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June 1, 2012 at 4:09 PM in reply to: How are people dumber than us going to make out with their 401(k)s? #744801June 1, 2012 at 3:52 PM in reply to: How are people dumber than us going to make out with their 401(k)s? #744800
bearishgurl
Participant[quote=flu]So let me ask you again. Are you actively doing this right now, and have you been successful purchasing a property like this recently, and it is producing income right now? If not, and if it’s this easy why aren’t you doing it versus blogging about it? That’s my question. Because it seems like it’s a no brainer, why wait? Is there an inventory available from these described “sellers” who are interested in selling within the short period of time. Or do we have to wait 10,15+ years for people to start croaking before this happens? And again, why wouldn’t these people be putting the home on the market where it could fetch top dollars?[/quote]
A multitude of reasons. Because they don’t have the energy or incentive to ready these properties for sale. Some think their kids might want them (when they really don’t), lol. A couple of them marketed their properties between 2004 and 2006 and couldn’t get their “pie-in-the-sky” asking prices due to condition. Some of these owners (who all live locally) still think the market will “come back” to that. One property on a nice street has married owners who are privately “feuding” over its disposition. The wife is a “packrat” and doesn’t want to part with anything stored in the property. The husband moved them to another house they owned in order to leave her “collectibles” behind in the old one. (I wonder if she is “hoarding” there, also? :=0)
Most of these owners own multiple SFR’s, duplexes and triplexes and some own small commercial properties as well.
These people aren’t “sellers,” per se. They have to be (gently) warmed up to the idea with perhaps some “haul-away services” to sweeten the deal :=] Some are in failing health. Others are stubborn, emotionally-attached or are delusional about the real street value of their properties which are slowly being let go to waste.
If one waits until the owners “croak” (not within anyone’s control), then one must hope they “planned correctly.” Due to the amount of holdings some of them have, if there is anything amiss in their estate-planning, it will cause some properties to have to go through probate. This will entail the assignment of an administrator, who will have everything on the premises hauled away and auctioned off or given to charity. Then they will hire a cleaning company and then market the property in conjunction with getting a court order to sell it. It will go on the MLS and could attract flippers and investors.
In my neck of the woods, I’ve witnessed the above scenario repeatedly.
I can’t access the money right now. I have to wait. My potential “equity partner” already has the cash but currently has their hands full rehabbing a large property in their “off hours.”
Meanwhile, I’ll get the CPM designation while in a “holding pattern.” THAT is a no-brainer.
June 1, 2012 at 2:41 PM in reply to: How are people dumber than us going to make out with their 401(k)s? #744790Participant[quote=flu]Well ok great. So how long have you been trying to do this, and how long do you think it will take before you can start generating income from this strategy.?I ask because it sounds great as a plan, but if it takes like 10+years for one to just get started, I can’t wait that long. There comes a point when I don’t want to start doing this in my golden years. I want it done well before then so that in my golden years, everything is on auto-pilot more or less.
The other question I have is if someone needs to sell, how do you figure they aren’t going to try to put in on the market and try to get the best offer possible ,but rather sell to you directly?[/quote]
flu, I don’t understand why your “rental home” can’t be up and running and producing income within 60 days of purchasing it (assuming it needs SOME rehab upon purchase). I would be buying with an equity partner and likely paying cash, thus closing costs would be low. I’ve only approached some of these owners for a friend who was looking for investment properties a few years back and at that time, none of the owners wanted to sell. Things change as people move on up into their eighties and beyond. Sometimes it takes a few years for their kids to successfully talk them into selling non-productive rental properties, ESP if they will need the money for assisted living.
Most all of these properties need more work than lenders will approve (esp for the FHA 203b program). The work isn’t that expensive if you can do most of it yourself (no structural problems) and have ways of getting some work done cheaper. These owners aren’t likely to get multiple offers above what someone off the street would privately offer them considering they would be saving the sales commission. As a principal or co-buyer, I would obviously have to disclose to them that I am a licensee in my or “our” offer to purchase.
