… and I immediately thought about posting it here.
It was an infomercial, I was coming back late from work, and just kind of listened to it. There was a lady on the radio talking about investing. She kept talking about how stocks are bad because they go up and down, and then said... saving money can just be a waste because you don't make enough to beat inflation... and all that. She went on and on, and then made a final statement... "until now." … her big epiphany was, "buy rental properties."
Her examples were ridiculous... she said,
"Want that brand new BMW? Why save up and pay cash for it... when you can just buy one or two more homes and use the income to pay the monthly car loan payments!" I kept thinking to myself... my God... this is the worst financial advice I think I've ever heard in my life. Obviously, she was selling some "life changing program" that came with a book, some DVDs, and a 1-800 number for advice. But good Lord... who says you shouldn't save, and then pay for a loan by taking out two more loans?!!!
I'm all about property investment, believe me... but it's not that easy. You don't just "pick up a house or two." Unless you know the area you want to invest in, you have to spend months researching the place so you understand the positives and negatives. And then with respect to the house itself... when you buy a house... it's not immediately an investment until you build equity in it. Immediately following your purchase, that home is a liability... and a big one. Anything that breaks on it... that's your problem. And finding the right renter? The one I have in my Florida house is decent, but the one I had before then did over 10 thousand dollars in damages, and that was a petite woman.
I just... there are no words. I wonder if there were people listening to this and were like... I'm going to get me two houses, and then get a BMW...
I save just for a handy place to keep it. You dont earn crap in interest. What Id earn in a years interest wouldnt cover a weekend getaway. I have one stock thats done well. Ill have a hard time spending what Ive saved before I die without making anything more from it. Ive already done the buy everything you just want deal and got over it. I cant say im frugal, but I just buy stuff I really actually want or need. I used to buy anything, including cars and electronics just on a whim with 'hey thats neat, I gotta get one'. Take things like computers and phones some of you buy every 6 months new. My newest computer is like over 10 years old, Windows 7. The last phone before I got a smart phone 5 years ago, id had for over 10 years...a Casio Boulder Flip. Before I retired, id buy 3-4 cars a year just as a novelty to play around with and sell soon as i got tired of it. I had a Jag I kept for like 2 months...tired quick.
2 things I have learned. UNLESS you have some kind of insider info, property is a TERRIBLE investment. Cars also are bad. Your usually lucky if you get 1/3-1/2 of what you have in one back. Watch the big auctions...people sell cars for $50k that they spent $100k on. Im sure there is a small percentage of them that do come out even or a little ahead...but its a rarity. People who bought 2004 Ford GTs are probably ahead. I saw one Viper on B-J still with interior plastic and no miles sell for half of what the seller paid for it new...thinking he was going to make a killing. A friend has a 2010(?) Callaway Corvette conv he paid $115k for with 3,000 miles hes been trying for a year to sell for $50k.
[This message has been edited by rogergarrison (edited 07-13-2018).]
Real estate is the most common place where fortunes are made and lost. If you don't know what you're doing you can lose BIG.
I think a lot of the people who sell the idea of buying rental properties to poor people or people that don't do their research, are hoping they fail quickly, and are then desperate to sell, likely to the people that gave the seminar or ran the infomercial. No cheap properties in the area? Convince the locals they can make money buying and renting them out! The suckers buy the properties at or near retail, get in over their heads with no or bad renters and renovation costs, and are then desperate to unload them.
Only house I ever owned I bought with the ex for 105,000. It was a semi with no garage, plus we put another 15k into fencing, sod, landscaping. Place didn't even have screen doors from the builder.
3 years later another builder started putting up fully finished, 2 story with garage, for 99,900.
My place was now underwater by 45,000. Courts did me a favor awarding it to her in the breakup.
It really is true... you look at MOST wealthy families in this country, and they all come from real estate. For me personally... the two I know of in South Florida are (were) Wayne Huizenga, and Steven Ross. Of course... that's where our President built his wealth as well.
I'm huge into real estate. Not to say that I have a lot of it, but I'm a big fan of it is what I mean. This seminar (on the radio) made it seem so easy and such an effortless thing. I try to get into real estate, because I know the benefits. I have two pieces of land that I've purchased over the past 20 years. Only one is worth more than I paid for it, and not by much, the other... maybe the same as it was. My house in Florida I bought over 15 years ago... and I would have sold it but I kept it more out of an emotional decision when I moved. Thankfully, that worked in my favor (normally emotional decisions do not) and the home provides good income. But it's not like I planned all of that.
I have a home here in San Antonio, which... exactly as you said... 'The money is made at the buy' … it was a **** -hole when I bought it, got it 33% off similar homes in the area. And since I have the skills, I've been renovating it over the year (it was a mess, one-family owned, all original from 1983). I'll eventually sell it when I move for my next job, but this time, did my homework, did my research, and I'm quite pleased.
But it hasn't been without it's frustrations. Like I said... my last tenant (when I left Florida the first time) did over $10k in damages. I may still have the pictures somewhere. Being a landlord is just not that easy... and exactly... you're right. These seminars are meant to take advantage of people...
MEM, what I don't get is... what exactly is the draw of "New Construction?" When I first moved to San Antonio here, we were looking at new construction. I ultimately decided on a fixer-upper of equal value with more potential equity growth. Anyway, I can certainly understand the draw of new construction... particularly for people who just don't know or want to deal with other people's problems. You get a brand new home, with a warranty. But outside of that, you usually get a home in a "less established" area (meaning fewer amenities local to you), and the lot sizes are usually different. Maybe people don't care about big yards... but when I look at my home in Florida. There are newer homes, and while twice as large, the property is effectively half the size of my lot. They build the homes taller, and the lot is smaller. Man... don't get me started on new construction. I'm a big fan of the garage, but because of lot sizes, it seems every single home wants to present to you the garage, and the front door is on the side of the house. It's like... "Welcome to my warehouse!"
