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Discussion Starter · #1 ·
I was hoping to get some concensus on some of my thoughts. Not to stereotype my own kind, but I'm Iranian and we have a wierd way about us. Basically, we haven't quite caught up to speed on the new ways of the world, so there is some learning and stumbling that we go through.

So, here is the deal: I work for a living and have a house. I have slowly saved a bit of extra cash and used it to buy stocks. I was mostly speculating and got a little lucky. I freaked out a few months back and sold a good portion of it. So, the question is where to invest my money? Also, it is a given that my practices are very risky and unconventional, but then again you all know me by now. The goal is simply to invest for the future. i do not expect to see this money again for a minimum of 5 years. Here is what I was considering:
1 - Invest in some long term stocks (diversify) without using margin and just sit it out.
2 - Upgrade to a larger house.
3 - Buy a rental unit.
I was leaning at #3, since I figured that someone else would help me make the note on it (rent). if I just upgrade my own house, I have to worry about the added payments, too. Then when I started to get into rental properties (condos), I noticed that SD is pretty tapped out. Basically, the prices have shot up. Again being non-traditional, I came up with an unbased formulation of looking for something where I can pay 25% down and it would pay its own costs. I don't know if that is a good way to look at it, but that is how I evaluate "deals". As a reference, right now, most condos in SD are closer to 40-50% down if they are to pay their own way. It is understood that my evaluation assumes rent prices are constant and not dynamic (which they would be in a recession). So, this criteria led me towards the "slum lord" boundaries and I have started looking at multi-unit buildings. The particular building in question has 10 units and is OLD. I was planning on having 2 of the units NOT pay rent and used the remaining 8 for my evaluation.

So, here is the question to the forum:
Am i even close to being in-line? Do I need to go to a financial planner to help me plan (I am thinking so)? Up until now I assumed I didn't have enough money to make it worth these things, but now I am thinking that any amount of money needs good management.
Help a brother out!!
 

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Since you are relatively new to the game it seems, I would definitely seek out a finance expert. There are probably some here! R?
 

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You know my feelings regarding hard assets (RE.)
My concerns are containing risk in the SD RE market, yes there are some upwards pressure in rents but you also have a glut of condos hitting the rental market, for people that can survive negative cashflow they will hang on so as not to sell for less than what they paid for. But at some point, and that is the unknown, they may decide it hurts to much and sell just to get out of the monthly nut. Now that interest rates have stabilized the worst is probably over but that does not mean inventories for rentals will decrease.
Another factor for rentals in SD is the cost of maintenance (very expensive.) Especially if rents are barely covering your debt.

Better to consider other areas that are recipients of CA companies and residents ie: No. NV and AZ. My strategy is growth with the least amount of capital at risk and control of cost and expenses.

Regarding traditional portfolio management, assuming again your risk tolerance, we design a custom strategy using different managed accounts thereby controlling risk and flexibility. Combining traditional investment vehicles and RE is the best way to increase net worth with tax control.

Just my views.

R.
 

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Discussion Starter · #4 ·
Dude, you almost speak a different language than me. Thanks for the advice. I didn't realize you worked with people at my level. I assumed all your clients were already wealthy.
My main concern has always been buying and selling when I want to and not when the wallet forces it.
Looks like we need to have that beer sooner rather than later.
 

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Jangy, if you have time and haven't found that one great deal just yet, then take your time. All realtors say the market underwent a small correction and it's levelling off, but the truth is the prices are coming down when it comes to residential (non-apartment).

I might even be able to pull the listings in your area instead of having you rely on a realtor to feed you the info. Just let me know.
 

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Discussion Starter · #6 ·
I do have time and don't want to do anything rash. Any and all help or advice would be greatly appreciated. I am now even second guessing my entire strategy. I've been hesitant to look outside of SD, but R's point is well made. A properly managed site doesn't mean I have to be able to drive by on a daily basis. I have family in AZ anyway and have always loved that stretch at the end of the 8, so I think I should just hold tight and do the right thing.
 

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You're on the right track already.

I know some would kick me over this, but just as a personal comfort level, I think you're better off with slightly larger down payments. Most people like to use the leverage against their investments but keep in mind you'd need to sustain the expenses of that property if the economy goes sour.
 

