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Is real estate investing for real?

Robert Burns said: "Are most real estate investments made to make a couple of grand by buying and selling a single family home? That's not investing at all. These Cash Flow guys have everyone running around looking to buy from someone in difficulties and reselling at a couple of bucks profit. Other real estate "investors" buy a house, fix it up and sell at a profit. That's not investing either. Want to talk about investing in real estate? Start at 50M. Okay, 20M. I've had people say to me that they would invest 30 to 500 million for what I can get them but when it comes down to the crunch they are all looking for a 40% to 60% discount on their purchases. Cut me a break! There's quite a difference in turning around an REO and buying a 20M portfolio of refurbished REO's and you should be happy with a bulk discount. Anyone out there serious about talking big time real estate investing? How about bank loans that can be purchased or any of a big commercial banks distressed assets? That'll give any investor something to think about. That is if they are serious investors to start with who see potential and know what to do when they see potential. I'm not knocking anybody but face it; investing is a venue of the Financial Industry not internet guru's."

marbles said: "[QUOTE=Robert Burns] I'm not knocking anybody but face it; investing is a venue of the Financial Industry not internet guru's.[/QUOTE] Let me guess, you are in the Financial Industry."

newinvestor123 said: "Dude, just get it over with and post your spam so we can completely ignore you, please."

Harry said: "[QUOTE=Robert Burns] investing is a venue of the Financial Industry not internet guru's.[/QUOTE] You poor guy, you sound like "the little train that couldn't". Knowledge is power. There is money in real estate. Being wealthy helps, but having smarts at the ground floor of a venture is a good start. But admittedly I do consider the balance of money. I always consider it finite. Housing peaks and the money shifts to stocks. Sooner or later a sinking housing market and increased inventories are going to suck money out of the stock market to some degree. For this reason FEW of my stock positions are long term. I'm nickel and dime'ing growth and then I'm shifting to properties. (not housing stocks)"

thezster said: "[QUOTE=Harry] For this reason FEW of my stock positions are long term. [/QUOTE] It's now official.... We turned Harry to the dark side of trading rather than long term investing!!! :signs053: :wave: If you read his first posts - you'll see everything was long term growth/potential...... Welcome to the game! :talk028:"

Robert Burns said: "Wow, if the assumptions so quickly held by a few are any indication of the way they invest; maybe Superior Investor is the wrong title. Obviously the wrong place for civil discourse. Fear not, I'm gone"

Harry said: "[QUOTE=thezster]It's now official.... We turned Harry to the dark side of trading rather than long term investing!!! :signs053: :wave: If you read his first posts - you'll see everything was long term growth/potential...... Welcome to the game! :talk028:[/QUOTE] You luv this. :) I do have keepers. I have short term holds, and I have speculative plays that end up wither short or long, like today's sale LVLT. I do believe in long term but experiencing the popping of the tech bubble in 99keeps me caution. I keep money close to my hip. If I get a good ride I take the money and run. The market looks to be in a good position for a much longer run right now. but I always live with the feeling that the hammer will drop."

Harry said: "[QUOTE=Robert Burns]Wow, if the assumptions so quickly held by a few are any indication of the way they invest; maybe Superior Investor is the wrong title. Obviously the wrong place for civil discourse. Fear not, I'm gone[/QUOTE] Wow, a little adversity and you run? I like it here BECAUSE of the open-mindedness and my ideas being challenged."

AlfredSokol said: "[QUOTE=Harry]Wow, a little adversity and you run? I like it here BECAUSE of the open-mindedness and my ideas being challenged.[/QUOTE] Damn, he didn't even last 4 posts! :dazed052:"

asbuca said: "Hi, I am thinking of investing for the first time, and an acquaintance referred me to a program which deals with real estate and promises to give a return of 15%. Is this a dangerous program, or something I could give a try? The website is guaranteed15 dot com . Any of you guys have experience with them? Thanks for all your help! How do I tell a program as real or scam? Ben"

AlfredSokol said: "Its a scam as well as a reverse spam. You're what's known as a reverse spammer. But I bet you already know that."

Rbreb13 said: "Multiple posts with the same crap won't make it anymore attractive! If this is such a good deal? Why aren't you sipping Pina Colada's on a beach somewhere instead of spamming message boards? :flipoff:"

Robert Burns said: "Didn't multiple postings of religious crap make religious crap popular and a very profitable business to be in? Citi may crumble but kids will still be taught about Noah's ark; won't they? Ever notice that when the government sets up a "Blue Ribbon Panel" it's made up of the bozos who caused the problem to begin with? Talk about spam... Did doubting Thomas stick his hand into Jesus' side or was it his foot he stuck into his mouth?"

Heather said: ".. I seem to have lost the thread somewhere .."

