[BostonBMW]

Fellas, I have been making offers on investment properties and valuation of a property is my primary challenge. I come from the school of "if you're not embarrassed to make that offer, you're probably overpaying," so most of my offers are being declined. I do get a counter offer here and there, however just like game, I've moved on to a better deal.

I'm looking for Real Estate experts to weigh in:

- What is the methodology you use for evaluating a property? I'm talking a solid approach here, not go to Zillow or some other generic site.

- I'm extremely conservative when it comes to investing, where I'd like to come below 70% LTV on a purchase. I know that metro Boston is in a mini bubble, so I'm looking elsewhere -- where the property values are stable. Speaking with local appraisers is no help because they try to ballpark the valuation and come close to the bank financing. So how do you go about doing a valuation in a new investing area?

- I have an purchase option on a 2 unit house in Pennsylvania where I can either fix -> flip or hold for rental income. The house itself isn't worth much (purchase price) due to cosmetic renovations required, it's in a lower class neighborhood (not the hood though). Do I:

- Buy and sell immediately (taking less than a $5K net profit).
- Buy, fix and flip (not sure the profit)
- Buy and hold (with rental income for 2 units, I'm looking at a 10% cash on cash return)

Advice?

[DVY]

Buy and sell has implications because you pay comissions on both sides. Flips are rough if you don't have a steady construction crew that you work with.

Easiest and most predictable is probably buy and hold ASSUMING you have a good management company or live there. 10% COC is quite good. Issue is maintenance. If you hire a management company, you are going to get raped on repair charges. Its near impossible to verify if a) its an issue b) you are actually paying "low cost" for services and not getting raped by kickback comission shadiness c) management company isn't outright scamming you.

[pointbreak]

Keep in mind that if you live in your fixer for 2 years, your first 250k of profit are tax free.

[BostonBMW]

(08-16-2013 02:48 PM)DVY Wrote:  

Buy and sell has implications because you pay comissions on both sides. Flips are rough if you don't have a steady construction crew that you work with.

Easiest and most predictable is probably buy and hold ASSUMING you have a good management company or live there. 10% COC is quite good. Issue is maintenance. If you hire a management company, you are going to get raped on repair charges. Its near impossible to verify if a) its an issue b) you are actually paying "low cost" for services and not getting raped by kickback comission shadiness c) management company isn't outright scamming you.

Good points. For me, the valuation of the property is critical in determining which course is best:

- If I buy and turn around and sell, the most I can realize in after commission/fees is $5K (this is pretax though). Which almost doesn't make it worth my time.

- Fix & Flip vs. Buy & Hold: This is where I want to know what the ARV of the property will be. I'll definitely need a crew to take care of the construction, however I do have a reliable (ex Marine) GC who get the job done, however I want to have a strategy in mind, before spending the $$s fixing it up.

[BostonBMW]

(08-16-2013 03:16 PM)pointbreak Wrote:  

Keep in mind that if you live in your fixer for 2 years, your first 250k of profit are tax free.

I hear you. My day job is in Boston, so living in the fixer would not be an option, unless I have a private jet.

[LowerCaseG]

It really depends on what your appetite for aggravation is. 10% cash on cash sounds great but is it 10% of 20k or 200k. Makes a big difference when you are compensating yourself for being a landlord.

You cannot formulaicly value a property, unless it is a condo in a large building with 100 other units that are exactly the same, or a house in a subdivision. The best real estate investors are obviously good with numbers, but make decisions on instinct and gut feeling, not excel spreadsheets.

I have one client who makes a ton of money flipping houses, and another one who makes similar money buying, renting, holding for 5+ years and then selling, and rolling into something else. Probably neither of them could adopt the other's methodology and be nearly as successful. You have to employ an operation that you are comfortable with, are good at, and works for you.

You are asking someone to tell you what this property will be worth xx months/years into the future. That would be like me going to my stock broker and saying, "I am thinking about buying Exxon Mobil. What will I be able to sell it for in 18 Months?" Nobody will ever tell you the truth which is, "I have no idea."

[BostonBMW]

(08-16-2013 04:48 PM)LowerCaseG Wrote:  

It really depends on what your appetite for aggravation is. 10% cash on cash sounds great but is it 10% of 20k or 200k. Makes a big difference when you are compensating yourself for being a landlord.

