What to do with $140,000 cash

[Goodstuff]

Also, remember... $140,000 invested conservatively should give you at least 5% safely.
That`ll give you $7,000 a year to use toward your rent payment.
And will be $7,000 a year you won`t be getting if you use the money for a property.

Take your time.

 

[AndyLuchies]

QUOTE (invst4profit @ May 31 2009, 09:54 PM) Based on monthly expenses it is always less expensive to rent.

you`re telling my EVERY apartment owner/landlord is losing money on their deal or has paid off their mortgage? Its just not true. For example. buying a duplex and staying in half is no different than renting all of it out to someone else and paying rent to live in someone elses duplex... I still don`t get it.

 

[AndyLuchies]

QUOTE (Goodstuff @ Jun 1 2009, 01:43 AM) Also, remember... $140,000 invested conservatively should give you at least 5% safely.
That`ll give you $7,000 a year to use toward your rent payment.
And will be $7,000 a year you won`t be getting if you use the money for a property.

Take your time.

$7,000 is a terrible return on 140,000, that`s why in RE you leverage to get better returns. (by the way you will still be getting that $7000 every year because you won`t have to pay out $12,000 in rent).
A property that gives you 5% return on $$$ invested is terrible. That either means the property is pretty much break even, or you`re putting 100% down... both are not ACRE methods to be using...

 

[EdRenkema]

QUOTE (invst4profit @ May 31 2009, 07:54 PM) Based on monthly expenses it is always less expensive to rent. .


I doubt it, I rented for years and paid only $250 per month, also spent most of my time out of town working, saved lots of $ and `invested` in mutual funds.
I`ve tripled my net worth by buying my own home, living in it for a while, renting it out, refinancing, buying another and using secured lines of credit to buy 3 more. On my most recent purchase my DCR was strong enough for me to qualify immediately.

Don`t wait to buy real estate, buy real estate and wait.

 

[invst4profit]

QUOTE (jessandy @ Jun 2 2009, 06:30 AM)
you're telling my EVERY apartment owner/landlord is losing money on their deal or has paid off their mortgage? Its just not true. For example. buying a duplex and staying in half is no different than renting all of it out to someone else and paying rent to live in someone else's duplex... I still don't get it.






The total cost of home ownership is greater due not only to interest on mortgage, money tied up in down payment and principal payments as well as every miscellaneous expense from lawnmowers on up.

Owning a home is a liability due to the fact that it does not earn any income on your investment (aside from appreciation).

The reality is people usually rent because they can not afford to own.

 

[housingrental]

Yes but your comparing apples and oranges and as they have different risk profiles
The $7000 return is riskless
The higher potential return can result is not guaranteed and you can loose your investment... and more than your investment if you have a mortgage...
Investing in real estate can be great but its not a free lunch


QUOTE (jessandy @ Jun 2 2009, 06:35 AM) $7,000 is a terrible return on 140,000, that`s why in RE you leverage to get better returns. (by the way you will still be getting that $7000 every year because you won`t have to pay out $12,000 in rent).
A property that gives you 5% return on $$ invested is terrible. That either means the property is pretty much break even, or you`re putting 100% down... both are not ACRE methods to be using...

 

[EdRenkema]

QUOTE (invst4profit @ Jun 2 2009, 08:05 AM)
.

Owning a home is a liability due to the fact that it does not earn any income on your investment (aside from appreciation).






This is exactly what my mutual fund salesperson told me when I wanted to buy my first home. My question to him was do you own your own home? -point taken, conversation over!

 

[invst4profit]

No. Probably the bank owns it.
The problem when discussing home ownership is we are discussing a life style choice.
We all need a place to live and many chose to own a home but that is not a business decision.
Most individuals in fact only own part of a home in partnership with a bank. The interest payments on the mortgage and the lost income from your principal, in my opinion, must be subtracted from the appreciation at time of sale. When you take the actual profit and subtract all of your expenses while living in the home you will likely find no profit on a personal residence except in very unusual economic times.
In reality if you truly want to profit from home ownership you should be selling approximately every 5 years, if the economy is in upward mode, and re-invest all the return in a more expensive home. Otherwise your money is stagnant.

Look at the real numbers not just the difference between the purchase price and the sales price.

