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Best investment?
- Thread starter Doc
- Start date
BadAttitude
New member
real estate IMO
I read where some are thinking Real Estate has peaked. That kind of thinking has been around for over 12 months. If buying strickly for investment (not to live in yourself) I'm wondering if it's still a wise choice.
The stock market is not that safe, but if you diversify that looks better to me at this point. ....but I'm not sure, so that's why I'm asking for other opinions.
The stock market is not that safe, but if you diversify that looks better to me at this point. ....but I'm not sure, so that's why I'm asking for other opinions.
BadAttitude
New member
I agree it peaked, but it should still out perform the stock market for the fore seeable future
My sister makes loads of money in real estate. Invest in coastal property, watch population trends, there are bubble areas and areas where there is rampant speculation (like Las Vegas) that you might want to avoid if you are thinking of getting in on the ground floor of a boom. Then again, my older brother retired several years ago at the (then) age of 42 (he's 46 now), he invests in the stock market and just moved into a beautiful home in the premier community in northwest Indiana. Me, heck I work for a living. I suspect you'd get a lot better advice talking to either my brother or my sister than you would get from me!
I suspect you'd get a lot better advice talking to either my brother or my sister than you would get from me!>>>>>
Somehow Bob I doubt that.
Somehow Bob I doubt that.
I would recommend reading the book "The Millionaire Next Door" and then considering some safe investments before you throw your money into something high risk like real estate or the stock market.
Just my boring safe recommendation.
Just my boring safe recommendation.
BoneheadNW
Active member
All I know is that real estate around here is going up at an ever increasing rate. I don't know if it is the best investment, but if I had a spare mil lying around I would buy land in my area.
Bonehead
Bonehead
Yeah real estate is booming. A neighbor just sold their house after it was on the market for 1 week at the asking price. It's the middle of the winter. Lots of people moving here though so they need places to live.
It's crazy but if Greenspan thinks the bubble is going to burst then I'm going to listen to him. He seems to know more than I.
However, if I had the spare mil, I too would go with real estate. It just seems safer. Even if you wait a few years it will eventually go up.
It's crazy but if Greenspan thinks the bubble is going to burst then I'm going to listen to him. He seems to know more than I.
However, if I had the spare mil, I too would go with real estate. It just seems safer. Even if you wait a few years it will eventually go up.
bczoom said:
yep, me to.
I'm looking at some very small time investment. Either local property or a couple different stocks. If I can find a good real estate buy I'd jump on it, but maybe stocks would be a better way to go. Or even a mutual fund maybe.
Back to your original question.
Personally, I'm going with real estate.
It doesn't take as much analysis and trending as the stock market. It's hard to loose in real estate if you have some decent understandings. At worse, you might loose 5% but in most places, you'll gain.
Be careful in what are already "hot" markets as if there will be a bubble burst, it'll probably hit them the worse. If you're caught holding, plan on loosing.
Depressed markets are high risk and although property is cheap, it's a bit too risky for me. An example would be areas like upstate NY (primarily Buffalo, Rochester and Syracuse). Real estate is cheap but they can't give the stuff away due to the tax burdens, both real estate and sales tax.
Strategies I like:
Find a "bargain". Something in a decent area that is listed at 20% or so of current market value. Hard to come by but getting a bit easier as the baby-boomers start wanting to get out of the big houses and such. Normally, you'll be wanting to find places that aren't listed on the market. These are best found by word-of-mouth or by pounding-the-pavement. Other potential bargain ideas include things like:
Forclosures
Bankruptcy
Builder leftover lots (for land)
Owner or builder auctions
Drug property seizures (but watch the location)
Delinquent tax sales
Sheriff's sales
Income property. Basically, get a place where you rent it out at a rate higher than the expenses and cost of the property. Careful with this one as it may be time consuming for you.
Other things to consider for real estate:
Are you buying a property for a long-term investment or are you going to flip it to get your profit? If you plan on holding for years, you need to watch market trends for that area a lot closer.
Ethics. Like in stocks and such, there's greedy players. Be careful (and it's best not to become one).
Personally, I'm going with real estate.
