is there ever a time NOT to invest? - Posted by erica

Posted by anon on March 12, 2005 at 01:21:01:

Translating guilders to dollars requires an FU.
I can’t give FU’s freely anymore, because I’ve done it for many years. But, if someone wants to ask nicely, and mail me personally, I’ll give them an FU.

is there ever a time NOT to invest? - Posted by erica

Posted by erica on March 09, 2005 at 11:59:24:

yes, i posted a message regarding the timing of getting into real estate. i guess i am answering my own question if my goal is to have cash flow then it is always a good time, right? however, there is concern these days of the new construction market. in other words, it is so easy to purchase a new home these days, why would any one want to rent an apartment? does anyone have any advise on this? thank you for listening.

It depends … - Posted by Robert Campbell

Posted by Robert Campbell on March 09, 2005 at 12:48:14:

where you invest.

Some housing markets have linear trends that more or less track with inflation.

Other housing markets are cyclical.

David Krulac’s offers you some prudent advice – advice that is almost always good in linear real estate markets … but not always good in cyclical real estate markets.

Robert Campbell

Re: is there ever a time NOT to invest? - Posted by David Krulac

Posted by David Krulac on March 09, 2005 at 12:11:24:

IMHO there is no bad time to invest and that comes from my personal experience buying real estate over 40 decades. there are better times but no time to sit on the sidelines. I bought places in 1981 and 1982 when interest rates were approcahing 20% fixed for 30 years. I was still buying. You need to look at buying right and buying quality properties that you can rent or resell. And while interest rates are low at near 40 year low levels, no everybody can or wants to buy. Home ownership levels inspite of the record low interest rates are still around 70%. That means that 30% of people live in rented places. for some that’s a temproary situation and for other its a more permanent situation. But there will always be people getting divorced, moving to new area, just getting out of school, foreclosure, bankruptcy, and a whole host of other reasons why they rent including that in many areas renting is cheaper than buying. There will always be renters, IMHO. My rules for buying include:

  1. buy below market
  2. only buy positive cashflow
  3. only buy decent quality houses in decent quality areas.

I’m not sure it does not work in cyclical markets - Posted by David Krulac

Posted by David Krulac on March 09, 2005 at 15:00:12:

either. If you are investing for the long term, which rentals should be, then the cycles don’t have a lot of impact. You’ve probably read David Schumacher’s “Buy and Hold” Book, and you’ve probably even met him. He invests in Ca in the LA area, which is a pretty cyclical market. He says that you don’t need to pay below market and can pay market prices because you’re not selling anytime soon. He’s more Buy and never sell. If you buy a property at the peak of one cycle and it goes thru a down cycle eventually it will go back up. And as long as you aren’t selling in the valley the ups and downs are really immaterial.
Nothing is 100% warranted in real estate but I still think that even in a cyclical market, if you buy right, hopefully below market, have positive cash flow, and buy in good areas; then the down cycles won’t have much effect on you.
In a down cycle rents could go down and vacancy rates could go up, and those are serious concerns but they can be addressed. Some might say that in a down cycle that there would be MORE renters as there would be less people buying.

I was looking at this house and next door an odler gentleman was putting siding on a house. i stopped an dtalked to him and found out that he was the owner of the property and had rented the place to the same family for 50 years. I was quite amazed as even now the longest tennat I’ve had is 19 years. So i asked him what the rent was to rent this SFH. He replied $50. I don’t think that he was concerned about any cycles.

Re: is there ever a time NOT to invest? - Posted by REICA

Posted by REICA on March 09, 2005 at 13:20:27:

Cannot agree more with David…

Is it easy to buy below market out-of-state using realtor? I am talking about TX market. I am definitely going for cashflow, appreciation 2nd. Any advise.

40 DACADES??? (nt) - Posted by Cletus

Posted by Cletus on March 09, 2005 at 12:17:48:

nt

Re: I’m not sure it does not work - Posted by Kristine-CA

Posted by Kristine-CA on March 09, 2005 at 21:29:42:

David: what a great story about the 50 year rental for $50.00! Maybe
there is hope for me after all. My new landlord is over 70 though. But
he looks healthy and fit. He also owns the house next door–his only
two rentals. His rents are below market but he rents totally as-is–and
we tenants know not to call–we like this low rent.

I’m so curious about the family that rented for 50 years. I probably
shouldn’t be–NYC rent controls are like that. Kristine

A different approach to real estate investing - Posted by Robert Campbell

Posted by Robert Campbell on March 09, 2005 at 15:18:49:

David Krulac,

Thank you for sharing your point of view.

I find your comments on this discussion board insightful.

Best wishes,

Robert Campbell

its either 40 years or 4 decades, your choice NT - Posted by David Krulac

Posted by David Krulac on March 09, 2005 at 15:01:25:

`

Re: He is really old (nt) - Posted by ed copp

Posted by ed copp on March 09, 2005 at 13:16:37:

$

Re: I’m not sure it does not work - Posted by David Krulac

Posted by David Krulac on March 09, 2005 at 21:49:55:

it wasn’t rent control, just an old man with no mortgage and no interest in raising rents.

sometimes I feel that old, when - Posted by David Krulac

Posted by David Krulac on March 09, 2005 at 15:10:16:

a reference is made to something that happend more than 20 years ago and nobody know anything about it or when I’m wearing some piece of clothing older than everybody in the room.

Re: sometimes I feel that old, when - Posted by RichV(FL)

Posted by RichV(FL) on March 09, 2005 at 19:18:49:

You guys are so funny sometimes. This has to be a top ten thread. I hope IB(NJ) is reading this.

RichV(FL)

Re: sometimes I feel that old, when - Posted by Cletus

Posted by Cletus on March 09, 2005 at 15:19:37:

David,

Were you in a good position to score some beachfront property at Plymouth Rock, or did you let that get away?

not only missed out on Plymouth Rock but also - Posted by David Krulac

Posted by David Krulac on March 09, 2005 at 17:10:26:

some obscure island for $24, I think it was called Manhattan or something like that.

when was this? - Posted by jon

Posted by jon on March 10, 2005 at 14:43:58:

That was a seriously good deal. Anyone know when manhattan was purchased?

How much was this $24 bucks worth in today’s dollars?

Dont forget the Louisiana purchase!(nt) - Posted by RichV(FL)

Posted by RichV(FL) on March 09, 2005 at 19:09:14:

$ :slight_smile:

Re: not only missed out on Plymouth Rock but also - Posted by nik

Posted by nik on March 09, 2005 at 18:53:45:

Hey! I remember that!

Re: when was this? - Posted by Anonymous Coward

Posted by Anonymous Coward on March 11, 2005 at 17:59:13:

It was originally purchased in 1625 for 60 Dutch Guilders:

http://teachpol.tcnj.edu/amer_pol_hist/thumbnail2.html

A quick bit 'o math, assuming a 10% annual return on investment, indicates that that original 60 Guilders, had it been invested rather than used in the purchase, would be worth about:

32,164,115,316,989,100.00 Guilders.

I’ll leave it up to you to do the currency exchange for 1625 Guilders into 2005 Dollars. Ditto for discounting inflation since 1625 – you figure it out.

Personally, I would have rather invested the money than purchased the island. But that’s just me.