All Forum Posts by: Austin Luepkes

@Barry H.

The 50% rule is basically just figuring that Net operating income will be 50% of gross rent revenue. So if your 4-plex rents for $32000 a year, your actual income would be 16,000 a year

Frank Sanchez I had a bond position but I just sold it to purchase real estate. With CD's there isn't actually any lock on it but depending on the specific CD there is just a penalty of perhaps 6 months interest, which on a CD isn't much. Definitely a better option than a checking account. In my scenario there is no penalty because I had a special deal with a local bank that was trying to get more business (no cause for concern because I matched the FDIC protection limits). I've just always believed that you should keep a small portion of your money on the sidelines that way it's not tied up in anything if a good opportunity comes along

@Frank S.

But isn't that basically the exact same situation that I described because you are allocating a portion of your portfolio to a low risk/low reward investment vehicle and repositioning when equity prices are cheap? The only difference is that I'm using a CD instead of bonds in this case. 

@Paul Allen @Frank S. I'm talking about keeping a portion, like 25% in something stable like a CD. That way if something were to happen I could put that money in and quickly regain what I lost since  that 25% will make a strong return in a recovering market

Okay, so as we all know the stock market has been on winning spree for quite some time now. With all time highs across the board, one can see why there is a bit of a fear that stock prices will come crashing down eventually. Now, whether that is going to happen this year or 5 years from now, there's a solid chance that when the market crashes again it will sink lower than our current levels. That being said, do you think it is a good idea to keep a thick chunk of cash in CD's or other safe assets and just hold off on investing in things like index funds until the opportunity presents itself? or would you rather just put that money in the market and let it ride?

I got 4.01% on commercial in February

@Mike DeLong

Why not kill 2 birds with one stone? You're laying out money regardless. Might as well see some benefit from it

What kind of cap rates/rent to price ratios/whatever are you seeing in your area on the mls? Specifically 4 unit apartments. I'm seeing them with cap rates of like 6.5% (using the 50% rule for expenses) and I live in a small town. I'm trying to decide if its worth paying a 6-7% cap price or if everyone else is getting them at 9%. I bought a 14 cap and a 11 cap in these past several months but those were rare deals and I've been hard pressed to find anything similar.

@Paul Allen

If you were able to invest in a fund that averaged 8% and allowed you to borrow that same amount of money back 5 years later for 4%, all the while still earning 8% in that fund (on the full account value, even including what you borrowed) on average, would you do it?

Would you still do it if you knew that, as time went on, the value in your fund would grow and you could borrow more for 4% and invest in something else that makes 8%---without ever having to explain your reasoning to a loan officer?

How about if the gains in that account value were not taxable? How about if the amount you borrowed--which would eventually be much more than your investment--wasn't taxable?

Would it be a deal breaker if your heirs get an extra million dollars when you die?

Or would you rather just "invest" that money in something called term life insurance where you personally would never see the benefit of and have about a 10% chance your kids might get a million bucks?