Remind me (again) how real estate isn't a GREAT investment?

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JackoC
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by JackoC » Sun Aug 19, 2018 12:03 pm

triple, oops

WanderingDoc
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 12:05 pm

Nate79 wrote:
Sun Aug 19, 2018 10:40 am
The most glaring problem of this discussion is the complete ignoring of the risk associated with the use of leverage to boost real estate returns. Certainly due to the nature of the loans it is not the same risk compared to margin loans to invest in stocks but still there is risk. The idea of paying cash for a rental is so blasted these days in favor of taking on leverage up to the max. But there are still some wise real estate investors out there preaching against this strategy.
Those real estate investors are in the distinct minority. The wealthiest and most successful Real Estate Investors use Leverage because it is the best tool we have specifically in this asset class. It is a way to unlock several extra profit centers in real estate, hedge inflation, diverse fire risk from an equity and geographical standpoint, etc.I have detailed this further in prior posts.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

WanderingDoc
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 12:07 pm

Don't confuse 'real estate investing' for 'dabbling in real estate'. Those aren't the same thing.

BrooklynInvest wrote:
Sun Aug 19, 2018 7:48 am
I have a 2-family house and the rent now covers our mortgage and taxes. Yay me.

BUT . . . in the 11 years that I've had the house, I've refinanced (no cash out) at lower rates three times (luck), rents have doubled (luck + significant renovations to the apartment) and halved the pretty significant principal I owed (cash, lots of cash)

Downside: Three things -

1. The opportunity cost of the money I've put into the house versus a diversified portfolio

2. My time. I've had a part time job for the last 11 years in addition to my full time gig

3. Hassle. Sometimes the aggravation is significant.

Upside:

1. We live in a nice brownstone for free

2. Rents index to inflation, give or take, while my mortgage doesn't

3. Leverage on the house itself. Rent allowed me to buy more property than I personally needed. Capital gain is amplified

Suggestion - don't disregard luck in my simplistic analysis above. Works both ways. Good luck!
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

WanderingDoc
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 12:14 pm

Really? So you had low to mid seven figures in real estate equity by the time you're in your mid-20s? You have read over 200 books on business, philosophy, and mindset, have been working with at least three mentors.. by your mid-20s? I'd love to hear about it.

I always tell younger folks asking me about this to never get married (or divorced) before realizing their dream.

I never said anybody can be FI within 5 years if they invest in real estate. Show me where I said that. What I said was, if you just invest in index funds you're guaranteed that you will not be FI in 5 years or less. The same cannot be said if you invest in real estate.
stoptothink wrote:
Sun Aug 19, 2018 11:01 am
Turbo29 wrote:
Sun Aug 19, 2018 8:36 am
WanderingDoc wrote:
Sat Aug 18, 2018 1:03 pm

in summary, real estate is a very forgiving investment that requires very little brain power and business knowledge and math knowledge to get right.
So if it doesn't need brains or knowledge to get right, maybe you were just lucky investing at the right time.

I know several people invested in real estate who lost everything in the crash 10 year ago. In one case it not only destroyed their wealth, but destroyed their marriage and family too.

I suspect timing has a lot to do with your alleged success. What year did you start investing in real estate?
I was WanderingDoc during the last RE crash. I was in my mid-20's and telling my mom that in a few years she'd never have to work. I was also recently married and my wife knew I had been quite fortunate (to that point). I am very debt-averse and wasn't leveraged at all, and I also was very young and had a 9-5 which could pay the bills, so when '07 happened I lost most of my life savings but I wasn't totally financially devastated. My two partners were in their 40's and had been in residential RE their entire life; both were "worth" well into 7-figures. Both ended up divorced, bankrupt, and living with their parents. One of them has recovered (sort of), the other hasn't. I learned a lesson and have since recovered, but it is still hard sometimes to look back and think that had I not gotten into RE (and faced divorce a few years later which was directly related to suddenly not being able to provide the lifestyle my wife expected), I'd likely be FIRE right now (at 37) just from working, saving, and index investing.

You either have to be lucky or really know what you are doing. I, like most people who get involved, didn't really know what I was doing. RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs is hilariously ridiculous (and I think he knows this). Of the handful of people around me who still have some stake in RE, I suspect most of them (at this point) have either lost money or would have been far better off with a basic 3-fund portfolio.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

stoptothink
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by stoptothink » Sun Aug 19, 2018 12:35 pm

WanderingDoc wrote:
Sun Aug 19, 2018 12:14 pm
Really? So you had low to mid seven figures in real estate equity by the time you're in your mid-20s? You have read over 200 books on business, philosophy, and mindset, have been working with at least three mentors.. by your mid-20s? I'd love to hear about it.

I always tell younger folks asking me about this to never get married (or divorced) before realizing their dream.

I never said anybody can be FI within 5 years if they invest in real estate. Show me where I said that. What I said was, if you just invest in index funds you're guaranteed that you will not be FI in 5 years or less. The same cannot be said if you invest in real estate.
stoptothink wrote:
Sun Aug 19, 2018 11:01 am
Turbo29 wrote:
Sun Aug 19, 2018 8:36 am
WanderingDoc wrote:
Sat Aug 18, 2018 1:03 pm

in summary, real estate is a very forgiving investment that requires very little brain power and business knowledge and math knowledge to get right.
So if it doesn't need brains or knowledge to get right, maybe you were just lucky investing at the right time.

I know several people invested in real estate who lost everything in the crash 10 year ago. In one case it not only destroyed their wealth, but destroyed their marriage and family too.

I suspect timing has a lot to do with your alleged success. What year did you start investing in real estate?
I was WanderingDoc during the last RE crash. I was in my mid-20's and telling my mom that in a few years she'd never have to work. I was also recently married and my wife knew I had been quite fortunate (to that point). I am very debt-averse and wasn't leveraged at all, and I also was very young and had a 9-5 which could pay the bills, so when '07 happened I lost most of my life savings but I wasn't totally financially devastated. My two partners were in their 40's and had been in residential RE their entire life; both were "worth" well into 7-figures. Both ended up divorced, bankrupt, and living with their parents. One of them has recovered (sort of), the other hasn't. I learned a lesson and have since recovered, but it is still hard sometimes to look back and think that had I not gotten into RE (and faced divorce a few years later which was directly related to suddenly not being able to provide the lifestyle my wife expected), I'd likely be FIRE right now (at 37) just from working, saving, and index investing.

You either have to be lucky or really know what you are doing. I, like most people who get involved, didn't really know what I was doing. RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs is hilariously ridiculous (and I think he knows this). Of the handful of people around me who still have some stake in RE, I suspect most of them (at this point) have either lost money or would have been far better off with a basic 3-fund portfolio.
:oops: Save us from boasting about your mentors and how many books you have read, it is your persistent hyperbolic and completely baseless claims about how easy it is to become fabulously wealthy with RE that people disagree with.

WanderingDoc
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 12:43 pm

stoptothink wrote:
Sun Aug 19, 2018 12:35 pm
WanderingDoc wrote:
Sun Aug 19, 2018 12:14 pm
Really? So you had low to mid seven figures in real estate equity by the time you're in your mid-20s? You have read over 200 books on business, philosophy, and mindset, have been working with at least three mentors.. by your mid-20s? I'd love to hear about it.

I always tell younger folks asking me about this to never get married (or divorced) before realizing their dream.

I never said anybody can be FI within 5 years if they invest in real estate. Show me where I said that. What I said was, if you just invest in index funds you're guaranteed that you will not be FI in 5 years or less. The same cannot be said if you invest in real estate.
stoptothink wrote:
Sun Aug 19, 2018 11:01 am
Turbo29 wrote:
Sun Aug 19, 2018 8:36 am
WanderingDoc wrote:
Sat Aug 18, 2018 1:03 pm

in summary, real estate is a very forgiving investment that requires very little brain power and business knowledge and math knowledge to get right.
So if it doesn't need brains or knowledge to get right, maybe you were just lucky investing at the right time.

I know several people invested in real estate who lost everything in the crash 10 year ago. In one case it not only destroyed their wealth, but destroyed their marriage and family too.

I suspect timing has a lot to do with your alleged success. What year did you start investing in real estate?
I was WanderingDoc during the last RE crash. I was in my mid-20's and telling my mom that in a few years she'd never have to work. I was also recently married and my wife knew I had been quite fortunate (to that point). I am very debt-averse and wasn't leveraged at all, and I also was very young and had a 9-5 which could pay the bills, so when '07 happened I lost most of my life savings but I wasn't totally financially devastated. My two partners were in their 40's and had been in residential RE their entire life; both were "worth" well into 7-figures. Both ended up divorced, bankrupt, and living with their parents. One of them has recovered (sort of), the other hasn't. I learned a lesson and have since recovered, but it is still hard sometimes to look back and think that had I not gotten into RE (and faced divorce a few years later which was directly related to suddenly not being able to provide the lifestyle my wife expected), I'd likely be FIRE right now (at 37) just from working, saving, and index investing.

You either have to be lucky or really know what you are doing. I, like most people who get involved, didn't really know what I was doing. RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs is hilariously ridiculous (and I think he knows this). Of the handful of people around me who still have some stake in RE, I suspect most of them (at this point) have either lost money or would have been far better off with a basic 3-fund portfolio.
:oops: Save us from boasting about your mentors and how many books you have read, it is your persistent hyperbolic and completely baseless claims about how easy it is to become fabulously wealthy with RE that people disagree with.
You only speak for yourself. Not "us". If you aren't interested, don't read the thread. All good.

PM sent to those requesting the 'stocks vs. real estate' comparison podcast! Check your inboxes.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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HomerJ
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by HomerJ » Sun Aug 19, 2018 12:45 pm

stoptothink wrote:
Sun Aug 19, 2018 11:01 am
RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs...
This is EXACTLY the same as a person coming on here who bought bitcoin or Netflix 5 years ago and starts telling us how easy it is for anyone to get rich quick.
Last edited by HomerJ on Sun Aug 19, 2018 2:45 pm, edited 1 time in total.
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tibbitts
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by tibbitts » Sun Aug 19, 2018 12:52 pm

Stormbringer wrote:
Sun Aug 19, 2018 7:40 am
Jack FFR1846 wrote:
Sun Aug 19, 2018 7:27 am
Here ya go. I rented my house out while my company sent me to graduate school. I hired a property manager to handle "everything". I get a call from the manager at 3am (why I use that time) saying that the tenants report sewage backed up, coming back out the drain for the washer and it's going to cost $1000 to have an emergency pump out and clean up.

