What Would You Do W/ $700K

[belizesailor]

Originally Posted by Fence Man

Yes, I noticed that as well. $389K was the last price, if memory serves. $495/unit. I do have a little bit of additional information that is relevant, with regard to the owner and why they want to sell. It seems like a legitimate deal. Dad and I discussed it at length tonight, and I think we'll look a little deeper into it. Might be something that would help get us on a boat more months of the year, and that would be a good ROI. [emoji2]

No kidding good ROI ! A common simplified sniff test for MF properties is GRM (Gross Rents Multiplier), which is gross monthly rents x 100. Its over simplified, but its a good sniff test to weed out properties. The acquisition cost should ideally be no more than GRM. In this case $495 x 16 x 100 = $792K! If the owner is not trying to unload a big problem, then it should cash flow like crazy. Such a big spread between GRM and asking price sure raises doubts. I dont know the occupancy rate, but it would have to be very low to make up that spread.

[Fence Man]

Originally Posted by belizesailor

No kidding good ROI ! A common simplified sniff test for MF properties is GRM (Gross Rents Multiplier), which is gross monthly rents x 100. Its over simplified, but its a good sniff test to weed out properties. The acquisition cost should ideally be no more than GRM. In this case $495 x 16 x 100 = $792K! If the owner is not trying to unload a big problem, then it should cash flow like crazy. Such a big spread between GRM and asking price sure raises doubts. I dont know the occupancy rate, but it would have to be very low to make up that spread.

Yes, the GRM is outa sight on this one. We are going to see it later this week, so I'll report the condition then. The area it's in is not exactly booming, and is a very small town. Seems to be mostly retired folks and single men living there now. The property is very clean, and is next door to the post office, and across from the bank. There is currently only one vacancy. I can't remember what the building was before, but church is ringing a bell. I also can't remember off hand when it was converted, but will update with that info later. This was one of the owners first properties, and he is now on to 100+ unit complexes in the city. The reason for selling is that he's trying to keep everything a little more centrally located, and this one is 75 miles from the others. The outward appearance of the building, parking lot, and lawn area, is very nice and clean. All the units are on separate utilities, and the tenants pay on their own. The average utility cost per month on the community portion of the building is around $800/month, but seems awfully high to me. I don't know if there is any income from the community area, or if it's "free" for residents to use. I'm probably going to have to sell a guitar to make the downstroke, so if any of you are in the market for a mint condition, all original 1956 Les Paul Custom...….give me a shout.

[P3sailor]

Buy myself a nice used Amel Super Maramu and do some real sailing for a while!

[lynnzaxser]

I would pay off our current trawler and buy one only a couple of years old with all the bells and whistles we could afford. Our old trawler? I would donate it....Cap’n Hubby is very tired of “projects” to have on the boat....getting a decent newer one (our current one is 37 years old) would relieve some of that for him....

[svGenesis]

Originally Posted by a64pilot

400K invested to return 36K a year is what kind of return?
A little over 11% before any kind of fees or taxes?
Good luck

Math? that is about 9%, The S&P has averaged that over the last 7-8 years, My Mutuals have done much better, Many other options to list.
One could get by on $2k or $2.5k per month, or at least use the kitty to supliment the month to month cost's It should reasonably last several decades.

[Mike Cunningham]

OK. I finally gotta say it.
I've been lurking and learning for years on this forum. Overall, I value it and almost all posts, especially those from many of the regulars.We're now live- aboards on a 36' cat, and CF has helped get us here.
At 70 years old, I have belonged to and participated in, many forums since the advent of such online things, including several motorcycle (read Harley Davidson) forums.
The comment about "...wasting our time" has finally prompted me to say that this forum has, by far, some of the most, argumentative, confrontational, negative and belittling contributors I have had the dismay to read. AND, that includes the aforementioned biker forums, whose participants are not known as exactly the most genteel people in the world.
I reiterate: I value and enjoy this forum, and my sincere thanks goes out to all those who have helped us and so many other sailors, cruisers, and boaters over the years. I will continue to follow, and maybe one day contribute in a more positive manner.
There! Rant over.
Thank you all for sharing your experience, knowledge, and non-judgemental opinions.

[a64pilot]

Originally Posted by svGenesis

Math? that is about 9%, The S&P has averaged that over the last 7-8 years, My Mutuals have done much better, Many other options to list.

One could get by on $2k or $2.5k per month, or at least use the kitty to supliment the month to month cost's It should reasonably last several decades.

