Another victim of the housing market. This home was bought by an investor/flipper in Dec. 2009 for $350k from US Bank and flipped it in Feb. 2010 for $595k. If I remember it correctly, it was listed for $580k. Not a bad profit for two months worth of holding. I am not sure if the new owner was aware of this information, or his realtor hid this information from him. I wouldn't buy it knowing this information because I would just tick me off so bad. Basically, the new owner paid 2005 price for the home. It is what it is. The market determines the price, not you, not me.
1625 Ridgetree Way, San Jose, CA 95131
By E-man Follow Thu, 25 Mar 2010, 12:54am 7,339 views 113 comments
In San Jose CA 95131
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@ pkennedy,
Disclaimer: I'm not an expert on this. This is only for entertainment purpose.
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seaside says
No one in his/her right mind would overpay $200,000+ for a house. Are you suggesting that this buyer did because he/she didn't research the Internet? If I may ask, where do you go to get the information you need to become an informed buyer?
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@ seaside,
I am one of those bottom-feeding investors, too. I am considering putting a couple of my properties on the market this year, too. Just like other investors, I only have to pay capital gain if the deals are closed 1 year 1 day after I bought it.
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@E-man,
I think I agreed with you about what you're feeling as a buyer.
Emotionally upsetting that is. Is that right thing to do? Is it ethical, ect... those are legitimate questions. But that has nothing to do with the reality when a business is a business.
The bottom line there is that the buyer pays for the value he sees at the time, not for the history. Flippers and investors should do the work needed to be done, so that they can show the buyer the kind of value he seeks. That's business decision b/w two parties.
Hey E-man. you always got my best wishes.
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SIR YES SIR. Diversification. Dang, you sound like a CFP.
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Haha, not an accusation. You're a finance guy, and you're doing well so you must be in investment banking of some sort. In regards to your points above:
1) Exactly how my wife and I feel, but we try to go a little bit further. Our goal is to pass some assets on to our nieces and nephews too if possible. She has 5 brothers. I have 2 brothers and 2 sisters. So we're looking at 20 kids (2 kids/family?). Therefore, the bar is set very high.
2) This is the American dream. Having debt up to your eyeballs. juuuuuuust kidding :D
3) Another housing run-up is not probable, but for sure.
Don't know why but we have so much in common and think alike too.
I recommend this read. Very insightful. http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom
Cheers.
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5 baggers in 15 years huh! Sounds so tempting, but would likely come true. What do you think of REITs like NLY and AGNC? They give pretty hefty yields. Or you only recommend Preferred shares and that's it.
I don't day trade. More like month trade. Last year I did about 25 trades. I do it just for the fun of it and I don't bet the farm on it. I get 100 free trades per year from Wells Fargo for having a PMA account.
My real estate mentor told me that the stock market is monopoly's money, and day trading is a fool's exercise. Probably true.
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What, pkennedy has joined the party? Welcome aboard :o)
@ SF ace,
I am almost convinced. Let's recap my understanding. Preferred shares are thinly traded, less volatile and pay a nice dividend. Can the dividend of preferred shares be cut? Although thinly traded, I can always get in and out if need be, right? If that's the case, why the hell would one wants to own common shares? Are there more to it?
Thanks.
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All good points SF ace... I've done a decent accumulation for banks, well mainly in Citi, because the others looked like they had fully recovered already, or nearly. I'm going to take another look through what is out there.
#2 is a good one and hard sometimes. #3 is something I need to learn to do, I tend to go all or nothing still. #4 is interesting, I've never really thought of exiting after an upgrade, I figure I'm on the right track at that point. #5 is something I'm starting to come to grips with, I fully agree with the order there as well. I would like to get into some more technical trades, how much work is it to get into those? I figure the more trades I do, the less of the "love" aspect I'll obtain, and more likely to dump crap when I should, rather than hold it because it should be doing better but isn't. #6 is good, I saw GE just tank, and figured I could accumulate and wait for the return of the dividends, but it took off without the dividends, so I sold based on your comments before about being able to capture capital gains and/or dividends. I figured I wasn't going to see too much more from it this year. #7 I've never dealt with, and something I wouldn't mind looking into more.
And I'm going to second E-mans question on this one.
Btw, for anyone looking for a really interesting book, I really enjoyed warren buffets snow ball. It really shows his personality, it goes from child hood to current and involves lots of stories all along the way. Very little to do with investing fundamentals, mostly history of what he's done and why. People always say they're investing like warren buffet, but they aren't. Warren Buffet would trade a stock quickly if he got what he wanted out of it. Even when he was young, he learned how to buy up enough of a company to influence it, and push it in his direction, then sell it and move on. When he no longer could buy up pieces of companies due to his wealth, he dropped stock trading and went with bershire, and basically gobbled everything up, but also bounced companies off each other, by taking free cash from one company to help a company that traditionally needed spurts of cash. He also knew bershire was dead, but the owner tried to short change him, and instead of selling the company he didn't want, he bought it all. It appears that he's taken companies that say have investment cycles and matched them up. Instead of having a company sit on a huge sum of money, waiting for the next "investment" cycle to begin, he used it in another company that had already started it's investment cycle, so he always kept all of his capital working, unlike most other companies who just need to keep a decent buffer around them at all times for when the economy changes. Anyways, I really enjoyed the book. Fascinating, easy reading and Warren really has an interesting personality and life!
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@ SF ace,
Looking at the charts, institutions are definitely bailing. Thanks a lot for your inputs.
