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Old 14-08-2008, 15:40   #16
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Well, you do not find them in California! In fact, if you own real estate in California at all right now I feel for you.

I live in a suburb of Atlanta. There are LOTS of small houses in town in Atlanta that can be bought from banks (foreclosed homes) in the $20K - $50K range right now. This is what I am doing for a living currently (I own a small mortgage company and to say the mortgage biz is slow is a big understatement! ). There is tons of junk and the good ones sell very quickly when the price gets right but it can certainly be done. All of the homes the banks are selling need work and you cannot get a loan against them in the condition they are in so its a cash only game. But its entirely possible to buy a house for $35K, put $25K into a renovation and then rent it out for $850 - 900 per month.

Or you can purchase a home already renovated and with a renter in place that pays $850 per month for about $75K - $80K.

As for passive investments.... check out Everbank.com

They offer FDIC insured foreign currency money market accounts. They have one that pays 5.5% and is invested 25% each in the currencies from New Zealand, Australia, Canada and South Africa. You earn the 5.5% return PLUS any gain on the currency swap itself (or loss...). Yes, the dollar has been gaining lately but given the US debt situation and growing money supply I would not bet longer term on the dollar. YMMV



Terry
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Old 14-08-2008, 15:48   #17
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Terry

If you are not currently looking to purchase homes would it be possible to send me a listing in your area. also what about property management, is it dependable and pretty much worry free?? This sounds kinda promising and I would be willing to fly out to check out some properties. I would of course pay you for your time and efforts.

i just dont know jack about realestate
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Old 14-08-2008, 16:40   #18
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GZ:

I'm not bad mouthing Terry. I think he has a sensible plan but for you to do something like this would break my first rule of investing: Don't invest in anything that you don't understand!!! Another member of this board added to it -- "Anything that you don't understnad the first time it is explained to you." I'm from the Grating State of Kalifornia too. I can't stand it much longer either but becareful with what you invest in. This is a good time for people with a low risk tolerance to just try and not lose any money. For those with a risk tolerance there is a possibility to make a lot of money.

BTW what about laddering some CD's and seeing how the economy shakes out. That way you can leave now and then decide how to invest your money in a year or two when(if) interest rates return to a historical average. OK I'm off my soap box.

Terry, just to spark the East Coast West Coast rivalry, it is a great time to own real estate in California. All of my apartment buildings are full and that means I can raise rents. You just had to buy them at the correct time. Before the RE buble started to get out of hand.
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Old 14-08-2008, 16:59   #19
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GZgunner....


I am not going to say that I cannot help you or that what I am doing would not work for you but Charlie is exactly right. Its not as easy as simply flying in, look at a few houses, plop your money down and sail off into the sunset. I wish it was!

Property managment can work, but its not cheap. If you own 20 houses then I think you would no doubt need help. If you own only a few, there are other ways to managing things. The key is to have good tenants and to get to know the neighbors.

Buying these houses as foreclosed properties from the banks is a full time job. I look at 50 houses for each one I buy. Many are simply junk. Tear-downs. Many others are in locations that resemble war zones. Lots of others simply need more work than it really makes sense to do given the after renovations value. Its like panning for gold.... except lots of others have their hands on the same pan! It takes lots and lots of looking and making offers and being patient and then being ready on the spot to move very quickly when a good deal is found. Then there is managing the rehab process which is another can of worms.

I have a number of clients that recognize that lots of these homes are stupid cheap and excellent investments but they have no time nor expertise at putting it all together. So they purchase the homes from me after I have renovated them and found good tenants, so it is more of a turn key investment. BUT.... down the road they are still going to have to deal with problems and replacing tenants and such. Real Estate is not a purely passive investment and if your not comfortable with that then its not for you.

Right now, I have more clients than I have inventory. Like I said, finding and buying the houses in the right location at the right price is the trick and its a full time job. I may be able to help if your really interested depending on what your time frame is. Still, you need to give this a lot of thought. I am not trying to sell you anything.

I have been in the mortgage biz for 17 years and I have been investing in real estate for over 12 years and I know this area having lived here all my life. So its an entirely different ball game for me than it would be for you. Again, not trying to say it could not work for you but just pointing out that as Charlie said its not that simple nor easy and there are always risks.


Charlie...... I agree it is a fantastic time to own rentals. As long as you did not buy them in 2006! There are no problems at all renting around here, the problem is in trying not to get annoyed at the 200 phone calls you get from a house for rent ad in the newspaper! The rental game has plenty of pitfalls but for now at least finding renters is not one of them.



Terry
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Old 14-08-2008, 17:07   #20
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Is $1000 a month including boat maintenance and medical expenses? I assume it must be foregoing any of the cruiser medical insurance policies, right? I can appreciate it would mean anchoring out all the time and very limited 'dining out' (latte's for me...), but what do you really mean by 'frugal'? I'm curious as $1000/month is at the very, very bottom of most of the 'cruising budget' scenarios I've seen, and most of those are at least 4-5 years old. I also have a very vested interest for my own plans.

Scot
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Old 14-08-2008, 17:35   #21
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Hey Jaga:

I could easily spend a mont in desolation sound for less than $1000. Just stay away from stores. Living expenses are not that much it is when the Yacht businesses put their hands in your pocket that things get expensive.
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Old 14-08-2008, 17:42   #22
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i am very interested in further investigating this. Can you possibly provide me with a link to your business or Pm me some contact info.

