.... wrote:
Since 98% of your clients lost money, I'm guessing that you worked in a boiler room.
You are totally wrong again.
All of my clients got a good return, because I put them in excellent funds and didn't sell individual stocks.
There's a difference. Read my previous messages.
By the way I still have some of those same funds myself.
oldguy wrote:
a couple of which really have returned more than 20% per year over the last ten years. (I realize that 20% per year over ten years isn't as impressive as your funds' 20% per year over 25 years.
I am glad you have finally come to this enlightening awakening.
By the way, 20% is higher than 17%.
O.K., you've outlasted me. This thread is yours. Make all the idiotic pronouncements you want.
You are correct. Many real estate investors put the least amount possible in a deal. But it's not to reduce risk, it's to increase return on equity & allow further portfolio diversification. Here's a real world example: I can leverage $100k in equity to somewhere just shy of $1M with debt. If the s*** hits the fan, I have $100K to payoff $1M. If I had only invested the $100K I had, I could only lose that $100K. Thus more risk. Trump has good attorneys structure deals to isolate bankruptcy risk & has cash reserves to cover short-term cash shortages when the s*** hits the fan.
Obviously if you were leveraged at 10x equity & lost it all you would declare bankruptcy (which is why you need a good attorney to structure the deal for you in the first place, not after the s*** has hit the fan to bail you out). But even bankruptcy is going to end up costing you more than the initial $100K in capital you leveraged up.
I'm not sure where the guy comes up w/ 98% of investors lose money in the stock market because it is patently false. If you look globally the market has gone up something like 1200% in the past 30 years. In the long run, most investors make money. There are investors that don't follow that trend and lose money but they are the exception, not the rule. p.s. I have an e-trade account & trades cost something like $10/transaction so unless your buying nickel & dime quantities the fees of buying individual stocks is lower than mutual funds (even no-load funds charge a management fee that is typically around 1% except for index funds which are cheaper).
portfolio diversification by definition reduces risk. Leveraging real estate investemnts changes the risk profile rather then increasing or reducing risk.
In real estate, it is diffricult to lose it all, because you are purchasing an asset that has value. However things can happen that make your real estate lose all or close to all of it's value. These catastrophic instances are rare.
By having a deversified protfolio, you become able to absorb a castrophy at a few properties without your real estate business going belly up.
Most of the time when real estate investments fail it is because of manigerial problems or market forces (high vacancy, etc...).
Market forces tend to be localized in the real estate business, by having a deversified protfolio, you essentially eliminate market risks, because people need to live and work somewhere.
If you suck at management, then you are hosed whether or not you leverage your investments.
J.R. wrote:
But that doesn't cost you anything when they do, takes no effort or time on your part, and you personally don't need to change the fund or do anything, nor every need to watch the fund or it's results, not even for years... dumb ass.
Anyway all this talk about "investing" in stocks, which is really just throwing your money away to investment brokers, or investing in mutual funds -- not through investment brokers but rather directly to the companies -- ON YOUR OWN, is simply a not very important diversion from what this thread is all about which is investing in real estate.
The best way to invest for your lifetime is in real estate.
CAPITAL GAINS BUDDY....they are talking about capital gains
everytime a mutual fund trades in your name and makes a profit the individual investors of the mutual fund pay the taxes...
You are such a hack
I was very diversified in 1999. I had at least 12 different internet stocks.
Entertaining thread. It cracks me up. I'm wondering if it's real.
Anyway...
Are you talking arithmetic average or geometric average?
20%+ compounded returns for 25 years is anomolous to say the least. The only two money managers on earth that are publicly known to have accomplished this the last 25 years are Warren Buffett and Lou Simpson as far as I am aware of. There must be a third mystery guy operating in seclusion and secrecy out there somewhere, but where ... and how ... *insert eerie music here*
Diversification does reduce risk. Increasing your debt load does increase risk. They are two separate issues. When looking at a diversification strategy a prudent investor weighs the risks of increasing debt load against their goals (e.g., returns, reduction of risk available by increasing diversification, etc.). Just because somebody leverages their capital to invest in real estate does not mean they are going to diversify.
If you leverage up a diversified portfolio of properties & an economic event occurs to increase vacancy across your portfolio (which has in the past happened & will again happen), you may not be able to meet debt service obligations across your portfolio. Properties are traded based on cap rate which is effectively based on a multiple of net operating income (NOI). Since vacancy is down, NOI is down, and the value of the properties has decreased. If you need to sell the properties because you cannot cover the debt service, you will likely take a loss greater than an unleveraged investor.
I'm not an opponent of leveraging real estate transactions. It absolutely has its place in real estate investing but it needs to be carefully analyzed based on the investor (e.g., individual, firm, etc.) & investing goals.
People love buying rehab projects. So maybe get a house, kick in a few walls, smash in the furnace, etc.. then sell them what they want.
bump
Our fearless leader at a much earlier date.
finance 101 wrote:
You are correct. Many real estate investors put the least amount possible in a deal. But it's not to reduce risk, it's to increase return on equity & allow further portfolio diversification. Here's a real world example: I can leverage $100k in equity to somewhere just shy of $1M with debt. If the s*** hits the fan, I have $100K to payoff $1M. If I had only invested the $100K I had, I could only lose that $100K. Thus more risk. Trump has good attorneys structure deals to isolate bankruptcy risk & has cash reserves to cover short-term cash shortages when the s*** hits the fan.
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Fizakat wrote:
Incase you are considering Dubai, I came across various upcoming real estate projects from a builder called . It looked promising to me but took your call after you are completely convinced—so great solution for Real Estate investments.
Yes. I'm sure he is considering Dubai....
I'm interested in becoming a real estate investor. How does this field work exactly? Do you buy a house, wait for it to appreciate, and then sell it after 10 years? Or do you buy it and sell it right away?
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