Sorry your teaching lesson fell on fallow ears. Why do you suppose “young” and “foolish” so often end up in the same sentence together?
Now, I see some progress here in your thinking. If we are to talk about personal restraint I wonder if we couldn’t hypothesize that the same person who would actually put aside $15K or $20K into a holding account and not touch it would be the same person who would not touch his two $10K or four $5K credit cards or lines of credit?
Again, I think the advice is old-fashioned and from a different era. It probably made sense when it originated.
I know, it is hard to give up one’s old ideas for new ones. But you’re pretty close to there, I’d venture.
I’ve been doing a little survey with people that I know and some that I don’t know.
Pay off some bills
Buy a new luxury car
Buy new furniture
Take a vacation
Pay off house
Buy stuff for the kids (cars, furniture)
Buy a boat, RV, or similiar item
Invest whatever is left
Most of these people work an hourly job. The only ones who said they would invest at least $90,000 of it were my relatives (Mom and Brother). Everyone else said they would blow it. Paying off the mortgage wasn’t that high on the list. The first thing on my list was purchasing a business so I wouldn’t have to work for some one else any more. It’s been on my list for about 5 years now, it’s only been about 2 years that real estate has been number 1. My dream is coming true because I did get a little over $100,000, and I am buying a mobile home park (decided it was best for me after a years research). What is wrong with all these other people? Was I raised the wrong way? Most of these people will work all their lives and never have anything. Yet, I find it hard to feel sorry for them.
GG,
You never did give us the numbers.
Tell us about the deal.
What is their total asking price?
What does it appraise for?
How much down is required?
How much will your payments run?
ect. ect. ect.
Have you thought about doing a one year triple net lease with an option to buy?
You could lease it for one year then let it go back if it looks like it would not ‘pay out’.
WHAT ARE YOU THINKING???
No way would I invest the whole $100,000 in one investment! You should be able to invest in anywhere from 10-100 rei’s with that kind of $$$$$. Put less down and spread it out for heaven’s sake.
A friend at work told me about his wife’s sister and her husband. He worked at a place and got exposed to mercury. He received a $150k settlement that was tax free because it was due to medical. It only took about 6 months and they blew it all. Paid off a few small bills they had, got some new furniture, new concrete drive, took all the extended family out to eat at Outback, etc. They traded NEW cars about 5-6 times in 4 months. He has and still has other medical problems and has recently been in the hospital unable to work. Now ALL the money is gone and they are at risk of loosing their house because they cannot pay for it. Also the 2 cars they have (both financed) are past due. They would have been better off paying the mortgage, at least they’d have a house.
Take financial advice from anyone who is not currently in a position that you respect, for their financial discipline and accomplishments over a long period of time. In other words, as you have so aptly figured out, don’t listen to the CHEMIST… That is the one who can readily turn a pile of money into a pile of Cr*p, at will… and prides themself on their skills too.
My advice, (and I used to give financial advice for a living as a CFP… today I only have one client), is:
payoff any revolving debt that has a non-deductible rate of 8% or greater.
Do not payoff long term mtg’s.
Do not invest all the remaining funds into any one investment.
Spend only a small % of this 100K on worldly posessions, but it is OK to spend some. Total deprivation is not recommended.
5)Invest into one or more investments that are conducive for achieving your long term goals, such as the MH park. However, not all MH parks are created equal, so be sure to do your due-diligence on the acquisition.
Maintain a balance in cash reserves that is equal to 3 to 6 months of your living need.
Well, sounds like your mother and brother are the only sensible people you know. What does that say about your choice of people to know? It is my impression that we real estate investors tend to flock together and talk to each other and ignore the lunkheads.
I think you are in danger of succumbing to “Real estate investor arrogance.” It’s not really as bad as it sounds: you see things so much better than other people so you feel superior to them. Remember to be kind to those who don’t own real estate. They may be your renters, sellers, or buyers someday.
I think that the problem may be due to the mass media constantly harping on spending money, buying things and services. That is because they are catering to their advertisers who want you to be buying their stuff and services. If that is all people see most of the time, how are they supposed to understand that you should be living below your income and investing the rest?
Just don’t flaunt your wealth too much in front of them. Remember to drive the official car of property owners: a white ten-year-old Toyota pickup with dented fenders.
I’m thinking that the park doesn’t make my stomach hurt. The thought of several different properties makes it hurt, bad. Besides I’m not putting it all in the park. I’ve put some of it into a safe investment, mutual funds. I’ll do something else later, after research and something that doesn’t make me hurt. On top of all that I don’t have a job right now, I don’t plan on getting a job right now and it would be much more difficult to get the financing for several different things right now. I’m buying a job, the investment part is an extra.
It’s not listed with a broker. He’s asking 275,000. 64 spaces, 24 lot rent, 6 rentals, and the rest are empty. The owner is out of state and has other business interests. The gross income right now is about 4,000 per month. Not very much, but with 34 empty spaces, the income would double just with lot rent. There aren’t very many expenses right now, a light bill and well expenses. It’s in a major metropolitan area, next to a large military base. When we finally decided a park was what we wanted, a nearby military base was mandatory. The lots are spaced out, so there is potential to double the lots. There are a lot of large trees for shade, also. The park needs a great deal of work, but nothing we can’t do ourselves. We’ve remodeled several houses and trailers and found out that the trailers are easier and quicker as a general rule. After we get the park in shape (at least 5 years, our plan is probably a little slow) we will start looking at houses. Don’t know what we will do with them yet, but we have some time to decide.
