The Investment Thread (stocks, bonds, real estate, retirement, just not gold)

[Balls on the Line]

Remember that companies gave out 2x more dividends in the early 80's compared to now. They were also much higher before and after 1929. It's hard to get down to those valuation levels with dividends as low as they are now. If we were to visit 5000 on the Dow with these kinds of dividends it would be the lowest valuation in history. That's probably why in 2008 we didn't get down to 1982 valuations and why we've been above trend for 20 years. For dividends to go back up to 5%, we would need corporate tax rates to go back up to 50% and for interest rates to spike again like in the 80's. The net result would be less internal investment and money would flow back to shareholders. We're at a time when price valuations are high and dividends are low. Not a great time to be investing. It's possible to go down to 1982 valuations, but not sure I would bet money on it. It's more important to get the trend right than to time the bottom. Don't miss out on the gains if we find ourselves bouncing off of 15,000-17,000 on the S&P because the government cuts rates back to zero and we still have historically low corporate tax rates.

I'm thinking not so much that dividend payouts will increase, but that equity prices will drop. Dividends may actually be cut as established companies pay down debt. It will be the new balance sheets that will be able to compete against whatever the risk free rate is ( 5%, 10%,??). And what will be the risk free rate in a world of sovereign defaults? Are there any hard currencies now?

When we get to the equity bottom be it 2021, 2025 or 2032, what will comprise the Dow at that point? The present components are a financially engineered mess. The companies that will be the new Dow probably have been started yet. I feel bad for anybody counting on a equity derivative product ( structured note) to perform in the next ten years.

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[wagrxm2000]

P/e ratio is at 20, in 2015 it was also at 20

There's nothing different now compared to then.

 

[wagrxm2000]

Not reading all that. Saw last paragraph, all of that has been growing since the last crash. I've said it once and I'll say it again, no one can say when that will actually cause a crash.

In 2015 people said the exact same thing when we were at the exact same p/e ratio and we went up another 30 some percent.

Go ahead and admit it, you've been out of the market since 2015.

I can't count the amount of charts I've seen with people saying because of this we will crash. Guess what? They have all been wrong.

 

[Momus]

Big talker for someone who only own one house.

Buying rentals for cheap plus leverage....You missed an opportunity of a lifetime!

Big talker for someone who accomplished nothing.

"I have 20 rentals."
"I'm never wrong."
Repeat 50x

You are the fakest person in SDN. No one cares.

 

[Momus]

Not reading all that. Saw last paragraph, all of that has been growing since the last crash. I've said it once and I'll say it again, no one can say when that will actually cause a crash.

In 2015 people said the exact same thing when we were at the exact same p/e ratio and we went up another 30 some percent.

Go ahead and admit it, you've been out of the market since 2015.

I can't count the amount of charts I've seen with people saying because of this we will crash. Guess what? They have all been wrong.

The market can stay irrational longer than you can stay solvent.

Market can go up another 40% from here and then crash 25%. Then, you will buy at 25% off (if you can even predict that's the bottom - you can't) thinking you get a life time deal looooool. Many people did exactly that for many mini corrections. They would be doing better had they invest as they have money.

 

[BMBiology]

Big talker for someone who accomplished nothing.

"I have 20 rentals."
"I'm never wrong."
Repeat 50x

You are the fakest person in SDN. No one cares.

Calm down and take a Xanax!

You may not like how I say things but I have been right most of the times.

Have you repaid your mommy yet?!

 

[wagrxm2000]

Calm down and take a Xanax!

You may not like how I say things but I have been right most of the times.

Have you repaid your mommy yet?!

What percent cash are you at right now?

 

[mentos]

Even I have recognized how timing was important to my success in buying multiple rental properties.

I'm interested in investment properties. Can you share some info about your rentals? Are they houses/apartments, what percentage are your down payments, how long does it take to profit, how often do you have vacancies, do you manage them yourself or hire a company, if something breaks do you fix yourself or call a contractor, any problems with tenants, is it a PITA to be a landlord?