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PBR is one that I want to get into, but also one that worries me a little bit. I'm going to ask my wife a bit about this one, and perhaps her father. He is a big pusher of PBR as well.
It's a government owned entity, setting prices, etc. New found Oil but no new found "riches for the poor" is probably going to be a political band stand in this upcoming election. With promises to share the wealth with the poor. I'm not positive on this, but it is something I could see happening. Whether they would do anything, is unknown, but Lula won be making promises and payments to the poor. The next person up is likely to continue with those promises. I'm betting the conservative party won't stand behind this, but the workers party could push something like this.
Btw, turmoil like this is what I'm hoping for during these elections. :) Brazil has enough multi nationals + enough growth for the last decade that they won't give it up easily, but fear will be strong during these elections due to workers party members promising the world like lula did. Their political system has run offs, so if one party doesn't get a clear majority, then minority parties are kicked out and new voting happens with the new subset for the president. So we could get several rounds of this.
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It's ok, not good not terrible. I don't like the 6% convertable (around 4-6 dollars) preferred's A and B hanging around as a common shareholder. That financing last year (not great timing) improved their balance sheet but the cost was too great. It will impair the value of the company signifcantly if someone else wants to buy it.
However, the variable cost is so low that growing the base and monetizing the user base would flow right into cash. The key is whether that could be executed and will be worth a lot of money for potential suitors. I have used answer.com to primarily seek/ask questions about fixing cars but the potential is limited as well. I'll wait until Q1 comes out to see where they are at.
The site im really bullish on is linkedin.com. It is going to destroy monster international and whatever yahoo, google and MSN has as equilvalant, someone will pay big bucks to acquire that one. That is a sure IPO buy for me.
Let's throw another similar one out there, thoughts on loop?
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If it's such a great product, one of the big firms would swoop in and grab it for pennies. If all they need to do is drop a bit of money into it to grease the wheels..
I used to watch the news with my friend, and essentially news advertising = drug companies. Every fancy looking drug that came up, he would say "so-and-so drug" essentially once he decoded what was in these ads they were saying "cure aids with asprin.. "
We're really scraping the bottom of the barrel now with drug manufacturing (actually drug discovery). We're taking what we have and trying to find new uses for it, new drugs are far and few between. I'm pretty skeptical on all drug companies now... Doing new studies takes time, if it requires "changes" good luck.
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Buying opportunity is nice, I would rather have my money out, so I can have more fun during a buying opportunity though...
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Kennedy,
This reminds me of the Asian contagion in 1997. A few months before that contagion I had moved to all cash because I had got laid off. Then when I got another job it was right when the contagion hit and I went all in. It was a huge windfall. I am open minded that it is the beginning of a contagion like with Austrian debt default in 1931, but that took another almost two years to unravel to our shores. For the meanwhile there's some similarities (not the same thing as "it's the same situation all over again") to overreaction to Greek sovereign debt crisis.
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Ah thanks.
I got to the CUSIP# and there was a search functionality, but I wasn't able to come up with anything! I thought it might more resemble options pricing and/or naming.
1K increments is handy, I was wondering how they were priced as well, and paying the accrued interest makes sense as well. That pretty much sums up everything I was wondering about.
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I'm a messy investor. Investing without enough knowledge and dangerous :) I'm very good at savings, and I'm very value orientated, vs super deal. Super deals are generally priced that way for a reason, I like to get value and get a good price on things. I also min/max my living standards. If i'm not getting the best, I'll often buy the worst and see if I like it, if I do, I'll probably end up with the best next time. Investing, I spent too much time reading crap I didn't need to read. I should have been value investing for the last decade. Ah well, live and learn. I'm still making mistakes, but taking in everything you guys have said and others! I'm currently waiting for the market to make a move somewhere. I think it's going to head back down again, just because of momentum. I don't think any massive crash, just a drop, and then back on up. I'll see if I can figure out this dip and try and buy in as it's returning.
As for the housing deals, you're basically having this guy find a house for a 30% discount, then flipping it and paying him a 30% commission? Will he resell it, or do you need to introduce realtors in there again? Are you planning on renting them out? Even at 500K it seems like you would need some hefty rent to make it worth while.
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market goes down because money is flowing out, most likely into the fixed income market (bond market), lowering yield and raising the premium of the bond.
If you think about it from a broader perspective, a 30 year goverment T bill at 4.31% means you are locking in that rate of return for 30 years. If interest is at 5%, then your 4.31% is worth less thus a discount to balance the difference, but if interest is at 4%, then your 4.31% is worth more thus there is a premium to balance the difference. In the end, you'll still get 4.31% regardless and reversing the transaction is not a big deal. You can't lose money on bonds, you can make a little more than 4.31% or a little less.
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pkennedy says
You got it. When the market corrects or crashes, people run to bonds, which pushes yields down. Like I said above, SF ace likely knows this stuff before the average Joe like us since he's in the business. You don't want to bet against him. With that said, it looks like the market is not done correcting. Every bounce is a chance to sell. Now is the time to identify which market leader stocks to buy on the next leg up. My two picks are SBUX and AAPL.
My half-way decent knowledge is in real estate so I'll stick with it for a while. I will diversify when I have more money, not now.
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Thank you very much for your response. I just need some confirmation.
I always get in trouble when I over-analyze things. I guess I should stick with the K.I.S.S. rule, and continue to let the numbers be my guidance. I've been reading too much negative data/info from several economists, and it got me so bearish.