It doesn't take as much analysis and trending as the stock market. It's hard to loose in real estate if you have some decent understandings. At worse, you might loose 5% but in most places, you'll gain.
Be careful in what are already "hot" markets as if there will be a bubble burst, it'll probably hit them the worse. If you're caught holding, plan on loosing.
Depressed markets are high risk and although property is cheap, it's a bit too risky for me. An example would be areas like upstate NY (primarily Buffalo, Rochester and Syracuse). Real estate is cheap but they can't give the stuff away due to the tax burdens, both real estate and sales tax.
Strategies I like:
Find a "bargain". Something in a decent area that is listed at 20% or so of current market value. Hard to come by but getting a bit easier as the baby-boomers start wanting to get out of the big houses and such. Normally, you'll be wanting to find places that aren't listed on the market. These are best found by word-of-mouth or by pounding-the-pavement. Other potential bargain ideas include things like:
Forclosures
Bankruptcy
Builder leftover lots (for land)
Owner or builder auctions
Drug property seizures (but watch the location)
Delinquent tax sales
Sheriff's sales
Income property. Basically, get a place where you rent it out at a rate higher than the expenses and cost of the property. Careful with this one as it may be time consuming for you.
Other things to consider for real estate:
Are you buying a property for a long-term investment or are you going to flip it to get your profit? If you plan on holding for years, you need to watch market trends for that area a lot closer.
Ethics. Like in stocks and such, there's greedy players. Be careful (and it's best not to become one).
DOC you asked the $64,000,000.00 question. who the hell knows, all the pundits tell you to get in the market for the long haul, but know what? pretty soon you no longer have the long haul (you get old) i lost a fe w $$$$ back in 2000 when the bublel burst, will never make that all back but doing ok this year(not great) As far as Real Estate, depend on where it is, if i could answer your question i would be Rich
v8dave
Wizard
These are two distinctly different types of investments. For starters, one is active and the other is passive. And, if you aren't willing to spend the time on it, Real Estate isn't the one for you.
However, the Real Estate while being active, is also heavily leveraged. Assuming you have $50,000 you can buy a $500,000 house (well, maybe). Now, say it costs 10% (fees, comissions, inspections, repairs) to flip the house, so you have to make 10% to come out even. But, if the housing market increases 20% you've made $50,000. If the housing market doubles you've made $450,000.
Now take the $50,000 and invest in stocks. It costs $500 per side to flip the stocks. So, the same 20% increase in stocks nets you $9,000. If the market doubles, you've made $49,000.
Now on the other hand if the housing market slides 10%, you've lost your initial investment times two -or- $100,000. A 10% slide in stocks you lose $6,000.
So, how about a Real Estate Investment Trust, or REIT? A stock that invests in Real Estate. Look at the recent track of EOP a REIT or VGSIX a fund that buys different REITs.
You pay your money, you take your chances. There ain't no free ride.
Ok, I've oversimplified the costs here, but it's only a small amount and it does make the artihmetic easier to understand.
However, the Real Estate while being active, is also heavily leveraged. Assuming you have $50,000 you can buy a $500,000 house (well, maybe). Now, say it costs 10% (fees, comissions, inspections, repairs) to flip the house, so you have to make 10% to come out even. But, if the housing market increases 20% you've made $50,000. If the housing market doubles you've made $450,000.
Now take the $50,000 and invest in stocks. It costs $500 per side to flip the stocks. So, the same 20% increase in stocks nets you $9,000. If the market doubles, you've made $49,000.
Now on the other hand if the housing market slides 10%, you've lost your initial investment times two -or- $100,000. A 10% slide in stocks you lose $6,000.
So, how about a Real Estate Investment Trust, or REIT? A stock that invests in Real Estate. Look at the recent track of EOP a REIT or VGSIX a fund that buys different REITs.
You pay your money, you take your chances. There ain't no free ride.
Ok, I've oversimplified the costs here, but it's only a small amount and it does make the artihmetic easier to understand.
v8Dave said:
Good info Dave. I had not thought of the REIT's.
Thanks!
A8r - You can't go wrong with land for your home. We have 50 acres and love it. We've made out great on equity appreciation for our place.
