Home Investment Strategy... Do Something With Your Affiliate Monies

My plan is to only invest in my primary residence and maybe vacation homes/condos if it makes sense. Then pour all other money into stocks/index funds and hold them basically forever. Over long periods of time, stocks should outperform everything else. Plus you don't have crazy stupid costs, taxes, fees, etc...

I read an article the other day about why about 60% of pro athletes eventually go broke, and one of the main reasons was because they put almost all of their money into tangible assets like real estate, restaurants, stupid inventions, etc...

I really don't like what all is involved in real estate. It costs 6% of the sale price when you sell a house through a normal real estate agent. 6% OF THE PRICE! That is just stupid. On top of that you have taxes, insurance, repair costs ect. Trying to rent out a place is 10x more problems. No thanks...
 


One other way of doing things - but this is highly dependent on the area and market.

My uncle is heavily into real estate and he basically makes additions or completely wipes out the whole house and builds a new one then flips it. The market is really hot here and has been for a long time so this obviously might not work so well everywhere.

The trick is finding shitty houses in fairly good neighborhoods. One house he did recently he basically picked up a house for $400k that was falling apart in a high class neighborhood, most houses in the $1m - $5m range. I don't know the specifics in terms of costs and budgeting (though I do know some of the costs of individual work that went into it) but he tore that pos down and built out a huge house that at MAX probably cost $600k and that seriously has to be at the high end.

It took a while to sell but he basically flipped it for $2 mil. Even if it takes you 2-3 years from start to finish on one house it's easily worth it. Though ideally it shouldn't take more than 1. The trick is being able to find someone who'll do most of the work so you don't have to be there every day running the show. You could go through a builder but it will obviously be a lot more expensive though probably still worth it. If you can find a partner who's in the business already but maybe has trouble finding funding that would be the ideal situation. You provide the funding, they do all the work and you work out a reasonable split of profits.

There is a lot of bs that goes with this too but at 100% ROI it's easily worth it. 5-10% and dealing with renters, not so much.

Oh one other thing - it's a lot easier to secure funding once you have assets like these. So basically you don't even have to use your own money the whole time but take out loans on all the construction work and use the bank's money. After every stage of the building process you can also re-mortgage to pull more funding out for construction. The obvious benefit of all this is you have more of your own money to do other things with as well such as buying up rental properties if you really wanted to go that route also ;)
 
cheshire said:
You also have to consider taxes, bringing the house up to code, and then dealing with renters. Now there's nothing wrong with that but your 10-12% is going to drop to about 5-6%. This is coming from someone that owns 5 rental homes.
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Sounds about right. People I know who actually do the shit tell me they figure to make around 50-55% of the rent. So many people just see the rental rate and don't figure in all the other costs, even without a mortgage.
 
leadsupplier said:
i'm quitting affiliate marketing and getting a real job to invest in real estate ... seriously

sure the money doesnt roll in as fast, but you have real life assets. when there is no on in your house, sure times can be tough, but at least you still have a fucking piece of real estate
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I hope this was a joke. If the money isn't rolling in as fast, obviously you would have LESS money to invest. If you want to invest in real estate ( whatever that means, really), you can use affiliate marketing proceeds- if that's what you really want to do.

You never really own your own property. You are always paying a fine/tax/rent to someone.

Having a fucking HOUSE where you live is one thing. Everyone needs shelter. It's not really an investment though.

Shit, I have a mortgage-free house. Property taxes go up every year. I just had to buy new AC. I need a new roof. Fence needs replaced ( several grand for small shit like that), and it's a fairly new house. Most major appliances and parts involved in a house are made to last around 10 years, if that. Owning a house can be pretty shitty. I can't imagine being a landlord.

Real estate isn't an asset if you can't get the money out of it and costs you more to carry than you make getting out of it. I thought all my Ken Griffey Jr Rookie cards were an asset, too.
 
From what you all writing about it you better buy some sites on flippa:) Especially leadsupplier lol, bro, when times are tough you need cash, not real esate !!! Better buy that new BMW you always wanted with AM monies:)

I am living in 7 bedroom flat in my country in center of town like Vegas:) (Got it slowly room after room in times where salaries of mom was big in $ and flats were peanuts, those times will never return, it's like entering cars business now LOL)
But anything except cheap rent is not applicable, it's not even worth it. And I already invested in something which is not ready yet. Plus people don't have so much cash today. Will be better, but in future. But where to get more cash for it ? (

LOL at 5% ROI/year too. Absolutely LOL

Probably I don't know much and that fliping works better in US all other offline businessmans I know regret about entering few years ago, with current prices and so on. And really big ones I hear all living in rented property to have money for investments!

Those real estate business is like gambling for people with big money.

r3p1v, word! Have read that US celebrities like Brad Pitt and others invested in that Dubai biggest hotel huge money and it didn't worked out.
 
I am no real estate expert, but I do advise a startup that has some great online real estate analysis tools for investors:

Intelligent Real Estate Investment Decisions - eRealInvestor

Most of the service is free, you can run multiple scenarios, import properties or search for foreclosures, and you can use sliders to see how the ROI changes based on rental rates, vacancy, etc. They even have rental comps built in.

Recommend it if you are serious about investing in real estate, the service is basically a ton of private Excel models translated into flash for the Web. Pretty slick.
 
there is real good money in stuff like this. cali building codes are high standard tho.
 
I assume you are talking about planet earth properties. The real money is on the moon my friend. I'm saving all my monies for when the human race needs to expand.
 
Funny hearing about how home values are "supposed to appreciate by 5+% annually" from a bunch of people who grew up in a huge housing bubble.
 
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I'm quite surprised about Volk's lack of knowledge on this "strategy". I mean c'mon, tieing up $100K for 5% return (I can invest in secure bond funds and make that without 1/10 of the headaches that a property would have) isn't what I what I expected from the Ready, Set, Super Affiliate.

I agree that most people think real estate is like the baller's sure thing for tucking away their money. I mean it's great if you know what the fuck you're doing, but there are quite a few people who think they can buy a place and then just make assumptions about their rental income. Property managers, vacancies, maintenance, tenants that don't pay, tenants that trash your place, taxes, plus other repairs really eats into your ROI real quick.
 
Are you calculating your ROI based on paying all cash or am I understanding this rong ??

If you put down 5% on a 100k property and netted 5k at the end of the year (this is after taking out all expenses: PITI) your cash on cash return would be 100%.

If you sold your 100k house for 110k next year your ROI would be 10% (Loan + down payment)

Nobody except wholesalers looking to get around 60% of FMV on a house pays all cash.

I also don't think its a wise idea to pay all cash for a home and then rent it out - your tying up an unnecessarily large amount of cash just to control the property.. You could do pretty much the same thing for 99-100% less with something like a lease option if you wanted to.
 
Bofu2U said:
Not a bad idea, but if I wanted a 6% yearly return I'd stick with mass micro-lending. I think it's average 7% APY a year now (after defaults).
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What micro-lending platform are you using? I have some money in Lending Club right now, about 2-2.5 months into the earliest loans I made. Kind of worried about what happens after the first year or so, though.
 
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