You cannot formulaicly value a property, unless it is a condo in a large building with 100 other units that are exactly the same, or a house in a subdivision. The best real estate investors are obviously good with numbers, but make decisions on instinct and gut feeling, not excel spreadsheets.

I have one client who makes a ton of money flipping houses, and another one who makes similar money buying, renting, holding for 5+ years and then selling, and rolling into something else. Probably neither of them could adopt the other's methodology and be nearly as successful. You have to employ an operation that you are comfortable with, are good at, and works for you.

You are asking someone to tell you what this property will be worth xx months/years into the future. That would be like me going to my stock broker and saying, "I am thinking about buying Exxon Mobil. What will I be able to sell it for in 18 Months?" Nobody will ever tell you the truth which is, "I have no idea."

I think that there are some misunderstandings here, so please allow me to clarify:

- I'm not asking someone to tell me what the property is going to be worth in the future, but understanding whether there is a valuation methodology that I can use. Something that has yielded definite results.

Also, I completely disagree that you cannot formulaically value a property. Individual investors, REITs, and Commercial Developers do this all the time. To rely on "gut" and not run the numbers through an Excel sheet is foolish -- that is how people lose their shirts.

Also, you are conflating what I am asking (calculations for present LTV and ARV for local markets) with the Equities. Real Estate is a value add proposition not an invest purely based on analysis, namely, you can not do much to shift the stock price after you have taken a position (unless you're an institutional investor/HF/PE). So no one can predict the stock price movement 18 months from now, however you can certainly value the equity. I use Fundamental Analysis with formulas based on Ben Graham's Security Analysis and Intelligent Investor. I have done fairly well in the market and don't need a stock broker. I'm looking for something similar in RE.

[paninaro]

I'm not sure I understand what you're asking. Why not just look at yield? Expected rental income vs property value. Just treat it like a cashflow, discount it back, etc.

Any decent real estate agent can give you numbers on the yield in that area, which should be something you can roughly compare. They can also give you a ballpark on the property price and whether that is fair based on comps.

[trey]

Real estate is valued based on the income it throws off, like any other asset. However you never see a DCF done because it's silly to try and estimate a discount rate for 10 years off or whatever, as you say.

If you're looking at residential stuff, ask a few brokers or local investors what kind of cap rates / income multiples properties are trading for. It will vary a lot depending on the characteristics of the property but look at enough and you'll have an idea for a certain area/city. Then you have a back of the envelope valuation.

Example: Multifamily units, say a 10 unit apartment building, might be trading at around an 8 cap, or 12.5 multiple. Take the annual net income of the property, multiply by 12.5, and you have your rough valuation. It gets a bit sticky from here because some people include/exclude certain things from the 'net' in net income so figure out what's gone into the calculation.

Then you can make your assessment for where the market is going for that property, negotiate a price, add your financing structure, and you're off to the races.

[Ironsun]

I work in real estate as a broker in the Southern California area.

The saying I have heard about investing in real estate is that you make your money when you buy not when you sell. This saying goes to your question of valuation.

Valuation is a combination of things: Current inventory of available homes, Average DOM (days on market), Type of sale i.e traditional or distressed (short sale or REO), the home itself and it amenities AND the market outlook.

If inventory is tight and the local economy is at least stable then you can expect that decent properties will be getting multiple offers. That is what is happening here in socal. Investors have a tough time as they have to keep the profit they want to make in mind when putting together an offer while going up against owner occupants who will offer top dollar.

When I value a property I look to see what similar properties have sold for in the last 2, 3, 6 months. This is a fairly straight forward process and will yield a price range for the property. I then will apply the market outlook (are prices steadily going up - down - sideways, are properties getting multiple offers, where are similar properties currently priced etc.) and then I price it. Applying the market outlook is more art then science.

If you are looking to do a flip you would look to see what the property would go for in good condition in the current market. Then determine how much fixing it needs, what profit you want, overruns, and come up with your offer price.

My advice to you would be:
1) Get your financing 100% together to close in less then 30 days, preferably 20. This is big and can put you over the top against a higher offer. Terms are important.

2) Make a decision on what you will do i.e. buy and hold or flip and have appropriate plans for each. Leaving it up to decide when you see the property, especially at this stage of what appears to be the beginning of your investment life, is a recipe for failure.

3) Make a decision on what areas you want to invest in. Do your research. Get the info so you know what is happening in the local market.

4) Find someone to work with. An agent or another investor who has access to sold info and can guide you with regard to pricing a property out.

