Posted by GL(ON) on January 08, 2003 at 15:36:44:
That’s because it’s too slow and boring. Also you have to go against everything regular people believe.
But it works like gangbusters and will make you rich with minimal work and minimal risk, if you have the stamina to stick with it.
Bullet proof - Posted by Grant
Posted by Grant on January 07, 2003 at 21:17:22:
Could someone please tell me how to make L/Os & wraps (that I finance) safe (so I don’t lose money) in a market that is falling at say 10% per year?
Your help is appreciated
Grant
You can’t - Posted by GL(ON)
Posted by GL(ON) on January 08, 2003 at 08:39:00:
If you do LO’s and wraps in a falling market like you describe, you will get burned badly and so will the people that trusted you.
The way to get rich in such a market is to buy and hold. Buy ONLY with a positive cash flow from rent. This means you must be able to rent at reasonable prices and that your area is not going to sink to the level of Bangladesh or turn into a ghost town.
Anything short of total permanent disaster, and you can buy and hold with confidence, provided you have positive cash flow. If the market is falling 10% a year sellers will be begging you to take their properties on any terms you are willing to give them.
With pos cash flow you can make all the income you want even if real estate never goes up one cent. And if you buy $1 million dollars worth, in 20 years when it is paid off you will be a millionaire anyway.
But real estate always comes back doesn’t it? And when it does you will be sitting pretty.
This is how major real estate fortunes are made. Long term buy and hold, buying when everyone is selling cheap and selling when everyone is clamoring to buy.
Could you explain - Posted by Bill
Posted by Bill on January 08, 2003 at 06:19:48:
Grant,
Sorry, but I’m confused here. Could you please explain how you intend to profit in a market that is declining?
And how many more years do you think the decline will continue?
To answer your question, I don’t see how any terms could help in a situation like this, no matter how good they were.
On a L/O, if the value falls below the buy price, what incentive does the buyer have to exercise the option and buy? They could go next door and buy for less.
On the wrap, they might be locked in by the terms of the payment schedule, but you can bet they won’t be happy.
Now if you could buy for 50 percent of FMV and resell just a little below FMV, MAYBE the market would bottem out and reverse before the option became due on the L/O.
Why ot focus your activity on a steady or increasing market?
Of course, you could get the best deal you can and then rent them out to Section 8 renters. Then if the value keeps going down, at least you’ll still have payments coming in from the govt. There’s lots of deals like this in the slums of big cities all across the country. Right near me I can buy a duplex for 25-30K any day of the week and rent it out for 700-900 a month. Today’s Jan 8th and only 4 murders in the area so far. Makes me want to go right down there and start working. No thanks, I’ll be sticking to the fringe areas and those quiet little back towns where there hasen’t been a murder in 10 years.
Bill
Re: You can’t - Posted by Ellen
Posted by Ellen on January 08, 2003 at 12:53:08:
It is very refreshing to read a favorable comment on buy and hold investing. I’m sure there are a lot of people here that are living off the income from rents, but it is not discussed or promoted here often.
Tim Fierro Alert ! - Posted by Rick(MD)
Posted by Rick(MD) on January 08, 2003 at 10:16:04:
“Today’s Jan 8th and only 4 murders in the area so far.”
Ha!