So much for "passive", even with a paid manager.
My company has seven property managers. There is always one of them, plus a maintenance guy, on call 24/7. In our contract with the property owners, we negotiate a threshold, below which we have complete discretion to authorize repairs, and above which we have to get permission from the owner. This allows the owner to control how many calls they get. The contract authorizes us to perform repairs for emergency situations even it goes above that amount.

In your scenario, under our contract, we would have performed the repair and let you know about it in the morning.
This seems to be the key to making money in real estate "passively." If your property management business can get services (not just repairs but renovations, etc.) at wll below half of retail, you can still mark them up a little and the owner can pay an amount that may let them make money. I don't believe an owner paying retail can ever make money in real estate.

Now that I think about it, assuming that's what you're doing, don't people want to hire you all the time for repairs/renovations that have nothing to do with renting? I mean, don't they literally want you to manage the property they own and live in? Sounds like a good deal for a homeowner to me.
Last edited by tibbitts on Sun Aug 19, 2018 12:55 pm, edited 1 time in total.

stoptothink
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by stoptothink » Sun Aug 19, 2018 12:53 pm

WanderingDoc wrote:
Sun Aug 19, 2018 12:43 pm
stoptothink wrote:
Sun Aug 19, 2018 12:35 pm
WanderingDoc wrote:
Sun Aug 19, 2018 12:14 pm
Really? So you had low to mid seven figures in real estate equity by the time you're in your mid-20s? You have read over 200 books on business, philosophy, and mindset, have been working with at least three mentors.. by your mid-20s? I'd love to hear about it.

I always tell younger folks asking me about this to never get married (or divorced) before realizing their dream.

I never said anybody can be FI within 5 years if they invest in real estate. Show me where I said that. What I said was, if you just invest in index funds you're guaranteed that you will not be FI in 5 years or less. The same cannot be said if you invest in real estate.
stoptothink wrote:
Sun Aug 19, 2018 11:01 am
Turbo29 wrote:
Sun Aug 19, 2018 8:36 am


So if it doesn't need brains or knowledge to get right, maybe you were just lucky investing at the right time.

I know several people invested in real estate who lost everything in the crash 10 year ago. In one case it not only destroyed their wealth, but destroyed their marriage and family too.

I suspect timing has a lot to do with your alleged success. What year did you start investing in real estate?
I was WanderingDoc during the last RE crash. I was in my mid-20's and telling my mom that in a few years she'd never have to work. I was also recently married and my wife knew I had been quite fortunate (to that point). I am very debt-averse and wasn't leveraged at all, and I also was very young and had a 9-5 which could pay the bills, so when '07 happened I lost most of my life savings but I wasn't totally financially devastated. My two partners were in their 40's and had been in residential RE their entire life; both were "worth" well into 7-figures. Both ended up divorced, bankrupt, and living with their parents. One of them has recovered (sort of), the other hasn't. I learned a lesson and have since recovered, but it is still hard sometimes to look back and think that had I not gotten into RE (and faced divorce a few years later which was directly related to suddenly not being able to provide the lifestyle my wife expected), I'd likely be FIRE right now (at 37) just from working, saving, and index investing.

You either have to be lucky or really know what you are doing. I, like most people who get involved, didn't really know what I was doing. RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs is hilariously ridiculous (and I think he knows this). Of the handful of people around me who still have some stake in RE, I suspect most of them (at this point) have either lost money or would have been far better off with a basic 3-fund portfolio.
:oops: Save us from boasting about your mentors and how many books you have read, it is your persistent hyperbolic and completely baseless claims about how easy it is to become fabulously wealthy with RE that people disagree with.
You only speak for yourself. Not "us". If you aren't interested, don't read the thread. All good.

PM sent to those requesting the 'stocks vs. real estate' comparison podcast! Check your inboxes.
I have no problem just skipping your posts in otherwise very informative discussions, but come on, there have been entire threads started to suggest that maybe you should be banned from the board because so many people think you are a troll.

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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by AlphaLess » Sun Aug 19, 2018 12:59 pm

1. Portfolio investing (mostly total stock + total bond type of strategies) == Not taking too much time, low cost, LIQUID, easy to see performance day-to-day, easy to estimate volatility of returns, and mean returns.

2. Real estate investing == investing in REITs. Similar to the above. It is up to you to figure out how this compares to the above.

3. Landlording == OCCUPATION or small business that has both wage / sweat income, as well as capital return.

In my view, third is very different from 1 or 2:
- requires skill,
- requires a lot of time,
- has hidden costs, unless you start doing it over and over again, and can really attribute all the costs. Example: the cost of your own time.
- NOT diversified (unless you have 100s of properties all over the country),
- big time YMMV.

#1: none of the above!
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AlphaLess
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by AlphaLess » Sun Aug 19, 2018 1:03 pm

unclescrooge wrote:
Sat Aug 18, 2018 12:04 am
During the last cycle I bought 18 investment homes all over the country.

I sold when the going was good. I saw many other investors who were over leveraged, and instead of being on the verge of early retirement, hit middle age with zero networths.

A lot of investors are really bad at math. While they are capable of accurately calculating their returns on the original investment, they forget to calculate the return on equity, which slowly declines until they've dropped from the midteens to mid single digit returns within several years. These are not dissimilar to the stock investors who also consistently lose money, or under perform the indicies.

Profits are eroded by property manager fees, legal fees, vacancies, repairs, maintenance. Few of these items are accurately calculated in their projections.

I tried bidding on several rentals this year and the market was insanely hot. Homes in suburbs of 2nd tier mid west cities were being snatched up within 48 hours at prices that don't make economic sense. Every one thinks they can become flippers or landlords. As a result I gave up and decided to wait until the next recession.

If you can buy rentals 9 years after the bottom and still make a profit then good for you. I personally think that ship has sailed.
^ Upvote x 100.

If you can time a market, you will always come out ahead.

A lot of the so-called real estate 'investors' who brag about good fortunes are lucky due to timing of purchase.

But try to invest $1mm in stocks on Mar.3.2009 vs whatever 'real estate' means.

I guarantee you that stocks will come out ahead. BIGLY.
"You can get more with a kind word and a gun than with just a kind word." George Washington

MrBeaver
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by MrBeaver » Sun Aug 19, 2018 1:24 pm

yearzero wrote:
Sun Aug 19, 2018 11:16 am
MrBeaver wrote:
Sat Aug 18, 2018 8:13 pm
As others have said, great returns come from luck/timing + managing yourself (job). For the most part, I prefer REITs + stocks, though I might jump in on RE if we had another big downturn in RE like 2008-2009.

I can see myself buying properties in whatever town(s) my two kids go to college, but putting their names on the deed and loan in addition to mine (joint ownership). I’d pay for their rent out of my 529, and pay them to manage the property and collect rent from roommates so they can start a Roth IRA. They would gain confidence of the ‘I can do this stuff without dad there’ variety and get a head start on their credit score. Once they graduate, I’d have them refinance it and relinquish my half so they can sell it owing no capital gains, or stay there. They get a 50k headstart on net worth, practice on how to maintain a property, and four years of Roth IRA contributions, on top of the value of their education.

I’d also make an exception if I had an on-site second unit. I’d have no problem renting and managing that because it would just feel like maintaining my own home.

Great idea. This is something I've thought about a lot also. Are there any rules against using one a child's 529s to pay for rent on properties they own half of via some formal ownership structure?
I haven't fully researched it, so I really don't know. It's possible that it could require some sort of LLC or trust structure which would add complexity and cost. I have enough years before this becomes a reality that I'll just wait and see as the details of such an arrangement are likely to change in the mean time. Heck, they might even vary by state for all I know. I would also probably encourage them to do one year on campus just to ease into the college structure and ensure a healthy friend base is built before isolating them off campus.

I have seen examples of where the parent owns the property with no child student ownership and 529 money from a 529 with the student as a beneficiary is used to pay rent to the parent. In that case, the total allowed room and board must be equal or less than what the school lists as typical room and board costs. Doing that is certainly an option, but my main goal with this wouldn't be building my own portfolio, but rather giving the student a leg up so they can start their career with good habits, a good credit score, and a stable non-negative net worth. The biggest risk to this would be if interest rates rose during college such that the student refinancing to change the terms of the loan was not feasible.

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HomerJ
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by HomerJ » Sun Aug 19, 2018 1:24 pm

WanderingDoc wrote:
Sun Aug 19, 2018 12:14 pm
I never said anybody can be FI within 5 years if they invest in real estate. Show me where I said that.
Here you go.
WanderingDoc wrote:Ability to retire in 3-5 years on a teacher's salary and a teachers IQ. Happens every day with real estate.
So sometimes it only takes 3 years! Awesome! Waiting 5 years was the deal-breaker for me.
What I said was, if you just invest in index funds you're guaranteed that you will not be FI in 5 years or less. The same cannot be said if you invest in real estate.
This is correct. It IS possible to hit a home run if you buy the right home(s) with a ton of leverage in the right market at the exact right time.

It is also possible to hit a home run if you buy the right individual stock(s) with a ton of leverage at the exact right time.

But it's also possible to lose money or even go broke if you buy the WRONG home(s)/stock(s) with a ton of leverage at the WRONG time.

So far, no one has gone broke buying and holding index funds. It's a slow and steady path to wealth.

And in general, in most time periods, in most markets, real estate is ALSO a slow and steady path to wealth, just like index funds.

It's nearly impossible that you don't understand that.

It's absolutely amazing to me, that with a housing crash that happened just ten years ago, you appear completely clueless to the fact that leveraged real estate can crash and bankrupt someone.

It's absolutely amazing to me that you are completely unaware of the other 95% of the country where houses don't increase 200% in value in 5 years, and where rents can stay stagnant for 5 years, instead of jumping 15% a year. In those places, real estate is not a guaranteed QUICK path to riches. Real estate can still be a slow and steady path to wealth in those places. No one is disputing that. But FI in 3-5 years is extremely rare, and becoming rarer.

Even in the 5% areas, houses cannot increase 200% in 5 years again and again. Especially with mortgage rates going up.

You MUST be aware that you bought in the exact right market at the exact right time (recovery from the last crash), with a large salary (doctor) with a ton of disposable income, and with interest rates as their lowest point in 70 years.