Good info BC. a couple xmas's ago we found a house on the river being auctioned on xmas eve. They posted 24k was the lowest bid accepted. I was not in a postition to bid on that one, but have been looking for something similar ever since with no luck. Right time, right place can sure make a difference.
Frank - your exactly right ...if anyone knew for sure they'd be rich, but I wanted to hear your all thoughts on the matter, and I'm glad I asked.
Doc, if you invest in REIT's make sure you find out if it is a REIT that holds real estate or a REIT that holds mortgages.
Anyway, I don't think anyone has asked the 2 most important questions: What is your time horizon for the funds you want to invest (when will you need the money)? and What is your risk tolerance? Answering those 2 questions truthfully will help you make your decision.
Anyway, I don't think anyone has asked the 2 most important questions: What is your time horizon for the funds you want to invest (when will you need the money)? and What is your risk tolerance? Answering those 2 questions truthfully will help you make your decision.
Junkman
Extra Super Moderator
I recently purchased some Ford convertible bonds that are now paying me 10%. As long as Ford doesn't go under, I am in good shape. If the bonds go down in value, my 10% will have to cover some of the loss. I am in them for the long haul and hope that when they mature, I will have made a good profit on the purchase and the interest on top of it. I never gamble any money that I can't afford to loose and have always used that philosophy in my investments. Just don't buy any timeshare hoping to make money. I know lots of people that think that timeshares are great buys. Unfortunately they are also the people that can least afford to own them.
So true. What worked for me was real estate speculation to accumulate savings, then market-tracking mutual funds to hold on to them without active management.v8dave said:
Here's a real estate method that served me well: Get several agents to be on the lookout for fixers. Before buying one analyse what it will cost to bring this house up to average resale price considering its nearby comparables. Then see if there is a huge profit in doing, or contracting, the fixing. Walk away if there is no opportunity for a killing.
Sooner or later those agents will find some sort of unrealized opportunity. I always joked that a rental with the smell of dog-piss in all the carpets was an easy $100,000 profit for remodeling it. This is because most rental investors won't buy anything they wouldn't live in themself so a rental that far gone is effectively valueless.
I never actually found one that bad, but I did buy an abandoned uncompleted remodel that had the toilet and a huge mound of moldy carpet in the front yard. $3,000 and a month of my labor and it was ready to rent. Total cost? The seller had already received a down payment from the flake who abandoned the remodel so he didn't ask one from me. He just wanted to get out from under the bank payment he was carrying so he wouldn't lose all his equity. The $3,000 repair materials plus assuming the loan, which the rents more than covered, was my total investment. When I sold it 3 years later I netted about $100,000.
After a couple of deals like that I was able to 'retire' at 32 and spend 2 years earning an MBA while living on rents. I wanted to learn how the pros did it. What I learned was that there is a huge premium for taking risk, 99% of the population wants to buy a certainty such as a rental property that doesn't need any work to put it in use. There's a lot of money to be made in providing that certainty to more cautious people. In fact that is the key to making real money in whatever field.
That approach will be more profitable than trying to anticipate and share in general RE trends that everyone knows about.
The other thing I concluded from my MBA courses is that the stock market has the greatest rate of appreciation of any passive investment but 85% of investors don't exceed the return of the big mutual funds. In other words the best investment is buy and hold a fund that tracks the whole market and don't gamble trying to be in the 15% that are making greater returns. Those people probably are active investors who spend their whole life analysing investments, and still should attribute their success to luck rather than skill. The market by definition rises or falls based on the shared expectations of all the participants, and I think it is pointless to bet against that much shared knowlege.
bczoom, it sounds like you know more about RE than you have told us!
Not me...California said:
This bunker thing I'm working on has been one of the most interesting as I haven't ventured into anything quite as unique. Playing in the commercial/industrial area (especially for an underground facility) opens up all kinds of new things to consider so I'm doing it partially for the experience. If I can get through this one, I doubt I'll get stumped on any others in the future.
Viking - I'm planing to invest and reinvest this cash until I retire and maybe past that. So I'm looking at 15 to 20 years.
