patrick.net

GC,

Thanks, that's the 1!

DinOR

I had no family money to pay that $135,000, just my 15 years of Air Force pay, and a couple of rental properties I bought on credit and paid off as quick as I could.

Maybe this is a question for FAB, but how hard is it to get into the landlord game as a side business?

I'm a typical Bay Area professional working 50-60-70 hours a week. I'd really like to get some sort of passive income stream going on. Some of my coworkers own rental properties, but they bought them a long time ago - so it's hard to compare.

What's a good strategy moving forwards?

A buddy of mine purchased a nice twice the home for the same amount in 1995. What some poor idiots do these days.
And of course another idiot paid $950K for 1000 sq ft. 200% overvalued.

2266 Plummer Ave. $950,000, 1,112 SF, 4 BR, 1994:$180,000
http://www.mercurynews.com/realestatenews/ci_5459903

I just saw the ad on TV and thought I would pass it along. I hate it when they stick reserves in there.

eburbs - either out of state or wait in california.

It's not a spending problem, it's an income problem.

I’d really like to get some sort of passive income stream going on. Some of my coworkers own rental properties, but they bought them a long time ago - so it’s hard to compare.

eburbed,

As FAB has shown many times here by example, owing rental properties is in no way "passive income." The maintenance work involved, dealing with renting and tenants, that's all pretty darn active. My parents own several rental properties too (for decades), and I've been "asked" to help with the maintenance work throughout my youth. Nothing passive there.

Space Ace,

You might appreciate this commentary from marketwatch re: Web 2.0:

http://www.marketwatch.com/news/story/web-20-showing-signs-bubble/story.aspx?guid=%7B028C8E7D%2D4AA8%2D4746%2DBE28%2D6454EFD675CA%7D

"No boundaries. The economy is going to suck this year. I see all sorts of commercial for lease signs."

The economy will be OK, healthy profits this year so far. For lease signs have been around now for 6 years and not moving. City should rezone and add more homes off Central in SC to MT. so damn space wasted and plenty of builders ready to jump in.

You can expect rates to go up .... FED is still targeting the RE bubble.

skibum - I was as they say in the middle of the $4 Trillion Dollar B2B market. My company was valued at nearly $6 Billion dollars. There was
only 250 people there. Honestly we though our stock was manybe worth $20 bucks at best on a good day. Even us finance guys were wondering what Wall Street was smoking.

Space Ace,

the FED is not targeting the housing bubble, the FED is busy savings its own ass. The FED has long departed from its initial mission statement - fighting inflation.

I bet you anything that the only possible action for FED right now is the stay put, while keeping the hawkish comment on inflation alive. People around the world are already finding out that FED won't do anything about inflation, all it can offer is lip service. Either late 2007 or early 2008, FED will start cutting rate.

I am looking forward to the day when FED starts cutting rate, that will be a lifetime opportunity for us to profit.

"20 bil. Freddie bail-out?"

Dinor - they are extending 30 years to 50 years and giving 5% discount on montly payments. This is after it goes up 35% So instead of
paying 3x price after 30 years you get 4-5x price after 50 years.

What did the Economist call this The new Serfdom ... picture of peasent caring a home on his back...Financial Slavery... give me break...

@Mark,

Ha. She's deleted every post, including the non-combative ones (incl. mine). Oh well, it's her blog to do with as she pleases.

Y'know, I just noticed that EVERY thread on her blog has "0 comments". Hmmm... is she really that unpopular or just intolerant of dissenting opinions?

As FAB has shown many times here by example, owing rental properties is in no way “passive income.” The maintenance work involved, dealing with renting and tenants, that’s all pretty darn active.

I think my colleagues own places in Arizona - so i don't think they're actually going there to manage the properties.

Do property management companies take a big bite via fees?

People around the world are already finding out that FED won’t do anything about inflation, all it can offer is lip service. Either late 2007 or early 2008, FED will start cutting rate.

If the fed can only give lip service and not raise rates, then why would they cut rates?

http://www.mercurynews.com/realestatenews/ci_5459903?nclick_check=1

Man, there's a lot of sales from "Somename Trust" to "Average Joe".

OO,

I also believe FED want to bail themselves out badly but the real question is if there is room for them to cut rates further.
Wouldn't that make the dollar plunge even further and hurt the fiat currency system?
Also, if you don't mind me asking, how will you profit from that? Gold?

Man, there’s a lot of sales from “Somename Trust” to “Average Joe”.

It is not uncommon for people of moderate means to place properties under revocable living trusts. I think it is more of an estate planning thing.

I am not an expert.

Not estate planning advice.

eburbed,

Were you talking passive income in the tax sense, in that you have other passive income you need a corresponding write off for?

I only deal with single family homes, and screen my tenants well. So far I have been lucky (compared to others) in the "toilets and tenants" aspect. However, I only have one rental at this time. I sold the other 4 during the housing bubble, since the prices went to absurd highs and anyone with good credit wanted to jump on the buy bandwagon and not rent. I put all that cash into Treasuries and 6% Credit Union accounts, waiting for the right time to buy again.

If you are going to buy rentals in CA, you may have to wait awhile for the prices to fall low enough for you to buy such that rent will cover enough of the mortgage. It will happen. I've been around long enough to see crashes in Texas, Denver, Boston, DC, ABQ, Phoenix, Omaha, Florida, and Virginia. But maybe the SF Bay area is different......

It is not uncommon for people of moderate means to place properties under revocable living trusts. I think it is more of an estate planning thing.

Hm, the words "revocable living trust" was never in my vocabulary. Are these just big tax shelters or something?

