or restaurant or dental practice or gym or some other business as an equivalent alternative. Lets make it clear then. Owning rental properties is not an equivalent alternative to investing in stocks (not as passive) but it is also not equivalent to o...
by tomtoms
Sun Oct 04, 2020 5:12 pm
Forum: Investing - Theory, News & General
Topic: Actual Real Estate Investment vs REIT
Replies: 13
Views: 1472

Re: Actual Real Estate Investment vs REIT

The downside of owning rental properties is having to do the work. You have to learn your rental market, find a good property manager, understand the risk.

Is it worth the extra return? Maybe not if you are just going to buy one rental.

I find the RE market to be inefficient compared to the stock market. You are competing against first time buyers, people who buy with emotions. You can make a lot of money if you do it right and if you own multiple properties.
by tomtoms
Sun Oct 04, 2020 4:56 pm
Forum: Investing - Theory, News & General
Topic: Actual Real Estate Investment vs REIT
Replies: 13
Views: 1472

Re: Actual Real Estate Investment vs REIT

I own rentals. I don’t own REIT: 1) high fees; 2) I don’t want to own commercial properties; 3) can’t leverage with low interest rate; 4) can’t control my investment
by tomtoms
Sun Oct 04, 2020 2:03 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

When you talk about leverage, you need to talk about interest rate. This is what Buffett said: “Warren Buffett says along with equities, single-family homes are a very attractive investment right now. Appearing live on CNBC's Squawk Box, Buffett tells Becky Quick he'd buy up "a couple hundred thousand" single family homes if it were practical to do so. If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down.“ https://www.cnbc.com/id/46538421 my friend that article is nearly 9 years old. you have missed the window. Interest rate is lower now than ever. sure but purchase prices are up 2-3x vs 2010 (...
by tomtoms
Sun Oct 04, 2020 1:37 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

tmcc wrote: Sun Oct 04, 2020 1:35 pm
tomtoms wrote: Sun Oct 04, 2020 1:26 pm

When you talk about leverage, you need to talk about interest rate.

This is what Buffett said:

“Warren Buffett says along with equities, single-family homes are a very attractive investment right now.

Appearing live on CNBC's Squawk Box, Buffett tells Becky Quick he'd buy up "a couple hundred thousand" single family homes if it were practical to do so.

If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He advises buyers to take out a 30-year mortgage and refinance if rates go down.“

https://www.cnbc.com/id/46538421
my friend that article is nearly 9 years old. you have missed the window.
Interest rate is lower now than ever.
by tomtoms
Sun Oct 04, 2020 1:37 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

Rentals require more work but that is why you get better return than stocks. Can any more experienced members than myself speak to how much of the better returns would be attributable to the extra work that goes into rentals vs how much is simply from using leverage? Many landlords were over-leveraged in 2008 and went bankrupt. I know some experienced real estate investors who judge their returns on the basis of them paying cash for the property, even though they use leverage to purchase the property. They refuse to try to 'make a bad property good' on the basis of leverage. and many landlords have made a fortune off the 2008 crash. If anything, the crash has made real estate more secure due to regulations. No more funny money.
by tomtoms
Sun Oct 04, 2020 1:26 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

Rentals require more work but that is why you get better return than stocks. Can any more experienced members than myself speak to how much of the better returns would be attributable to the extra work that goes into rentals vs how much is simply from using leverage? When you talk about leverage, you need to talk about interest rate. This is what Buffett said: “Warren Buffett says along with equities, single-family homes are a very attractive investment right now. Appearing live on CNBC's Squawk Box, Buffett tells Becky Quick he'd buy up "a couple hundred thousand" single family homes if it were practical to do so. If held for a long period of time and purchased at low rates, Buffett says houses are even better than stocks. He ad...
by tomtoms
Sun Oct 04, 2020 1:04 pm
Forum: Investing - Theory, News & General
Topic: Why not Real Estate instead of Stocks?
Replies: 210
Views: 27316

Re: Why not Real Estate instead of Stocks?

My family and I own 9 single family homes as rental properties and the result has been phenomenal. Rentals require more work but that is why you get a better return than stocks. Here is the math: let’s say you own $400 k rental (20% down payment = $80 k) and it appreciates 4%/year (16 k). If your tenants pay for all expenses including a property manager and long term repairs, you would make $16 k/80 k = 20% return on the appreciation in the first year (more as time goes by). Even with a modest 3% appreciation, you would make 12% return. I have not included extra rent, mortgage pay down by tenants, buying it below market value which would further increase your return. Is rental for everyone? Certainly not but I believe it is for people who h...
by tomtoms
Tue Sep 29, 2020 12:08 pm
Forum: Personal Finance (Not Investing)
Topic: Landlords: How are you doing this year?
Replies: 163
Views: 24351

Re: Landlords: How are you doing this year?

Just became a landlord last week after buying my very first investment property in a highly desirable suburb of Oro Valley, AZ (north of Tucson). Instead of these low interest rates working against my savings, thought I’d have them work for me instead and landed a nicely maintained 2-story SFR (built in 2012) with 25% down and a stellar (for investment rates) 3.25% at 0.25 points. The pandemic has surely reshaped tenant qualifications by now. Property management company had no problems renting it out for $100 above the appraised rent estimate. Found a great family working in the medical field and far exceeded the minimum requirements and screening. Estimated ROI after all expenses is north of 7%, which I know is lower than most investors w...
by tomtoms
Tue Sep 29, 2020 11:15 am
Forum: Personal Finance (Not Investing)
Topic: Landlords: How are you doing this year?
Replies: 163
Views: 24351

Re: Landlords: How are you doing this year?

Just became a landlord last week after buying my very first investment property in a highly desirable suburb of Oro Valley, AZ (north of Tucson). Instead of these low interest rates working against my savings, thought I’d have them work for me instead and landed a nicely maintained 2-story SFR (built in 2012) with 25% down and a stellar (for investment rates) 3.25% at 0.25 points. The pandemic has surely reshaped tenant qualifications by now. Property management company had no problems renting it out for $100 above the appraised rent estimate. Found a great family working in the medical field and far exceeded the minimum requirements and screening. Estimated ROI after all expenses is north of 7%, which I know is lower than most investors w...