 

[BMBiology]

I'm interested in investment properties. Can you share some info about your rentals? Are they houses/apartments, what percentage are your down payments, how long does it take to profit, how often do you have vacancies, do you manage them yourself or hire a company, if something breaks do you fix yourself or call a contractor, any problems with tenants, is it a PITA to be a landlord?

You can make a lot more money with rental properties than the stock market if you do it right and you pay zero tax (legally too).

I buy single family homes in an upcoming neighborhood then I let my property manager take care of the rest. I make sure the properties cash flow, even after taking long term maintenance cost and vacancy into consideration.

The secret is knowing what to buy and buying it at below market value. That takes experience, time and good business instinct. I also have 7+ years of real estate experience and I have seen hundreds of homes.

Of course some of you are going to b*tch about the hassle of rental properties and that is good thing. That means my family and I will keep on making bags of money while you collect your 7-9% per year. Nothing is wrong with that of course but I choose to be wealthy while I am still young and that requires calculated risk taking and extra work.

 

[BMBiology]

What percent cash are you at right now?

Let’s just say I have more money in gold/cash than in my 401 k, ROTH IRA, HSA and brokerage account combined. I want to buy 1 or 2 more rental properties this year if I can get them at a good price. Of course this also depends on how the economy does this year.

 

[BMBiology]

I still know don’t why some people refuse to acknowledge that the global economy including the U.S economy is slowing down.

If the economy is doing so well then why can’t the fed increase interest rate without the stock market crashing? The S&P 500 is 2700 today. That is 2x its 2007 peak. Do you really see your friends and family doing that much better today than 2007? If your average joe doesn’t have much wealth today, then who is supporting the stock market? The fed can keep interest rate low but there will be consequences....debt, debt, debt and then hyperinflation!

 

[wagrxm2000]

Let’s just say I have more money in gold/cash than in my 401 k, ROTH IRA, HSA and brokerage account combined. I want to buy 1 or 2 more rental properties this year if I can get them at a good price. Of course this also depends on how the economy does this year.

Did you hire a manager?

 

[mentos]

You can make a lot more money with rental properties than the stock market if you do it right and you pay zero tax (legally too).

I buy single family homes in an upcoming neighborhood then I let my property manager take care of the rest. I make sure the properties cash flow, even after taking long term maintenance cost and vacancy into consideration.

The secret is knowing what to buy and buying it at below market value. That takes experience, time and good business instinct. I also have 7+ years of real estate experience and I have seen hundreds of homes.

Of course some of you are going to b*tch about the hassle of rental properties and that is good thing. That means my family and I will keep on making bags of money while you collect your 7-9% per year. Nothing is wrong with that of course but I choose to be wealthy while I am still young and that requires calculated risk taking and extra work.

Your properties always cash flow, does that mean you put $0 down and pay PMI?

 

[BMBiology]

Did you hire a manager?

Of course. This way I get to spend more time looking at properties.

 

[BMBiology]

Your properties always cash flow, does that mean you put $0 down and pay PMI?

No, I usually put 25% down payment.

 

[mentos]

No, I usually put 25% down payment.

How long does it take to make your down payment back?

 

[Momus]

Calm down and take a Xanax!

You may not like how I say things but I have been right most of the times.

Have you repaid your mommy yet?!

Again confirming what I just said. Big talk with no real number to back it up. What comes out of your mouth is all the same. You are that dude in a party that never does anything wrong, always reporting how great he is. When you have to say "I am right" on the top of the mountain, yet no one believes you. Sad.

Pride and envy is two of the seven deadly sins and you, my friend, you have both.

 

[Momus]

I'm interested in investment properties. Can you share some info about your rentals? Are they houses/apartments, what percentage are your down payments, how long does it take to profit, how often do you have vacancies, do you manage them yourself or hire a company, if something breaks do you fix yourself or call a contractor, any problems with tenants, is it a PITA to be a landlord?