 

[HeatherBrandt]

Many good points mentioned here. Things that come to mind:

What other areas do you need to invest in (or deal with) so your business/investments are a success? Luck happens to those who are prepared.
-updated will, disability insurance, life insurance for both of you.
-health insurance, gone for a physical/dental appt lately?
-do you need tools for your trade, a workshop, a truck?
-pension, RRSP`s, RESP`s, savings from your past life?

If all the above are in place, something horrible could happen and you`ll likely be able to carry on.

Positives of renting:
-likely to rent something less expensive than you would buy, won`t feel the need to spend lots on decorating/furnishing
-allows you manoeuvre more quickly out of undesirable situations.
-no/little repair/maintenance cost
-if you don`t like renting, it will motivate to get your business moving, do real estate research, or fix any problem that is hogging your money.
-it will give you time to figure out your household budget in a new province.
-it will provide time for you and your spouse to choose your primary residence together without being rushed and regretful.
-provides a networking opportunity with likeminded people. Find an intelligent/savvy landlord, learn from him/her. Perhaps get a heads up on property?
-gives you an excuse to say no when your kids ask for pet.
-you can still write off business related expenses (portion of rent reffice, shop, utilities) against your income.

I like the duplex idea. But you must buy right and view it as an investment that you are living in temporarily, rather than your perfect primary residence.

Also, you and your wife are in the middle of one the most stressful times in your life! Both of you will be working hard, have too little sleep, and your kids will surprise you everyday (good and bad!). Give yourself some cushioning (financial, emotional, social, and spiritual). The winner is the one that keeps playing the game. The problem here is that you are playing multiple games at the same time with different rules (business, marriage, family, investments, self--in no particular order) and you need to "win" them all. Luckily, you have influence on the rules.

Good luck,

 

[JoefromTO]

QUOTE (HeatherBrandt @ Jun 2 2009, 02:48 PM)
Many good points mentioned here. Things that come to mind:



What other areas do you need to invest in (or deal with) so your business/investments are a success? Luck happens to those who are prepared.

-updated will, disability insurance, life insurance for both of you.

-health insurance, gone for a physical/dental appt lately?

-do you need tools for your trade, a workshop, a truck?

-pension, RRSP's, RESP's, savings from your past life?



If all the above are in place, something horrible could happen and you'll likely be able to carry on.



Positives of renting:

-likely to rent something less expensive than you would buy, won't feel the need to spend lots on decorating/furnishing

-allows you manoeuvre more quickly out of undesirable situations.

-no/little repair/maintenance cost

-if you don't like renting, it will motivate to get your business moving, do real estate research, or fix any problem that is hogging your money.

-it will give you time to figure out your household budget in a new province.

-it will provide time for you and your spouse to choose your primary residence together without being rushed and regretful.

-provides a networking opportunity with likeminded people. Find an intelligent/savvy landlord, learn from him/her. Perhaps get a heads up on property?

-gives you an excuse to say no when your kids ask for pet.

-you can still write off business related expenses (portion of rent reffice, shop, utilities) against your income.



I like the duplex idea. But you must buy right and view it as an investment that you are living in temporarily, rather than your perfect primary residence.



Also, you and your wife are in the middle of one the most stressful times in your life! Both of you will be working hard, have too little sleep, and your kids will surprise you everyday (good and bad!). Give yourself some cushioning (financial, emotional, social, and spiritual). The winner is the one that keeps playing the game. The problem here is that you are playing multiple games at the same time with different rules (business, marriage, family, investments, self--in no particular order) and you need to "win" them all. Luckily, you have influence on the rules.



Good luck,






I have to admit...that is the most interesting perspective Iv'e seen in a long time. Great choice of words...

 

[Goodstuff]

Some very good points here.

One important thing to keep in mind: Remember, if your family faces too many stresses at once (new house, move, kids, schools, new job, etc) it can put an incredible strain on your marriage.

This is something to consider carefully. You may think you're winning the game, but if your spouse leaves you on account of the stress, you're back at square one (or worse) financially. You've just lost half of everything you had and now your life - and your kids' life - is a mess.



Think about renting for a while until you get settled and get to know the new place well. That way you'll pick the right property at the right price and won't be rushed into something you'll regret. You've got the rest of your life to get rich. Take it one step at a time.