These properties are DEFINITELY not ready to compete with the vast majority of listed properties on the MLS today and their owners won’t undergo any cleanup/rehab. A few of them have the owners stuff stored in them.
There are a LOT of houses all over SD County that may have a “porch swing” in front and furniture inside. This is no way means anyone lives there … or has even lived there in the last decade. If the owner bought it for $5K to $32K, it has been paid off for decades and its property taxes are $368 year, WHO CARES? Just store your stuff and turn off the utilities. Get your grandson out there in the front yard once a month with the weedwacker (to appease city/county officials). You have a nearly “free” indefinite storage unit. DONE :=D.
June 1, 2012 at 12:04 PM in reply to: How are people dumber than us going to make out with their 401(k)s? #744768Participant[quote=flu]…I’m sorry. But you talk a lot about how things *should* be. But when it comes to these opportunities, things are always 100% clear in hindsight.
So, I just don’t get what your plan is to be an experienced RE landlord without a willingness/understanding of how the markets are actually working, because it’s not as simple as just waking up one day, saying I want to buy that property that yields a 10%+ roi, and be done with it…If it were THAT easy, a lot of people (including me) would be all over it….[/quote]
I don’t intend on making offers on listed properties. I know where the longtime “vacants” are in three “target areas.” Some have been “vacant” as long as ten years and regularly have the weeds mowed down in front to avoid municipal fines. I will approach and re-approach those owners with cash offer(s). Some are now getting to the point where their 60-70 yo “kids” are having to make decisions for them. Perhaps some will now come to their senses.
I will be targeting “free and clear” properties (w/o all the “flipper” competition). Only persons intimately familiar with these “hoods” would know about these opportunities.
That’s why as a potential RE investor, you have to keep your eyes and ears open. But this is hard to to when one lives in an area that is surrounded by newish housing tracts for miles around and is not familiar with older areas. You’re using your (expensive, MR-built) parks and trails for your daily walk instead of walking in the ‘hood ;=]
You can’t learn about possible viable “investment opportunities” doing that.
June 1, 2012 at 11:52 AM in reply to: How are people dumber than us going to make out with their 401(k)s? #744767Participant[quote=flu][quote=bearishgurl]I like an “investment” that I can see and touch (tangible), such as that “cute” 1188 sf light green battenboard house down the street that needs a roof (and probably a few other things).
But that’s just me.[/quote]Why does an investment have to be “cute” in order for it to be a investment?…[/quote]
I was being facetious. Actually, battenboard can be a maintenance headache and I personally prefer a dwelling that is 1750 to 2200 sf, although without kid(s) I would probably be fine in +/- 1400 sf.
June 1, 2012 at 11:48 AM in reply to: How are people dumber than us going to make out with their 401(k)s? #744766Participant[quote=CONCHO] . . . If you want to see the future of the US, just visit Brazil. Huge underclass, small middle class, and a tiny elite that manages the whole affair from their helicopters, private jets, and island getaways.
At least here in SD we will still have good weather![/quote]
Uhh, concho, I intend on managing my “stable” of “elite” rental homes (hopefully always full of regular-folk tenants) from my lofty “New Balance” jogging shoes. I don’t know about Brazil but American landlords who live in or near their rentals (there are millions of them, btw) don’t have any of that stuff. They collect rent on foot or in their well-maintained 1986 Buick or 1991 Toyota.
I have found throughout life that the most prosperous people are usually the ones you would never suspect are worth anything at all.
June 1, 2012 at 11:40 AM in reply to: How are people dumber than us going to make out with their 401(k)s? #744763ParticipantI like an “investment” that I can see and touch (tangible), such as that “cute” 1188 sf light green battenboard house down the street that needs a roof (and probably a few other things).
But that’s just me.
June 1, 2012 at 11:33 AM in reply to: How are people dumber than us going to make out with their 401(k)s? #744762Participant[quote=no_such_reality]…Rental management, a small business (and government headaches that go with it), are the way to go.[/quote]
I’m a RE licensee, a licensed paralegal and an ex-gubment “bureaucrat.”