Congrats to you. Smart, lucky, whatever. You did great. But that set of conditions is not normal across the country, and not even normal for all 5-year periods where you live, and teachers, starting today, under different conditions, have almost no chance of becoming FI in 3-5 years.

But they have a very good chance of becoming wealthy, slow and steady, over time via index funds, real estate, or a combination of both.
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WanderingDoc
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 1:50 pm

HomerJ wrote:
Sun Aug 19, 2018 12:45 pm
stoptothink wrote:
Sun Aug 19, 2018 11:01 am
RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs...
This is EXACTLY the same as a person coming on here who bought bitcoin or Netflix 5 years ago and starts telling us how easy it is for anyone to get rich quick.

And we should ignore that person in exactly the same way. Either they are trolling or they lack perspective.
No it isn't. Housing is a REAL asset which produces INCOME. Bitcoin is an imaginary currency which produces NO INCOME. Investing in paper (Netflix) does not produce any income (I don't count a 2% dividend as income).

I have never used the word "easy". You did.

I have two properties which I pulled out my entire initial investment (and then some), that still pay me every month, and have resulted in hundreds of thousands of dollars in PROFIT since 2013. My total investment in these properties is ZERO. Just one of (many) things you cannot do with index funds. Anything worth doing is worth doing well.

I invest in index funds now because I have extra cash. I do not wish to have more than 20% of my NW in paper. I can be honest to myself what the superior investment is. The beauty of life is you can choose what makes sense to you, not follow everyone else like a sheep.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by Nate79 » Sun Aug 19, 2018 2:27 pm

WanderingDoc wrote:
Sun Aug 19, 2018 12:05 pm
Nate79 wrote:
Sun Aug 19, 2018 10:40 am
The most glaring problem of this discussion is the complete ignoring of the risk associated with the use of leverage to boost real estate returns. Certainly due to the nature of the loans it is not the same risk compared to margin loans to invest in stocks but still there is risk. The idea of paying cash for a rental is so blasted these days in favor of taking on leverage up to the max. But there are still some wise real estate investors out there preaching against this strategy.
Those real estate investors are in the distinct minority. The wealthiest and most successful Real Estate Investors use Leverage because it is the best tool we have specifically in this asset class. It is a way to unlock several extra profit centers in real estate, hedge inflation, diverse fire risk from an equity and geographical standpoint, etc.I have detailed this further in prior posts.
Thanks for making my point. Right out of the loud leverage crounds talking points that the most successful use leverage without any mention of risk. Bigger pockets 101.

lws
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by lws » Sun Aug 19, 2018 3:07 pm

Buying a residential property to rent out is a business. We are aware that most new businesses fail but some do succeed. Do proper research and give it a shot if you think that the odds favor you.
I once bought and rented a condominium and it was a painful experience.

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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by catalina355 » Sun Aug 19, 2018 3:20 pm

WanderingDoc wrote:
Sun Aug 19, 2018 1:50 pm
HomerJ wrote:
Sun Aug 19, 2018 12:45 pm
stoptothink wrote:
Sun Aug 19, 2018 11:01 am
RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs...
This is EXACTLY the same as a person coming on here who bought bitcoin or Netflix 5 years ago and starts telling us how easy it is for anyone to get rich quick.

And we should ignore that person in exactly the same way. Either they are trolling or they lack perspective.
No it isn't. Housing is a REAL asset which produces INCOME. Bitcoin is an imaginary currency which produces NO INCOME. Investing in paper (Netflix) does not produce any income (I don't count a 2% dividend as income).

I have never used the word "easy". You did.

I have two properties which I pulled out my entire initial investment (and then some), that still pay me every month, and have resulted in hundreds of thousands of dollars in PROFIT since 2013. My total investment in these properties is ZERO. Just one of (many) things you cannot do with index funds. Anything worth doing is worth doing well.

I invest in index funds now because I have extra cash. I do not wish to have more than 20% of my NW in paper. I can be honest to myself what the superior investment is. The beauty of life is you can choose what makes sense to you, not follow everyone else like a sheep.
Could you walk us through the numbers? It would help everyone understand how you got to 7 figures NW.

lostdog
Posts: 1241
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by lostdog » Sun Aug 19, 2018 4:02 pm

patrick wrote:
Sat Aug 18, 2018 8:58 pm
WanderingDoc wrote:
Sat Aug 18, 2018 5:16 pm
No. If I tried utilizing my TSP balance today I would pay a 10 or 20% withdrawal penalty (I'm not over 65) and a 25% tax on traditional assets. Truly a (quality of) life-deferral plan. In a taxable account you have to pay 15-38% taxes. It's a mediocre investment for tax consideration purposes.
The penalty actually goes away sooner -- at 59 and a half. Furthermore, the penalty can often be avoided even before that (the contribution amount in a Roth is always penalty free to withdraw, and traditional balances can be converted to Roth and then the conversion amount is penalty free after 5 years).
72t also?

WanderingDoc
Posts: 1142
Joined: Sat Aug 05, 2017 8:21 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 4:08 pm

catalina355 wrote:
Sun Aug 19, 2018 3:20 pm
WanderingDoc wrote:
Sun Aug 19, 2018 1:50 pm
HomerJ wrote:
Sun Aug 19, 2018 12:45 pm
stoptothink wrote:
Sun Aug 19, 2018 11:01 am
RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs...
This is EXACTLY the same as a person coming on here who bought bitcoin or Netflix 5 years ago and starts telling us how easy it is for anyone to get rich quick.

And we should ignore that person in exactly the same way. Either they are trolling or they lack perspective.
No it isn't. Housing is a REAL asset which produces INCOME. Bitcoin is an imaginary currency which produces NO INCOME. Investing in paper (Netflix) does not produce any income (I don't count a 2% dividend as income).

I have never used the word "easy". You did.

I have two properties which I pulled out my entire initial investment (and then some), that still pay me every month, and have resulted in hundreds of thousands of dollars in PROFIT since 2013. My total investment in these properties is ZERO. Just one of (many) things you cannot do with index funds. Anything worth doing is worth doing well.

I invest in index funds now because I have extra cash. I do not wish to have more than 20% of my NW in paper. I can be honest to myself what the superior investment is. The beauty of life is you can choose what makes sense to you, not follow everyone else like a sheep.
Could you walk us through the numbers? It would help everyone understand how you got to 7 figures NW.
Search my prior posts. It is there. People that are so hard-headed and indoctrinated in a certain way won't change their minds no matter what, and I am not here to do that. There are those that want to learn about a different asset class that doesn't require money coming out of your paycheck for 20 to 40 years with none coming back in, and a decreased quality of life waiting for a day that may or may not come. Several have private messaged me just yesterday. I already have Financial independence from Real Estate, which is why I am passionate about it. I love this stuff. I'm not here to convert anyone. I think people should do what makes them happy, free, and wealthy, whatever they believe that is.

There are alternatives to delayed gratification, sending part of your paycheck somewhere where you have no control over it, and waiting decades for retirement at a time where you may not be as mobile, carefree, excited about life, healthy, or even alive. The best time to do it the things that you're really want to do is yesterday. The second best time is now. Not decades into the future.

I was part of the BiggerPockets website in its early stages, where I drew a lot of benefit from it. Now it is way too commercialized for me, so the value has dramatically reduced. More than 90% of people that join ask questions like how can I buy real estate with no money, who wants to be my mentor, and other ridiculous things. Most never get started, which is where most of the value lies. Therefore, I do not frequent that website anymore as there is too much junk to sift through nowadays.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

WanderingDoc
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 4:12 pm

lostdog wrote:
Sun Aug 19, 2018 4:02 pm
patrick wrote:
Sat Aug 18, 2018 8:58 pm
WanderingDoc wrote:
Sat Aug 18, 2018 5:16 pm
No. If I tried utilizing my TSP balance today I would pay a 10 or 20% withdrawal penalty (I'm not over 65) and a 25% tax on traditional assets. Truly a (quality of) life-deferral plan. In a taxable account you have to pay 15-38% taxes. It's a mediocre investment for tax consideration purposes.
The penalty actually goes away sooner -- at 59 and a half. Furthermore, the penalty can often be avoided even before that (the contribution amount in a Roth is always penalty free to withdraw, and traditional balances can be converted to Roth and then the conversion amount is penalty free after 5 years).
72t also?
I am well aware of filling the lower tax brackets when you decide to retire. That is literally a joke. You have just decided that you want to be poor during your retirement. You have decided that you want a lower income when you are older. I don't know about you, but I want to have a higher income the older I get. That is my mentality. Consider expanding your thinking. Even Dave Ramsey makes more when he's older then he did when he was younger. That's what we all should strive for. Deciding to be poor and in lower tax brackets as a strategy to avoid penalties and taxes is laughable, at best.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

KlangFool
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by KlangFool » Sun Aug 19, 2018 4:17 pm

WanderingDoc wrote:
Sun Aug 19, 2018 4:12 pm
lostdog wrote:
Sun Aug 19, 2018 4:02 pm
patrick wrote:
Sat Aug 18, 2018 8:58 pm
WanderingDoc wrote:
Sat Aug 18, 2018 5:16 pm
No. If I tried utilizing my TSP balance today I would pay a 10 or 20% withdrawal penalty (I'm not over 65) and a 25% tax on traditional assets. Truly a (quality of) life-deferral plan. In a taxable account you have to pay 15-38% taxes. It's a mediocre investment for tax consideration purposes.
The penalty actually goes away sooner -- at 59 and a half. Furthermore, the penalty can often be avoided even before that (the contribution amount in a Roth is always penalty free to withdraw, and traditional balances can be converted to Roth and then the conversion amount is penalty free after 5 years).
72t also?
I am well aware of filling the lower tax brackets when you decide to retire. That is literally a joke. You have just decided that you want to be poor during your retirement. You have decided that you want a lower income when you are older. I don't know about you, but I want to have a higher income the older I get. That is my mentality. Consider expanding your thinking. Even Dave Ramsey makes more when he's older then he did when he was younger. That's what we all should strive for. Deciding to be poor and in lower tax brackets as a strategy to avoid penalties and taxes is laughable, at best.
WanderingDoc,

May I suggest you start your own topic with a title of "WanderingDoc System of Real Estate Investing"? Then, whoever is interested in your system can check out your thread and ask the question.

