All Forum Posts by: Bob Hines

If you're self employed, look at a SEP-IRA. The limits on how much you can put away and take a tax deduction on every year is much higher than a regular IRA (5k+/- vs about 50k). The investment management firm I work at uses Charles Schwab and the forms there are very easy to fill out.

I'll put in my 2 cents, I think the recovery will be sometime around 2011-12. You have to remember how Average works, when you have 3-5 years above average, it doesn't fall back to the average mark-it goes below it. That's how the average is created.

I disagree with those saying that we're going to be seeing high inflation so that it will be a great time to own real estate. I believe we are in a time of high Deflation and that real estate values are not a place to be long term right now (although this is a re website so everybody knows there are other reasons to buy that for future gradual increases in value.)

Inflation is an increase in the supply of money (which can result in the common usage of the word 'inflation' to mean higher prices-although higher prices does not mean actual inflation-an increase in the supply of money). Deflation is a decrease in the supply of money. Anybody having a hard time getting a hold of money right now? With real estate being so expensive and virtually all buyers needing a loan, there is no way values can go up when loans (supply of money) are so hard to get right now (decreasing supply). Take a look at General Motors. How many times have they announced that they are going to raise prices to offset higher steel/rubber/oil/wages/healthcare in the last year? Where are they now? Offering their largest rebates and best financing terms ever.

While everybody is talking about what they think inflation is, DEFLATION is the real problem/threat right now.

I was expecting the socialization to happen latter in the month-I'm surprised it happened this early. I guess all the cheerleading in the press last tues/wed about the successful & oversubscribed bond issuances didn't work. Raising $5 billion in 1-3 month notes must be easier than rolling over the entire $230+ billion of long term notes that Fannie & Freddie have maturing this month (I come from a stock/credit market background).

A word of caution to all- there is an abnormally large amount of bank/financial company long term bonds that mature this month and next (sept & oct). Many of these banks last raised capital (preferred stock) in the 8%-10% range and those securities are now priced in the 12%-14%+ range. The big question hanging over this is what will the interest rate be this time? Will everybody be able to raise capital or will some/many be cut off? How long can a business last if it needs long term financing from a hard money lender?

As bad as the stock market has done this year, it has done fabulously compared the credit market. (the credit market is many magnitudes larger that the equity market so it is usually considered the 'smart' money compared to the stock market). National City bonds are pricing in about a 25% chance that they go under in the next 12 months! It's going to get scary out there and the next 2 months are going to tell us a lot.

I'm a financial planner and I've told a retired engineer (early 60s) that with his 800k nest egg he would never have to worry about money again and I've told a doctor (early 60s) that his 3.3 million wouldn't last 20 years and more likely closer to only 15. How can this be when the Dr has 4 times as much money and he came into the meeting thinking he was set for life??? The Dr 'needs' 240k/year to live off of (which means withdrawals of 300k-350k from a retirement account) while the engineer needs 60k.

I had a morning meeting with a client (late 60s) who fell out of his chair when we told him that in a couple of years when he is forced to start withdrawing from his IRA that his yearly income would be 100k. That afternoon a different client (early 70s) was very concerned that he didn't have enough money to live on and that he might need to increase his withdrawals from his investment portfolio. His annual income that wasn't enough to live on? $1,000,000

So in speaking about financial independence, I offer a quote from Dante's Paradise Lost "The mind in and of itself is it's own place, and in that place it can create a heaven from hell, or a hell from heaven."

How to do electric:
Make sure power is off-buy and use the tester
Black to Black
White to White
Bare wire to Bare wire (ground to ground)
Make sure the switch is on the black-that way as long as the switch is turned off, the circuit is dead and you can work without going to the basement and turning the breakers off and on

Honestly, knowing that will get you through most electrical jobs in a house

Tom: you didn't hear this from me, but if you run a small length of wire from the neutral (white) to where the ground is, when they plug in the tester it will show that the outlet is grounded, even with only 2 wires-not that I've ever done this ;-) It's not going to be to code but:
1 nobody will ever check if the tester lights up correctly
2 if you take a look at the breaker box, the neutrals (whites) and grounds end up at the same place anyway.
3 the previous owners must have done it because it tested fine for me when I bought the place

I'm just about to write my first contract on an investment property-so take this with a grain of newbie salt-but my plan right now is to do a combination of what you are debating. I plan on leveraging up to 5-6 multifamilies (primarily 2 & 4 families) as fast as possible and then focusing on paying off loans. If you use your 1 @ $800 or 4 @ $200 example-think of the beginning when you are only making $200 on that property while you still have a mortgage. That's going to take a long time to pay down. Now if you leverage up to 4 @ $800 in the beginning, you're now going to be paying one of the loans off much faster and then things will really be smoking after the first loan is gone.