5) There are guys who are real estate brokers in a variety of areas. Investment brokers who have good knowledge of a bunch of markets and can guide you. Research to find them as they are a small bunch. They will primary be buy and hold guys and not able to help with flips.

Some random thoughts:
Flipping is best done locally so you can control cost, the work crew, develop a relationship with a solid agent to help you sell when work is done.

Decide on a profit margin for flipping. $5k seems small to me. Even if it is under 100k house. Remember, cost overruns come out of your profit in the end.

Gary Keller has some good books on investing and flipping properties, check them out.

This is a numbers game and your offers will get rejected a lot more then accepted. No big deal. Reflect, learn, next.

The motivation of a seller is very important to you. Find out what it is if you can. Someone who does not really need to sell, has put the home on the market to see what will happen and is looking for the highest price is a no go for you. A guy who has a job transfer, has some equity and needs to get out is the kind of motivated seller you want. 'I can close in 20 days and sure you can rent back for a month'.

My opinion is that you may start off flipping to build up cash, however your ultimate goal should be to buy and hold. 1031 into something bigger and work to build up cash flow. Independent lifestyle.

Good luck.

[Anaguma]

(08-16-2013 05:12 PM)BostonBMW Wrote:  

(08-16-2013 04:48 PM)LowerCaseG Wrote:  

It really depends on what your appetite for aggravation is. 10% cash on cash sounds great but is it 10% of 20k or 200k. Makes a big difference when you are compensating yourself for being a landlord.

You cannot formulaicly value a property, unless it is a condo in a large building with 100 other units that are exactly the same, or a house in a subdivision. The best real estate investors are obviously good with numbers, but make decisions on instinct and gut feeling, not excel spreadsheets.

I have one client who makes a ton of money flipping houses, and another one who makes similar money buying, renting, holding for 5+ years and then selling, and rolling into something else. Probably neither of them could adopt the other's methodology and be nearly as successful. You have to employ an operation that you are comfortable with, are good at, and works for you.

You are asking someone to tell you what this property will be worth xx months/years into the future. That would be like me going to my stock broker and saying, "I am thinking about buying Exxon Mobil. What will I be able to sell it for in 18 Months?" Nobody will ever tell you the truth which is, "I have no idea."

I think that there are some misunderstandings here, so please allow me to clarify:

- I'm not asking someone to tell me what the property is going to be worth in the future, but understanding whether there is a valuation methodology that I can use. Something that has yielded definite results.

Also, I completely disagree that you cannot formulaically value a property. Individual investors, REITs, and Commercial Developers do this all the time. To rely on "gut" and not run the numbers through an Excel sheet is foolish -- that is how people lose their shirts.

Also, you are conflating what I am asking (calculations for present LTV and ARV for local markets) with the Equities. Real Estate is a value add proposition not an invest purely based on analysis, namely, you can not do much to shift the stock price after you have taken a position (unless you're an institutional investor/HF/PE). So no one can predict the stock price movement 18 months from now, however you can certainly value the equity. I use Fundamental Analysis with formulas based on Ben Graham's Security Analysis and Intelligent Investor. I have done fairly well in the market and don't need a stock broker. I'm looking for something similar in RE.

http://www.johntreed.com/REIbooks.html

Get the "How to Buy Real Estate for at Least 20% Below Market Value" and the "Best Practices for the Intelligent Real Estate Investor" books. The principles are very similar to Ben Graham's Intelligent Investor.

That being said, RE investing is a lot of hard work for a merely okay return, and is more like a full time job compared to stocks. If you are already beating the S&P from stock investing in your spare time then you should just continue to do that instead.

[Cr33pin]

Buy and rent, the people living there will make the payments for you with rent. Once its paid for its money in your pocket every month for the rest of your life long as you keep it rented. I have multiple houses and hired a guy to look after them now I am free to travel the world or live were ever I want and not have to work. Its a pretty good set-up if you ask me.....

[CJ_W]

(08-16-2013 02:24 PM)BostonBMW Wrote:  

Fellas, I have been making offers on investment properties and valuation of a property is my primary challenge. I come from the school of "if you're not embarrassed to make that offer, you're probably overpaying," so most of my offers are being declined. I do get a counter offer here and there, however just like game, I've moved on to a better deal.

I'm looking for Real Estate experts to weigh in:

- What is the methodology you use for evaluating a property? I'm talking a solid approach here, not go to Zillow or some other generic site.

