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follow BayArea 2017 Oct 16, 1:34pm
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Real estate and the stock market equities are bloated at historical highs. Where would you put your money today?
Energy is the worst performing sector right now. I think it will change eventually and it will be the best performing.Vanguard energy fund for long term potential and discounted value right now. But off course I would put only maybe 20% of my cash available.
Pay off my Mortgage and free up $14.4K(escrow not included) a year over the next 20 years That would be $244K I wont have to pay.
Paying off your mortgage is like investing in a bond. I like also some stocks in the mix
Vanguard index funds.
Educate yourself in niche products that appeal to you.Then buy low sell high.
BlueSardine saysEducate yourself in niche products that appeal to you.Then buy low sell high.I agree with this too. I trade acreage. And I love it!
BayArea saysIf no better options at that time, then keep doing what I had been doing during the 5yrs up to that point?Is this the only cash for have liquid or do you have another pool available for emergency uses (loss of job, etc)?With the low rate environment we're in, is there a side "hobby" that you can buy/flip some items and make a return on the cash. I know you mentioned cars as one of your interests. Can you buy and flip some specialty vehicles and make a few bucks?
If no better options at that time, then keep doing what I had been doing during the 5yrs up to that point?
Secret rainy day account in case my wife goes crazy at some point.
BayArea saysReal estate and the stock market equities are bloated at historical highs. Where would you put your money today?Real estate is bloated at historical highs in some places. There are some great deals to be had out there if you look hard enough. I'm bailing out Vegas which is getting way too frothy and buying elsewhere. Just bought 2 houses for 100k (not 100k each, 100k for both) in a mixed neighbourhood in the rust belt. Not high crime. Both came with stable long term tenants. Gross rent 950 each. Net 600 to 650.
buy bitcoin if you feel like throwing away hard earned cash.
Bob, if I may ask, what approach do you use to not only find the location but the specific property? It sounds like the deal was sweetened by already having long term tenants? How did you managed that and am I correct that you are using a property management company?
There's a lot of investors out there claiming that bitcoin is just getting started
For now I've pulled back my real estate, stock equities, and have transitioned more heavily into 20yr treasuries (TLT), precious metals and metal mining, and cash.
Bob, thanks for the reply. What city if you don't mind me asking?
You aren't going to get a lot of appreciation (like pretty much zero) in most of the area's that have the higher returns. But if the shit hits the fan there isn't going to be any real downside either. I was invested in the RIo Grande valley (another previous home) in 2007 and the properties didn't lose any value in the crash.Didn't gain much in 10 years I owned either. But the returns were very good.
Bob, I like a lot of the opinions you have contributed about real estate, but from a pure investment point of view, I am a little bit confused why someone would prefer Zero appreciation with high rental returns, vs high appreciation rates and lower rental returns? I would think, the latter provides better overall returns over time.I could be biased as OC where all my rentals are, generally provides high appreciation with lower rental returns.I ask this question to all.
I looked up the OC numbers. OC prices 2017 are at $2 sq foot rents and right at 300 aq foot to buy. I'm buying at 40 a sq ft (actually slightly less but I don't have my calculator) and renting at .8. So for a 2k sq foot house you would be paying 600k and getting 4000 a month 48,000 a year. For 600k I can get 12 houses renting at 800 or 9600 a month 115,200 a year. That 66,000 a year difference. The expenses will work out differently but are houses in oc actually appreciating 60k a year each and every year long term? If so great of for you, but there are very very few markets that is true for and tying up half a mil plus for one house on that gamble doesn't turn me on at all.
My old house, worth almost $800K rents for $3,300. The condos worth around $500K rents for $2,800 per month, with a $1,000 per month in expenses for association, property taxes, mello roose taxes. Still a 3.5% to 4% cap rate, which is still very high in OC compared to the past.Also keep in mind the management headaches you would have with a dozen properties, and constant cost of fixing them up. $50K properties, anywhere, cannot be in great shape.
You dodged my question. What is the long term ROI? What was the original price, what is the price now, what is rent paid over what time period? You keep telling me appreciation works better, but you aren't laying out much of a case why. You also can't reinvest appreciation until you sell the house and then you pay 7% closing on it. I can keep reinvesting the higher rents relative to purchase price in an ongoing basis to create additional revenue.
$50k purchase $800/m is war zone territory. Vacancy will be at least 30% and maintenance will be through the roof as tenants will cook meth turn tricks and trash the house before leaving.