FirefighterB said: "holy.left.field"

tomtat1 said: "[QUOTE=asbuca;51486]Hi, I am thinking of investing for the first time, and an acquaintance referred me to a program which deals with real estate and promises to give a return of 15%. Is this a dangerous program, or something I could give a try? The website is guaranteed15 dot com . Any of you guys have experience with them? Thanks for all your help! How do I tell a program as real or scam? Ben[/QUOTE] I would be leery of anyone guaranteeing double digit returns"

deltaneutral said: "I've been in commercial real estate for years and it, in my opinion, is the best way to invest in real estate. Investing in real estate is simply another asset class. I'm not saying it's better than any other investment, just simply another class for diversification. Residental real estate may be a good investment if someone is buying a house in which they plan to live in for many years and not worry about market fluctuation. However, as an investment, it's not the best choice. Mainly because it carries single tenant risk. If you lose your tenant, you are paying the debt service yourself...possibly for many months. Also, there is the tenant risk in how your property is cared for. Typically tenants don't care about your property like it's their own. Usually the property will receive significant wear and tear. Be prepared to replace/repair appliances, call plumbers, replace carpets, paint, etc. Residential tenants will usually let repairs they deem as small go. Things like dripping faucets probably won't warrant a call, yet as the owner the potentail water damage and large water bills could be a problem. To top it off, people listen to "guru's" like Marshall Ruddick. They buy homes in areas they dont know, leverage highly with interest only loans and don't do proper due diligence. They soon learn that their supposed cash flow of a couple hundred bucks a month on little or no investment ends up being a negative cash flow of a few hundred a month. Then when they lose a tenant, they're upside down a couple thousand a month. Good investment? Commercial real estate is better for many reasons. If you invest in a little multi-tenanted office building or strip retail center, the single tenant risk is eliminated. You can lose a tenant or 2 and usually still have expenses and debt service covered. I have been putting people in commercial properties for years and getting double digit cash on cash returns. Bank underwriting is more stringent. You won't get the high leverage like residentail, but you also don't see as many defaults now either. Commercial loans are underwritten on debt coverage ratios. Typically the bank want to see $1.25 of net operating income (NOI) for every $1 of debt. That NOI is calculated after all expenses, vacancy allowances, reserves, etc. After figuring the maximum amount of loan dollars based on debt coverage, the bank typically limits the maximum amount t 75% loan to value (LTV). That's right, you have to put 25% of your own skin in the deal. Tenants also have rent increases built into the leases. Usually they are tied to CPI or are set increases of, for example, 2.5%/year. Plus, it's a bricks and mortar investment. It's tangible. You can touch it and see it. Plus, tenants care for the property becasue it's their place of business. They usually make small repairs themselves and if something needs to fixed, you can rest assured they will tell you quickly. High single digit to low double digit ROI's are normal...depends on the asset quality, tenants, etc. But that means you get cash flow immediately. So in a nutshell, you put 25% of your money in, you get around a 10% cash on cash (1st year) after all expenses and debt service obligations are paid, the bank lends you 75% (which the tenants pay it off for you) so at the end of 25 years, you own it free and clear...thank you tenants. Plus, rents are tied to CPI so you cash flows are inflation adjusted and your cash flows go up each year. If you invest in properties with NNN leases, all expenses are passed through to the tenants. This takes the risk out of expense increases affecting your cash flows. For example, property taxes can double on an assessment; with NNN leases the expense increase is passed through to the tenants and not borne by the owner. Plus, since prices are determined on the income a property produces, the value of the building usually goes up as rents increase. Of course, this is not a guarantee, but it is less specualtive that assuming a house will appreciate. Someone in this forum wrote that double digit returns are too good to be true. That's not true. I see it every day. I know developers that pay 15% to 18% for money in their projects. I have hard money lenders that will pay 12% to use your money. The problem with that is that the money is treated as ordinary income and you get taxed at your bracket. In commercial reat estate you get the tax advantages of depreciation and interest write offs, plus more, to offset your income and I have helped many, many people get those double digit returns. If you need references...just ask. Plus, you can even set up your own LLC as the asset manager of the property (not property manager...you should have a professional property manager) and use the LLC to run personal expenses through creating even more tax savings. So, is investing in real estate real? Absolutely."

tomtat1 said: "[QUOTE=deltaneutral;69896] Someone in this forum wrote that double digit returns are too good to be true. That's not true. I see it every day. [/QUOTE] If you are referring to me I said that you should be leery of anyone guaranteeing double digit returns. The key word is guaranteeing. While I agree with you that commercial real-estate is a solid investment with many advantages including Tax treatment and the ability to use leverage, there are no guarantees. Saying that if done properly you can make double digit returns, and guaranteeing them are two totally different things. In fact guaranteeing them makes you a liar and someone to be avoided. That was the point I was making."

deltaneutral said: "tomtat1. I'm not sure if I was referring to you or not, but you are absolutely right. There are no guarantees in anything and if I may add...in addition to being leery of anyone offering a guaranteed return...stay away from anyone that says "trust me"."