Noted, I suck at math, but stocks depending on when you want to cherry pick the years have not done as well as you would like.
https://seekingalpha.com/article/413...ear-since-2000

[jlcnuke]

Originally Posted by svGenesis

Math? that is about 9%, The S&P has averaged that over the last 7-8 years, My Mutuals have done much better, Many other options to list.
One could get by on $2k or $2.5k per month, or at least use the kitty to supliment the month to month cost's It should reasonably last several decades.

Historically, spending $36k/year with a $400k portfolio invested 100% in stocks would have lasted 30 years in a 20.3% of the 118 historic scenarios available with our market data. The maximum spend level that would last 30 years in at least 80% of the historic time-frames we can analyze would have been ~$18,816/year. If you only wanted to have money for 20 years you could have bumped that up to $23,689/year with an 80% probability of not running out before the end of those 20 years. If you want a 95% probability of not running out, that 20 year number drops back to $18.6k/year spending historically and the 30 year number goes to ~$15.4k.

Just for reference...

(historical reference percentages calculated using FireCalc.com)

[a64pilot]

I had never seen FireCalc before, it matches what my “money” man worked up for me nearly exactly.
Really good to play with the numbers yourself to get an idea of likelihood of success.

[daletournier]

Originally Posted by a64pilot

Noted, I suck at math, but stocks depending on when you want to cherry pick the years have not done as well as you would like.
https://seekingalpha.com/article/413...ear-since-2000

"Animal spirits"as Keynes was quoted saying, is what always concerns me with markets. Fundamentals seem to be less powerful than these "animal spirits". The problem of course is if the main driving force isnt good fundamentals then the market can heavily revert (quickly) when the animal spirits dissappear.

Its easy to see when "animal spirits " are running the show, look at valuations.

[svGenesis]

Originally Posted by jlcnuke

Historically, spending $36k/year with a $400k portfolio invested 100% in stocks would have lasted 30 years in a 20.3% of the 118 historic scenarios available with our market data. The maximum spend level that would last 30 years in at least 80% of the historic time-frames we can analyze would have been ~$18,816/year. If you only wanted to have money for 20 years you could have bumped that up to $23,689/year with an 80% probability of not running out before the end of those 20 years. If you want a 95% probability of not running out, that 20 year number drops back to $18.6k/year spending historically and the 30 year number goes to ~$15.4k.

Just for reference...

(historical reference percentages calculated using FireCalc.com)

So historically you are looking at a 4.5%ish return at a very high probability! (?)

I'm no financial wizard/planner but, I used my 29 years of 401k as a reference, I basically have used several select stock mutuals over the years, then never more than3-4 individual stocks. (I will never buy bonds or other instruments) I Historically use Fidelity OTC, and Contrafund. (check those historical numbers) as well as a couple other funds. I currently have BP shares which i bought in December at $36 a share $44 now. (8% dividend then, 6% now). It's not rocket science and Historically these well managed funds tend to beat history pretty well. Besides my pension should make up for any shortfalls until SS kicks in.

[jlcnuke]

Originally Posted by a64pilot

I had never seen FireCalc before, it matches what my “money” man worked up for me nearly exactly.
Really good to play with the numbers yourself to get an idea of likelihood of success.

It's a great tool imo. Fidelity has a good calculator as well. The versatility of FireCalc is what I really like (being able to add in SS, pensions, other spending planned etc). The sequence of return risk is hard to quantify for most people, but it's included automatically in tools like FireCalc, which is very helpful imo. It's still based on historical information, so it's obviously not a guarantee, but no guarantees exist so it's about as close as you can get to one without a psychic's help.

[Amapola]

I'd put a down payment on that Nordhavn I've been wanting.

[GordMay]

Greetings and welcome aboard the CF, Mike C.

[belizesailor]

Originally Posted by svGenesis

So historically you are looking at a 4.5%ish return at a very high probability! (?)

I'm no financial wizard/planner but, I used my 29 years of 401k as a reference, I basically have used several select stock mutuals over the years, then never more than3-4 individual stocks. (I will never buy bonds or other instruments) I Historically use Fidelity OTC, and Contrafund. (check those historical numbers) as well as a couple other funds. I currently have BP shares which i bought in December at $36 a share $44 now. (8% dividend then, 6% now). It's not rocket science and Historically these well managed funds tend to beat history pretty well. [emoji2][emoji2] Besides my pension should make up for any shortfalls until SS kicks in.

Most funds dont beat unmanaged market indexes over time. You can buy an ETF index, avoid the expenses of a fund, and likely get a better long term return.