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How do you find out if an investor loses money?

By dodgerfanjohn   Follow   Sat, 10 Dec 2011, 1:59pm   2,913 views   29 comments
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Overheard a conversation the other day.....

Person bought a investment property...and it still sits vacant. This would make the second property this person bought that remains vacant(the other is going on 4-5 years).

Without getting into details, this person buys into "hype" investments a lot. And they have the money to go into, but probably not the drive to make things work. They are by no means poor but on a day to day cash basis, their life is probably horrible.

This is an extreme example, I realize. But investment fail. Fail thats costing this person a great deal in lifestyle consequences. Of course if RE goes up by 20% a year, they are gonna be wealthy real soon. But LOL.

Real estate investing is touted as a near fail proof investment. Buy cash, earn 5%. But how can one evaluate the truthfulness of that claim without having access to the downside...the investors that lose money. By nature, people don't like to disclose that they lost money. This is why everyone that goes to Vegas
"broke even". People lie really bad when it comes to this sort of thing.

So the question remains...is there any vehicle that measures how much investors take it in the shorts?

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1. bubblesitter Follow Befriend (5) 10 threads 2,329 comments

   1   2:02pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Millions of them. All the toxic mortgages given out by banks few years before 2007 were considered investment by banks. Banks are still holding them in the hopes of return of golden days. :)

2. Nomograph Follow Befriend (1) 104 threads 2,851 comments

   2   2:42pm Sat 10 Dec 2011   Share   Quote   Permalink   Like (1)   Dislike   bubblesitter says Without getting into details, this person buys into "hype" investments a lot. And they have the money to go into, but probably not the drive to make things work. They are by no means poor but on a day to day cash basis, their life is probably horrible. Generally speaking, it's best not to poke around in other people's business simply because you're curious. You would be better off finding out how the investor is MAKING the money to buy houses with, rather than convincing yourself that he is LOSING money. Focus on the win, not the loss. Frankly it sounds like this person is doing quite well, and you are painting him as someone who "doesn't have the drive to make things work and probably has a horrible life" out of jealousy.

3. Nomograph Follow Befriend (1) 104 threads 2,851 comments

   3   2:42pm Sat 10 Dec 2011   Share   Quote   Permalink   Like (1)   Dislike (1)   That, and the Dodgers suck.

4. dodgerfanjohn Follow Befriend 19 threads 590 comments Los Angeles, CA

   4   4:12pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Nomograph..way to deflect from the question. To respond to your inquiries...public employees salaries are public. A good number of upper level public employees have a large enough income that investing is a constant past time. They also tend to not hide that they handle their investment activity while at work. So by nature, it cannot be snooping around when it's pushed in your face.

5. bubblesitter Follow Befriend (5) 10 threads 2,329 comments

   5   4:42pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (2)   Nomograph says jealousy There comes the jealousy theme from uncle Nomo. Jealous of what? Millions of investors making thousands since 2007? LOL.

6. Nomograph Follow Befriend (1) 104 threads 2,851 comments

   6   5:12pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   bubblesitter says Jealous of what? People who make more money than you do. It's an extremely common form of envy.

7. Nomograph Follow Befriend (1) 104 threads 2,851 comments

   7   5:20pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (2)   dodgerfanjohn says Nomograph..way to deflect from the question. Thanks. I was rather pleased myself. dodgerfanjohn says A good number of upper level public employees have a large enough income that investing is a constant past time. The problem is that you are asking all the wrong questions. By your own description, this person is more successful and has achieved a higher position in life than you have. Don't ask what they are doing wrong, ask what they are doing right.

8. iwog Follow Befriend (48) 274 threads 12,576 comments 47 male Lafayette, CA Premium

   8   6:19pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Protected   dodgerfanjohn says So the question remains...is there any vehicle that measures how much investors take it in the shorts? The question is absurd and shows a complete lack of understanding about a basic financial transaction. You want to somehow measure a loss on an asset (not a commodity) that has no defined value without a closing transaction, and you want to expand the study to encompass the sum total of all investors trying to make money in rental real estate? Almost all homes, even ones illegal to rent because of tenant laws, can be rented for just below market. Therefore you are taking the example of someone voluntarily keeping a property vacant, or incompetently keeping a property vacant, and pretending it's an epidemic for the purpose of trolling people interested in real estate investing. Fail is right.

