Comments on: Does Real Estate Make Sense? http://www.llamamoney.com/does-real-estate-make-sense/ It's not just money - it's Llama Money Wed, 24 Feb 2010 19:39:57 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Ned Carey http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-1404 Ned Carey Sun, 09 Nov 2008 06:55:17 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-1404 As you said in the post "Reward does not come without risk" In fact I believe real estate is one of the riskiest investments out there. BUT, with real estate you can control your risk with knowledge. For me, I actually consider it low risk. However I am just the opposite situation form you. I am thinking now is a good time to buy stock now that they have been beaten down so badly. As you said in the post “Reward does not come without risk” In fact I believe real estate is one of the riskiest investments out there. BUT, with real estate you can control your risk with knowledge. For me, I actually consider it low risk.

However I am just the opposite situation form you. I am thinking now is a good time to buy stock now that they have been beaten down so badly.

]]> By: Llama Money http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-339 Llama Money Thu, 10 Apr 2008 15:12:19 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-339 Sharon: I guess that's why real estate requires a TON of homework - something I haven't done yet. I live in southern Texas, which is a pretty low-cost area as far as housing goes. Still, to buy a decent home in a decent area here will run well upwards of $100k. Maybe the Corn states are a better choice. When I have the cash reserves built up, I'll look into it more. I must have patience, for now, so I can get to that point. Sharon:
I guess that’s why real estate requires a TON of homework – something I haven’t done yet. I live in southern Texas, which is a pretty low-cost area as far as housing goes. Still, to buy a decent home in a decent area here will run well upwards of $100k. Maybe the Corn states are a better choice. When I have the cash reserves built up, I’ll look into it more. I must have patience, for now, so I can get to that point.

]]> By: Sharon http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-338 Sharon Thu, 10 Apr 2008 14:17:07 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-338 Actually, all of my homes are in awesome shape in great neighborhoods and school districts. I don't buy in high crime areas or poor school districts (I'd never sleep at night). I purchased my homes wholesale (20-25% below market), put in some carpet, appliances and paint (around $2-3K), and am now getting top rents! I'm not sure where you live, but I think that may be what you're using as a reference point - perhaps by you $50K would buy a crummy home. It's all about research and finding the right area at the right price. Believe it or not, they still exist! Actually, all of my homes are in awesome shape in great neighborhoods and school districts. I don’t buy in high crime areas or poor school districts (I’d never sleep at night). I purchased my homes wholesale (20-25% below market), put in some carpet, appliances and paint (around $2-3K), and am now getting top rents!

I’m not sure where you live, but I think that may be what you’re using as a reference point – perhaps by you $50K would buy a crummy home. It’s all about research and finding the right area at the right price. Believe it or not, they still exist!

]]> By: Llama Money http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-336 Llama Money Thu, 10 Apr 2008 14:02:24 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-336 Sharon: I would be deathly afraid of buying a $50-$80k home. I guess it's very dependent on the area, but that would buy a really trashed-out home in a poor area here. It's starting to sound like I'll really need to look elsewhere if / when I decide to buy my first rental. Kyle: 20% per year in the stock market is a fluke, not the rule. Unless your last name is Buffet, you can't count on returns like that. At least not long term anyway. Of course, buying Berkshire Hathaway stock could have similar potential :) I've gone back and forth between stocks and real estate ever since I've started caring about money. I don't think there's a clear cut answer on which one is best. That's why eventually I would like to have stakes in both, to hedge my bets. Sharon:
I would be deathly afraid of buying a $50-$80k home. I guess it’s very dependent on the area, but that would buy a really trashed-out home in a poor area here. It’s starting to sound like I’ll really need to look elsewhere if / when I decide to buy my first rental.

Kyle:
20% per year in the stock market is a fluke, not the rule. Unless your last name is Buffet, you can’t count on returns like that. At least not long term anyway. Of course, buying Berkshire Hathaway stock could have similar potential :)

I’ve gone back and forth between stocks and real estate ever since I’ve started caring about money. I don’t think there’s a clear cut answer on which one is best. That’s why eventually I would like to have stakes in both, to hedge my bets.

]]> By: Sharon http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-328 Sharon Wed, 09 Apr 2008 23:13:48 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-328 So Kyle, are you a hedge fund manager? I have a couple of family and friends who would love to make those kinds of returns in the stock market (I'm talking people who actually know what a put, call and option are). All I hear them whining about is how their portfolio is dwindling daily. Seriously, e-mail me and I might be able to give you some referrals. But as I said at the end of my first post, "to each their own." I know not everyone should invest in real estate - I think sometimes my enthusiasm for it makes me appear as if I do think that though :) My family personally thinks I'm nuts, but only time will tell. In the meantime, the age old debate of real estate versus stock market is alive and well. Success in all You Do! Sharon So Kyle, are you a hedge fund manager? I have a couple of family and friends who would love to make those kinds of returns in the stock market (I’m talking people who actually know what a put, call and option are). All I hear them whining about is how their portfolio is dwindling daily. Seriously, e-mail me and I might be able to give you some referrals.

But as I said at the end of my first post, “to each their own.” I know not everyone should invest in real estate – I think sometimes my enthusiasm for it makes me appear as if I do think that though :) My family personally thinks I’m nuts, but only time will tell.

In the meantime, the age old debate of real estate versus stock market is alive and well. Success in all You Do!

Sharon

]]> By: Sharon http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-327 Sharon Wed, 09 Apr 2008 23:09:59 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-327 Hi Llama Money - you are correct, I live in California. But, we have our eye on a couple of areas that if they continue to decline further, will actually cash flow, so I'm pretty excited about that. Right now, however, I'm investing in areas where you can buy cash flow homes for between $50-80K, so between down payment and closing cost, you need about $18K. Compared to areas where homes sell for $130-150K, that's much more doable. Of course, you should also set aside approximately six months of mortgage payments in reserves, but with $400 mortgages, I'm still able to buy a property for about $21K. Not a small amount of money, but no as large as other areas. That's why I choose to go to another state. If it's something that really interests you, though, you'll know when the time is right! I'd advise finding a partner or a mentor for your first couple of deals, just to be safe. Hi Llama Money – you are correct, I live in California. But, we have our eye on a couple of areas that if they continue to decline further, will actually cash flow, so I’m pretty excited about that.

Right now, however, I’m investing in areas where you can buy cash flow homes for between $50-80K, so between down payment and closing cost, you need about $18K. Compared to areas where homes sell for $130-150K, that’s much more doable. Of course, you should also set aside approximately six months of mortgage payments in reserves, but with $400 mortgages, I’m still able to buy a property for about $21K. Not a small amount of money, but no as large as other areas. That’s why I choose to go to another state.

If it’s something that really interests you, though, you’ll know when the time is right! I’d advise finding a partner or a mentor for your first couple of deals, just to be safe.

]]> By: Llama Money http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-322 Llama Money Wed, 09 Apr 2008 15:09:11 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-322 I'm totally a novice at real estate, so it's great to hear from a pro. Sharon it sounds like you have been doing this for awhile - long enough to get a solid team with you. For a new investor, doing long-distance deals seems like a bad idea. But if you're living in California or another high-dollar area, then rents couldn't come close to covering your mortgage, so it makes sense. Having that 20% down rule is great. You avoid PMI, fancy loans, and also get your hedge against a market drop. That's the difficulty for me, since I couldn't come close to 20% down on a property right now. Perhaps the time isn't right yet for me. I’m totally a novice at real estate, so it’s great to hear from a pro. Sharon it sounds like you have been doing this for awhile – long enough to get a solid team with you. For a new investor, doing long-distance deals seems like a bad idea. But if you’re living in California or another high-dollar area, then rents couldn’t come close to covering your mortgage, so it makes sense.

Having that 20% down rule is great. You avoid PMI, fancy loans, and also get your hedge against a market drop. That’s the difficulty for me, since I couldn’t come close to 20% down on a property right now. Perhaps the time isn’t right yet for me.

]]> By: Kyle http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-321 Kyle Wed, 09 Apr 2008 14:50:36 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-321 Sharon, 20% per annum is quite doable with a variety of investments in any economy. An intelligent hedged stock strategy can get there with less risk and less work than real estate if you do it properly, for instance. There's more than one road to Jerusalem. Real estate investing is great, but it's not a utopia. And it's a lot of work! Owning real estate is more like a part-time job than an investment. Sharon, 20% per annum is quite doable with a variety of investments in any economy. An intelligent hedged stock strategy can get there with less risk and less work than real estate if you do it properly, for instance. There’s more than one road to Jerusalem. Real estate investing is great, but it’s not a utopia. And it’s a lot of work! Owning real estate is more like a part-time job than an investment.

]]> By: Mid-Week Wordpress Crashed Link Love | Amateur Asset Allocator http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-319 Mid-Week Wordpress Crashed Link Love | Amateur Asset Allocator Wed, 09 Apr 2008 14:06:12 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-319 [...] Money asks Does Real Estate Make Sense as he weights the pros and cons of buying a rental property.  I have 150 acres of land in south [...] [...] Money asks Does Real Estate Make Sense as he weights the pros and cons of buying a rental property.  I have 150 acres of land in south [...]

]]> By: John Kreiss http://www.llamamoney.com/does-real-estate-make-sense/comment-page-1/#comment-313 John Kreiss Wed, 09 Apr 2008 03:13:48 +0000 http://www.llamamoney.com/does-real-estate-make-sense/#comment-313 Does Real Estate Make Sense? This article presents a lot of interesting points. There are certainly values out there in residential and commercial real estate for long-term investors seeking value. The challenge, however, is getting a loan that makes sense in this market for the lender and investor. It takes a lot of equity to produce positive cash flow from residential property and lenders are reluctant to give money to investors without substantial equity in most cases. No mone-down loans appear to be a thing of the past and how many consumers have an extra $60K in their pocket to drop down on a $300,000 residential property? Does Real Estate Make Sense? This article presents a lot of interesting points. There are certainly values out there in residential and commercial real estate for long-term investors seeking value.

The challenge, however, is getting a loan that makes sense in this market for the lender and investor. It takes a lot of equity to produce positive cash flow from residential property and lenders are reluctant to give money to investors without substantial equity in most cases. No mone-down loans appear to be a thing of the past and how many consumers have an extra $60K in their pocket to drop down on a $300,000 residential property?

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