Lay it on me.
Signed,
bearishgurl “red-tape” Morgan
June 1, 2012 at 11:30 AM in reply to: How are people dumber than us going to make out with their 401(k)s? #744761ParticipantYes, flu. I stand by my assertion and $400K in WAY TOO MUCH to pay for a “bread and butter” (as AN would call it) rental house, ESP in MM! I won’t speak for AN but he would probably agree ;=]
$100K – $250K (w/o MR and HOA) is a MUCH more doable price point where the owner wouldn’t be sucking swamp water with taxes and fees thru the inevitable vacancies (referring to free and clear owners here).
June 1, 2012 at 11:25 AM in reply to: How are people dumber than us going to make out with their 401(k)s? #744758Participant[quote=kev374] . . . And, this generation cannot count on Social Security at all! And who knows what will happen to Medicare, that may not exist too![/quote]
Neither can boomers currently under the age of 60…at least not for their ENTIRE lifetime from age 66 forward. Yes, a portion of boomers are locked out of collecting SS at age 65 – those that are born after August 8, 1956.
[quote=kev374]The problem with the previous generation is that they preach everything, the fact is that they have just been RIDICULOUSLY lucky to have SOLID jobs with pensions, low costs of living throughout their earning lifetime, a super stable job market relatively speaking, low cost for housing and all entitlements intact – SS, Medicare etc. That is not the situation for the current generation.[/quote]
kev, those SOLID jobs were not the “glamour” jobs of today, nor did they have anywhere NEAR the working conditions of today OR employee-friendly laws in place (FMLA for example). Sorrento Valley either did not exist or was ONE dead-end street with four bldgs on it (circa very early-eighties). Most retired “boomers” in SD that DID NOT retire from the government retired from “head-down” positions such as assembler/mechanic from Convair, General Dynamics, NASSCO or Rohr. SD was a manufacturing town and the majority of contracts were with the military.
The Gen X and Gen Y family-consumers of today CAN live frugally and save but most choose NOT TO! Boomers had no other choice, due to lack of as many options, products and new housing tracts to choose from as young families of today have.
It’s all relative.
June 1, 2012 at 10:58 AM in reply to: How are people dumber than us going to make out with their 401(k)s? #744748Participant[quote=harvey]. . . But please – just for entertainment value – do tell us how we are supposed to save for the long-term without using the investment markets.[/quote]
A suggestion was made earlier here (AN?) to do “CD laddering.” That’s one way. Another way is rental houses. I’m not talking about highly-encumbered ones (HOA/MR). I’m talking about buying a fixer-upper, spending 30-60 days in your off hours to clean it up and then leasing it. Got $150K?? There are plenty of places in SD County where one could buy a house which, after fixed up a little ($5-8K + elbow grease), one can make a steady $1300 – $1600 mo off $160K ($150K purch + closing costs + fix-up $$). Know anywhere else you can do this??
Afraid of getting off the fwy and looking around? Bone up on your “people skills” a bit, pri ;=]
It’s doable.
I wouldn’t have thought so just a year ago.
June 1, 2012 at 10:37 AM in reply to: How are people dumber than us going to make out with their 401(k)s? #744745Participant[quote=HLS]Twilight Zone scenario OR Reality ??
The 401K system is the largest Ponzi scheme in the history of the world, only 2nd to the US housing bubble that was engineered to occur.
It is naive to believe that generation after generation can benefit from the stock market yet tens of millions of people are counting on it 100% because *GASP* the govt condones/approves/suggests it, and makes it foolishly attractive with ‘pre tax dollars’
The reason that defined benefit plans were done away with is because it wasn’t possible for professionals to manage money with solid returns decade after decade for many thousands of people, yet it is now ‘expected’ that amateurs will have a better return.