Do property management companies take a big bite via fees?

Not too much, normally 5-10% monthly rent per unit. Obviously the more units, the less they charge. I always chose to manage my own just because on a month to month basis they basically mail your mortgage payment in. I use eviction services for evictions which is all a manger would do anyway.

If the fed can only give lip service and not raise rates, then why would they cut rates?

Because the Fed --and Congress-- just loves asset bubbles and (stealth) inflation. Anything to help keep the economy lookin' good and assist in deflating those Twin Towers of Terror: The National Debt & future Medicare/SS obligations. Of course, cutting rates will also help bail out FBs and lenders, or at the very least, slow the bleeding.

Are these just big tax shelters or something?

Not necessary. But AFAIK properties under these trusts are non-probate.

I am not a lawyer.

Were you talking passive income in the tax sense, in that you have other passive income you need a corresponding write off for?

And my luck w/stock options has been the complete opposite of SP's Sun/Yahoo/Google friend.

You avoid probate fees, that's about it since pretty much the inheritance tax is no longer being charged on most estates.

viamently hee hee

I think the process of probate itself is scarier than its fees.

Estate Question:

If a wife murders her husband and then commits suicide, who survives who? :)

viably + vehemently = viamently

So he coined a new word, what's not to like? ;-)

a_k1947

Nice word play on the handle. I assume the 1947 is your birth year (since you are 60), but the a_k hits a note.

Is this a play with your real initials on the Soviet Kalishnikov 1947, aka AK-47?

Nice Harm. Criticize a typo from this morning. I'm the only one I know.

@Malcolm,

Hey now --it was Different Sean who pointed it out, not me!

How would you even know what he was talking about. I had to scroll up to see what you guys were talking about. Give me a break.

I did a page search just like you. Sheesh, why do I have to be the bad guy?

Just seems tacky to me.

I'm truly sorry. I make *plenty* of typos, so should not be one to cast stones.

Malcolm,

With that incredible keyboard pugilism you demonstrated in this thread in your battle with those econ heavyweights, I think we can forgive a mispelled word.

I did not catch DS's intent either. I thought maybe "viamently hee hee" was some sort of Aussie giggle.

Anthony,

If you agree that FED is just an extension of the government, then we all know what a government is most concerned with: social stability, which means employment rate. Be it aristocratic, totalitarian or democratic, a society with very high unemployment will upset the very foundation of a government, which is an organism with its own self-interest.

FED has painted itself into a corner. It really doesn't have much of a choice. Dollar's status as the world's reserve currency has been waning since the 60s, it is just a matter of time that as we keep going down this path, USD will just lose its dominating power, so it is not a scenario that the Americans are entirely unprepared for, psychologically. We were at a crossroad choosing between inflation and deflation, but so far, the signs are clear, we are choosing inflation. The real inflation rate, for anyone who shops at grocery markets and drives a car to work, is far beyond the published "core" rate. FED is no dummy, the last time I checked, the FED governors are living in the same country as I do, so they know what the real inflationary picture is.

The most ideal case for America is to devalue slowly, 5% a year maybe, so as not to upset the financial system in general, and bring on the impact of a cheap USD to the US public gradually, while alleviating the real debt load of Americans. Let's face it, we are a debtor nation, each household in Amerca carries an average $9.8K credit card debt, much more in mortgage, and has a negative savings rate. We have a huge medicare and social security gap in the wake of baby boomer retirement. No democratic government is going to do anything (aka, choosing deflation and defending the dollar) to jeopardize the interest of its main constituents - debtors.

However, history has shown us that soft landing is hard. Landing in itself typically means hard landing. So while I recognize it is the wish of the FED to manage a soft landing for the dollar, I don't buy this scenario. Once the landslide starts, it is difficult to hold back and the market always overreacts in the short term.

If you believe in a seriously weakening dollar, parking your money anywhere outside of the dollar will benefit. While I am big on Euro, oil, agriculture, and gold as shorter-term bets as things are sorting themselves out, I am more bullish on US companies that will benefit from a weakening USD in the long-term. A weak dollar will rejuvenate lots of home-grown industries and most FBs and welfare deadbeats off their butt to start working again. I see a collapsing dollar as an essential step in the healing process.

Breaking news on the Virginia Tech shooter:

http://www.cnn.com/2007/US/04/18/vtech.shooting/index.html

CNN also learned Wednesday that in 2005 Cho was declared mentally ill by a Virginia special justice, who declared he was "an imminent danger" to himself, a court document states.

In another part of the form, Cho was described as "mentally ill and in need of hospitalization, and presents an imminent danger to self or others as a result of mental illness, or is so seriously mentally ill as to be substantially unable to care for self, and is incapable of volunteering or unwilling to volunteer for treatment."

Interesting to note that Virginia actually has some fairly stringent background checks on handguns compared to most other Southern states:

http://www.bradycampaign.org/legislation/state/viewstate.php?st=va#bgnd

BACKGROUND CHECK AT STATE LEVEL
Do state police perform a background check in addition to federal NICS check? Yes

State law restricts gun-trafficking by limiting the number of handguns that can be purchased at one time. No more than one handgun may be purchased by a person within a 30-day period. This restriction on bulk-buying of handguns helps prevent gun traffickers from buying handguns at gun stores and reselling them on the street to criminals.

Basically, aside from banning firearm possession for people who have been declared mentally ill in the past but have no prior criminal record, I don't see what else the State of Virginia could have been expected to do to prevent this.

Headset, I was thinking the same thing. I typed in confrontation mode for about 3 hours and I have some clown pick out one misspelled word from the whole thing to ridicule?

But Harm, thanks.