I currently own cellular stores in central california and even though they are an item apparantly noone can live without now days its not something I can own and run absentee. And the business is becoming increasingly
diffacult with them devalue everything phone that comes out. Customers just have no appreciation for something they think they get free( 2 contracts and massive fees notwithstanding).

I have been in business for myself for the last 9 yrs and am always willing to learn the ropes and put forth the effort required once a decision is made to dive in( all pun intended).

Let me know if you have soemthing for me to research in a PM etc etc

In the least I thank you all for your advice and suggestions

gunner
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Old 14-08-2008, 17:48   #23
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Hey Jaga:

I could easily spend a mont in desolation sound for less than $1000. Just stay away from stores. Living expenses are not that much it is when the Yacht businesses put their hands in your pocket that things get expensive.
Charlie,
I absolutely agree with you. I'm living on the hook in Roche Harbor and easily fitting my day to day costs in that, even at Roche grocery prices. But, as I have a broken engine I'm not burning diesel so my biggest budget item is lattes.

Really, though, it's not the day-to-day costs I'm concerned about. I couldn't fit an annual haul-out and even the cheapest cruiser medical insurance (which I can't get while still in the US) in a $1000/month budget, and only minimal diesel usage at todays prices.

Scot
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Old 14-08-2008, 18:48   #24
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Hi Scot:

Salute the three flags for me. $1k would be tight. I think that to live on that you would need to be creative when problems come up and work out some kind of trade for an engine etc. Not something I could do but I have seen some real pros do it. Good luck with the engine. Say hello to roche for my family and I
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Old 15-08-2008, 02:13   #25
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But its entirely possible to buy a house for $35K, put $25K into a renovation and then rent it out for $850 - 900 per month.
Boy have you guys got it good
Over here a 2x1 flat will cost 200k and return maybe 10k.
A 3x1 house in a cheap suburb maybe 300k + with a return of 15k costs about 2k P.A. So about a 5% return less costs.
What your suggesting is about a 15% return less costs and with the property at the bottom only upside for capital gain. Amasing put me down for 20

Mike
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Old 15-08-2008, 06:22   #26
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If you want to go the rental property route you have to find a market with a stable economy and depressed prices. I am buying short sales and forclosures in Atlanta. I look for 2 or 3 bedroom houses in the $50 -$75K range and finance about 60%. After T&I, maintenance and management they net $400 to $600/month. You run the risk of a major downturn and vacancies but they yield 15-16% and hopefully when this mortgage mess is over I will have some capital gain. Besides, if everything goes south you will be in the tank no matter what you invest in. You just have to have 3 or 4 of them to insure positive cash flow if one goes vacant and a good management company. It takes some time to find the good ones but it can be very rewarding.
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Old 15-08-2008, 07:07   #27
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Gunner,

Just take off for two years. Then come back. Don't worry about income. Just live off half your savings for those two years. Don't scrimp, don't short change the grocery clerk, keep the insurance bills paid, and maintain the boat. Really, just shove off as soon as possible, and come back to civilization sooner rather than later.

Thus don't get involved with any investing. Do that while shoreside. Keep something like 50k of money set asside in a nice interest bearing account as high as you can get it. Don't do more than 12 to 18 month terms on the account. When you get back from your cruise, you'll have money to set up a house and restart your businesses.

That's my plan, however slightly more modest in the amounts to spend, and years to cruise.

David.
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Old 15-08-2008, 07:12   #28
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This is what we are doing. I currently own 4 rental houses that kick off $2600 per month in net rental income. By next spring I will have 5 houses and around $3300 in monthly income.

In my view relying on rental property income while cruising is an invitation to a nervous breakdown. A mom and pop operation will keep you busy finding and screening tenants, making sure you get your rent on time and fixing all the things that will certainly need fixing. These are only some of the problems. Enjoyable cruising in these circumstances is nearly impossible. The only way it might be done is if you own enough or maybe an apartment building where professional management is feasible.
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Old 15-08-2008, 08:10   #29
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You would definitely need a management company to handle it for you. I don't live in Atlanta and only drive by the properties once a year or so just to check on the condition. You will pay 8-10% management fee but it is well worth it.
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Old 15-08-2008, 09:14   #30
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While I am here local, I do all the management myself. I have a renovation crew always ready to go and can deal with any issues quickly and cheaply.

Once we move aboard and are out cruising, I will no doubt use a management company to help with some situations. The management fees are not horrible, the cash flow is still good. I evaluate things on a property by property basis and have contacts here in the business who can help with finding new tenants and dealing with maintenance issues on a per case basis at very reasonable costs. But this is due to my having lived here for 40+ years and being in the Real Estate biz, if your an absentee owner then a management company is really the best bet.

No investment is without risks or downsides. Even investments in US Treasury Bonds suffer from inflation rates higher than the bond yields. Everyone has to decide for themselves what they are comfortable with. I like investing in real, tangible property. It has always worked very well for me while my attempts at investing in stocks and such have always been a disaster. At least with real estate, you cannot end up holding a piece of worthless paper.

GZgunner... I will PM you some info next week, I am off to the grind of looking at houses over the next 3 days.




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