KlangFool

patrick
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by patrick » Sun Aug 19, 2018 6:03 pm

WanderingDoc wrote:
Sun Aug 19, 2018 4:12 pm
lostdog wrote:
Sun Aug 19, 2018 4:02 pm
patrick wrote:
Sat Aug 18, 2018 8:58 pm
WanderingDoc wrote:
Sat Aug 18, 2018 5:16 pm
No. If I tried utilizing my TSP balance today I would pay a 10 or 20% withdrawal penalty (I'm not over 65) and a 25% tax on traditional assets. Truly a (quality of) life-deferral plan. In a taxable account you have to pay 15-38% taxes. It's a mediocre investment for tax consideration purposes.
The penalty actually goes away sooner -- at 59 and a half. Furthermore, the penalty can often be avoided even before that (the contribution amount in a Roth is always penalty free to withdraw, and traditional balances can be converted to Roth and then the conversion amount is penalty free after 5 years).
72t also?
I am well aware of filling the lower tax brackets when you decide to retire. That is literally a joke. You have just decided that you want to be poor during your retirement. You have decided that you want a lower income when you are older. I don't know about you, but I want to have a higher income the older I get. That is my mentality. Consider expanding your thinking. Even Dave Ramsey makes more when he's older then he did when he was younger. That's what we all should strive for. Deciding to be poor and in lower tax brackets as a strategy to avoid penalties and taxes is laughable, at best.
Avoiding the penalty has nothing to do with tax brackets or having a low income. All of the ways listed for avoiding penalties work just as well even if you are in the top tax bracket. Perhaps you weren't aware of that.

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vitaflo
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by vitaflo » Sun Aug 19, 2018 6:08 pm

Real estate investing isn't much different than starting your own business. You leverage to juice returns and put the proceeds back into the biz to generate more revenue and of course you take all the risk to do so. Comparing this to investing in index funds is a little silly. The risk profiles are entirely different.

I also made well over 7 figures in the first 5 years of my business but I wouldn't go around saying anyone could be a business owner (even if I did find it pretty easy). It takes a lot of skill, patience and good luck. For every winner there are a lot of losers (or people barely treading water). The survivorship bias of successful business people is incredibly strong. Many cannot understand how someone could fail at something "so easy". And yet I've seen enough people like this lose everything because they believed their own hype and got too greedy too fast.

In the end, risk is what generates the returns. And risk has a downside. If you can stomach the downside then any investment is good. If you can't, then I would stay away. I could have probably generated 8 figures in 5 years if I had doubled down from the beginning. But that's all in hindsight and the downside was much higher than I was willing to stomach at the time.

WanderingDoc
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 6:17 pm

patrick wrote:
Sun Aug 19, 2018 6:03 pm
WanderingDoc wrote:
Sun Aug 19, 2018 4:12 pm
lostdog wrote:
Sun Aug 19, 2018 4:02 pm
patrick wrote:
Sat Aug 18, 2018 8:58 pm
WanderingDoc wrote:
Sat Aug 18, 2018 5:16 pm
No. If I tried utilizing my TSP balance today I would pay a 10 or 20% withdrawal penalty (I'm not over 65) and a 25% tax on traditional assets. Truly a (quality of) life-deferral plan. In a taxable account you have to pay 15-38% taxes. It's a mediocre investment for tax consideration purposes.
The penalty actually goes away sooner -- at 59 and a half. Furthermore, the penalty can often be avoided even before that (the contribution amount in a Roth is always penalty free to withdraw, and traditional balances can be converted to Roth and then the conversion amount is penalty free after 5 years).
72t also?
I am well aware of filling the lower tax brackets when you decide to retire. That is literally a joke. You have just decided that you want to be poor during your retirement. You have decided that you want a lower income when you are older. I don't know about you, but I want to have a higher income the older I get. That is my mentality. Consider expanding your thinking. Even Dave Ramsey makes more when he's older then he did when he was younger. That's what we all should strive for. Deciding to be poor and in lower tax brackets as a strategy to avoid penalties and taxes is laughable, at best.
Avoiding the penalty has nothing to do with tax brackets or having a low income. All of the ways listed for avoiding penalties work just as well even if you are in the top tax bracket. Perhaps you weren't aware of that.
Nope. The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty. I have read the same blogs and guides that you have. You fill in the 0-15% income brackets. Which is another way of saying, have less income and be less wealthy.

See here: https://www.gocurrycracker.com/never-pay-taxes-again/

Trump, Cardone, and Kiyosaki legally do not pay any taxes on real estate income or appreciation (I haven't either). And they earn 7 to 8 figures PER YEAR. Go curry cracker can only do the same with index funds - only he recommends (and brags about) living on $36K per year.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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HomerJ
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by HomerJ » Sun Aug 19, 2018 6:23 pm

WanderingDoc wrote:
Sun Aug 19, 2018 4:08 pm
There are alternatives to delayed gratification, sending part of your paycheck somewhere where you have no control over it, and waiting decades for retirement at a time where you may not be as mobile, carefree, excited about life, healthy, or even alive. The best time to do it the things that you're really want to do is yesterday. The second best time is now. Not decades into the future.
"After years of disappointment with get rich quick schemes, I know I'm gonna get rich with this scheme. And quick."

-Homer J. Simpson
The J stands for Jay

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HomerJ
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by HomerJ » Sun Aug 19, 2018 6:26 pm

WanderingDoc wrote:
Sun Aug 19, 2018 4:12 pm
lostdog wrote:
Sun Aug 19, 2018 4:02 pm
patrick wrote:
Sat Aug 18, 2018 8:58 pm
WanderingDoc wrote:
Sat Aug 18, 2018 5:16 pm
No. If I tried utilizing my TSP balance today I would pay a 10 or 20% withdrawal penalty (I'm not over 65) and a 25% tax on traditional assets. Truly a (quality of) life-deferral plan. In a taxable account you have to pay 15-38% taxes. It's a mediocre investment for tax consideration purposes.
The penalty actually goes away sooner -- at 59 and a half. Furthermore, the penalty can often be avoided even before that (the contribution amount in a Roth is always penalty free to withdraw, and traditional balances can be converted to Roth and then the conversion amount is penalty free after 5 years).
72t also?
I am well aware of filling the lower tax brackets when you decide to retire. That is literally a joke. You have just decided that you want to be poor during your retirement. You have decided that you want a lower income when you are older. I don't know about you, but I want to have a higher income the older I get. That is my mentality. Consider expanding your thinking. Even Dave Ramsey makes more when he's older then he did when he was younger. That's what we all should strive for. Deciding to be poor and in lower tax brackets as a strategy to avoid penalties and taxes is laughable, at best.
WanderingDoc wrote:The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty.
Again, you show your absolute lack of perspective.

You seem to have zero idea what "poor", "scarcity", or "poverty" means.

With a paid off house, one can live very well in the "lower" tax brackets.
Last edited by HomerJ on Sun Aug 19, 2018 7:06 pm, edited 4 times in total.
The J stands for Jay

BrooklynInvest
Posts: 127
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by BrooklynInvest » Sun Aug 19, 2018 6:27 pm

I don't consider 7 figures in rental real estate dabbling but congratulations if you do.
WanderingDoc wrote:
Sun Aug 19, 2018 12:07 pm
Don't confuse 'real estate investing' for 'dabbling in real estate'. Those aren't the same thing.

BrooklynInvest wrote:
Sun Aug 19, 2018 7:48 am
I have a 2-family house and the rent now covers our mortgage and taxes. Yay me.

BUT . . . in the 11 years that I've had the house, I've refinanced (no cash out) at lower rates three times (luck), rents have doubled (luck + significant renovations to the apartment) and halved the pretty significant principal I owed (cash, lots of cash)

Downside: Three things -

1. The opportunity cost of the money I've put into the house versus a diversified portfolio

2. My time. I've had a part time job for the last 11 years in addition to my full time gig

3. Hassle. Sometimes the aggravation is significant.

Upside:

1. We live in a nice brownstone for free

2. Rents index to inflation, give or take, while my mortgage doesn't

3. Leverage on the house itself. Rent allowed me to buy more property than I personally needed. Capital gain is amplified

Suggestion - don't disregard luck in my simplistic analysis above. Works both ways. Good luck!

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HomerJ
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by HomerJ » Sun Aug 19, 2018 6:44 pm

WanderingDoc wrote:
Sun Aug 19, 2018 6:17 pm
Avoiding the penalty has nothing to do with tax brackets or having a low income. All of the ways listed for avoiding penalties work just as well even if you are in the top tax bracket. Perhaps you weren't aware of that.
Nope. The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty.
FYI, he was talking about your incorrect statements of PENALTIES on withdrawals until age 65.

Avoiding PENALTIES has nothing to do with income.

It's 59.5, not 65. And you can pull money from tax-deferred accounts even earlier, with no penalty, using various methods like 72t.
Last edited by HomerJ on Sun Aug 19, 2018 10:56 pm, edited 1 time in total.
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Jags4186
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by Jags4186 » Sun Aug 19, 2018 6:54 pm

It’s very simple. Real estate CAN be a great investment and it CAN be a crappy one. Just like investing in stocks, bonds, or anything else.

I believe one of the big reasons people enjoy investing in real estate is that there is significant sums of money moving back and forth on a monthly basis. It feels great when $1000s of rent hits your bank account every month. And then it can feel great when you pay all the bills and have $$$ left over. But all of that sounds like a business to me and businesses can be successful, middling, or busts.

patrick
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by patrick » Sun Aug 19, 2018 8:42 pm

WanderingDoc wrote:
Sun Aug 19, 2018 6:17 pm
Nope. The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty. I have read the same blogs and guides that you have. You fill in the 0-15% income brackets. Which is another way of saying, have less income and be less wealthy.

See here: https://www.gocurrycracker.com/never-pay-taxes-again/

Trump, Cardone, and Kiyosaki legally do not pay any taxes on real estate income or appreciation (I haven't either). And they earn 7 to 8 figures PER YEAR. Go curry cracker can only do the same with index funds - only he recommends (and brags about) living on $36K per year.
Here's a simple question for you: If a 60 year old withdraws $250K from a Roth IRA in one year, are you willing to admit that there would be no tax and no penalty on the withdrawal?

Stormbringer
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by Stormbringer » Sun Aug 19, 2018 8:48 pm

You guys might as well go argue with a tree.
"Compound interest is the most powerful force in the universe." - Albert Einstein

andypanda
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by andypanda » Sun Aug 19, 2018 9:01 pm

I've known folks who made a great deal of money by owning anywhere from 12 to 35 single homes, duplexes or small apartment buildings. Nothing fancy, all working class and student rentals.

