All Forum Posts by: Aaron Gordy

Lower interest rates will decrease the carry costs and lead to more investment. 

Lets start with the goal. If your goal is to be an entrepreneur then use the money to become an entrepreneur. Bill Gates started Microsoft from a garage. It seems that 150k could go a long ways towards that goal. If that is your goal then take that 150k and get busy on your dream. 

The days of throwing a dart on a map and getting a cash flowing or a deal in Austin are long gone. They went out when interest rates ticked up. Are there still deals happening? Yes. Within the last 90 days 75 duplexes were sold. Those buyers are finding ways to make it work for them. 

So what that means to me is that your specific sfh purchase didn't outperform the S&P. You should probably have either chosen a better real estate deal or invested in the s&p. 

I am arguing that the path to real wealth should not be argued in generalities as there are real life examples of billionaires within real estate AND stock investors.  You gave a specific example of your house vs the stock market. I countered with a real example of a real estate deal with infinite return blowing away the stock market. Choose the path that makes the most sense to you. 

How much are  you willing to bet? Did the s&p have infinite returns? I can't recall any period of time that one could put down zero and get 440k back via the stock market. I had zero down. This is not even considering the tax benefits nor the income derived from that asset over time. 

The crystal ball is never accurate. It seems that folks talk and talk about almost the same thing, ad nauseum. Reality is this. The world recently lost one of the best investors of all time: Charlie Munger. He was a billionaire who didn't buy real estate but bought companies and stocks of successful companies. Was he wrong? Its pretty obvious that he did exceptionally well. And then you have Gerald Hines, who is a billionaire making money off real estate in Texas primarily. Who is wrong? They are both obviously correct. I would like to revert back to KISS and I am not talking about the band. Keep it simple stupid. I have to remind myself of that, even though I have a masters degree. Buy good assets. There are bad real estate properties and there are also busts in the stock market: Enron. One can't categorically say that one segment in the future is worse than the others with accuracy and if it was so easy to predict then we would all be billionaires.  

Real deal example and is  probably the best buy and hold deal that I will ever made. Bought a duplex using the va loan in Austin Texas with no money down. Lived in one side while attending the university. Realized that I made a home run and kept that property for 15 years or so until my horizons broadened to bigger things. Bought it for 80k sold it for 440k with zero down. Infinite returns. I could go crazy looking for that diamond in the rough via Value Line in the stock market but its not going to happen. Good buy.

Its all risky though but its not as risky as putting the money under your bed and losing value. Choose wisely that meets your comfort zone. If its little risk that you want then buy treasuries or cd's and sleep well. Personally, I like a little risk and the thrill of pulling off a big deal. Truth be told though, its all about meeting the demand in real estate. If there is demand for your product then people will rent it out or buy it so there is little risk. But if you build or lease out a property with little demand or a myriad of issues then you will have problems moving it and therein lies the heartache and possibly bankruptcy depending upon the gamble: Donald Trump with his casinos. 

@Madhan S.  Boots on the ground is critical. I am not privy to any particulars of the deal at all. The array is located on Burton Drive. Burton drive is in the rapidly gentrifying Riverside/Oltorf corridor. On the surface it looks great. Underneath the surface its a little more dicey and one has to be very calculating. That particular area is known for clay deposits in the ground that can really mess up foundations. Buying a property with foundation issues is not necessarily a problem if the purchase price is reflective of the risk. With foundation issues, one could have plumbing, drywall, flooring and even roof issues and alot more. I rebuilt a house in the area a decade or so ago that had cracks in the walls that I later discovered had a 6 foot diameter bee hive in it. That was a grand slam home run deal because it was purchased right even with those unknown issues. Foundation issues are very very real there and can really destroy returns if not careful.  

Be specific with your source.... Saying freddie mac without a link to the actual article or the research is not credible. 

Folks migrate for jobs. Texas is and has been a job creating machine for a very long time. 

@Carlos Ptriawan Its a shame that you hate on Austin metro so much with out real concrete on the ground evidence with unemployment numbers/building permit data/employment growth or any real data backing up assertions. Why will prices fall in the Bronx? Philly? Austin? What are their respective levels of inventory? Is there segments that are doing better than others such as are 1 bedroom condos doing better than 3 bedroom townhomes? 

Point 1. Speculation. How do you know that interest rates will be cut with certainty? 

2. Speculation and localization is very different in CA. LA is not Sacramento. Each metro has their own economic drivers. Austin's economic drivers are very different from the cities mentioned previously. What are the months of inventory and how are the main economic drivers doing? 

3. Speculation. Even within Miami you can't just throw a dart on the map and say that its a good deal. Little Haiti is very different than Coconut Grove. Why not Fort Lauderdale? 

4. True. Inventory is always the name of the game. Sellers market is typically defined as having less than 6 months of inventory. Buyers market is over 6 months of inventory. Austin is at 3.2 months of inventory btw.