Biggerpockets and youtube are a wealth of resource for rental properties. Tons of real life examples of people dealing with numbers and problems. Just like this one, this dude is a real legend with 200+ units and no property manager LMAO.

I never care too much about active RE investing coz my greatest sins are greed AND sloth. They don't mix well, getting 7-10% return while still hitting 8 figures later and NO extra work are great.

 

[mentos]

Biggerpockets and youtube are a wealth of resource for rental properties. Tons of real life examples of people dealing with numbers and problems. Just like this one, this dude is a real legend with 200+ units and no property manager LMAO.

I never care too much about active RE investing coz my greatest sins are greed AND sloth. They don't mix well, getting 7-10% return while still hitting 8 figures later and NO extra work are great.

Wow how long did it take to hit 8 figures? Is it mostly in taxable or retirement accounts? Can't you retire now?

 

[Momus]

Wow how long did it take to hit 8 figures? Is it mostly in taxable or retirement accounts? Can't you retire now?

I said later as if in the future. I wish I had 8 figs now... :-/

 

[Charcoales]

I said later as if in the future. I wish I had 8 figs now... :-/

Just retire at high 7 figs and get a 20-30k dream partime "job" for a baseline?

 

[BMBiology]

Are you in a high SALT tax state? My belief was the new tax laws would make renting and owning rental properties better financially than owning for both renters and landlords since property tax is a fully deductible business expense for landlords, but not for owners anymore. Is that what you've seen?

Yes, I live in California which is a high SALT state. There is really no tax incentive to owning a primary residence in California because now you can only write $10 k in state income tax and property tax combined (for singles and couples).

In California, property tax can only increase by no more than 2% per year so there is a lot of incentive to hold on to the property forever.

One of the best things about being a landlord is the tax benefits. Everything is a tax write off. People are always looking for a place to live so the government has to make sure there is a supply of properties on the market. Of course there is a lot of lobbying from real estate, construction industry, etc. If you do it right, you can protect your rental properties from a bad divorce even without a prenup.

The trend in California now is families living together which makes sense because it is expensive here. So I like big properties with 4 or 5 rooms and 3 bathrooms in a decent/good neighborhood. If a neighborhood is clean then that is a good sign. If they don’t take care of the neighborhood then most likely they won’t take care of your house!

 

[BMBiology]

How long does it take to make your down payment back?

I make most of my money from the appreciation, not so much from rents. I am putting down 25%. I get to leverage the other 75% so even if the house only increases 3.5% per year, I still make a lot of money.

The hard part is not the 25% down payment. The hard part is finding that right property. It is like finding in a needle in a haystack sometimes. I am constantly looking at properties on my phone and since I have a lot of experience now, I don’t go see a property unless I know it will cash flow.

I didn’t think I would like the real estate business because there are some shady people here. But it is kinda fun and I am in full control. I can’t call the Chief Executive Officer of a company that I own shares in and tell him what to do but I can tell my property manager to not increase rent on my good tenants if I choose to. If there is a lot of money to be made, there will always be shady people. But I am the one who is writing the check, so if they are not on board with my plans then off they go. I don’t give second chance from the contractor fixing my floor to the real estate agent writing my offer. Since they know I am buying multi properties, they are extra nice and careful with me. I am not a one time client and I make sure they know that.

Only if you care....people are impress with you when they know you own multi rental properties because anyone can buy stocks but not everyone can buy a rental property. You are suddenly a more interesting person.

 

[WVUPharm2007]

Y'all are complicated. I'm just going until I get about $2.5 million, then I'm moving to either Central America or Eastern Europe where I can live like a king off of that in perpetuity and you'll never see or hear from me again.

 

[BMBiology]

Again confirming what I just said. Big talk with no real number to back it up. What comes out of your mouth is all the same. You are that dude in a party that never does anything wrong, always reporting how great he is. When you have to say "I am right" on the top of the mountain, yet no one believes you. Sad.

Pride and envy is two of the seven deadly sins and you, my friend, you have both.

Jealous much?