I never wanted to work that hard, especially while holding a full-time job. It was a seven day a week gig for them. One headache after another even when things were running smoothly.

And that's why real estate isn't a GREAT investment. Too much work. I worked from 15 to 61 and had nights and weekends off and for 25 years only worked 4 days a week. Having every Fri/Sat/Sun off was GREAT.

WanderingDoc
Posts: 1142
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Sun Aug 19, 2018 9:32 pm

patrick wrote:
Sun Aug 19, 2018 8:42 pm
WanderingDoc wrote:
Sun Aug 19, 2018 6:17 pm
Nope. The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty. I have read the same blogs and guides that you have. You fill in the 0-15% income brackets. Which is another way of saying, have less income and be less wealthy.

See here: https://www.gocurrycracker.com/never-pay-taxes-again/

Trump, Cardone, and Kiyosaki legally do not pay any taxes on real estate income or appreciation (I haven't either). And they earn 7 to 8 figures PER YEAR. Go curry cracker can only do the same with index funds - only he recommends (and brags about) living on $36K per year.
Here's a simple question for you: If a 60 year old withdraws $250K from a Roth IRA in one year, are you willing to admit that there would be no tax and no penalty on the withdrawal?
1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

AZAttorney11
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by AZAttorney11 » Sun Aug 19, 2018 9:36 pm

WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm
patrick wrote:
Sun Aug 19, 2018 8:42 pm
WanderingDoc wrote:
Sun Aug 19, 2018 6:17 pm
Nope. The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty. I have read the same blogs and guides that you have. You fill in the 0-15% income brackets. Which is another way of saying, have less income and be less wealthy.

See here: https://www.gocurrycracker.com/never-pay-taxes-again/

Trump, Cardone, and Kiyosaki legally do not pay any taxes on real estate income or appreciation (I haven't either). And they earn 7 to 8 figures PER YEAR. Go curry cracker can only do the same with index funds - only he recommends (and brags about) living on $36K per year.
Here's a simple question for you: If a 60 year old withdraws $250K from a Roth IRA in one year, are you willing to admit that there would be no tax and no penalty on the withdrawal?
1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
Lol

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catalina355
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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by catalina355 » Sun Aug 19, 2018 10:32 pm

WanderingDoc wrote:
Sun Aug 19, 2018 4:08 pm
catalina355 wrote:
Sun Aug 19, 2018 3:20 pm
WanderingDoc wrote:
Sun Aug 19, 2018 1:50 pm
HomerJ wrote:
Sun Aug 19, 2018 12:45 pm
stoptothink wrote:
Sun Aug 19, 2018 11:01 am
RE absolutely can be an amazing investment, but WanderingDoc's hyperbole about how many "normal" people out there do it with amazing results and the suggestion that anybody can do it and be FI in 5yrs...
This is EXACTLY the same as a person coming on here who bought bitcoin or Netflix 5 years ago and starts telling us how easy it is for anyone to get rich quick.

And we should ignore that person in exactly the same way. Either they are trolling or they lack perspective.
No it isn't. Housing is a REAL asset which produces INCOME. Bitcoin is an imaginary currency which produces NO INCOME. Investing in paper (Netflix) does not produce any income (I don't count a 2% dividend as income).

I have never used the word "easy". You did.

I have two properties which I pulled out my entire initial investment (and then some), that still pay me every month, and have resulted in hundreds of thousands of dollars in PROFIT since 2013. My total investment in these properties is ZERO. Just one of (many) things you cannot do with index funds. Anything worth doing is worth doing well.

I invest in index funds now because I have extra cash. I do not wish to have more than 20% of my NW in paper. I can be honest to myself what the superior investment is. The beauty of life is you can choose what makes sense to you, not follow everyone else like a sheep.
Could you walk us through the numbers? It would help everyone understand how you got to 7 figures NW.
Search my prior posts. It is there. People that are so hard-headed and indoctrinated in a certain way won't change their minds no matter what, and I am not here to do that. There are those that want to learn about a different asset class that doesn't require money coming out of your paycheck for 20 to 40 years with none coming back in, and a decreased quality of life waiting for a day that may or may not come. Several have private messaged me just yesterday. I already have Financial independence from Real Estate, which is why I am passionate about it. I love this stuff. I'm not here to convert anyone. I think people should do what makes them happy, free, and wealthy, whatever they believe that is.

There are alternatives to delayed gratification, sending part of your paycheck somewhere where you have no control over it, and waiting decades for retirement at a time where you may not be as mobile, carefree, excited about life, healthy, or even alive. The best time to do it the things that you're really want to do is yesterday. The second best time is now. Not decades into the future.

I was part of the BiggerPockets website in its early stages, where I drew a lot of benefit from it. Now it is way too commercialized for me, so the value has dramatically reduced. More than 90% of people that join ask questions like how can I buy real estate with no money, who wants to be my mentor, and other ridiculous things. Most never get started, which is where most of the value lies. Therefore, I do not frequent that website anymore as there is too much junk to sift through nowadays.
Could you post a link please to the explanation. I did a quick search and could not find a succinct explanation of how you did this.

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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by patrick » Sun Aug 19, 2018 11:28 pm

WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm
patrick wrote:
Sun Aug 19, 2018 8:42 pm
Here's a simple question for you: If a 60 year old withdraws $250K from a Roth IRA in one year, are you willing to admit that there would be no tax and no penalty on the withdrawal?
1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
There is usually a choice of traditional or Roth. Someone who prefers tax free withdrawals over tax deductions on contributions won't have traditional at the top of their list.

If even 59.5 is too old, there are ways to avoid penalties before then. Withdrawing from Roth up to the basis, converting traditional to Roth and withdrawing 5 years later, or taking substantially equal periodic payments from traditional all avoid penalties (and avoid tax for Roth accounts) at any age (even 25), regardless of total income.

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Re: Remind me (again) how real estate isn't a GREAT investment?

Post by catdude » Mon Aug 20, 2018 12:52 am

HomerJ wrote:
Sun Aug 19, 2018 6:26 pm
With a paid off house, one can live very well in the "lower" tax brackets.
Homer is right, I retired at 55 with a paid-off house, and I live just fine on my $36K annual pension, with a nice nest egg to boot. I don't have car payments either -- about 8 months ago I paid cash for a nice car. All this was possible thanks to index fund investing.
catdude | | All generalizations are false, including this one.

KlangFool
Posts: 10404
Joined: Sat Oct 11, 2008 12:35 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by KlangFool » Mon Aug 20, 2018 7:29 am

Folks,

If someone offers you a get rich quick scheme and says that everyone can do that, there has to be a catch somewhere. Basic common sense tells you that if that is true, everyone would be doing it. Unfortunately, I had seen this before. We knew what happened in the real estate bust of 2008/2009. Everyone was doing it.

But, those get rich scheme folks will tell you that

A) This is because only they know the secret.

B) The other folks are not brave enough

And so on.

Real estate investing is the same as running a business.

1) Not everyone can do it.

2) Not everyone can do it well enough to be successful.

3) It is running a business. You have to work a lot harder than working in a job. In the long run, it might be possible to be a handoff business. But, at least in the first few years, you would have to work very hard.

I come from a multi-generation business family. 50% or more of my extended family is in one form of business of another. We invest in all kind of stuff. We know that only certain kind of people has a fighting chance to be successful in business. And, that is not a guarantee of success either.

KlangFool

TN_Boy
Posts: 535
Joined: Sat Jan 17, 2009 12:51 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by TN_Boy » Mon Aug 20, 2018 9:30 am

WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm
patrick wrote:
Sun Aug 19, 2018 8:42 pm
WanderingDoc wrote:
Sun Aug 19, 2018 6:17 pm
Nope. The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty. I have read the same blogs and guides that you have. You fill in the 0-15% income brackets. Which is another way of saying, have less income and be less wealthy.

See here: https://www.gocurrycracker.com/never-pay-taxes-again/

Trump, Cardone, and Kiyosaki legally do not pay any taxes on real estate income or appreciation (I haven't either). And they earn 7 to 8 figures PER YEAR. Go curry cracker can only do the same with index funds - only he recommends (and brags about) living on $36K per year.
Here's a simple question for you: If a 60 year old withdraws $250K from a Roth IRA in one year, are you willing to admit that there would be no tax and no penalty on the withdrawal?
1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
I'll say one thing, you are a pretty good troll. I admire the way you shift the discussion while never answering specific questions. Well played!

You move quickly to the absurd claim that it is easy for someone with a middle class income to get to FI (whatever that means to you) in five years or less. I'd really like for you to answer my question on how somebody making 50k to 70k gets enough money in investment loans to buy sufficient property to make them "FI" in three to five years. Walk me through the numbers of the original investment and how our fortunate RE investor becomes FI. But of course you can't do that.

But the better part is how you then make a bunch of new false statements - to divert challenges from your prior unsubstantiated claims - about how if you use market investing you can't access that money until you are really really old, and go on to make wrong statements about withdrawals from tax deferred accounts, the tax rates etc. Basically moving from one silly claim to another.

Underlying all the "have to be old to access money from investments" complaint is the assertion that using other means you can "get rich quick." Get rich quick schemes have been around a long time. I think most of the folks on this board are (a lot) smarter than the people who fall for such nonsense.

You: "The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty"
Me: LOL.

I imagine you are having a good time with all this and I am really enjoying your footwork.

kosomoto
Posts: 434
Joined: Tue Nov 24, 2015 8:51 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by kosomoto » Mon Aug 20, 2018 9:43 am

TN_Boy wrote:
Mon Aug 20, 2018 9:30 am
WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm
patrick wrote:
Sun Aug 19, 2018 8:42 pm
WanderingDoc wrote:
Sun Aug 19, 2018 6:17 pm
Nope. The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty. I have read the same blogs and guides that you have. You fill in the 0-15% income brackets. Which is another way of saying, have less income and be less wealthy.

See here: https://www.gocurrycracker.com/never-pay-taxes-again/

Trump, Cardone, and Kiyosaki legally do not pay any taxes on real estate income or appreciation (I haven't either). And they earn 7 to 8 figures PER YEAR. Go curry cracker can only do the same with index funds - only he recommends (and brags about) living on $36K per year.
Here's a simple question for you: If a 60 year old withdraws $250K from a Roth IRA in one year, are you willing to admit that there would be no tax and no penalty on the withdrawal?
1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
I'll say one thing, you are a pretty good troll. I admire the way you shift the discussion while never answering specific questions. Well played!

