All Forum Posts by: Paul B.

I wonder if this license plate is available in Georgia, and if it is, how long would I be allowed to keep it before I offend someone's delicate sensibilities?

Interesting read.

From that page, however:

The society's 2004 annual report showed that there were 5,810 individual members.

On 21 April 2009 the Society's website stated that it had 6,286 members.

So, at that rate of growth, they will have achieved their goal right about the same time that the Sun burns out. :mrgreen:

I don't see it, Not in my lifetime, anyway.

I don't think the Euro has exactly been a success.

I'll preface this post by saying that the author of this "article" makes his living by selling fear. Without it, he has nothing. Still, it's kind of an interesting read:

U.S. Dollar Collapse Could Occur at Any Time

So, you offered $45K, they came back at $62K, and then, without having received your counter, they said they could do $54K?

If $50K is your absolute max price, just say, "$50K is my absolute max price. And yes, this is my 'highest and best.' Tick-tock."

I was the first to think of the Shake Weight.

I won't say what inspired me.

How is the general market for real estate and this kind of work where you live? Could be a sign of the times that these guys are getting busy; bad for you, but good for the local economy.

I know here in the Atlanta 'burbs I put construction of a small pool house up for bid, and I had guys tripping over themselves to get the job, even though it was not very big. They all showed up on time, and they all had their bids in on schedule.

I think anyone here should be able to admit that there are different values for the same asset based on certain variables.

Car dealers buy cars at auction wholesale, then turn around and buy the same car retail for hopefully more money. Pawn shops buy a watch and then sell it to someone else at a profit.

It's the same with houses. Sometimes the circumstances are such that someone needs to "pawn" their property. They know they are leaving money on the table, but their problem is being solved, and they don't care.

Like that duplex, I paid $115K, put $12K in, and within 5 months I was at the settlement table where I sold it for $177K. When the dust settled, I made $39K. I certainly don't think the property appreciated that much in 5 months; I definitely bought it for less than "fair market value." The seller originally asked for $130K, and she came down to $115K when she saw I was a cash buyer who would close fast.

Point being, even in her mind, she knew she was getting less than it was worth, but she didn't care because it was worth more to her to solve her primary problem than it was to wring out every last cent from the sale.

Much debate here. Nice to see everyone so passionate, all with an eye toward causing everyone to do a little critical thinking. At the end of the day, you have to do what works for you. If it keeps on working for you, you won't change it. If it doesn't, you will.

First, the discussion of "what is equity." Seems to be that some people choose to use cost because they say all the talk of buying "below market value" is nonsense. They say, if it's what a buyer will pay, that's the market. Period.

Although I think there's some truth to that, the fact is that -- at least I hope it's a fact -- some of us are buying for properties at a cost that really is below their market value. Or, at the very least, we are buying properties where we can create value by making repairs and getting more than $1 in for every $1 out.

Case in point:

I bought a duplex for $115K. I put $12K into it. My basis is $127K. It rents for $700 a side. Let's assume the 50% rule holds, so it cash flows $700 a month.

If I use my basis to calculate equity (let's assume I paid cash), then my return on equity is $8,400/$127K, or 6.6%.

However, let's say I know (or think) that the property is worth $175K. That is, I feel that I have created $48K in equity for myself because (a) I bought the property right to begin with and (b) I've just got mad skills at renovating places cheaply. If I really think the place is worth $175K, and assuming that I'd pay about 9% in transaction costs (commission, closing, etc.) to sell the place, then my "real" equity in the property is:

$175K - 9% = $159,250.

So therefore, if calculating an ROE on my investment, I come up with $8,400/$159,250, or 5.3%.

I think it's completely correct to look at it this way, IF my "market value" is accurate, because you need to know what your investment options are and if they are better than what you have now.

It's like if someone gave me a $100K house for free, and it rented for $1 a year. Sure, my return on equity could be considered infinite since my basis is zero. Why sell? I'm making an INFINITE return on my investment, right?

Well, of course you'd sell that place in a New York minute, because you could take the $90K net from the sale of that place and make more than $1 a year from it.

Another comment on the notion that what you pay IS the market, if that's the case then I guess wholesalers should just give up the game, shouldn't they? I mean, their whole business model is predicated on buying (or tying up) a property for below what someone else (hopefully a rational person) will pay for it.

So, for me...

Return on investment = the net income before debt service divided by the entire cost of the asset

Return on equity = the net income after interest expense (but not principal) divided by your equity (using whatever number works for you)

Cash on cash = the net income after debt service (including principal payments) divided by how much actual cash you have in the deal

There are many ways to tweak these numbers using accruals, etc., and that's where you have to think for yourself.

Oh, as for GAAP, as a "big-bank" trained credit analyst, I know that GAAP, in the literal sense, is far from perfect. It allows earnings and numbers to be massaged to meet a company's needs. In summation, we went to great extent to deconstruct and reconstruct financials to get to the soft, chewy center of what is really going on.

"Oh, Dennis Marshall! I'm looking in your direction!"

:mrgreen: