Investments

[Got Juice]

i hate posting OT shit, but sometimes this is a great place to get answers for random shit.

I have been thinking about making some pretty big decisions with my life and i would like some opinions.

what has croseed my mind is instead of spending my money on a nice home and other shit, like a really nic car, etc. i was thinking about buying a average home and just taking the rest of my cash and investing it. im thinking im 22 right now, if i was to invest say 10-15k for the next 8 years, by the time im 30 i should be pretty financially stable.

i havent got a lot of knowledge on investments, but im sure someone here could maybe help point me in the right direction. maybe some ideas, anything is appreciated.

thanks,

GJ

[Tugboat]

If you got enough money to buy a house a car and then put 10-15 away I would say your already doing very well.

[GerryT]

I'd consult with a CPA or investment broker or an officer of your bank. Sounds like you are talking significant money, so get some expert opinions
and good luck.

[slide]

Im with Gerry. Would recommend talking to the investment representative/specialist at your bank. Typically there is no charge to talk with them and dont feel obligated to do anything until youre comfortable. Either talk with the branch manager or one of the tellers to set something up.

Worked for a brokerage firm back in the day. Good luck...

-slide

[Big A]

DON'T talk to advisors, brokers, etc for advice. If they really knew what they were talking about, they wouldn't be working in a crummy job but enjoying their millions/billions.
Those are the financial equivalents of the skinny/fat guys in the gym that seem to know everything but don't have the body to show for it. You don't ask them for advice now, do you?

Best advice I can give you is to research everything yourself as much as possible. All types of investments, reasearch them out. Then find the ones that make the most logical sense to you and make you feel more comfortable and choose from there.

My personal choices, if I was in your shoes would be to put some money away in something secure in case the shit hits the fan (gold or diamonds). That way, if things go bad, you can always have something that you can cash in that is recognised world wide as valuable. Diamonds are good since they mostly go up in value (I am talking about investment quality diamonds), and you can just slip them in your pocket if you need to suddenly leave the country.

Then, after you got enough value in things like above for an emergency fund, then with the rest go into real estate as that goes up generally speaking and with the equity you get in the house, borrow money from the bank and invest it into a fast growing business.
That way you can increase your $ very quickly. Obviously, you have to put a lot of time and effort into deciding what business to invest in (most improtant thing is that the management/owners of the business know what they are doing), in order to make sure that not only that you won't lose your investment, but that it will explode as well.

[Got Juice]

thanks for all the replies, i guess ill spend my sunday researching investments, fun fun fun.. lol

when i said i want to put 10-15k a year away, i mean that is every extra penny.. im not going to be spending cash or going out to clubs like i had in the past, wasting hundreds of dollars. i think it can be done, if i am a little smarter with my money.

i just see all to often, families with nice cars, homes, etc. but they are just skimming by on credit and hoping they dont have a big expense come up because they are already at their financial boundaries. i dont want to be that way.

thanks,

GJ

[xcelbeyond]

Originally Posted by Big A

DON'T talk to advisors, brokers, etc for advice. If they really knew what they were talking about, they wouldn't be working in a crummy job but enjoying their millions/billions.

I was thinking the exact/same thing. Kinda like expecting how to make money from a professor (almost all) on "business." If they are so intelligent/knowledgable about business, why aren't they out in the real world making a fortune?!? I just luv it when someone tells me - well my professor told me I shouldn't do that HAHAHAHA

[G.E.R.M]

invest in hard assets...

if you had 15k per yr extra to put away....

even here on LI that could be a down payment on a small rental home with 2 apts in it...


i dont like stocks cuz with the world the way it is you never know when that stock will just go byebye....

[MrJuiceHead]

gold is good it just hit a record high if i am not mistakin......i like real estate also, you would have to try to lose money in that field. its all about risk. figure out how much you are willing to take.

[JnJ23]

the best investment you can make is investing in a cash flow producing asset.

search, look around for properties, and make a downpayment with the least amount possible and rent it out. all you have to do is have some security capital, and calculate everything and make sure your getting good net, and your good to go. ofcouse it's abit harder than it sounds but if your motivated enough and find a good deal you will be a happy man, and it will be the best thing you can ever do. if you dont want to rent it out, renevate and sell. find the worst property in the best neighborhood.

[Got Juice]

jnj, i believe you hit the nail on the head by saying find the worst property in the best neighborhood. i started looking around the net today for some local property.

a buddy of mine was saying you can do interest loans or something to that effect. basically you get a loan, but you are only paying on interest so the payment is lower. it obviously wouldnt be a smart thing to pay on for a long time, but 5-6 months wouldnt hurt.

thanks,

todd

[vitor]

I own a few investment properties with my brother, im also a mortgage lender, I am only licensed in MD/DC/Va so cant really help most of you guys out.

But in regards to your interest only payments, these are great loans, you need fairly good credit, and for most investment properties to get a good rate and make good rental income you are looking at 10% down, you can get away with 100% financing but the rates will stink.

I buy homes in the 40-80k range, spend 15-20k fixing, add a bedroom or 2, a bathroom, then refi, to get money out and rent Sect 8. Check around for your local banks, most of them have great programs to help you rehab rental property and avoid coming too far out of pocket for fixing them up,

[Big A]

Originally Posted by vitor

I buy homes in the 40-80k range,

Very lucky to find homes that cheap. Here (Aust west coast), the cheapest you can find is A$150k-$200k (US$120k-$150k) and that is in the skankiest part of town that you don't even want to drive through.
If you want a nice little unit(not house) in a middle class suburb you are looking at AU$300k+ (US$250k).

On the east coast of Aust it's even worse - I have seen in Melb just recently in a SHITTY suburb, a disgusting cottage for A$600k (US$500k) where it's only description was that it was 'livable'!

Fuck you are lucky to get houses at those prices the more I think about it!

[JnJ23]

down here in SF, houses go for at least 4-500k, its crazy

[fatchops]

I applaud you bro, I too am 22 yrs old. I am just bought 2 low income houses but in a community where people would love to live and the other one by a college. I am still living with my parents and just saving up and trying to not like you said "live by your credit card", and try to be more stable for the long run. Everyone has there opinions and besides getting professional help, the biggest thing that has helped me is just talking to people that have been around, ask questions to your co-workers and you never know who you can run into. Real estate right now in Colorado is booming and is cheaper then ever to buy real estate. It's a win win situation, give it a try. Good luck

[vitor]

Since I got back from over seas, military wise I have been staying with my Pops for a bit. I live in Montgomery County Md, the cheapest home here is like 325, but In baltimore where I invest you can get great deals in great area's. Im lucky my bro is taking care of me or letting me join his latest deal.

In baltimore the way you get a deal on a house is
1. It is burnt, pipes frooze, or a huge peice of shit
2. Its in the worst drug dealing area and you wont want to live there
3. Its an estate sale some punks gradma died and they want to sell asap
4. Someone is in Forecloseure

My brother went to look at this huge detached home, an estate sale, anyways the pipes had just frooze, basement flooded, they wanted 90k, he walked in said I will give you 60k, 30 day closing. They agreeed.


His plan was to spend 60k, fix itup sell for 200k, He gutted the entire home, had new HVAC, Elec, Plumb, siding, windows, etc, right now our entire rough in is done, we are putting up drywall next week. Look to sell in late january for around 245-260k.

My point is even in Australia, or Cali wherever you live their are deals. Before I left for active duty I would search the MLS <-- Multiple Listing Service, a realtors database every day, look at deals, then once a week throw out 30-40 offers. My offers are embarassing, someone wants 100k, I offer maybe 50k, my whole Idea is, someone somewhere is going to want to get rid of their home, need to do it, is just so fed up wants out, their is motovation out there, out of those 30 offers I get maybe 1-2.

Look for motovation, days on market, estate sales, fire damage, etc. Find out about section 8 in your area.

Another thing, please dont buy Carlton Sheets course biggest waste of your time, if your serious about real estate investments, Their is a Real estate group im a member of that has free knowledge, it is run by some very religous people and I promise no one is gonna sell you something or take your money.

Find out about a local real estate club in your area.

I will try and post some before and after photo's of this renovation so you guys can see what we are doing. Im hoping to do this full time in the next year or so, get like 20-30 rentals bewteen my brother and I, then buy an apartment complex.

Oh BTW, My real estate broker in ARizona, Im looking for some homes out their, knows that Rich Dad Poor dad guy very well, he was telling me how he is a great motivator, has great idea's but doesnt hardly own any real estate, so dont believe every thing you read. " You make more money selling supplies to the Miners, then being a Miner "

[Coopie]

As someone who has been in the investment services profession for over a decade, the best advice I could give anyone is this: Ask a trusted friend to recommend a Financial Advisor to you. Then, go INTERVIEW the Advisor to see if his style and personality mesh well with your personality and investment objectives.

Do not Talk to a CPA - CPA's are generaqlly not SEC licensed, nor do they have any training in: risk assessment and aversion, proper disclosure of investment objectives, and portfolio management. CPA's have been late to the table, and have only begun to become "RIA's" (registered investment advisors) as of the past few years. And RIA certification only requires: a $50 annual filing fee, never having been convicted of a felony involving theft of funds (embezzlement, or other financial crime), and a 75 Question multiple coice exam.

Do not Talk to Bank Advisors - Bank advisors are generally failed brokerage firm brokers. Yes, they have the mandatory training, but working for a bank they are very limited as to what they can recommend, and they CANNOT CUSTOMIZE AN INVESTMENT STRATEGY FOR YOU! They use "investment templates" consisting of mutual funds and annuities ONLY! Steer clear.