You move quickly to the absurd claim that it is easy for someone with a middle class income to get to FI (whatever that means to you) in five years or less. I'd really like for you to answer my question on how somebody making 50k to 70k gets enough money in investment loans to buy sufficient property to make them "FI" in three to five years. Walk me through the numbers of the original investment and how our fortunate RE investor becomes FI. But of course you can't do that.

But the better part is how you then make a bunch of new false statements - to divert challenges from your prior unsubstantiated claims - about how if you use market investing you can't access that money until you are really really old, and go on to make wrong statements about withdrawals from tax deferred accounts, the tax rates etc. Basically moving from one silly claim to another.

Underlying all the "have to be old to access money from investments" complaint is the assertion that using other means you can "get rich quick." Get rich quick schemes have been around a long time. I think most of the folks on this board are (a lot) smarter than the people who fall for such nonsense.

You: "The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty"
Me: LOL.

I imagine you are having a good time with all this and I am really enjoying your footwork.
Yes, I do believe he is a troll. Either that or completely oblivious to the fact he was lucky buying in 2013 when real estate prices were incredibly low.

I have asked him where to find the deals he claims you can get today, and he couldn't produce a single example property.

As somebody who is ACTUALLY buying real estate in 2018 and beyond, I know how absurd his expected appreciation/returns are. He expects the appreciation of California with the cash flow and prices of Detroit.

Can we please just stop humoring him?

KlangFool
Posts: 10404
Joined: Sat Oct 11, 2008 12:35 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by KlangFool » Mon Aug 20, 2018 10:00 am

kosomoto wrote:
Mon Aug 20, 2018 9:43 am
TN_Boy wrote:
Mon Aug 20, 2018 9:30 am
WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm
patrick wrote:
Sun Aug 19, 2018 8:42 pm
WanderingDoc wrote:
Sun Aug 19, 2018 6:17 pm
Nope. The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty. I have read the same blogs and guides that you have. You fill in the 0-15% income brackets. Which is another way of saying, have less income and be less wealthy.

See here: https://www.gocurrycracker.com/never-pay-taxes-again/

Trump, Cardone, and Kiyosaki legally do not pay any taxes on real estate income or appreciation (I haven't either). And they earn 7 to 8 figures PER YEAR. Go curry cracker can only do the same with index funds - only he recommends (and brags about) living on $36K per year.
Here's a simple question for you: If a 60 year old withdraws $250K from a Roth IRA in one year, are you willing to admit that there would be no tax and no penalty on the withdrawal?
1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
I'll say one thing, you are a pretty good troll. I admire the way you shift the discussion while never answering specific questions. Well played!

You move quickly to the absurd claim that it is easy for someone with a middle class income to get to FI (whatever that means to you) in five years or less. I'd really like for you to answer my question on how somebody making 50k to 70k gets enough money in investment loans to buy sufficient property to make them "FI" in three to five years. Walk me through the numbers of the original investment and how our fortunate RE investor becomes FI. But of course you can't do that.

But the better part is how you then make a bunch of new false statements - to divert challenges from your prior unsubstantiated claims - about how if you use market investing you can't access that money until you are really really old, and go on to make wrong statements about withdrawals from tax deferred accounts, the tax rates etc. Basically moving from one silly claim to another.

Underlying all the "have to be old to access money from investments" complaint is the assertion that using other means you can "get rich quick." Get rich quick schemes have been around a long time. I think most of the folks on this board are (a lot) smarter than the people who fall for such nonsense.

You: "The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty"
Me: LOL.

I imagine you are having a good time with all this and I am really enjoying your footwork.
Yes, I do believe he is a troll. Either that or completely oblivious to the fact he was lucky buying in 2013 when real estate prices were incredibly low.

I have asked him where to find the deals he claims you can get today, and he couldn't produce a single example property.

As somebody who is ACTUALLY buying real estate in 2018 and beyond, I know how absurd his expected appreciation/returns are. He expects the appreciation of California with the cash flow and prices of Detroit.

Can we please just stop humoring him?
It is very simple.

1) Becomes a doctor

2) Have a high 6 figures income and 6 figures savings

3) Get lucky in a few of your gambles with your high 6 figures savings. Then, you have 7 figures in net worth.

End of story.

Now, if someone wants to claim that (1) to (3) is simple and anyone can do that, he/she will be laughed out of the room. This is the problem of his claims.

Furthermore, in order to avoid any clear discussion and challenges, always end with "PMed me with more details".

KlangFool

kosomoto
Posts: 434
Joined: Tue Nov 24, 2015 8:51 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by kosomoto » Mon Aug 20, 2018 10:10 am

KlangFool wrote:
Mon Aug 20, 2018 10:00 am
kosomoto wrote:
Mon Aug 20, 2018 9:43 am
TN_Boy wrote:
Mon Aug 20, 2018 9:30 am
WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm
patrick wrote:
Sun Aug 19, 2018 8:42 pm


Here's a simple question for you: If a 60 year old withdraws $250K from a Roth IRA in one year, are you willing to admit that there would be no tax and no penalty on the withdrawal?
1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
I'll say one thing, you are a pretty good troll. I admire the way you shift the discussion while never answering specific questions. Well played!

You move quickly to the absurd claim that it is easy for someone with a middle class income to get to FI (whatever that means to you) in five years or less. I'd really like for you to answer my question on how somebody making 50k to 70k gets enough money in investment loans to buy sufficient property to make them "FI" in three to five years. Walk me through the numbers of the original investment and how our fortunate RE investor becomes FI. But of course you can't do that.

But the better part is how you then make a bunch of new false statements - to divert challenges from your prior unsubstantiated claims - about how if you use market investing you can't access that money until you are really really old, and go on to make wrong statements about withdrawals from tax deferred accounts, the tax rates etc. Basically moving from one silly claim to another.

Underlying all the "have to be old to access money from investments" complaint is the assertion that using other means you can "get rich quick." Get rich quick schemes have been around a long time. I think most of the folks on this board are (a lot) smarter than the people who fall for such nonsense.

You: "The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty"
Me: LOL.

I imagine you are having a good time with all this and I am really enjoying your footwork.
Yes, I do believe he is a troll. Either that or completely oblivious to the fact he was lucky buying in 2013 when real estate prices were incredibly low.

I have asked him where to find the deals he claims you can get today, and he couldn't produce a single example property.

As somebody who is ACTUALLY buying real estate in 2018 and beyond, I know how absurd his expected appreciation/returns are. He expects the appreciation of California with the cash flow and prices of Detroit.

Can we please just stop humoring him?
It is very simple.

1) Becomes a doctor

2) Have a high 6 figures income and 6 figures savings

3) Get lucky in a few of your gambles with your high 6 figures savings. Then, you have 7 figures in net worth.

End of story.

Now, if someone wants to claim that (1) to (3) is simple and anyone can do that, he/she will be laughed out of the room. This is the problem of his claims.

Furthermore, in order to avoid any clear discussion and challenges, always end with "PMed me with more details".

KlangFool
Looks like you didn't list number 2 as hard to obtain, any advice on how to get a high six figure income easily? ;)

I have PM'd WanderingDoc. It didn't yield any results so I don't know why he put that there. I don't have an issue with him having a high income an retiring early - my issue is that he can't produce any example properties when he says it's so common to get such high returns.

TN_Boy
Posts: 535
Joined: Sat Jan 17, 2009 12:51 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by TN_Boy » Mon Aug 20, 2018 10:12 am

kosomoto wrote:
Mon Aug 20, 2018 10:10 am
KlangFool wrote:
Mon Aug 20, 2018 10:00 am
kosomoto wrote:
Mon Aug 20, 2018 9:43 am
TN_Boy wrote:
Mon Aug 20, 2018 9:30 am
WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm


1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
I'll say one thing, you are a pretty good troll. I admire the way you shift the discussion while never answering specific questions. Well played!

You move quickly to the absurd claim that it is easy for someone with a middle class income to get to FI (whatever that means to you) in five years or less. I'd really like for you to answer my question on how somebody making 50k to 70k gets enough money in investment loans to buy sufficient property to make them "FI" in three to five years. Walk me through the numbers of the original investment and how our fortunate RE investor becomes FI. But of course you can't do that.

But the better part is how you then make a bunch of new false statements - to divert challenges from your prior unsubstantiated claims - about how if you use market investing you can't access that money until you are really really old, and go on to make wrong statements about withdrawals from tax deferred accounts, the tax rates etc. Basically moving from one silly claim to another.

Underlying all the "have to be old to access money from investments" complaint is the assertion that using other means you can "get rich quick." Get rich quick schemes have been around a long time. I think most of the folks on this board are (a lot) smarter than the people who fall for such nonsense.

You: "The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty"
Me: LOL.

I imagine you are having a good time with all this and I am really enjoying your footwork.
Yes, I do believe he is a troll. Either that or completely oblivious to the fact he was lucky buying in 2013 when real estate prices were incredibly low.

I have asked him where to find the deals he claims you can get today, and he couldn't produce a single example property.

As somebody who is ACTUALLY buying real estate in 2018 and beyond, I know how absurd his expected appreciation/returns are. He expects the appreciation of California with the cash flow and prices of Detroit.

Can we please just stop humoring him?
It is very simple.

1) Becomes a doctor

2) Have a high 6 figures income and 6 figures savings

3) Get lucky in a few of your gambles with your high 6 figures savings. Then, you have 7 figures in net worth.

End of story.

Now, if someone wants to claim that (1) to (3) is simple and anyone can do that, he/she will be laughed out of the room. This is the problem of his claims.

Furthermore, in order to avoid any clear discussion and challenges, always end with "PMed me with more details".

KlangFool
Looks like you didn't list number 2 as hard to obtain, any advice on how to get a high six figure income easily? ;)

I have PM'd WanderingDoc. It didn't yield any results so I don't know why he put that there. I don't have an issue with him having a high income an retiring early - my issue is that he can't produce any example properties when he says it's so common to get such high returns.
I think that is because he is making it up.