Just my two cents...




QUOTE (HeatherBrandt @ Jun 2 2009, 01:48 PM)
Many good points mentioned here. Things that come to mind:



What other areas do you need to invest in (or deal with) so your business/investments are a success? Luck happens to those who are prepared.

-updated will, disability insurance, life insurance for both of you.

-health insurance, gone for a physical/dental appt lately?

-do you need tools for your trade, a workshop, a truck?

-pension, RRSP's, RESP's, savings from your past life?



If all the above are in place, something horrible could happen and you'll likely be able to carry on.



Positives of renting:

-likely to rent something less expensive than you would buy, won't feel the need to spend lots on decorating/furnishing

-allows you manoeuvre more quickly out of undesirable situations.

-no/little repair/maintenance cost

-if you don't like renting, it will motivate to get your business moving, do real estate research, or fix any problem that is hogging your money.

-it will give you time to figure out your household budget in a new province.

-it will provide time for you and your spouse to choose your primary residence together without being rushed and regretful.

-provides a networking opportunity with likeminded people. Find an intelligent/savvy landlord, learn from him/her. Perhaps get a heads up on property?

-gives you an excuse to say no when your kids ask for pet.

-you can still write off business related expenses (portion of rent reffice, shop, utilities) against your income.



I like the duplex idea. But you must buy right and view it as an investment that you are living in temporarily, rather than your perfect primary residence.



Also, you and your wife are in the middle of one the most stressful times in your life! Both of you will be working hard, have too little sleep, and your kids will surprise you everyday (good and bad!). Give yourself some cushioning (financial, emotional, social, and spiritual). The winner is the one that keeps playing the game. The problem here is that you are playing multiple games at the same time with different rules (business, marriage, family, investments, self--in no particular order) and you need to "win" them all. Luckily, you have influence on the rules.



Good luck,

 

[AndyLuchies]

QUOTE (invst4profit @ Jun 2 2009, 02:20 PM) No. Probably the bank owns it.
The problem when discussing home ownership is we are discussing a life style choice.
We all need a place to live and many chose to own a home but that is not a business decision.

For me it was a business decision 100%. People talk about real estate "might" appreciate. If you use the acre system it SHOULD appreciate. Investmart, You have still not answered my question. All those miscellaneous expenses you mentioned, e.g. lawmowers, mortgage interest etc. are included in the landlord`s rent as well. Again, you are saying they`re all losing money on their renters? If they`re making money, so would you. As long as you keep the same lifestyle choice whether renting or owning. Most people don`t buy property because they`re afraid of responsibility and change, or prefer to waste money on trinkets first, not because its SO much more expensive than owning.

*****
sure $7000 is risk free, but because you`ve done real estate research, the 25-100% return on your investment in real estate is low risk. The risk only comes from the shortcuts. If its a risk, you need to do more research. SO aside from a fire, or lightning striking something you should be fine. That`s why we join rein, to identify risks and elimate them through systems. Besides, we`ve all see how great the stockmarket is...haha. 5% isn`t much better than inflation, its a waste of everyone`s time unless you don`t care about wasting money... People always pay for security. that`s what 5% return is, paying for security. With acre program you add security to a phenomenal return.

 

[AndyLuchies]

my suggestion is to buy the worst house on the block, that way you can either fix it up and live in it (look for cosmetic repairs only because cheaper, less risky, and can repair while you live in it), or if you change your mind, you can sell it quick and make a little $ through your renos. I don`t think i would rent first simply because you can do research now from afar instead of waiting until you move there. Just make sure anything you buy wouldn`t lose money in the short term IF you had to come back...something that may be difficult in today`s economy, but NOT impossible.

Have fun, enjoy the risk, God never intended anyone`s life to be boring, scared people just try to make it that way. (of course, God never intended people to not have a reasonable amount of security either, but that`s why you have life ins.)

 

[Thomas Beyer]

QUOTE (HeatherBrandt @ Jun 2 2009, 01:48 PM)
..

