Thread: Retirement/Investment Planning

Risky in what sense? If you buy a property that is cash flow positive from the day you buy it, even when you factor in mortgage, taxes, insurance, vacancy rate, and any other expenses you may incur, then how is that any more risky than giving your money to potentially the next Enron, Bernie Madoff, or whomever else? If you buy a house for X hoping that in Y months it is worth 2*X then I totally agree that real estate is risky.

Originally Posted by CivilWars

If you plan to buy a house for 200K, and rent it for 1K per month then I would advise you to avoid real estate all together.

IMHO to blindly take the advice of someone who is supposedly an "expert" is the biggest risk you can take, regardless of what market you are getting into. Real estate intrigues me. There are so many options available; rent houses, apartments, hotels, commercial property, RV parks, storage units...

Find something you like, and make find a way to make it make money for you.

Yea don't buy a 200k home if you can only rent it for 1k. That doesn't make any sense. Your only getting 6 percent on your money and your not even including the taxes and insurance.

My brothers and I are all licensed Realtor's in the state of Arizona. A couple years ago we started investing our own money into rental homes. The properties here in AZ are extremely cheap. We have purchased several foreclosed and distressed homes at 30K. Put in about 10K of repairs into them (we do all the repairs our self so its pretty cheap) and then rent them anywhere from 700-950 a month. The homes are generally 3 or 4 bedrooms with 2 or 3 bath. 40K investment and around 9K in revenue, that's about 22 percent return on your money. There are also some very cheap multi unit complexes that we have invested in such as fourplexes. A fourplex here in AZ goes for around 90K to 105K, 4 units at around 600 a month each is 2,400 monthly. That's 90k investment and around 28k yearly revenue (32 percent).

We have also had little trouble leasing them. We've been running a small family operated grocery store for around 12 years. We tend to only buy rental homes close by to our grocery store because we know a lot of people in the neighborhood.

The guy I was working with in Phoenix is doing the same thing, but the only difference is he rents to recovering alcoholics that recently got out of rehab. 40K ARV investment, then 6 guys per house (2 per BR @ 3 BRs) @ $100/person/week. So he makes an initial cash investment of about 40K, then rakes in $600/week or $2400/month. He has 6 houses full, and just bought a quad, and he has a waiting list.

Everything is risky if you do it wrong.

+1 ON the real estate. Buy some houses and retire at 50 years old. My uncle doesn't work and he owns a few condos in California. My instructions are to buy 5 houses by 50 years old and that's what I plan to do. The market is great in Texas and I'm going to start buying ASAP, probably one as soon as I graduate college and I'll work on it till I have at least 5 working and generating revenue.

Originally Posted by CivilWars

The guy I was working with in Phoenix is doing the same thing, but the only difference is he rents to recovering alcoholics that recently got out of rehab. 40K ARV investment, then 6 guys per house (2 per BR @ 3 BRs) @ $100/person/week. So he makes an initial cash investment of about 40K, then rakes in $600/week or $2400/month. He has 6 houses full, and just bought a quad, and he has a waiting list.

Everything is risky if you do it wrong.

Wow, he's doing pretty good lol I should look into that. He's basically investing the same amount of money and getting twice the revenue.


The way my family feels about the risk that its not much of a risk. When you purchase a 4 bedroom home for 30K what more can you ask for? If there is another drop in the real estate market I doubt were gonna lose much equity on a 30K home. Also the rental market seems to be pretty strong right now, we never have any trouble finding renters. I think the reason the rental market is strong right now is because of all the people losing their homes. They have to live somewhere and don't have the credit buy another home so they rent. However, sometimes we do come across bad renters but that's why we always ask for a months deposit before hand.

Originally Posted by Mango_Attack

+1 ON the real estate. Buy some houses and retire at 50 years old. My uncle doesn't work and he owns a few condos in California. My instructions are to buy 5 houses by 50 years old and that's what I plan to do. The market is great in Texas and I'm going to start buying ASAP, probably one as soon as I graduate college and I'll work on it till I have at least 5 working and generating revenue.

Make sure to take into consideration the cost of the property and the amount of rent your going to receive. Don't make the mistake of blindly buying a rental property without first analyzing the numbers. If the numbers don't make sense and your not getting a decent return on your investment don't buy it. Like I said you get the most bang for your buck with multi unit complexes.

We made the mistake of buying a rental property in 2007 for 250K and we only collected 1,200 a month in rent. 250K investment for 14k in yearly revenue is not a good investment (5 percent). Looking back at it, I don't know what the hell we were thinking. I guess we just figured that the home values would continue to sky rocket. So make sure to look at the numbers first and then consider the potential risks, there is always the risk of losing equity in the property. But like I said earlier that something that we don't really feel is a risk when your buying a 30K-40K home.

Also don't fall in love with any single property. The reason we were able to get ours so cheap is because we were very conservative. If we liked a home and someone made a higher offer, we just let it go and moved on to the next one. Remember, your trying to get a property at a good value, if outbidded so be it. Move on to the next one, trust me there is plenty of inventory out there right now.

That's the gain from those houses?... Seems kinda low, but I assume you are not taking into account all the equity you are building.

My fidelity 401k account had a 10% gain last year and is at 5.5% so far this year... It sounds like that is a more sound investment then.

10% is pretty good and you don't have to put up with all the hassles and stress of dealing with tenants. Everyone's situation is different but this something that has worked out well for my family.

Originally Posted by QuickLightning

That's the gain from those houses?... Seems kinda low, but I assume you are not taking into account all the equity you are building.

My fidelity 401k account had a 10% gain last year and is at 5.5% so far this year... It sounds like that is a more sound investment then.

There is a huge difference in increase in value, and income. If you had 40K in your 401K, and made 10% per year, assuming you pull put all profits, you would make 4K per year. If I put 40K in a rent house, and make 900/month, assuming I pull out all profits, I make 10,800 per year. Plus, if things go well I see an increase in equity. Who wins?