KlangFool
Posts: 10404
Joined: Sat Oct 11, 2008 12:35 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by KlangFool » Mon Aug 20, 2018 10:34 am

kosomoto wrote:
Mon Aug 20, 2018 10:10 am
KlangFool wrote:
Mon Aug 20, 2018 10:00 am
kosomoto wrote:
Mon Aug 20, 2018 9:43 am
TN_Boy wrote:
Mon Aug 20, 2018 9:30 am
WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm


1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
I'll say one thing, you are a pretty good troll. I admire the way you shift the discussion while never answering specific questions. Well played!

You move quickly to the absurd claim that it is easy for someone with a middle class income to get to FI (whatever that means to you) in five years or less. I'd really like for you to answer my question on how somebody making 50k to 70k gets enough money in investment loans to buy sufficient property to make them "FI" in three to five years. Walk me through the numbers of the original investment and how our fortunate RE investor becomes FI. But of course you can't do that.

But the better part is how you then make a bunch of new false statements - to divert challenges from your prior unsubstantiated claims - about how if you use market investing you can't access that money until you are really really old, and go on to make wrong statements about withdrawals from tax deferred accounts, the tax rates etc. Basically moving from one silly claim to another.

Underlying all the "have to be old to access money from investments" complaint is the assertion that using other means you can "get rich quick." Get rich quick schemes have been around a long time. I think most of the folks on this board are (a lot) smarter than the people who fall for such nonsense.

You: "The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty"
Me: LOL.

I imagine you are having a good time with all this and I am really enjoying your footwork.
Yes, I do believe he is a troll. Either that or completely oblivious to the fact he was lucky buying in 2013 when real estate prices were incredibly low.

I have asked him where to find the deals he claims you can get today, and he couldn't produce a single example property.

As somebody who is ACTUALLY buying real estate in 2018 and beyond, I know how absurd his expected appreciation/returns are. He expects the appreciation of California with the cash flow and prices of Detroit.

Can we please just stop humoring him?
It is very simple.

1) Becomes a doctor

2) Have a high 6 figures income and 6 figures savings

3) Get lucky in a few of your gambles with your high 6 figures savings. Then, you have 7 figures in net worth.

End of story.

Now, if someone wants to claim that (1) to (3) is simple and anyone can do that, he/she will be laughed out of the room. This is the problem of his claims.

Furthermore, in order to avoid any clear discussion and challenges, always end with "PMed me with more details".

KlangFool
Looks like you didn't list number 2 as hard to obtain, any advice on how to get a high six figure income easily? ;)

I have PM'd WanderingDoc. It didn't yield any results so I don't know why he put that there. I don't have an issue with him having a high income an retiring early - my issue is that he can't produce any example properties when he says it's so common to get such high returns.
kosomoto,

<<Looks like you didn't list number 2 as hard to obtain, any advice on how to get a high six figure income easily? ;)>>

Why aim so low?

Some examples from my family:

Example #1

1) Be the top 10 students of the high school class of your country

2) Go overseas and get a good accounting degree and then attend graduate school at University of Chicago

3) Worked at Wall Street for 10+ years.

4) Earn 7 figures in salary and bonus every year.

Example #2

1) Buy lottery tickets.

2) Strike lottery 3 times in 10 years

3) Become a multi-millionaire

How hard could this be?

KlangFool

WS1
Posts: 16
Joined: Wed Jan 07, 2015 3:45 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WS1 » Mon Aug 20, 2018 10:47 am

WanderingDoc wrote:
Sun Aug 19, 2018 12:07 pm
Don't confuse 'real estate investing' for 'dabbling in real estate'. Those aren't the same thing.

BrooklynInvest wrote:
Sun Aug 19, 2018 7:48 am
I have a 2-family house and the rent now covers our mortgage and taxes. Yay me.

BUT . . . in the 11 years that I've had the house, I've refinanced (no cash out) at lower rates three times (luck), rents have doubled (luck + significant renovations to the apartment) and halved the pretty significant principal I owed (cash, lots of cash)

Downside: Three things -

1. The opportunity cost of the money I've put into the house versus a diversified portfolio

2. My time. I've had a part time job for the last 11 years in addition to my full time gig

3. Hassle. Sometimes the aggravation is significant.

Upside:

1. We live in a nice brownstone for free

2. Rents index to inflation, give or take, while my mortgage doesn't

3. Leverage on the house itself. Rent allowed me to buy more property than I personally needed. Capital gain is amplified

Suggestion - don't disregard luck in my simplistic analysis above. Works both ways. Good luck!
This isn't "dabbling in real estate." This is how a FEW HUNDRED THOUSAND New Yorkers own their homes

FoolMeOnce
Posts: 327
Joined: Mon Apr 24, 2017 11:16 am

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by FoolMeOnce » Mon Aug 20, 2018 10:51 am

catalina355 wrote:
Sun Aug 19, 2018 10:32 pm
WanderingDoc wrote:
Sun Aug 19, 2018 4:08 pm
catalina355 wrote:
Sun Aug 19, 2018 3:20 pm
WanderingDoc wrote:
Sun Aug 19, 2018 1:50 pm
HomerJ wrote:
Sun Aug 19, 2018 12:45 pm


This is EXACTLY the same as a person coming on here who bought bitcoin or Netflix 5 years ago and starts telling us how easy it is for anyone to get rich quick.

And we should ignore that person in exactly the same way. Either they are trolling or they lack perspective.
No it isn't. Housing is a REAL asset which produces INCOME. Bitcoin is an imaginary currency which produces NO INCOME. Investing in paper (Netflix) does not produce any income (I don't count a 2% dividend as income).

I have never used the word "easy". You did.

I have two properties which I pulled out my entire initial investment (and then some), that still pay me every month, and have resulted in hundreds of thousands of dollars in PROFIT since 2013. My total investment in these properties is ZERO. Just one of (many) things you cannot do with index funds. Anything worth doing is worth doing well.

I invest in index funds now because I have extra cash. I do not wish to have more than 20% of my NW in paper. I can be honest to myself what the superior investment is. The beauty of life is you can choose what makes sense to you, not follow everyone else like a sheep.
Could you walk us through the numbers? It would help everyone understand how you got to 7 figures NW.
Search my prior posts. It is there. People that are so hard-headed and indoctrinated in a certain way won't change their minds no matter what, and I am not here to do that. There are those that want to learn about a different asset class that doesn't require money coming out of your paycheck for 20 to 40 years with none coming back in, and a decreased quality of life waiting for a day that may or may not come. Several have private messaged me just yesterday. I already have Financial independence from Real Estate, which is why I am passionate about it. I love this stuff. I'm not here to convert anyone. I think people should do what makes them happy, free, and wealthy, whatever they believe that is.

There are alternatives to delayed gratification, sending part of your paycheck somewhere where you have no control over it, and waiting decades for retirement at a time where you may not be as mobile, carefree, excited about life, healthy, or even alive. The best time to do it the things that you're really want to do is yesterday. The second best time is now. Not decades into the future.

I was part of the BiggerPockets website in its early stages, where I drew a lot of benefit from it. Now it is way too commercialized for me, so the value has dramatically reduced. More than 90% of people that join ask questions like how can I buy real estate with no money, who wants to be my mentor, and other ridiculous things. Most never get started, which is where most of the value lies. Therefore, I do not frequent that website anymore as there is too much junk to sift through nowadays.
Could you post a link please to the explanation. I did a quick search and could not find a succinct explanation of how you did this.
Here is a recent post with numbers explaining why he laughs at a measly 20% annual return: viewtopic.php?f=10&t=253819&p=4019435#p4017203

WanderingDoc
Posts: 1142
Joined: Sat Aug 05, 2017 8:21 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Mon Aug 20, 2018 10:54 am

kosomoto wrote:
Mon Aug 20, 2018 10:10 am
KlangFool wrote:
Mon Aug 20, 2018 10:00 am
kosomoto wrote:
Mon Aug 20, 2018 9:43 am
TN_Boy wrote:
Mon Aug 20, 2018 9:30 am
WanderingDoc wrote:
Sun Aug 19, 2018 9:32 pm


1) From what I have observed, this is the order of dollar amounts (highest to lowest) in the TYPICAL index fund portfolio:
- traditional
- taxable
- Roth

2) You are talking about a 60 year old. I am talking about being financially free before being a senior citizen. All else being equal, you are less energetic, less healthy, less mobile, etc. over time from age 25 to 80. Also, you are more likely to be dead the older you are (obviously).
I'll say one thing, you are a pretty good troll. I admire the way you shift the discussion while never answering specific questions. Well played!

You move quickly to the absurd claim that it is easy for someone with a middle class income to get to FI (whatever that means to you) in five years or less. I'd really like for you to answer my question on how somebody making 50k to 70k gets enough money in investment loans to buy sufficient property to make them "FI" in three to five years. Walk me through the numbers of the original investment and how our fortunate RE investor becomes FI. But of course you can't do that.

But the better part is how you then make a bunch of new false statements - to divert challenges from your prior unsubstantiated claims - about how if you use market investing you can't access that money until you are really really old, and go on to make wrong statements about withdrawals from tax deferred accounts, the tax rates etc. Basically moving from one silly claim to another.

Underlying all the "have to be old to access money from investments" complaint is the assertion that using other means you can "get rich quick." Get rich quick schemes have been around a long time. I think most of the folks on this board are (a lot) smarter than the people who fall for such nonsense.

You: "The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty"
Me: LOL.

I imagine you are having a good time with all this and I am really enjoying your footwork.
Yes, I do believe he is a troll. Either that or completely oblivious to the fact he was lucky buying in 2013 when real estate prices were incredibly low.

I have asked him where to find the deals he claims you can get today, and he couldn't produce a single example property.

As somebody who is ACTUALLY buying real estate in 2018 and beyond, I know how absurd his expected appreciation/returns are. He expects the appreciation of California with the cash flow and prices of Detroit.

Can we please just stop humoring him?
It is very simple.

1) Becomes a doctor

2) Have a high 6 figures income and 6 figures savings

3) Get lucky in a few of your gambles with your high 6 figures savings. Then, you have 7 figures in net worth.

End of story.

Now, if someone wants to claim that (1) to (3) is simple and anyone can do that, he/she will be laughed out of the room. This is the problem of his claims.

Furthermore, in order to avoid any clear discussion and challenges, always end with "PMed me with more details".