Also, you and your wife are in the middle of one the most stressful times in your life! Both of you will be working hard, have too little sleep, and your kids will surprise you everyday (good and bad!). Give yourself some cushioning (financial, emotional, social, and spiritual). The winner is the one that keeps playing the game. The problem here is that you are playing multiple games at the same time with different rules (business, marriage, family, investments, self--in no particular order) and you need to "win" them all. Luckily, you have influence on the rules.



..


wise words .. wise indeed !



Let me add these wise words here I read somewhere, by B.C. Forbes written in 1917:



"Too many so-called 'successful' men are making business and end and aim in itself. They regard the multiplying of their millions and the extension of their works as the be-all and end-all of life. Such men are sometimes happy in a feverish, hustling, sort of way, much as a fly placed on a tube of oxygen is furiously happy until it life burns out. But they have no time for the tranquil, finer, deeper joys of living. They are so obsessed with the material, the that they cannot enjoy the immaterial, the tangible, the ideal, the spiritual - quiet thought, self-communion, reflection, poise, inward happiness, domestic felicity. What profiteth it a man to gain uncounted riches if he thereby sacrifices his better self, his nobler qualities of manhood.



Mere getting is not living."



and clergyman Henry van Dycke wrote about 100 years ago: "To be glad of life, because it gives you the chance to love and to work and to play and to look up at the stars; to be satisfied with your possessions, but not contented with yourself until you have made the best of them; to despise nothing in the world except cowardice; to be governed by your admirations rather than your disgusts; to covet nothing that is your neighbor's except his kindness of heart and gentleness of manners; to think seldom of your enemies and often of your friends .. these are little guideposts on the footpath to peace."

 

[margaretcowan]

I agree with other members advising to postpone buying your principle residence. I`ve always rented my principle residence and invested in real estate.

Years ago a financial planner told me this was the best path. Recently a wealth manager told me studies that added costs and equity gains of the two scenarios show you`re farther ahead financially by renting your home than you are owning your principle residence.

Margaret
ww.italycookingschools.com

 

[housingrental]

RE " sure $7000 is risk free, but because you`ve done real estate research, the 25-100% return on your investment in real estate is low risk. The risk only comes from the shortcuts. If its a risk, you need to do more research. SO aside from a fire, or lightning striking something you should be fine." Not really. Not much risk in a government bond. Risk in buying real estate doesn`t just come from taking shortcuts its an inherent feature of the asset type. You can purchase a property that`s cash flow positive in an area that meets your economic criterea and even after ten years still lose money.. how?
1) Transaction costs - Land transfer tax, realtor fee, lawyer fee, etc..
2) Operations - Think its cash flow positive? what if five years later rental rates have dropped 20% and interest rates for your mortgage are at 7%?
3) Changes in neighborhood - Factory ramp up production down the street? Traffic quadruple? Zoning changed nearby? Crime rate increase?
4) Valuation - Prices don`t always go up, they also go down...The fundamentals of a region might be great today but will they be in ten years ? Remember there was a time when people use to want to live in Windsor...

QUOTE (jessandy @ Jun 4 2009, 06:34 AM) For me it was a business decision 100%. People talk about real estate "might" appreciate. If you use the acre system it SHOULD appreciate. Investmart, You have still not answered my question. All those miscellaneous expenses you mentioned, e.g. lawmowers, mortgage interest etc. are included in the landlord`s rent as well. Again, you are saying they`re all losing money on their renters? If they`re making money, so would you. As long as you keep the same lifestyle choice whether renting or owning. Most people don`t buy property because they`re afraid of responsibility and change, or prefer to waste money on trinkets first, not because its SO much more expensive than owning.

*****
sure $7000 is risk free, but because you`ve done real estate research, the 25-100% return on your investment in real estate is low risk. The risk only comes from the shortcuts. If its a risk, you need to do more research. SO aside from a fire, or lightning striking something you should be fine. That`s why we join rein, to identify risks and elimate them through systems. Besides, we`ve all see how great the stockmarket is...haha. 5% isn`t much better than inflation, its a waste of everyone`s time unless you don`t care about wasting money... People always pay for security. that`s what 5% return is, paying for security. With acre program you add security to a phenomenal return.