DO TALK TO AN ADVISOR AT ONE OF THE MAJOR BROKERAGE FIRMS. Smith Barney, UBS PaineWebber, Merrill, etc. They can create for you a customized portfolio based on your needs, objectives, and risk tolerance. They are trained to base advice on your Hopes, Dreams, and Fears. As a former Financial Advisor with Merrill I went through their 5 year training program after obtaining my MBA. There is constant ongoing training and multi-layered oversight. I left Merrill after 10 years and after managing over $75 million in client assets. Investment professionals build portfolios, but they also build relationships and growth is based upon referrals. Follow this lead and you will not be dissapointed.

Also, to those who think that Advisors are not "real" because thye're not out managing their own millions, that's nonsence. My first year as an Advisor I made six figures - that was 1995. The following year I was earning mid six figures and that continued - through good years and bad. In order to NOT WORK, and just manage personal assets you'd need a lump sum of $50 million. I don't know many people who start out life with that kind of capital. And, unless you'd plan on getting an MBA, and really becomming a student of markets and market theory - I'd leave investing to the professionals.

We saw what happened to people when they started to believe that they could manage their own assets. Most of the "solo investors" lost their homes and retirement stashes when the market collapsed in 2000. A well-balanced portfolio, however, stands the test of time because it is created with a plan, with discipline, and with the understanding that markets are cyclical.

The multi millionaires of the world are not out buying their own stocks or creating their own portfolios. They are running their businesses or just relaxing while the investment professionals are overseeing their capital.

And as for Real Estate - it pales in comparison to the equity markets in termsof overall return. Go look up an IBBOTSON CHART comparing the two and you'll see this:

Avg return on real estate (1950 - 2004) = 11%
Avg return on large cap stocks (same timeframe) = 15%

And, not to get technical, but the risk to return ratio for real estate versus stocks is like apples and oranges. More consistent returns with equity investing as opposed to real estate.

Everyone has their own thoughts - no disrespect to anyone or their ideas. But, after a decade and a half of dealing with clients I can't even begin to tell you the great sense of satisfaction in having a client call in and get a check that will pay their child's tuition, or cut a check to a client that will be their vacation home purchase, or their first retrirement check - knowing that wealth was created by my knowledge, ability, and caring. That's what investing is about.

[drgoodbody]

I'm with Coopie on this one - I personally have 2 financial advisors, both of whom I have built relationships with over time and their performance has been better than the broad market indices over the time frame that I've used them (last few years, post 2000 crash). Initially I managed my own money, and I'm quite conservative with what I buy. But as my net worth grew, I found it increasingly time consuming to do the necessary research to feel good about an investment option. Now I have to say, that I had > $500K of liquid assets when I hiered an advisor, which was a goal I had set before moving my money over. Today, I just concentrate on maximizing my earnings, and then rest assured that it is being invested wisely and per my rules - I monitor my money closely but its still nice to know that someone is helping me watch it as well.

Oh and I have substantial realestate holdings as well - those I manage directly, but eventually I may need help there as well.

My advice is to invest in things you understand and know - if you don't know much, then do the research. Don't just listen to someone blindly - thats a rule for all aspects of life (investments, gearing, etc.) Do your homework and talk to people, but make your own decisions.

DrG

[C_Horse]

In order to give you good advice, I believe we require more information. For example, the types of things being described on this thread range from purchasing run-down houses and renovating them to investing in the stock market. The approach should really depend on the larger picture of your life.

Not knowing anything but your age and available investment income, it seems like you are a recent college graduate with good job prospects. If that's the case you should work on building your career in the field you chose. You should sock away the money in a tax deferred account and buy a house to live in for the tax shelter.

On the other hand, if your job prospects aren't great but you have cash flow and are interested in real estate the home rehab idea makes sense. - CH

[Armageddon]

This is the kind of shit that I've been trying to do for sometime. But I don't have money to come up with for property, let alone making improvements. I have a few friends that do this and they always tell me that the best thing is to come up with 10g's and they can help. Fuck there's houses around here for 5-25 thousand dollars. Granted it's in shitty neighbor hood, but they sell. A bunch of investors just came through and bought a ton of property for low $$. They put almost nothing into them. They buy $25,000 home after putting$10-$15 thousand turn around and sell them for $60 grand. I know one guy tha bought a $120,000 house for $35,000. Descent area but within a 1-2 mile drive of the hood. HE's sold it 3 different times on land contract. The people make there down payment and one or two months of payments then the stop. He goes and kicks them out and starts over. The house has paid for itself almost twice already. The reason he got it so cheap was the bank repoed it and marked it at $65,000 but it had black mold in the boiler system. So they thought it wasn't liveable. So he made an offer and they took it. It only takes bleach and water to destroy black mold. After we cleaned for a day it was a pimp as house. Were I live $120,000 gets you a fairly large home. My moms house is worth around $180,000 and that bitch is two stories, full basement, large kitchen, 4 average bed rooms and a LARGE master room, and two bath rooms. My old roomie that lives is cali said that it would sell for way over $400,000 out there. Places are way different