9. Katy Perry Follow Befriend 8 threads 530 comments Murrieta, CA

   9   6:19pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   could it be a tax write off??

10. dodgerfanjohn Follow Befriend 19 threads 590 comments Los Angeles, CA

    10   8:17pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Okie dokie duck, I'll ask an unbiased question and two follow up questions; Do some people or groups of people who invest in real estate lose money ? If the answer is yes, how many lose money and how many make money? What is the amounts of those gains and losses?

11. elliemae Follow Befriend (25) 413 threads 6,983 comments Saint George, UT elliemae's website

    11   9:13pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (3)   dodgerfanjohn says Do some people or groups of people who invest in real estate lose money ? Some do, some don't. dodgerfanjohn says how many lose money and how many make money? Some lose money, some make money. dodgerfanjohn says What is the amounts of those gains and losses? I hope your question was meant to be rhetorical. You aren't speaking of a specific investment, so it's impossible to answer. dodgerfanjohn says Real estate investing is touted as a near fail proof investment. If someone tells you an investment in real estate is nearly fail proof, please make sure that your calendar shows that the year is 2011 and not 2007. This is a common mistake. dodgerfanjohn says is there any vehicle that measures how much investors take it in the shorts? No. There are as many investments as there are stars in the sky. dodgerfanjohn says Person bought a investment property...and it still sits vacant. ptiemann says From the original post, I cannot figure out why it stays vacant. I read the OP and there simply isn't enough information to even figure out how long the property has been vacant. It could be a day or a year... It could be an empty lot, a SFH, commercial property or a unicorn stable. This thread is ridiculous, except the part about the Dodgers sucking. That was painfully true.

12. iwog Follow Befriend (48) 274 threads 12,576 comments 47 male Lafayette, CA Premium

    12   9:20pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Protected   dodgerfanjohn says Do some people or groups of people who invest in real estate lose money ? Yes. dodgerfanjohn says If the answer is yes, how many lose money and how many make money? The huge majority of real estate investors (people who actually buy based on cash flow) make money. The ratio is probably between 10 to 1 and 100 to 1 in favor of people making money. The reason is that time benefits the real estate investor. Although costs are fixed and predictable, income and real estate values will almost always rise in the long run making even a bad decision turn out good as long as the property is held long enough. In other words if the numbers work today, the chance that the numbers will improve go up every subsequent year forever. The number of people who bought California investment rental property in 1991 and held it to 2011 and lost money is for all practical purposes zero. A person who bought in 2006 betting on further appreciation wasn't a real estate investor, he was a real estate speculator. dodgerfanjohn says What is the amounts of those gains and losses? This is like asking how much money people made buying shares of Apple stock. There's no possible statistic that would have any meaning here. I will say that many multi-millionaires have been created by investing in real estate, but I'm sure a few people have gone bankrupt also.

13. bubblesitter Follow Befriend (5) 10 threads 2,329 comments

    13   11:09pm Sat 10 Dec 2011   Share   Quote   Permalink   Like   Dislike (2)   Nomograph says bubblesitter says Jealous of what? People who make more money than you do. It's an extremely common form of envy. Do you ever have any argument other then pure BS jealousy argument? What a no sense crap. Good bye.

14. B.A.C.A.H. Follow Befriend (6) 5 threads 2,359 comments

    14   12:15am Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (2)   Jealousy? Often when we hear that, it is someone imposing their own values onto another.

15. tatupu70 Follow Befriend (3) 15 threads 5,652 comments

    15   6:42am Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   bubblesitter says Do you ever have any argument other then pure BS jealousy argument? What a no sense crap. Good bye. The OP is no sense crap. He just wants to brag about how much someone else lost investing in real estate so he can say "I told you so".

16. TMAC54 Follow Befriend (9) 70 threads 930 comments San Leandro, CA

    16   7:34am Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Here are some interesting charts on Real property values. http://investmenttools.com/median_and_average_sales_prices_of_houses_sold_in_the_us.htm They May not relate to buyer in question. Need more info . Maybe the guy NEEDs the write off. Maybe the property is a big dog. I guess that chart of Las Vegas prices needs a little lubrication.

