Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I think through the end of next year (at least) is a great time to buy RE. But the way your friend is doing it is not the way to go about it.
Or it could be a great way to go about doing it assuming he did his homework. Perhaps he is leveraging low interest bank money into renovating a foreclosure property in a high demand/growing rental area. The rental income will offset morgage pmts., grow equity, and he can claim expenses/tax deductions. Many savvy people will continue to grow wealthy this way, despite the rest of the market....
savy people can grow money in any market ,, the problem is most small investors tend to confuse genius with bull markets...the end result is the dont have the resourses ,the knowledge or the stamina to survive the downturns.
I have friend who owns a house and still owes on it, and also owns a vacant lot which he still owes on. Instead of paying off the lot or paying down his house, he purchased a rental house. Was this really a good move on his part? He's in his early 30s and has plenty of time to pay off the debt but there is quite a bit of debt there.
Others are telling me that if they had the cash, they would be spending it all on real estate. Prices are down and interest rates are low, but won't prices fall further when interest rates start to increase? Is this a normal real estate crash like we had in the early 90s or something bigger that will take decades to recover from?
I just bought a condo in Vegas, I think it's a great time considering rates and prices, just make sure you can afford it. It's A LOT more costly owning vs renting.
I just saw the current CD rates at my bank. Even the bank manager was almost crying when she said they dropped again this week. There's not nearly no return. I'm wondering if I should put what I have into real estate. But then that ties up the cash of course, and how do you know when to buy if the bottom hasn't been reached (will there be a bottom???).
your not comparing apples to apples.. money in a cd is a savings not an investment. they serve totaly different purposes.
money in a bank is a holding place. it for spending money for the near future to eat and pay bills. in some cases its holding investment money thats going to be deployed when an investment oppurtunity comes up..
sometimes like in my usage of cash i use it to dampen volatility,risk and the swings in all my other investments.
the point is cash has a place and unless its merly investment money your looking to deploy buying risky assets because returns on your cash is low using more volatile assets as a proxy for cash is not a good idea...
This is a sensational time to invest in real estate, if you utilize the proper strategy, whether it be flipping, buy & hold, wholesaling, or any one of several other methods.
savy people can grow money in any market ,, the problem is most small investors tend to confuse genius with bull markets...the end result is the dont have the resourses ,the knowledge or the stamina to survive the downturns.
Agreed... Though maybe the OP's friend does have the resources, knowledge, and stamina. Maybe he is in the process of gaining this knowledge. Maybe he will become more "savvy" from the experiences (and failures) he receives from managing his RE investments. I followed the same path (highly leveraged in RE at the right time) while my friends told me I shouldn't do it. I'd do it all over again - failures and all.
no one here timed it worse than me. i closed on my first investment property oct of 1987 2 weeks before the big stock market crash.. it caused the biggest dip in real estate nyc ever had. by the time the smoke cleared i was down 30% in the value of the rental and out my entire downpayment. it took a decade until the rent was more then my costs.
but here we are decades later and even at these levels everything turned out just fine.
your not comparing apples to apples.. money in a cd is a savings not an investment. they serve totaly different purposes.
money in a bank is a holding place. it for spending money for the near future to eat and pay bills. in some cases its holding investment money thats going to be deployed when an investment oppurtunity comes up..
sometimes like in my usage of cash i use it to dampen volatility,risk and the swings in all my other investments.
the point is cash has a place and unless its merly investment money your looking to deploy buying risky assets because returns on your cash is low using more volatile assets as a proxy for cash is not a good idea...
Just a few years ago my CDs were getting over 5%, and not long before that 7.5%. Although modest, that was not a bad investment. It is only now that what you say is right on.
(Sorry, I posted my comment to the wrong thread---I have a separate thread on CDs)
Last edited by RiverBird; 10-23-2010 at 02:40 PM..
Just a few years ago my CDs were getting over 5%, and not long before that 7.5%. Although modest, that was not a bad investment. It is only now that what you say is right on.
(Sorry, I posted my comment to the wrong thread---I have a separate thread on CDs)
when rates were higher so was inflation so after taxes and inflation once again you were lucky to break even. equities were averaging almost 12% thru the 80,and 90's.
cd's and savings accounts for the most part are not investments. they are typically holding places for the money you made investing
There are many businessman who go for real estate now a days cause they found easy money.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
