Re: Cashin’ out … NO MORE BANKS ??? - Posted by LightWalker
Posted by LightWalker on August 04, 2009 at 05:37:11:
I would say that they all used it at some point, but then stopped at some point. I think borrowing money has been fed to us by the bankers for so many years as such a wonderful thing that now OUR ENTIRE SOCIETY AND NATION HAS BECOME SLAVES TO BANKS… Our every move is dictated to us by what some bank says…
I have a new mind on this… I’ve had an epiphany… =^) (LOL) … A mind shift. I’m viewing the world through NEW, and very exciting eyes now. Debt, as far as I’m concerned, IS NEVER A GOOD THING. Now this is going to shock most Real Estate Investors… (LOL)
Now this obviously is just my opinion… (LOL) … I no longer believe the montra … You have “Good Debt” … and you have “Bad Debt” I THINK IT’S ALL BAD!!! Any time you owe someone money, you have become a slave. I know… I know… this is going to sound crazy to us R.E. folks because we’re taught from day 1 to borrow money… but at some point, do you reaaaaaally need the banks? I SAY NO.
I just believe that I’m at a certain place in life that I simply don’t need them any more… so I’m going to kindly say thanks… but no thanks…
Even when I play Monopoly with my kids… I’M BRINGING MY OWN WAD OF CASH!!! (LOL) … =^)
I’ve thought about that book before, but never did bother getting it. It sounds interesting. Is it specific to CA? Is it pertinent to other areas of the county?
Part of the key is your goals too. The original posters goals are a less stressful life with not as many headaches. This is achieved by taking less risk. Leveraging anything is more risky but is also much more rewarding when done right. Neither way is wrong just looking to get different results from similar investments. I tend to side with Genes thinking but see both sides having great validity for different people.
Re: Why limit your options? - Posted by LightWalker
Posted by LightWalker on August 04, 2009 at 19:46:29:
Partnerships are great when things are in writing. Joint Venture Agreements work great.
I’m not into apt. bldgs, so I’m taking the $1mil apt bldg. that’s free and clear and selling that puppy. Then I’m taking $500k and buying some rentals CASH. I’m taking the other half and flipping. NO BANKS… NO LEVERAGE… DON’T NEED 'EM… Bye bye Mr. Banker… it’s been real… =^)
Either way, I think both plans work. I JUST CHOOSE CASH!!! (The Microsoft Way)… =^)
Posted by LightWalker on August 04, 2009 at 06:36:38:
Vic Quote:
“Let’s look at the numbers for a second. Let’s say I buy a house, fix it & sell it & make 20K in profit. How long would it take you to make that same 20K by renting that same house. I’d say just about forever. LOL”
(LOL) … very interesting Vic… A dollar in your hands today is worth more than a dollar in your hands next year… heck next week…
I think for me it will be a mix. Keepers / Flippers. Until I had my epiphany (LOL) … It was just Keepers… (LOL) … Love your thinking my friend.
Also… I think I need my money working harder. Having equity is nice, but I think we also need to be building cash “cache’s” also… I think that will bring proper “Balance to the FORCE” … (LOL) =^)
Re: You Must Be Reading My Mind - Posted by Celeste-fl
Posted by Celeste-fl on August 03, 2009 at 17:41:37:
Vic,
Thanks for your reply. I agree on some points,I also have been doing both for years and started out with leveraged rentals and hated it and sold them all. I did flips for years and grew tired of it. I went back to rentals, but this time it was with mobiles on land and low income houses in good working class areas. I pay all cash and use no leverage. I love it, I,m not getting 10-15% returns. I,m getting 40% returns and up. I have all my money back in a few years. I still flip a few houses a year for fun money.
Please cite a time in our history where there was monetary inflation (the kind I have been talking about) and wage decrease…or…where housing prices decrease.
It does take a lot of leveraged rentals to make any real money. With flips you can turn the money over real quick. With rentals you just keep getting your money in dribs & drabs. If you put all your cash into rentals, you soon run out of it & then you’re stuck in rental biz, even if you don’t like it. If you want to get out of rentals, you may have to wait for mkt. to change, which could take who knows how long. So I’m with you, a bird in the hand is better than two in the bush.
I can’t site a time when wages decreased & that’s not what I’m saying. What I’m saying is that wages may not keep up with inflation, which means people will qualify for less money. If they qualify for less money then the price of houses will not go up, they will come down. Now, over the very long term they will go up, just like most everything else, & yes eventually, they will be just fine even with inflation. But that may be a very long time coming. For ex. after 50 yrs. darn near everything will be more expensive than it is now - inflation or not.
Let me put this a little more simply. If someone has to qualify for a mtg. at 5% interest vs. paying 15%, the amt. of house they can qualify for is going to be way, way less at the 15%. Price will either have to come down or the houses will just sit.
I’m trying to look at the whole picture here as far as what happens to real estate during inflation & come up with some plan of action as to what to with real estate in the future.
For me the plan would be to recognize when inflation starts kicking up. Leverage out and buy/control as many cashflow properties as I can.
Eventually the feds would have to raise interest rates to combat high inflation (this is why most associate high interest rates with inflation), so the idea is get in before they have a chance to raise rates too much and to get fixed rate financing.
The fed and our govt have been very aggressive with money creation lately. I think this will lead to moderate to high inflation and they will not be able to tighten up things fast enough. It is possible for things to get bad enough that we slip into a hyperinflation situation.
I am worried what will happen once other nations start dumping our devalued dollars.
From a buy & hold point of view, this should work out.
But I’m also looking at it from a point of view of what happens if I don’t want to hold, but instead want to sell. I may be stuck, because when interest rates go up people may not be able to qualify for the house at the price I would want to sell it for.
In other words, you can buy & hold & let inflation do it’s thing for you & be OK.
Or try to sell, but may have to do so at reduced price because of the high interest rates.
For example. I have a couple of properties right now that I know I don’t want to hold for years. In fact, if I could sell them today I would. If I wait until inflation is here & I get stuck trying to sell in a period of high interest rates, I will probably have to reduce my price even lower than it is now in order to get them sold because the higher interest rates will mean lower sales prices.
>>>>If I wait until inflation is here & I get stuck trying to sell in a period of high interest rates, I will probably have to reduce my price even lower than it is now in order to get them sold because the higher interest rates will mean lower sales prices. >>>>>
I don’t think that will happen. Again look to history.
Look at graphs of inflation and nominal housing prices and you will see that the correlation that you worried about is not apparent.