 

[AndyLuchies]

QUOTE (housingrental @ Jun 4 2009, 09:46 PM) You can purchase a property that`s cash flow positive in an area that meets your economic criterea and even after ten years still lose money.. how?
1) Transaction costs - Land transfer tax, realtor fee, lawyer fee, etc..
2) Operations - Think its cash flow positive? what if five years later rental rates have dropped 20% and interest rates for your mortgage are at 7%?
3) Changes in neighborhood - Factory ramp up production down the street? Traffic quadruple? Zoning changed nearby? Crime rate increase?
4) Valuation - Prices don`t always go up, they also go down...The fundamentals of a region might be great today but will they be in ten years ? Remember there was a time when people use to want to live in Windsor...

point well taken, however many of the points you mentioned are addressed in ACRE program, transaction costs are a relatively small % of dealings anyways, IF after 5 years your rent is DOWN 20% its highly unlikely that the cause was not forseen (keep in mind Ben Tal said the economic turmoil we just went through is a once in a lifetime event, so we got that one over with). Changes in neighborhood should be researched, most of them are forseeable, and when they change you sell because neighborhood no longer fits your fundamentals. Prices going down will always be temporary IF you follow acre program. Windsor is a great example to use because how often was it on Don`s top 10 list? Did the research show long term longetivity? Did investors pull out once the real estate temperature changed?

This isn`t the stock market, good investments don`t usually turn bad overnight if diligence is taken.

I agree that "what if" scenarios can happen, but when you put the research to work, they won`t happen often, perhaps we just need to be more diligent about our property research or pickier about our property purchases... Dolf De Roos has a saying "In Real Estate, the deal of the decade comes along about once a week." Let`s not settle for average deals.

Also, we seem to be divided on whether its cheaper to rent or own. Could I get a rational argument from a renter as to WHY it is cheaper to rent? Many of you list expenses that a landlord has to pay as well (e.g. maintenance, taxes, mortgage) so how can renting be cheaper unless the landlord is LOSING money? (if landlord is making money, why can`t you save that when you rent to yourself)? How is it more expensive for me to own a house, than for my landlord to own the same house? I don`t get it. (Not to mention all the awesome tax advantages of owning a house.)
Please explain...sorry for hijacking this post.

 

[adamturner]

QUOTE (jessandy @ Jun 5 2009, 06:07 AM) point well taken, however many of the points you mentioned are addressed in ACRE program, transaction costs are a relatively small % of dealings anyways, IF after 5 years your rent is DOWN 20% its highly unlikely that the cause was not forseen (keep in mind Ben Tal said the economic turmoil we just went through is a once in a lifetime event, so we got that one over with). Changes in neighborhood should be researched, most of them are forseeable, and when they change you sell because neighborhood no longer fits your fundamentals. Prices going down will always be temporary IF you follow acre program. Windsor is a great example to use because how often was it on Don`s top 10 list? Did the research show long term longetivity? Did investors pull out once the real estate temperature changed?

This isn`t the stock market, good investments don`t usually turn bad overnight if diligence is taken.

I agree that "what if" scenarios can happen, but when you put the research to work, they won`t happen often, perhaps we just need to be more diligent about our property research or pickier about our property purchases... Dolf De Roos has a saying "In Real Estate, the deal of the decade comes along about once a week." Let`s not settle for average deals.

Also, we seem to be divided on whether its cheaper to rent or own. Could I get a rational argument from a renter as to WHY it is cheaper to rent? Many of you list expenses that a landlord has to pay as well (e.g. maintenance, taxes, mortgage) so how can renting be cheaper unless the landlord is LOSING money? (if landlord is making money, why can`t you save that when you rent to yourself)? How is it more expensive for me to own a house, than for my landlord to own the same house? I don`t get it. (Not to mention all the awesome tax advantages of owning a house.)
Please explain...sorry for hijacking this post.
This was hijacked a long while ago jessandy. I dont want to come across ungratefull because most replies are relevant, but they are kind off going astray. Lots of interesting points of view here,
More help with the $140,000.00 question please.

 

[housingrental]

Sorry Adam to hijack your thread
I think you`ve received some great responses and there`s not much that could be covered that wasn`t in them already.
I`d be cautious and wait until you`ve lived there for awhile before purchasing anything. Even then keep a large cash cushion to make life easier.