I'm not sure of my tolerance for loss. Guess I'm looking for the sure thing that doesn't exist. I heard of a PA couple who took the majority of their retirement cast and put it into the PA lottery. No surprise, they lost big time.
Congrats CA, sounds like you really got it together.
I appreciate all the advice guys. Thanks.
I'm not sure of my tolerance for loss. Guess I'm looking for the sure thing that doesn't exist. I heard of a PA couple who took the majority of their retirement cast and put it into the PA lottery. No surprise, they lost big time.
Congrats CA, sounds like you really got it together.
I appreciate all the advice guys. Thanks.
Stock Market or Real Estate - which ever one you choose, if you want to make the best possible return then you have to be prepared to work. From California's brief post I think he works pretty hard at finding the right properties and fixing them up. The people I know that actually make money in the stock market actually work pretty hard on tracking their investments.
Don't expect to plop down money and have double overnight while you do nothing. It happens but that is not the norm. The people that are really successful at anything tend to work for their success. Of course, it also takes money to make money and the more money you have the bigger risks you can afford to take. Just don't risk it all in one place.
Don't expect to plop down money and have double overnight while you do nothing. It happens but that is not the norm. The people that are really successful at anything tend to work for their success. Of course, it also takes money to make money and the more money you have the bigger risks you can afford to take. Just don't risk it all in one place.
As has already been eluded to above; hands down LAND is by FAR the best investment going. It has its ups and downs but not like the stock market. Another thing is that land is something you can touch and get your hands on that nobody can steal (at least not easily). I think in particular forest land is going to be a great investment with potentially upcoming "Carbon Sequestration" legislation.
you can retire on a mill..........nice. That would be my retirement income producer, but I have to have a few more for those emergencies.........you know tractors, trailers, land, fuel............barns.
rico304
New member
I know there is no real answer here. Depending on situation, either could be the big winner. My buddy lost over 100,000 in the market a couple years ago. He's building back up, but that will take some time. I invest moderately. It grows moderately. 
Maine's largest city is 20 minutes to the South of me(Portland). The second largest city is 20 minutes North of me(Lewiston). I chose to stay away from Portland as they are 3-4 times more expensive for a similiar piece of property. Lewiston is going up in rents and value quickly, while Portland has stopped any upward movement. I believe the "bubble" has or is about to burst there. Lewiston's bubble is growing daily. Even our paper had something about it. (which only helped me
) I think you need to spend MANY hours on the computer and with a real estate agent looking at buildings/land/houses if you want to seriously look at real estate. It's out there, I'm just trying to find out where, and how long it will take me to get there
Waterfront is definately a good investment if you can find it at a decent price. I'm looking that direction now, as well as houses built on speculation. (Very iffy, but I think I have an idea which direction our market is going in) Ya, sure I do!!
My answer in short, BOTH! (at least for me)
It should also be added that my investments are small by comparison to many. I'm just passing on what seems to be working for me.
Maine's largest city is 20 minutes to the South of me(Portland). The second largest city is 20 minutes North of me(Lewiston). I chose to stay away from Portland as they are 3-4 times more expensive for a similiar piece of property. Lewiston is going up in rents and value quickly, while Portland has stopped any upward movement. I believe the "bubble" has or is about to burst there. Lewiston's bubble is growing daily. Even our paper had something about it. (which only helped me
) I think you need to spend MANY hours on the computer and with a real estate agent looking at buildings/land/houses if you want to seriously look at real estate. It's out there, I'm just trying to find out where, and how long it will take me to get there Waterfront is definately a good investment if you can find it at a decent price. I'm looking that direction now, as well as houses built on speculation. (Very iffy, but I think I have an idea which direction our market is going in) Ya, sure I do!!
My answer in short, BOTH! (at least for me)
It should also be added that my investments are small by comparison to many. I'm just passing on what seems to be working for me.
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If I may suggest, keep in contact with realtors but spend some time pounding pavement yourself. The best things out there are probably not on the market and need to be found (by yourself). Added benefit is you save the 7-10% for the realtor.rico304 said:I think you need to spend MANY hours on the computer and with a real estate agent looking at buildings/land/houses if you want to seriously look at real estate. It's out there, I'm just trying to find out where, and how long it will take me to get there