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01-28-2013, 06:14 AM
I just love this topic. In Europe it's the same. Everybody sits in their office, does not go out during break and have a married life. Filling their life's with useless meetings and useless tasks. I often try to imagine those guys having sex, dominate their woman. I can not !
But I often think about it the other way: they think the same about YOU. This guy doesn't have a life. He's not married, he doesn't have kids. He lives in the city, not somewhere in a house on the countryside, etc...
I do disagree about your real estate statement. I have my own place in center of city. In suburbs the prices are just too high. When I'm old I sell the whole thing and buy a cheap house somewhere in Spain. I'm thinking about buying a 2nd property and renting it out.
I also think a lot about a way of cheating the whole system. Jobs you can do remote are not plenty-full. I know a lot of people who tried entrepreneurship and they all failed miserably and live now in poverty. The system is made so people try to be an entrepreneur and when they fail they lose all their money. It's a fucking trap.
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01-28-2013, 12:35 PM
I don't think it's quite as bad as this in the UK, there is an after work drinking culture so it's fairly common for people to head to the pub after work and people don't seem to let themselves go so much (at least in London) i.e don't become fat slobs. Also it's the norm for people in the UK who are making reasonable money to have travelled a lot, it's very easy to make short trips within Europe with all the cheap flights available.
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01-28-2013, 02:02 PM
Quote: (01-28-2013 12:35 PM)Jalouse Wrote:
I don't think it's quite as bad as this in the UK, there is an after work drinking culture so it's fairly common for people to head to the pub after work and people don't seem to let themselves go so much (at least in London) i.e don't become fat slobs. Also it's the norm for people in the UK who are making reasonable money to have travelled a lot, it's very easy to make short trips within Europe with all the cheap flights available.
Yeah Britain gets a bad rap but the part about easy travel to Europe is very true. I mean, I can hop on a plane tomorrow for a fairly low price and by in Milan in two hours. Completely different climate and culture. That's what I love about Europe. All the countries have very distinct identities yet are literally next to one another. A lot of American's lump all the Southern Euro, 'Latin', countries together. However, Italy and Spain for example are very different.
Every normal man must be tempted, at times, to spit upon his hands, hoist the black flag, and begin slitting throats. - H L Mencken
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01-28-2013, 03:43 PM
Quote: (01-27-2013 12:29 AM)StarcraftGG Wrote:
All throughout NJ and PA, there properties that you can purchase for cash flow which give you a cap rate (cash on cash), of 12% or more. For example, if I pay cash for a home at $100K (no mortgage at all), with a 12% cap rate, that means the property has a NOI (Net Operating Income) of $12,000 per year, which is money in your pocket after all expenses including taxes, insurance, utilities, vacancy factors, maintenance reserves, property management fees, etc are considered. 12% is good. Now it gets even better. I'm pretty sure TheCaptainPower has great credit. If he gets a mortgage at 75% of the purchase price (borrowing $75,000) from the bank at a fixed 4% over 30 years, his monthly payment (including both interest and principal) comes out to about $450 a month. This works out to $5,400 of payments a year. This $5,400 has to be deducted from your $12,000 NOI, leaving him with $6,600 net. But, since you only have $25,000 still in the property, this results in a return on investment of 26% per year! Each month that goes by, you get rent money, and your renter pays down some of the principal. If the property goes down in value, it doesn't matter - it's a cash flow property. If it goes up, you can the benefit from the upswing when and if you decide to sell. Plus, the property is insured.
So if he fully deploys his $200,000 cash (into $800K worth of properties) in the manner above getting 26% ROI, that's $52,000 a year. In this situation, I would book a one way ticket to my beloved Cali, Colombia where the weather and women are better, and cost of living is far lower. With the excess cash, I would start building up another pool of rainy day savings, and would plow the rest back into paying down the principal. So, let's say the properties are fully paid off in 25 years. TheCaptainPower is now 58 years old. Now, he has $800,000 worth of paid off properties (assuming 0 appreciation and 0 rent increase) with no more mortgage payments, which suddenly result in his yearly income leaping to $96,000 a year (12% of $800,000) since he no longer has mortgage payments.
So, above scenario, TheCaptainPower invested $200,000 of his own money. It earned him $52,000 a year for 25 years, and then he decides to sell all of it for $800K after that time. That's $2.1 million total (assuming 0 appreciation).
If you purchased $200K worth of stocks, it would need to go up approximately 10% per year every year for 25 years straight without you touching any of it before it reaches $2.1 million in value. I bet stocks suddenly don't look as attractive anymore.
Welcome to the fast lane.
GLHF everyone (Good Luck, Have Fun in Starcraft speak)
Great Post
Starcraft GG. I think we have started off in another tangent, Do help me understand what you mean by Cap rate (Cash on Cash) of 12 %. From what I can understand is if a House is bought by casj of $ 100,000. and it brings in rent of $1,000/month that is 12,000/yr or 12 % per year.
On another Note all the sentiments mentioned for Fianancial Sector do apply for Healthcare Industry as well and I have found Physicians to have very Unhealthy Lifestyles, working their assess off to pay off loans and possessions.
"You can not fake good kids" - Mike Pence
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01-29-2013, 03:07 AM
Quote: (01-28-2013 10:39 PM)StarcraftGG Wrote:
Quote: (01-28-2013 03:43 PM)Lothario Wrote:
Great Post Starcraft GG. I think we have started off in another tangent, Do help me understand what you mean by Cap rate (Cash on Cash) of 12 %. From what I can understand is if a House is bought by casj of $ 100,000. and it brings in rent of $1,000/month that is 12,000/yr or 12 % per year.
When I read what you wrote about it bringing in rent of $1,000/month, I immediately think that is a "gross" number. The tenant actually writes you a check for that much, but it's not a "net" number where all the expenses have been deducted. Cap rate is the net amount (money left over after expenses) divided by your cash in the property.
So in your example, I see $1,000/month gross rent. Then I would deduct insurance, property tax, vacancy factor, maintenance factor, property management, utilities, etc., to arrive at a NET of... $500/month for example. Multiply this by 12 and you get your yearly NET of $6,000. NET divided by Cash in the property is $6,000 / $100,000 = .06 = 6% cap rate.
Thanks for replying Starcraft, Your explanation makes more sense now as I think rental properties don't get you more then 5-6 % net profit which would make this unwise to use your cash to buy property, I would much prefer to buy 4 properties using $100,00 and get the renters to pay for it and wait till it's paid off, That would be the sweet end for me. easier said then done, lots of headaches of renters , maintenanace along the way but he who takes the headache makes the money.
"You can not fake good kids" - Mike Pence
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02-02-2013, 07:57 AM
I see both perspectives. But what happens if you lose a tenat or get a housing collapse crisis like now. Doesn't that mean people are not inclined to rent? I'd imagine the ideal place to do this would be in a college area where you are guaranteed a steady stream of renters who can pay. What happens if the renters drag out the eviction process and you aren't getting paid but still having to pay multiple mortgages? Wouldn't one be better off just building the houses and selling them if they could obtain 600k loan + 200k base?
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02-02-2013, 08:29 AM
Rental properties can also sink you if you buy before a bubble collapses and rents adjust to below your mortgage costs. I've seen that happen to a guy.