Why do I care what people on this forum think about me? I have been going against the grain since Day 1 and I have been right a lot more than I have been wrong. That is how I approach life and that is how I make my bags of money.

 

[BMBiology]

Y'all are complicated. I'm just going until I get about $2.5 million, then I'm moving to either Central America or Eastern Europe where I can live like a king off of that in perpetuity and you'll never see or hear from me again.

I was on the same boat not too long ago. I could have “retire” this year but I am having a change of heart.

Why stop now? It doesn’t take much for me to be happy so why not go in big? I don’t know much about sports except MMA but I have a lot of experience with money so why call it quit while I am still young and keep that knowledge to myself?

That is just me. We all need a purpose in life and lying on a beach at 10 am is not my purpose.

 

[Actinomycin]

"I make most of my money from the appreciation, not so much from rents. I am putting down 25%. I get to leverage the other 75% so even if the house only increases 3.5% per year, I still make a lot of money."

Are you suggesting your house increases 3.5+rate of interest =7.5%. You need to account for the interest you are paying on the 75 percent you have leveraged. Historically house rates have not increased at that high a rate.

 

[BMBiology]

Some people have asked me how do I find the time?

It is not hard. I stopped doing things that don’t bring much value to my life. I don’t follow sports. I don’t care about what celebrity is fighting with what celebrity or who won the Oscar. I don’t waste my time and money on cars.

I do follow business news. I certainly do not live a frugal lifestyle. I believe the brain needs stimulation for it not to become dull and boring. I spent $300 on a steak dinner at a nice restaurant the other night. I am not saying that because I want to impress you but I believe new experiences are good for you and they will help you make more money.

At the end of the day...it is about spending quality time with my family and close friends and having a peace of mind. Taking good care of my family is also important and that often requires a lot of money.

 

[PharmDBro2017]

I appreciate you sharing some wisdom/tips and educating us on rental properties. That's a refreshing change from some of your other posting styles.

If you had the time, I think it would be cool to have you do a thorough post on rentals, how you got started, tips on finding and maintaining a good rental property, etc. and expand on it from there. Seems like a popular topic, and you have good experience with it. I've got one rental at the moment and definitely wanting to get more in the future, I still a LOT to learn in that area.

 

[wagrxm2000]

I would much rather do real estate crowdfunding then owning but that's just my personal opinion. Average returns have been around 10% last five years.

 

[Momus]

Jealous much?

Why do I care what people on this forum think about me? I have been going against the grain since Day 1 and I have been right a lot more than I have been wrong. That is how I approach life and that is how I make my bags of money.

0 sh1t given about you talking hot air in internet forum.

Read your own post history how you crap on others who are doing just fine. LOL

 

[Momus]

I would much rather do real estate crowdfunding then owning but that's just my personal opinion. Average returns have been around 10% last five years.

Roofstock gains quite a traction to own higher cap properties with low DP. I know a lot of techies using that to build a portfolio.

 

[BMBiology]

I appreciate you sharing some wisdom/tips and educating us on rental properties. That's a refreshing change from some of your other posting styles.

If you had the time, I think it would be cool to have you do a thorough post on rentals, how you got started, tips on finding and maintaining a good rental property, etc. and expand on it from there. Seems like a popular topic, and you have good experience with it. I've got one rental at the moment and definitely wanting to get more in the future, I still a LOT to learn in that area.

You have to realize what I am saying only applies to my neighborhood. It might not apply to your neighborhood. It does not replace experience. That is why it is essential for you to go out and look at > 100 houses before buying your first property. Talk to the listing agent. Ask him/her what she likes about the house, the neighborhood. You need to have a good sense of what property is under value and you need to identify where is the next upcoming neighborhood. Remember, you make money when you buy a property, not when you sell it.