I have read in the past about the history of a long line of Lottery Winners. The future is grim for almost all who win, as they have no idea what to do with the funds, that makes any sense. The fact is that a high percentage of them end up filing BK before too long after winning the coveted prize… if the info that I recall was correct.
Many of these folks become prey for every scam in the book, blow lots on bad habits, and consume many depreciable commodities… all a known recipe for financial ruination.
I asked out of curiosity not for advice. I’ve worked in finance all of my life, collections for a few years. All of these people are homeowners, I’m not sure I know anyone who rents. Used to, but he finally decided he wanted the responsibility of home ownership again. I didn’t include him in my survey, don’t know why, he probably woould have said invest it all. Some of these people are retired or near retirement and all but one lives a rather decent life. My neighbors have a Jim Walter home that has a contract on it for over 300,000. He has worked for the same company since he was 14 years old and is now close to 50. I agree that paying off credit cards, etc. is a good idea. Paying off the mortgage is a good idea for some. The one that I know for a fact doesn’t have anything is the one who would go and blow it all on ridiculous things. She is the only one who lives in a mobile home instead of a house. I’m not knocking the mobile home because I’m selling my house and moving into a singlewide in my trailer park. She’s my former babysitter and when my kids got old enough not to need her anymore she has called every so often to borrow money. Apparently I was her main source of income and she wants it to continue. To bad the baby factory has closed. In fact I would like the park to be an adult community, just don’t see that as being a good move right now.
The point of this was that most people would blow the money if it were given to them. There are only a small percentage of people who would take the time to find an investment that is right for them, something that would grow and let them have a better life in the future.
I totally agree with all parts of this message but the part about never paying down a long term mortgage. Although most of us use leverage as much as we can, leverage is not always the best approach on your personal mortgage…especially in this day and age. Unless you can earn a higher return on your personal funds than the interest rate you pay on your mortgage, you should pay off your mortgage. Also, there is something to be said about the security of having NO house payment, the ultimate in security, and a big step in being financially free. After all, if all you have to pay is taxes, utilities and repairs on a place, if you have no other revolving credit card debt, car loans or any other debt, you are pretty close to being self-sufficient. Additionally, for every dollar you pay for principal in the life of a mortgage, you pay two dollars in interest…less the tax benefits, that is still a lot of money!! Why pay it if you don’t have to??? It all boils down to what your conditions are, what your goals are, and what is going to make you more comfortable…
This is my request that you review recommendation #6.
I have heard similar suggestions for many years now.
I got to thinking that it probably was first promoted in the 1920s or some such era. I think that with the widespread usage of credit cards that this suggestion can be deleted and not used again. Of course, one has to be sure that one has a lot of borrowing room on one’s credit cards.
I’m thinking we can relegate this one to the “old husband’s tails” bin.
What do you want to know? It’s 31.5 acres, 64 spaces, approx. 40 homes need to be replaced. Roads need to be repaired. It’s located in the 2nd largest city in my state, next to an Army base. Potential income of over 15,000 per month.
It took us quite a while to determine that a mobile home park was the right investment for us. We researched different types of businesses before finding real estate, then we had to research the different types of real estate. For us a MHP is the perfect thing. There are all sorts of things that can be done with one. Lot rent only, home rentals, home sales, combination of these. We can have the tenants take care of lot upkeep, or hire someone, do it ourselves. We have an idea of what we are going to do but it’s such a flexible project that we are open to whatever works best.
I don’t mean to sound superior to anyone. All the people I asked are homeowners, drive decent cars and have decent jobs. None are really lacking anythingexcept for one. I’m sure most have an Ok retirement plan. It appears that the ones who are in their 30’s and 40’s are depending on an inheiritance for their retirement. My EX husband is one of these people. He refuses to pay the monthly bills. His parents are always telling him he should have what he wants now and that they will leave him something when they die. Well, he will be retirement age long before they are dead and on top of that, they don’t have anything either. His sister bought them a house. Enough of that, it makes me physically sick thinking about it.
As far as me, I will probably stick to a 3-7 year old vehicle. Single female, need better dependability from my car. My way of changing a tire is to get the cell phone out. I’ll keep my filthy 1998 Blazer with the ding in the back passenger door, bleach stain (forgot to clean the pressure washer), and broken front passenger seat (won’t recline, knob broke off, laying in the front door cup holder). I guess I’ll end up keeping my furniture also because I can’t even give it away. I’ve tried. Refuse to take it to the dump. The best thing I own is a recliner I bought at a yard sale for $35. The only luxuries I want is a good desk, chair and fast internet service. If I can eventually afford a live aboard boat, I’ll do that, but things aren’t as important to me as paying my bills on time and living comfortably. I can do that working for someone else, but I’m tired of working for someone else. Why should they go and buy things from my hard work?
I’m also thinking about donating a trailer to the women’s shelter. They will only let women stay so long and some of them need something for a little longer or they will end up in the same situation. Also plan to help someone get a child care license to open day care center. They can rent the house in the park to use as their business and also become contributing members of the community.
You are right about not associating with people who aren’t supportive in my endeavor. There are some that I refuse to talk to anymore about it. Some think the stock market is the way to go. Luckily my brother got out in 2000, now he is getting interested in real estate. He did make a killing with Krispy Kreme Doughnuts though!
- Posted by Joshua_NE