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Discussion Starter · #8 ·
Yeah, many of my friends prefer to put less down and use the extra to invest even more, but I get scared by the monthly payments. I know my way isn't ideal and I'm not looking to perfect it. i just want to make sure that I'm not making any obvious blunders.
 

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jangy said:
Yeah, many of my friends prefer to put less down and use the extra to invest even more, but I get scared by the monthly payments. I know my way isn't ideal and I'm not looking to perfect it. i just want to make sure that I'm not making any obvious blunders.
Same, and cant you also just write off your interest payments come tax time which will decrease your net taxable income?
 

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True, but it's either income tax or mortgage payments, and mortgage payments aren't variable based on your income. That's where people get in trouble.
 

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* adding to my first note, thats based on the assumption youre income levels are high enough where this is advantageous based on your tax situation. Which I would consider to be yes since you are looking into such a $$$$ busines venture. Just done with another tax season and still wonder why anyone would want to send uncle sam a check for $300k? Ridiculuous

anyways way off topic again...since this is more investing and not tax accounting. Gotta love how mymb subjects go way off on a tangent...

anyone get any roast beef lately ;)
 

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Go for #3 MyMBonline Frat house :thumbup: :chronic: :drink: :boobies: :la: :bj: :bukkake: :woot: :smoker: reminds me of the movie Old School
 

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Discussion Starter · #15 ·
Actually, Mike is on topic here. The net value in the end is the key. I don't want to make a bunch of profitable investments and not take advantage of the tax credits available, so it is a balancing act. In my case, I have a piece of land in Georgia that I've owned since high school. I am selling it and want to roll the money over into something else. WAMU wanted to see some stability from my end on two fronts. they wanted to see monthly income to cover both payments AND they wanted to see the liquid cash for the down payment. My payment on the land is only $400/month, so that is easy. Also, the rent from the new building counts against its payments, so that was also easy. Actually, it is funny how overextended banks will let you go, so monthlys were never the big issue.
Showing that I was serious was what I was told the issue was. the seller was apparently not willing to risk pulling the building off the market based on my $5000 check and pre-approval letter. That is why my realtor recommended I pay a larger deposit. He suggested something closer to $50K. I was hesitant to do that, since it is ALL of the cash I have (actually, I'm a bit short but could arrange) and I don't even know if they would accept. At any rate, I am holding off for now. I want to learn a bit more and do what is best for my family.
 

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Discussion Starter · #17 ·
Don't worry, I'm not doing the deal. You all have me re-thinking my whole strategy, so I'll wait. There is just too many things that feel wrong on this. First, why is the building not listed, yet? Why are they in such a rush to sell? etc etc.
 

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jangy said:
Don't worry, I'm not doing the deal. You all have me re-thinking my whole strategy, so I'll wait. There is just too many things that feel wrong on this. First, why is the building not listed, yet? Why are they in such a rush to sell? etc etc.
:hmm: if its not listed bro, red flags there...only way is to check if theirs any clouds on the title ...you can do that by checking with a title company....ask them whats the rush..sub primes are killing pp right now...

I can recall 5 years ago or so..my parents bought a house worth 1.1 million back in 98...big bucks back then. Economy crashed, dad started his other business at the wrong time...to make it short the house was appraised at 1.9 million, yet he need the cash so fast he sold it for 1.2 ! the new owner (who still lives there, got hella of a deal..oh p.s. the wife is hella hot) i checked a few months ago what that property is worth... its over 2.4 :( sad.. so maybe you ran across a deal like that ? who knows...if you need any help checking out info on the property let me know...ill see waht i can do in my office.

Hmm about investing money else where, are you willing to take high risk or nope ? let me know before i go on about what i think... i dont want to bore you to death just yet ! :drool:
 

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Discussion Starter · #20 ·
I am into hearing any and all options. As far as the listing part, I've both bought and sold before without having the house listed, so that wasn't a flag to me. I'm already over that one. I want to get a smoking deal (don't we all?), so I need to stay prepared to pounce when the deal presents itself.


Yo Benzo: I tried that route. Not paying taxes KILLED me, even though I was making bank. Why you think I ran from NC?
 
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