I look for these things: (1) single family homes, not apartments. A family with 2 kids and a grandmother is less likely to move vs. a college student living in an apartment. (2) clean neighborhood. If the neighborhood is trash then they will also trash your place! I like to walk around and get a general feel of the area....it is always a good sign when see neighbors saying hello to each other. (3) follow the big boys. If a big developer like Lennar or Trader Joe move into a neighborhood then that is a very good sign. They spend millions in research and they will pay millions in taxes to the city which in turn will make the neighborhood nicer.

Most importantly, you are not buying the property for yourself. You are buying it to rent it out so you must have a renter mindset and you must know what they look for in a renter.

 

[BMBiology]

I would much rather do real estate crowdfunding then owning but that's just my personal opinion. Average returns have been around 10% last five years.

Crowdfunding and REIT are fine if you want others to do it. Since they are doing it, they are going to charge you a lot of money.

10% return for the last 5 years is not impressive in RE investing. You would have made a lot more money if you had gone out there and buy rental properties yourself but hey, that requires work and money!

 

[wagrxm2000]

Crowdfunding and REIT are fine if you want others to do it. Since they are doing it, they are going to charge you a lot of money.

10% return for the last 5 years is not impressive in RE investing. You would have made a lot more money if you had gone out there and buy rental properties yourself but hey, that requires work and money!

Well that's what I mean, I'd rather use my time with my family then going out and looking for houses. 10% annual return isn't bad when you're looking just to diversify.

Financial samuari puts it best

"Completely Passive Investing

One of the main reasons why I sold my San Francisco rental house in 2017 is because I didn’t want to fix the leaks, fix the pipes, and deal with painful tenants who didn’t pay their rent on time. With a new baby, time was too precious for me to deal with all this hassle.

When you invest in crowdfunding real estate, you do no work after the investment closes. You still have all the up front work of analyzing the investment and seeing whether it’s a good fit for your overall plan. After the funds are transferred, it’s managed just like a REIT.

As a real estate crowdfunding investor, you simply log onto your dashboard and collect your payouts electronically."

 

[BMBiology]

Well that's what I mean, I'd rather use my time with my family then going out and looking for houses. 10% annual return isn't bad when you're looking just to diversify.

Financial samuari puts it best

"Completely Passive Investing

One of the main reasons why I sold my San Francisco rental house in 2017 is because I didn’t want to fix the leaks, fix the pipes, and deal with painful tenants who didn’t pay their rent on time. With a new baby, time was too precious for me to deal with all this hassle.

When you invest in crowdfunding real estate, you do no work after the investment closes. You still have all the up front work of analyzing the investment and seeing whether it’s a good fit for your overall plan. After the funds are transferred, it’s managed just like a REIT.

As a real estate crowdfunding investor, you simply log onto your dashboard and collect your payouts electronically."

Financial Samurai is a businessman. He made his money from buying rental properties, not from crowdfunding. I am sure he got a special deal when he promotes a product and he gets a commission when you click and buy. I am not saying that is wrong. What I am saying is you are not going to get the same generous offer as he did.

I get the time issue. Not everyone wants to look at properties. Not everyone is willing to pull the trigger. But often the same people who complain about time are the same people who are bursting their butt at work so they can earn a few dollars in bonus.

The only reason why RE investing is so profitable is because most people don’t want to do it or they can’t do it. That is actually a good thing. Less competition is a good thing.

 

[BMBiology]

"Are you suggesting your house increases 3.5+rate of interest =7.5%. You need to account for the interest you are paying on the 75 percent you have leveraged. Historically house rates have not increased at that high a rate.

That is why you have to make sure your tenant rent will pay for all expenses from mortgage, property tax to fixes, even vacancy. You have to make sure the property would “cash flow”. Even with a modest increase of 3.5% appreciation per year (not inflation adjusted), it is still a lot of money in the long term because you are leveraging the other 75% and your property tax (in CA) goes down every year when adjusted for inflation while your rent goes up every year.

You don’t even have to pay taxes on the profit if you do it right.

One thing people don’t talk about is...your rental property is a great hedge against inflation. It is an awesome way to protect your asset and pass on your asset from one generation to the next.