QUOTE (adamturner @ Jun 5 2009, 12:43 PM) This was hijacked a long while ago jessandy. I dont want to come across ungratefull because most replies are relevant, but they are kind off going astray. Lots of interesting points of view here,
More help with the $140,000.00 question please.

 

[housingrental]

point well taken, Awesome

however many of the points you mentioned are addressed in ACRE program, transaction costs are a relatively small % of dealings anyways, Realtors fees alone are normally 5% on a sale. This is huge and can be as much as some investors initial cash invested!

IF after 5 years your rent is DOWN 20% its highly unlikely that the cause was not forseen (keep in mind Ben Tal said the economic turmoil we just went through is a once in a lifetime event, so we got that one over with). Things can be going great... and then a few thousand new units are built over the next few years.. then the major industries of that town are hit... increase of supply + reduced demand = lower rents. Its not always easy to see this coming ten years in advance.


Changes in neighborhood should be researched, most of them are forseeable, and when they change you sell because neighborhood no longer fits your fundamentals. For sure. Many forseeable changes, but many to be blindsided by! Rezonings do happen. Cities and landowners do sell off lands and changes and densities and neighbourhood profiles do change. I`ve seen this happen many times. There are risks that come with investing in real estate.

Prices going down will always be temporary IF you follow acre program. Not necessarily.. and over what time period? Many investors might want to sell 5 years after purchase.. or ten years after purchase...


Windsor is a great example to use because how often was it on Don`s top 10 list? How long has he been publishing a list? How have the cities listed performed relative to the other rankings on the list and other areas?

Did the research show long term longetivity? YES absolutely at times in the past.

Did investors pull out once the real estate temperature changed? To be replaced by others....

This isn`t the stock market, good investments don`t usually turn bad overnight if diligence is taken. For sure your correct... more stable valuations... however real estate has high transaction costs, slow transaction times, operational costs, possibly severe time requirements and is generally purchased leveraged which magnifies loses....

I agree that "what if" scenarios can happen, but when you put the research to work, they won`t happen often,With current rent to purchase price in many markets I`m not that confident in that.
perhaps we just need to be more diligent about our property research or pickier about our property purchases... For sure


Dolf De Roos has a saying "In Real Estate, the deal of the decade comes along about once a week." Let`s not settle for average deals.
Also, we seem to be divided on whether its cheaper to rent or own. Could I get a rational argument from a renter as to WHY it is cheaper to rent? I own. It made more sense for me and generally does for most people. However in many cases renting is cheaper - 1) If your changing areas regularly it`s costly to buy and sell real estate - 2) Many areas it`s cheaper to rent then to own... Keep in mind for every place where rent is $1000/month to rent a $120k house theres another area where rent is $2000/month to rent a $500k house.



QUOTE (jessandy @ Jun 5 2009, 08:07 AM) point well taken, however many of the points you mentioned are addressed in ACRE program, transaction costs are a relatively small % of dealings anyways, IF after 5 years your rent is DOWN 20% its highly unlikely that the cause was not forseen (keep in mind Ben Tal said the economic turmoil we just went through is a once in a lifetime event, so we got that one over with). Changes in neighborhood should be researched, most of them are forseeable, and when they change you sell because neighborhood no longer fits your fundamentals. Prices going down will always be temporary IF you follow acre program. Windsor is a great example to use because how often was it on Don`s top 10 list? Did the research show long term longetivity? Did investors pull out once the real estate temperature changed?

This isn`t the stock market, good investments don`t usually turn bad overnight if diligence is taken.

I agree that "what if" scenarios can happen, but when you put the research to work, they won`t happen often, perhaps we just need to be more diligent about our property research or pickier about our property purchases... Dolf De Roos has a saying "In Real Estate, the deal of the decade comes along about once a week." Let`s not settle for average deals.

Also, we seem to be divided on whether its cheaper to rent or own. Could I get a rational argument from a renter as to WHY it is cheaper to rent? Many of you list expenses that a landlord has to pay as well (e.g. maintenance, taxes, mortgage) so how can renting be cheaper unless the landlord is LOSING money? (if landlord is making money, why can`t you save that when you rent to yourself)? How is it more expensive for me to own a house, than for my landlord to own the same house? I don`t get it. (Not to mention all the awesome tax advantages of owning a house.)
Please explain...sorry for hijacking this post.