All Forum Posts by: Mark Ferguson

@Mark Ferguson Warren Buffett has so many different interests. They may all be equity plays, but they are across many different markets and therefore he is protecting his income stream from certain sectors of any one market having an overall negative affect on his wealth. Becoming a HML keeps you in property, which is what you apparently know a lot about, not in chocolate bars!

It appears from Jay's comments that you have other income streams also which is no doubt some form of diversification.

These ideas are only there to be of help. If it is, good, if it is not, that's OK too.

@Mark Ferguson  answered your own question stick to the market you know and love..

And you are well diversified you make substantial commission income and you have passive investments. to the extent rentals are passive.  plus I think your also flipping.

and add in a few car deals and wa la diversification.. and of course Buffet owns how many different companies over how many different disciplines.. I know he owns See's candy and that's all I really care about..

Louis, the point of all of my posts have been that you can design a policy with cash value immediately. Any investor putting any of their own cash into a deal, can make more money by putting the money into life insurance premium first. 

If you go to an agent and you tell him you want a $250,000 whole life policy, then you are correct. It will take forever to build cash value. BUT if you have $250,000 that you are using for your real estate investing, we can work backwards to design a policy with the smallest death benefit possible for the premium. This might look like 5 annual premiums of $50,000 for a policy that is paid up for life. The initial cash value could be as high as $42,500 before 1 cent of dividends are paid. In 5 years all of your working cash will be in your "magic checking account".

This client would have roughly $42.5K of cash value PLUS $42.5K of loans available for real estate investment (plus the remaining $200K of cash the first year.) Both will be generating gains. Your money is literally working in two places at one time. The life insurance cash value is not replacing the real estate as an investment, it is enhancing the returns on the real estate.

@Mark Ferguson I understand what you are saying and the fact that you are a cash flow guy is good. What about diversifying your assets? You could use your equity to become a HML and thereby retain your assets as @Account Closed suggests and diversify as @Jay Hinrichs suggests. You could do well in this situation. Just a thought. 

It is never wise to put all your eggs in one basket. Being invested only in rental property for cash flow can be a dangerous strategy if markets turn and rents fall.

@Mark Ferguson ,  You seem like you are in the perfect position and a great younger age to begin investing in larger multi-family deals.  There are under-performing and poorly managed properties in most large cities especially in the Southeastern US.  You can take 1 Million as a downpayment on a much larger multi-family property that you can add value to.  Take the leftover $200-$300 for renovations and borrowing power.  Or even team up with some other partners.  Seems that you likely have the skills to make it happen and either refinance, keep the property, keep the cash flow, or sell it and do it all over again, while keeping the management of the first property, thereby keeping some of the cash flow.   You are likely someone I would love to partner with on some projects seeing as you have experience and lots of capital.  And the need for some 1031 placement!!   I apologize I dont have the time to read all the pages of this thread and hope I am not repeating an idea already broadcast. 

 Your point is well taken on whether the market will stay as strong as it has been. And I see some of the shakiness in Weld County with oil & gas being in the tank as it is. Here in Fort C the economy has stayed strong and people still are moving here. I'll keep following your thoughts for sure!

Cheers,

Dianne

 Hi Mark,

I really enjoyed reading the debate and comments on your post about buying / holding NoCo properties. Yep--it's going to be a bit hard to find SFH that have a lot of cash flow here but as I get started, having rentals close by and that look good on the appreciation front are most important to me. I saw a forecast that showed a comparison of similar homes built by the same builder in the 50s and what they sold for in 2015 in Boulder, Fort Collins, and Greeley. Given the stable communities and relative low supply / high demand in Fort Collins, seems like buy and hold can still make good sense. Particularly if I'm looking for appreciation without as much risk as a distant market I don't know and having to deal with property management from afar. What's your sense as you've been digesting all the comments?

It's great connect with you here.

Dianne

 Hi Bill S! Thanks--I have been following @Mark Ferguson's post about buy and hold in Colorado. There's some great comments there--and I also still see value in buying, even though it's a brisk market. Given the projections for home values in Fort Collins to trend towards Boulder's, there's still room with a strong economic outlook for appreciations. We want cash flow, but that's not necessarily our #1 goal. @Mark Ferguson--do you have any rentals in FoCO?

@Bill S--the Ultimate Beginner's Guide is a great one, I'm already through it. :)

Thanks for your encouragement!

Dianne

 Chicago is a good city for investing.  Not bad, but not great either (Texan cities sound like the best target at this point of the current real estate cycle).  Chicago is effectively 2 cities living side by side.  The impoverished city where crime and opportunity more closely resemble a 3rd world country (this is the side most national media portrays as Chicago, and the 2 parts Detroit), and the middle class and wealthier people live.  

Certain areas of Chicago (as in every city) are rapidly gentrifying, and this where you can still make very good returns.  Buy from populations who are cashing out and leaving, and rent to new wealthier population moving in.   Chicago is also a huge Turnkey trap city.  There are parts of Chicago that are worse than a war zone, which on paper may cashflow, but in reality would just be a money pit.  You can buy $500 houses here.  Unfortunately you may not survive the inspection.

I figure why not the best of both worlds? Why not buy cash flowing properties in markets with good long term appreciation outlooks.