- I'm extremely conservative when it comes to investing, where I'd like to come below 70% LTV on a purchase. I know that metro Boston is in a mini bubble, so I'm looking elsewhere -- where the property values are stable. Speaking with local appraisers is no help because they try to ballpark the valuation and come close to the bank financing. So how do you go about doing a valuation in a new investing area?

- I have an purchase option on a 2 unit house in Pennsylvania where I can either fix -> flip or hold for rental income. The house itself isn't worth much (purchase price) due to cosmetic renovations required, it's in a lower class neighborhood (not the hood though). Do I:

- Buy and sell immediately (taking less than a $5K net profit).
- Buy, fix and flip (not sure the profit)
- Buy and hold (with rental income for 2 units, I'm looking at a 10% cash on cash return)

Advice?

get this book

http://www.amazon.com/The-ABCs-Real-Esta...pd_sim_b_1

[BostonBMW]

(08-16-2013 11:19 PM)trey Wrote:  

Real estate is valued based on the income it throws off, like any other asset. However you never see a DCF done because it's silly to try and estimate a discount rate for 10 years off or whatever, as you say.

If you're looking at residential stuff, ask a few brokers or local investors what kind of cap rates / income multiples properties are trading for. It will vary a lot depending on the characteristics of the property but look at enough and you'll have an idea for a certain area/city. Then you have a back of the envelope valuation.

Example: Multifamily units, say a 10 unit apartment building, might be trading at around an 8 cap, or 12.5 multiple. Take the annual net income of the property, multiply by 12.5, and you have your rough valuation. It gets a bit sticky from here because some people include/exclude certain things from the 'net' in net income so figure out what's gone into the calculation.

Then you can make your assessment for where the market is going for that property, negotiate a price, add your financing structure, and you're off to the races.

Good points. I have been checking in with real estate agents in the area. When I get down there in September (right before the option expires), I'd like to do a walk through with a few agents and get their opinions + have a few contractors come out and give me bids. Even though I have good GC on lock, I still want to see other bids, just to learn.

If I exercise the option to buy and hold, I'm bringing in a dumpster and cleaning the place out, starting work ASAP - need to get both units rented.

[BostonBMW]

(08-16-2013 11:52 PM)Ironsun Wrote:  

I work in real estate as a broker in the Southern California area.

The saying I have heard about investing in real estate is that you make your money when you buy not when you sell. This saying goes to your question of valuation.

Valuation is a combination of things: Current inventory of available homes, Average DOM (days on market), Type of sale i.e traditional or distressed (short sale or REO), the home itself and it amenities AND the market outlook.

If inventory is tight and the local economy is at least stable then you can expect that decent properties will be getting multiple offers. That is what is happening here in socal. Investors have a tough time as they have to keep the profit they want to make in mind when putting together an offer while going up against owner occupants who will offer top dollar.

When I value a property I look to see what similar properties have sold for in the last 2, 3, 6 months. This is a fairly straight forward process and will yield a price range for the property. I then will apply the market outlook (are prices steadily going up - down - sideways, are properties getting multiple offers, where are similar properties currently priced etc.) and then I price it. Applying the market outlook is more art then science.

If you are looking to do a flip you would look to see what the property would go for in good condition in the current market. Then determine how much fixing it needs, what profit you want, overruns, and come up with your offer price.

My advice to you would be:
1) Get your financing 100% together to close in less then 30 days, preferably 20. This is big and can put you over the top against a higher offer. Terms are important.

2) Make a decision on what you will do i.e. buy and hold or flip and have appropriate plans for each. Leaving it up to decide when you see the property, especially at this stage of what appears to be the beginning of your investment life, is a recipe for failure.

3) Make a decision on what areas you want to invest in. Do your research. Get the info so you know what is happening in the local market.

4) Find someone to work with. An agent or another investor who has access to sold info and can guide you with regard to pricing a property out.

5) There are guys who are real estate brokers in a variety of areas. Investment brokers who have good knowledge of a bunch of markets and can guide you. Research to find them as they are a small bunch. They will primary be buy and hold guys and not able to help with flips.

Some random thoughts:
Flipping is best done locally so you can control cost, the work crew, develop a relationship with a solid agent to help you sell when work is done.

Decide on a profit margin for flipping. $5k seems small to me. Even if it is under 100k house. Remember, cost overruns come out of your profit in the end.