Just as real estate ‘professionals’ were cheerleaders for the housing bubble and many were sucked in by their ignorance,(because houses never go down) those whose incomes rely on the financial markets are cheerleaders for the 401K system and convinced of its success, blinded by their income.
As long as leverage and derivatives exist, it is likely that the scheme will go on in one fashion or another for a long time.
The wake up call will be when something REALLY big happens and *ONLY THEN* 99%+ of the people will say that nobody could have seen this coming AND ‘poor me, just like everybody else’ and EXPECT a govt bailout.
The govt will not have the resources to bail these people out and perhaps it will be game over at that time.
Good luck to those who are COUNTING on this system.[/quote]
HLS, I totally agree with this. I’m planning on shlepping by on 3 small pensions and collecting rent. I’m considering buying and fixing up rental houses with an “equity partner” in a couple of years and collecting rent on them. I’m working on my DRE “PM” designation as I write this.
I can’t imagine how the most vocal young “worker bees” on this forum are going to “retire” with $2-$3M and still keep their families’ lifestyles at the level they have been “accustomed to.”
I have recently come to the conclusion that rental income is the way to survive, IMHO. Unlike the stock market, this income stream is totally under one’s control. Admittedly a pragmatic “control freak,” I’m attracted to that. Those young Piggs on the current “retired cop under 60” thread who are prognosticating whether they will need $2M or $3M to retire are using the rarest and most “grandiose” examples of unclassified executives as the VAST majority of gubment retirees have monthly pensions between $350 and $1800. I believe in saving for retirement if one is able to but in my mind, it’s wacky to assume you will need $65K to $100K annual income in retirement. You’re supposed to have your principal residence paid off by then (or live in subsidized senior housing or a senior mobile home park if you do not have any assets).
That’s the way its always been.
May 29, 2012 at 6:11 PM in reply to: My next door neighbor was a cop, still under 60, been retired for more than 5 yrs #744509Participant[quote=AN][quote=SK in CV]Why should they work in 911 centers or schools or in the office if they can afford and prefer being retired? You think they should be forced to work? Should everyone be forced to work until they’re over 60 or just cops and firemen?[/quote]
How many profession in the private sector can afford to retire before 60?[/quote]
How many professions in the private sector put their lives on the line every day and typically have MUCH less than stellar working conditions (clean cubicle/office, multi-line phone, computer and gadgets at their constant disposal, restroom and lunch nearby, etc, etc).AN, do you think hanging out on the streets of San Diego County (or its fwys) are more “fun” than what you, as a “white collar” worker are doing everyday?
IIRC, jimmyle’s neighbor is living close to the SD substation where EVERY SD street cop begins his/her “lofty” career:
Drive to SE Division Stn. Park in the parking lot. Lock your “luxury” car. Start walking eastbound. Get to know the folks out there. And … have a nice life!
Participant[quote=birmingplumb]I cannot thank you enough for all of your sound advice both now and last year as I searched for my sons apartment. He followed advice and lives in San Diego in a zip code you recommended. He is so happy.He never wants to leave San Diego, enrolled in a Art Class almost next door, got a bus card and feels better than anytime I can remember. I thank you for taking time to post a generous reply.God bless you.[/quote]
I just reviewed your posts to refresh my memory, birmingplumb. I’m gratified to hear your (disabled) son found a suitable unit for himself in North Park (SD). This area is well-known for catering to the disabled, both within the community and in its public transportation. Of course your son “feels better” now because the climate we have here is very conducive to the health of those persons who come here from a harsh climate (such as MI). In addition, SD residents, for the most part are friendly and accepting. So glad to hear your son is doing well, birmingplumb!
Participant[quote=squat250]…It’s very likely that my sorting abilities make yours look puny and pathetic. Maybe I am better than you all. You people probably can’t alphabetize at computerlike speeds. Gosh. I am glad I am so gifted.[/quote]
scaredy, you’ve met your match. I CAN, too! Even at this late date (I’m not dead, yet) … must be a trait of longtime gubment workers, lol ….
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