17. pop Follow Befriend 1 comments

    17   9:24am Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Hi From Melbourne Australia, our 2011 is your(USA) 2007. Our property market is 18 months into our decline and it's looking terrible. I wish people over here would read more of what's gone on in the states. I keep hearing, "America is different" Yeah, from what I can tell the only difference is 5 years.

18. elliemae Follow Befriend (25) 413 threads 6,983 comments Saint George, UT elliemae's website

    18   9:47am Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (2)   tatupu70 says The OP is no sense crap. He just wants to brag about how much someone else lost investing in real estate so he can say "I told you so". You forgot to mention the obvious glee he feels when a more affluent coworker fails - although it's pure conjecture on his part because he's not actually part of the conversations. The OP throws out a pitch in the form of resentment about overpaid public employees who discuss their investment strategies at work - which is common for both public & private employees. People gotta talk about something, it's human nature. It's also human nature that people tend to discuss their "wins" and not their "losses," so casual conversations at work shouldn't be taken too seriously. Swing & a miss. The OP then opines that "on a day to day basis, their life is probably horrible" because the investor of which he speaks "(has) the money but probably not the drive to make things work." Since this was a conversation that was overheard rather than one he was part of, another swing & a miss for our dear OP. You don't claim to know this person well, so you base your assumption of his horrible life on conversations overheard at work? dodgerfanjohn says So the question remains...is there any vehicle that measures how much investors take it in the shorts? Notice how, in this game of fantasy baseball, the OP is playing both sides - he's the pitcher as well as the batter. Unfortunately, he showed his weakness (his glee at the possibility of someone he loathes failing) and it was used to the other team's advantage. dodgerfanjohn says it cannot be snooping around when it's pushed in your face. Since the conversation(s) were overheard, it's still snooping around. And is it really being pushed in your face, or are you eavesdropping? Yes, I caught that one. So you're out.

19. Dan8267 Follow Befriend (16) 768 threads 7,714 comments Boca Raton, FL Premium

    19   10:23am Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Protected   TMAC54 says Maybe the property is a big dog. That ain't a dog, it's a cow!

20. dodgerfanjohn Follow Befriend 19 threads 590 comments Los Angeles, CA

    20   11:01am Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Theres some serious idiocy involved in this thread. What prompted the posting was the overwhelming push by some of investment property combine this property: http://www.redfin.com/CA/Los-Angeles/312-W-5th-St-90013/unit-219/home/8163726 Seemingly people cannot stay away from ZOMG SOOOOOOO CHEAP!!!!!!! Few, if any will buy into this property as a primary residence. Lots of reasons, but the parking situation is awful, the denizens of the immediate area are sketch, the property owner has a history of really bad stuff, and much much more. Take my word for it, or look up reviews on Yelp. So that leaves the purchases as being investors putting down 100%(banks wont loan on the building). If one did any sort of due dilligence...like for instance a 30 second search on craigslist....they would discover that there are a never ending barrage of ads for rentals in the building, from both private owners and building management: http://losangeles.craigslist.org/search/apa/lac?query=sb+grand&srchType=A&minAsk=&maxAsk=&bedrooms= A slightly deeper probe would show that several units have remained vacant for a VERY long time and ads continually run over and over. Yet you never ever hear about real estate investors taking a loss. You hear about stock market investors taking a loss. You hear about individual stocks and the market as a whole falling, thereby indicating risk. But you never once hear from those on this site touting real estate investment about potential risk. So I was curious why that is? Some investors obviously lose money. Curious why there isn't a measurement or disclosure of risk in most of the postings.

21. tatupu70 Follow Befriend (3) 15 threads 5,652 comments

    21   11:19am Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (3)   dodgerfanjohn says Curious why there isn't a measurement or disclosure of risk in most of the postings. You're curious why a craigslist posting for a home doesn't have a disclosure of risk? Are you kidding me?

22. TMAC54 Follow Befriend (9) 70 threads 930 comments San Leandro, CA

    22   1:12pm Sun 11 Dec 2011   Share   Quote   Permalink   Like (1)   Dislike (1)   dodgerfanjohn says why there isn't a measurement or disclosure of risk in most of the postings Aside from fat bottom girls, RISKs make the world go round. The next breath you take MIGHT be your last if walking in to bad hazardous material situation. Your 0.09% interest paying savings account carries a little risk. Should he be told of the risks? Or let him figure it out ?