Gary Keller has some good books on investing and flipping properties, check them out.

This is a numbers game and your offers will get rejected a lot more then accepted. No big deal. Reflect, learn, next.

The motivation of a seller is very important to you. Find out what it is if you can. Someone who does not really need to sell, has put the home on the market to see what will happen and is looking for the highest price is a no go for you. A guy who has a job transfer, has some equity and needs to get out is the kind of motivated seller you want. 'I can close in 20 days and sure you can rent back for a month'.

My opinion is that you may start off flipping to build up cash, however your ultimate goal should be to buy and hold. 1031 into something bigger and work to build up cash flow. Independent lifestyle.

Good luck.

I appreciate your insights. Living in the Boston area (similar to So. Cal) the RE market is heating up, so I'm forced to look elsewhere for deals. I definitely have done research, read books, just need to learn about the local area RE.

I have saved your comments on a word file so that I can reference them.

[BostonBMW]

(08-17-2013 04:13 AM)Anaguma Wrote:  

(08-16-2013 05:12 PM)BostonBMW Wrote:  

(08-16-2013 04:48 PM)LowerCaseG Wrote:  

It really depends on what your appetite for aggravation is. 10% cash on cash sounds great but is it 10% of 20k or 200k. Makes a big difference when you are compensating yourself for being a landlord.

You cannot formulaicly value a property, unless it is a condo in a large building with 100 other units that are exactly the same, or a house in a subdivision. The best real estate investors are obviously good with numbers, but make decisions on instinct and gut feeling, not excel spreadsheets.

I have one client who makes a ton of money flipping houses, and another one who makes similar money buying, renting, holding for 5+ years and then selling, and rolling into something else. Probably neither of them could adopt the other's methodology and be nearly as successful. You have to employ an operation that you are comfortable with, are good at, and works for you.

You are asking someone to tell you what this property will be worth xx months/years into the future. That would be like me going to my stock broker and saying, "I am thinking about buying Exxon Mobil. What will I be able to sell it for in 18 Months?" Nobody will ever tell you the truth which is, "I have no idea."

I think that there are some misunderstandings here, so please allow me to clarify:

- I'm not asking someone to tell me what the property is going to be worth in the future, but understanding whether there is a valuation methodology that I can use. Something that has yielded definite results.

Also, I completely disagree that you cannot formulaically value a property. Individual investors, REITs, and Commercial Developers do this all the time. To rely on "gut" and not run the numbers through an Excel sheet is foolish -- that is how people lose their shirts.

Also, you are conflating what I am asking (calculations for present LTV and ARV for local markets) with the Equities. Real Estate is a value add proposition not an invest purely based on analysis, namely, you can not do much to shift the stock price after you have taken a position (unless you're an institutional investor/HF/PE). So no one can predict the stock price movement 18 months from now, however you can certainly value the equity. I use Fundamental Analysis with formulas based on Ben Graham's Security Analysis and Intelligent Investor. I have done fairly well in the market and don't need a stock broker. I'm looking for something similar in RE.

http://www.johntreed.com/REIbooks.html

Get the "How to Buy Real Estate for at Least 20% Below Market Value" and the "Best Practices for the Intelligent Real Estate Investor" books. The principles are very similar to Ben Graham's Intelligent Investor.

That being said, RE investing is a lot of hard work for a merely okay return, and is more like a full time job compared to stocks. If you are already beating the S&P from stock investing in your spare time then you should just continue to do that instead.

Perfect! I've ordered that book. This is something that I wanted and was looking for!

I have been beating the S&P by a few percentage points. I agree that RE investing is hard work, however if you look at cap rate + equity (sweat) you're in much better shape than the market which is subject to global trends instead of local ones. Besides, value investing has allowed me to keep on pumping my 401K pre-tax on auto pilot.

The last time I did some short term trading (not day trading/high frequency), my returns were 14% or so, it took a lot of time, took me out of the comfort zone and the capital gains, pissed me off. If I end up flipping any of my deals, you can be assured that I will do a 1031 exchange.

I don't need the money right now, in fact, I'm trying to live a minimal lifestyle.

[BostonBMW]

(08-17-2013 11:57 AM)Cr33pin Wrote:  

Buy and rent, the people living there will make the payments for you with rent. Once its paid for its money in your pocket every month for the rest of your life long as you keep it rented. I have multiple houses and hired a guy to look after them now I am free to travel the world or live were ever I want and not have to work. Its a pretty good set-up if you ask me.....