KlangFool
Looks like you didn't list number 2 as hard to obtain, any advice on how to get a high six figure income easily? ;)

I have PM'd WanderingDoc. It didn't yield any results so I don't know why he put that there. I don't have an issue with him having a high income an retiring early - my issue is that he can't produce any example properties when he says it's so common to get such high returns.
How do you know I have not produced an example of property? Have you read every single one of my posts? No you haven't. I have detailed many times how I have put down $20K to $30K in a property, and 1 to 2 years later, cash out refinanced my entire investment in the property which continues to produce cash flow, principal pay down, tax benefits, and appreciation. You may call me a troll or not, which I have no idea what that even means, but you just made up in your head that I have never produced an example property when I have multiple times on this forum.

I guess when you in your heart are indoctrinated in such a way that you refuse to believe that there is a better investment vehicle, you just decide and make things up as you go along without actually bothering doing the research.

There is a reason that successful individuals do not follow the pack.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

kosomoto
Posts: 434
Joined: Tue Nov 24, 2015 8:51 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by kosomoto » Mon Aug 20, 2018 11:16 am

WanderingDoc wrote:
Mon Aug 20, 2018 10:54 am
kosomoto wrote:
Mon Aug 20, 2018 10:10 am
KlangFool wrote:
Mon Aug 20, 2018 10:00 am
kosomoto wrote:
Mon Aug 20, 2018 9:43 am
TN_Boy wrote:
Mon Aug 20, 2018 9:30 am


I'll say one thing, you are a pretty good troll. I admire the way you shift the discussion while never answering specific questions. Well played!

You move quickly to the absurd claim that it is easy for someone with a middle class income to get to FI (whatever that means to you) in five years or less. I'd really like for you to answer my question on how somebody making 50k to 70k gets enough money in investment loans to buy sufficient property to make them "FI" in three to five years. Walk me through the numbers of the original investment and how our fortunate RE investor becomes FI. But of course you can't do that.

But the better part is how you then make a bunch of new false statements - to divert challenges from your prior unsubstantiated claims - about how if you use market investing you can't access that money until you are really really old, and go on to make wrong statements about withdrawals from tax deferred accounts, the tax rates etc. Basically moving from one silly claim to another.

Underlying all the "have to be old to access money from investments" complaint is the assertion that using other means you can "get rich quick." Get rich quick schemes have been around a long time. I think most of the folks on this board are (a lot) smarter than the people who fall for such nonsense.

You: "The only way to avoid taxes and penalties with index funds is to decide to live a life of scarcity and poverty"
Me: LOL.

I imagine you are having a good time with all this and I am really enjoying your footwork.
Yes, I do believe he is a troll. Either that or completely oblivious to the fact he was lucky buying in 2013 when real estate prices were incredibly low.

I have asked him where to find the deals he claims you can get today, and he couldn't produce a single example property.

As somebody who is ACTUALLY buying real estate in 2018 and beyond, I know how absurd his expected appreciation/returns are. He expects the appreciation of California with the cash flow and prices of Detroit.

Can we please just stop humoring him?
It is very simple.

1) Becomes a doctor

2) Have a high 6 figures income and 6 figures savings

3) Get lucky in a few of your gambles with your high 6 figures savings. Then, you have 7 figures in net worth.

End of story.

Now, if someone wants to claim that (1) to (3) is simple and anyone can do that, he/she will be laughed out of the room. This is the problem of his claims.

Furthermore, in order to avoid any clear discussion and challenges, always end with "PMed me with more details".

KlangFool
Looks like you didn't list number 2 as hard to obtain, any advice on how to get a high six figure income easily? ;)

I have PM'd WanderingDoc. It didn't yield any results so I don't know why he put that there. I don't have an issue with him having a high income an retiring early - my issue is that he can't produce any example properties when he says it's so common to get such high returns.
How do you know I have not produced an example of property? Have you read every single one of my posts? No you haven't. I have detailed many times how I have put down $20K to $30K in a property, and 1 to 2 years later, cash out refinanced my entire investment in the property which continues to produce cash flow, principal pay down, tax benefits, and appreciation. You may call me a troll or not, which I have no idea what that even means, but you just made up in your head that I have never produced an example property when I have multiple times on this forum.

I guess when you in your heart are indoctrinated in such a way that you refuse to believe that there is a better investment vehicle, you just decide and make things up as you go along without actually bothering doing the research.

There is a reason that successful individuals do not follow the pack.
Actually, I have read a considerable amount of your posts, including your posts where you use “numbers.” You have never once shown a specific property, you have ALWAYS given vague examples with numbers that are wildly different from the reality I am seeing, and I search the entire US for deals.

You say to PM you for more info, I have, and did not receive what you promised.

You make it very difficult to believe you.

I would be more than happy to give you specific properties as examples of what I do, and my returns are not anywhere close to yours, even with your “unique” accounting methods.

User avatar
catalina355
Posts: 96
Joined: Sun Jun 10, 2018 6:46 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by catalina355 » Mon Aug 20, 2018 12:03 pm

FoolMeOnce wrote:
Mon Aug 20, 2018 10:51 am
catalina355 wrote:
Sun Aug 19, 2018 10:32 pm
WanderingDoc wrote:
Sun Aug 19, 2018 4:08 pm
catalina355 wrote:
Sun Aug 19, 2018 3:20 pm
WanderingDoc wrote:
Sun Aug 19, 2018 1:50 pm


No it isn't. Housing is a REAL asset which produces INCOME. Bitcoin is an imaginary currency which produces NO INCOME. Investing in paper (Netflix) does not produce any income (I don't count a 2% dividend as income).

I have never used the word "easy". You did.

I have two properties which I pulled out my entire initial investment (and then some), that still pay me every month, and have resulted in hundreds of thousands of dollars in PROFIT since 2013. My total investment in these properties is ZERO. Just one of (many) things you cannot do with index funds. Anything worth doing is worth doing well.

I invest in index funds now because I have extra cash. I do not wish to have more than 20% of my NW in paper. I can be honest to myself what the superior investment is. The beauty of life is you can choose what makes sense to you, not follow everyone else like a sheep.
Could you walk us through the numbers? It would help everyone understand how you got to 7 figures NW.
Search my prior posts. It is there. People that are so hard-headed and indoctrinated in a certain way won't change their minds no matter what, and I am not here to do that. There are those that want to learn about a different asset class that doesn't require money coming out of your paycheck for 20 to 40 years with none coming back in, and a decreased quality of life waiting for a day that may or may not come. Several have private messaged me just yesterday. I already have Financial independence from Real Estate, which is why I am passionate about it. I love this stuff. I'm not here to convert anyone. I think people should do what makes them happy, free, and wealthy, whatever they believe that is.

There are alternatives to delayed gratification, sending part of your paycheck somewhere where you have no control over it, and waiting decades for retirement at a time where you may not be as mobile, carefree, excited about life, healthy, or even alive. The best time to do it the things that you're really want to do is yesterday. The second best time is now. Not decades into the future.

I was part of the BiggerPockets website in its early stages, where I drew a lot of benefit from it. Now it is way too commercialized for me, so the value has dramatically reduced. More than 90% of people that join ask questions like how can I buy real estate with no money, who wants to be my mentor, and other ridiculous things. Most never get started, which is where most of the value lies. Therefore, I do not frequent that website anymore as there is too much junk to sift through nowadays.
Could you post a link please to the explanation. I did a quick search and could not find a succinct explanation of how you did this.
Here is a recent post with numbers explaining why he laughs at a measly 20% annual return: viewtopic.php?f=10&t=253819&p=4019435#p4017203
Thank you FoolMeOnce! The posts following that one are interesting :wink:

WanderingDoc
Posts: 1142
Joined: Sat Aug 05, 2017 8:21 pm

Re: Remind me (again) how real estate isn't a GREAT investment?

Post by WanderingDoc » Mon Aug 20, 2018 12:12 pm

kosomoto wrote:
Mon Aug 20, 2018 11:28 am
WanderingDoc wrote:
Mon Aug 20, 2018 11:21 am
kosomoto wrote:
Mon Aug 20, 2018 11:16 am
WanderingDoc wrote:
Mon Aug 20, 2018 10:54 am
kosomoto wrote:
Mon Aug 20, 2018 10:10 am


Looks like you didn't list number 2 as hard to obtain, any advice on how to get a high six figure income easily? ;)

I have PM'd WanderingDoc. It didn't yield any results so I don't know why he put that there. I don't have an issue with him having a high income an retiring early - my issue is that he can't produce any example properties when he says it's so common to get such high returns.
How do you know I have not produced an example of property? Have you read every single one of my posts? No you haven't. I have detailed many times how I have put down $20K to $30K in a property, and 1 to 2 years later, cash out refinanced my entire investment in the property which continues to produce cash flow, principal pay down, tax benefits, and appreciation. You may call me a troll or not, which I have no idea what that even means, but you just made up in your head that I have never produced an example property when I have multiple times on this forum.

I guess when you in your heart are indoctrinated in such a way that you refuse to believe that there is a better investment vehicle, you just decide and make things up as you go along without actually bothering doing the research.

There is a reason that successful individuals do not follow the pack.
Actually, I have read a considerable amount of your posts, including your posts where you use “numbers.” You have never once shown a specific property, you have ALWAYS given vague examples with numbers that are wildly different from the reality I am seeing, and I search the entire US for deals.

You say to PM you for more info, I have, and did not receive what you promised.

You make it very difficult to believe you.

I would be more than happy to give you specific properties as examples of what I do, and my returns are not anywhere close to yours, even with your “unique” accounting methods.
Based on being a physician, and several pieces of information that have shared in my prior posts, if I post specific property addresses one would easily be able to identify my identity. I wouldn't post specific property addresses anyway, however I have given hints as to what cities the properties are in. I am not going to risk doxxing myself to a appease a naysayer on an anonymous forum. Have a nice one.
I don’t need to know what you own. I would like to see these supposed deals producing 20%+ returns. Surely you can find one given the fact you say they are typical? I don’t believe they exist. The fact that you won’t even mention the city specifically tells me you’re not confident in your numbers.
A return of less than 30% on a leveraged real estate deal is disappointing. You have to consider five profit centers of Real Estate. It is typical to achieve a 20% return on a deal where you invest completely possibly in a private placement and a sponsor takes 40-50% of the equity, and your return was still be 20%. For a deal you locate, get financing on, reposition, and manage, or manage the manager, you should look for at least 30% returns.

Did you know that the original name of the 401K was a salary reduction plan? That was always the intent but they had to change the name so it would be better to advertise.
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

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