23. elliemae Follow Befriend (25) 413 threads 6,983 comments Saint George, UT elliemae's website

    23   1:41pm Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (2)   dodgerfanjohn says What prompted the posting was the overwhelming push by some of investment property combine this property: I prize my ability to comprehend the written word – and in most cases I’m successful - but what the hell does that sentence mean? dodgerfanjohn says Few, if any will buy into this property as a primary residence. And you base this assumption on ??? dodgerfanjohn says So that leaves the purchases as being investors putting down 100%(banks won't loan on the building). And you know this how??? dodgerfanjohn says Yet you never ever hear about real estate investors taking a loss...But you never once hear from those on this site touting real estate investment about potential risk. I'm not sure we're on the same site… dodgerfanjohn says Theres some serious idiocy involved in this thread. Yes, there is. Your stated purpose was to ask how to tell if someone has lost money on a RE investment, and you went on to describe a person you overheard bragging about his investment prowess. The idiocy to which you refer belongs to you...

24. mdovell Follow Befriend (4) 28 threads 776 comments

    24   2:05pm Sun 11 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   without knowing that persons income and how much their risk tolerance is the question cannot realistically be answered. On business news sometimes it is said that a 2% loss is a "crash"..hardly If you want to see something really bad look at not residential but industrial. I did some work near an abandoned hospital. the grass was three feet long, graffiti all over the place, broken windows..so I figured no one actually owned this thing..it was empty for the past 15 years... Nope..they left it like that and there is a owner..they just sold it to another hospital! 15 years is a pretty long time to wait to sell something..but the need was there again and the population grew.

25. permanent_marker Follow Befriend (1) 71 threads 230 comments Mountain View, CA Premium

    25   2:19pm Mon 12 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Protected   @TMAC54 where do you get these photos / images?... cool stuff !

26. FunTime Follow Befriend (3) 38 threads 801 comments San Francisco, CA

    26   4:42pm Mon 12 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   On a related note, I'm regularly amazed by how difficult eTrade, Ameritrade, Schwab, and Merrill Lynch all make it to figure out how your investments are performing. The front page on all of their websites is set up to market that I'm doing poorly and need their consultation. When I finally find the performance data, I'm doing great! Does anyone offer a business with trust anymore? Or only when there's not much money on the line? It seem like every big money event, like buying houses or cars, is just a huge, confusing, uncomfortable experience.

27. E-man Follow Befriend (31) 34 threads 2,554 comments San Jose, CA Premium

    27   12:27pm Tue 13 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   Protected   dodgerfanjohn says Person bought a investment property...and it still sits vacant. This would make the second property this person bought that remains vacant(the other is going on 4-5 years). John, You're giving the Dodger a bad name here. Let's recap what you said. A person bought an investment property at or close to the peak and let it sit vacant for 4 to 5 years. Now he just bought another one for all cash and also let it sit vacant. This person is doing very well, and probably doesn't know what to do with all of his money. If I were you, I would ask that person how he makes his money. He might share some secrets with you if you can show him that you're half way intelligent. Talking about asking all the wrong questions........ Cheers.

28. TechGromit Follow Befriend (6) 85 threads 969 comments 44 male Egg Harbor City, NJ

    28   6:08pm Tue 13 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   dodgerfanjohn says Person bought a investment property...and it still sits vacant. This would make the second property this person bought that remains vacant(the other is going on 4-5 years). If you have one property that is sitting vacant and your losing money on, why the hell would you buy a second? Not much of an investor in my opinion.

29. elliemae Follow Befriend (25) 413 threads 6,983 comments Saint George, UT elliemae's website

    29   8:40am Wed 14 Dec 2011   Share   Quote   Permalink   Like   Dislike (1)   TechGromit says If you have one property that is sitting vacant and your losing money on, why the hell would you buy a second? Nowhere, not once, has dfj said that the guy is losing money. He's just assuming it because he's a spectator in this thing, it's all pure conjecture. TechGromit says Not much of an investor in my opinion. dfj isn't much of a reporter in my opinion. Thread FAIL!!!