Nice! I like your lifetsyle. I'm thinking along those lines, however I want to get a jump start on buying and renting. In some parts of the country, you can get houses for $30-$50K, however I am concerned about the:

- Valuation, want to get 75% or less in terms of LTV. Buy right.
- Cap Rates/Cash on Cash return.
- Finding the 'right' property manager, getting the most comprehensive insurance (in case the tenants burn place down).

Do you have any advice/want to share how you made this happen? My goal is to get to $5K per month in net rental income from real estate. I don't care about the location of my properties (State) as long as I am making the dollars every month.

[BostonBMW]

(08-18-2013 08:49 PM)CJ_W Wrote:  

(08-16-2013 02:24 PM)BostonBMW Wrote:  

Fellas, I have been making offers on investment properties and valuation of a property is my primary challenge. I come from the school of "if you're not embarrassed to make that offer, you're probably overpaying," so most of my offers are being declined. I do get a counter offer here and there, however just like game, I've moved on to a better deal.

I'm looking for Real Estate experts to weigh in:

- What is the methodology you use for evaluating a property? I'm talking a solid approach here, not go to Zillow or some other generic site.

- I'm extremely conservative when it comes to investing, where I'd like to come below 70% LTV on a purchase. I know that metro Boston is in a mini bubble, so I'm looking elsewhere -- where the property values are stable. Speaking with local appraisers is no help because they try to ballpark the valuation and come close to the bank financing. So how do you go about doing a valuation in a new investing area?

- I have an purchase option on a 2 unit house in Pennsylvania where I can either fix -> flip or hold for rental income. The house itself isn't worth much (purchase price) due to cosmetic renovations required, it's in a lower class neighborhood (not the hood though). Do I:

- Buy and sell immediately (taking less than a $5K net profit).
- Buy, fix and flip (not sure the profit)
- Buy and hold (with rental income for 2 units, I'm looking at a 10% cash on cash return)

Advice?

get this book

http://www.amazon.com/The-ABCs-Real-Esta...pd_sim_b_1

Just placed the order. I'm buying a bunch of RE books and methodically going through them all.

[renotime]

Have you ever considered selling the home on a note?

Some people aren't able to get approved for loans. You act as the bank and charge 12 percent interest with a small down payment.

The beauty of this is that you are collecting money once a month, but don't have to do anything when something breaks.

[BostonBMW]

(08-21-2013 03:57 PM)renotime Wrote:  

Have you ever considered selling the home on a note?

Some people aren't able to get approved for loans. You act as the bank and charge 12 percent interest with a small down payment.

The beauty of this is that you are collecting money once a month, but don't have to do anything when something breaks.

I haven't,mostly because I'd rather take a hands on approach with RE investing: add value through renovations, pay down the mortgage debt, and hope that he market value rises -> Equity generation.

While there is nothing wrong with holding a note, in fact its an excellent source of truly passive income, I'd like to put in some work at this time.

Great advice though!

[5th Street]

All you need to know here.

http://www.biggerpockets.com/renewsblog/

http://www.biggerpockets.com/forums/categories

http://www.123Flip.com

Me and you are looking to do the same thing. Want to hit that 4-5K semi passive income from rentals.

Just curious, how much money do you think you will need to invest to generate that return?

[liquiddrewl]

I've come across this same situation, and decided buying to rent it out just isn't in the books for me. There are constant annoyances such as the overhead costs, renters, maintenance fees, management fees(which I wanted to get rid of by managing it myself or via family, but who wants to do that for 30 years?), and in the end I'm just buying land. Large plots. Rural land. Various places that I want to place bets on, a bit here, a bit there, all over the chess board. High demand lots are less desirable because of their taxes, so you don't want beach front or downtown lots unless you're going to build on them and rent them out, which comes back to all the problems listed above.

If you're serious about spending the rest of your life managing other people's lives, that aren't your family, then buying property and renting it out is an option. I just think the constant fluidity of people is more suited to me as a renter rather than an owner constantly asking for money from people like me -- or worse, people unlike me.

What it sounds like is you have an excess of cash you have that needs to be gambled, in this case on property. Keep in mind every American citizen has a $3000 annual offset on stock market losses. Stock options, especially at expiration, can wildly swing 100-3000% so take advantage of that free 3000 bucks you get.