 

[Pharmacy Kid]

At the end of the day...it is about spending quality time with my family and close friends and having a peace of mind.

I think we can all agree on that. {thumbs up emoticon/}

 

[wagrxm2000]

I rewatched a documentary I saw a few years ago. I'm sure many of you saw it on Netflix and the financial literacy of the average person on this forum is likely above average anyway, but here ya go--pirated on YouTube and everything. Asset/debt bubble #3 of the second millennium a la the federal reserve.

"Money For Nothing: Inside the Federal Reserve"


And if that link doesn't work use this one.

There's the Carol we all know

 

[owlegrad]

There's the Carol we all know

I am still not convinced. Where’s the wall of text that is impossible to follow? Where’s the tin foil hat conspiracies? Although now that the links have started to appear perhaps the rest can follow.

 

[BMBiology]

There's the Carol we all know

I don’t think Pharm C is Carol.

 

[wagrxm2000]

I don’t think Pharm C is Carol.

I am still not convinced. Where’s the wall of text that is impossible to follow? Where’s the tin foil hat conspiracies? Although now that the links have started to appear perhaps the rest can follow.

It's not quite the same but give it time.

 

[BMBiology]

It's not quite the same but give it time.

It is not like what he is posting is wrong. Those are valid concerns.

 

[WVUPharm2007]

Bernanke literally saves the world from a crippling depression and people are still peddling idiotic Federal Reserve conspiracy theories. lol.

 

[BMBiology]

Bernanke literally saves the world from a crippling depression and people are still peddling idiotic Federal Reserve conspiracy theories. lol.

Criticizing the Fed doesn’t mean you believe in conspiracy theories.

I think Bernanke did a remarkable job of containing the housing and banking collapse but that doesn’t mean we should have kept interest rate abnormally low for the last 10 years.

Our Fed is not proactive and our politicians just care about the next election. If there is no consequence to low interest rate then why not keep it low forever?

Because there are consequences. You already see it in federal government debt, corporate debt, student loan debt and auto debt. Pension obligation is also worrisome and it will become a state and city debt.

There is going to be a point when investors are going to refuse to buy all of this debt with a low yield. What if they want 5% yield for 10 year treasuries? When this happens, other forms of debt would also need to increase their yield or no investor is going to buy their debt. Would companies like Rite Aid survive when it needs to pay 8% yield on its debt? If they can’t borrow further then Rite Aid would need downsize their business and lay off their employees.

 

[BMBiology]

It is also possible that corporate debt goes out of control first and the Fed would need to keep on printing money to cause inflation and tame corporate debt so they don’t have to downsize and lay off their employees

 

[Momus]

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

I would have been at least another $500k wealthier if I did everything perfect. This quote definitely resonate with a LOT of investors trying to time the market in the last decade.

 

[BMBiology]

 

[BMBiology]

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” – Peter Lynch

I would have been at least another $500k wealthier if I did everything perfect. This quote definitely resonate with a LOT of investors trying to time the market in the last decade.

Obviously it is very difficult to time the market exactly. However, that does not mean you should not be careful.

 

[WVUPharm2007]

Criticizing the Fed doesn’t mean you believe in conspiracy theories.

I think Bernanke did a remarkable job of containing the housing and banking collapse but that doesn’t mean we should have kept interest rate abnormally low for the last 10 years.

Our Fed is not proactive and our politicians just care about the next election. If there is no consequence to low interest rate then why not keep it low forever?

Because there are consequences. You already see it in federal government debt, corporate debt, student loan debt and auto debt. Pension obligation is also worrisome and it will become a state and city debt.

There is going to be a point when investors are going to refuse to buy all of this debt with a low yield. What if they want 5% yield for 10 year treasuries? When this happens, other forms of debt would also need to increase their yield or no investor is going to buy their debt. Would companies like Rite Aid survive when it needs to pay 8% yield on its debt? If they can’t borrow further then Rite Aid would need downsize their business and lay off their employees.

That's not the Feds fault. They are just reacting to how poorly the economy is being managed by Washington.