All Forum Posts by: John Wright

@Jay Hinrichs  Thank you for the kind response.  I hope that business is good for you up in your area.

@Jay Hinrichs I've had it explained to me that somehow you can use this as a leveraging vehicle so not only do you get the returns but you can borrow off of the unrealized gains (the paper returns) and do it that way.  Is this not true?

Anyway, as far as the life settlements is dirty claim...I have made a lot of money in low income housing. Much to my chagrin, when I was first starting out I had friends, neighbors, and women I was dating constantly insinuated that I was a "slum lord." A lot of people think the landlord business is despicable.... especially when we raise rents. This seems ludicrous to me as I sometime have to really stretch myself to the brink to bring my properties up to spec so that they will be approved by HUD. When I tried to explain to them that the people I was helping to house were literally one step away from being on the street they stuck to their guns and continued to infer that I was a slum lord. Since I became successful people now accuse me of being a greedy capitalist while I pay far higher taxes than they do. I suppose one person's filthy business is another person's salvation.

@Jay Hinrichs

@Andrey Y. Do you mean the whole life insurance industry is despicable?  How about the whole insurance industry for taking money from people?

@Mark Grigsby I'm sure it's like most things in business where the "devil is in the details".  The difference between a mutual fund and a Bernie Madoff scam comes down to the details... what I want to know is what is possible with this vehicle?  What kind of leverage can be obtained?  I have googled this subject and I am seeing all sorts of conflicting information.  How do I know it is legit and what dollar amounts are needed?  How do I separate the fact from the fiction?

I have been buying and selling real estate for about fifteen years in several different states.  I have had major ups and downs both in spite of and despite the pricing bubble that we experienced.  Mine has been a success story but perhaps my biggest source of frustration has always been my limitation in sourcing the necessary equity component to get more deals done aggressively.  I guess one of the biggest lessons that I have learned in the real estate field is the usefulness of leverage as a potentially helpful, but also potentially harmful tool. I've always liked the idea of being able to tie up 5-10x the dollar amount that I put down to purchase a property, rent it out and collect rental income.  I recently did a deal with a guy who I have known for about 10 years and I was amazed at how well he has done.  We talked shop for a while and he told me that he has been able to get equity for his deals through some sort of life settlement structure using insurance policies that he purchases at a discount from people who are perceived to be terminally ill, aged or some other reason why there is a higher likelihood that the policy could be redeemed for a higher value.  I'm not exactly sure how it is supposed to work, but it sounds like it might have merit.  I asked him to get me more information about it but he said that "the minimum investment was way higher than something I would ever be comfortable with doing" and didn't really want to talk about it.  Sorry for my long preamble, but I was wondering if anyone on here has had experience with this sort of thing or knew where I could get more information about it?  Can I actually leverage my existing funds into higher equity amounts to invest with?

Invest in things that you control and understand fully.  If you are unaware of an investment category that you can control and understand fully, then invest first in educating yourself so that you can control and understand something to invest in.  Abdicating control and understanding to a third party is positioning yourself into potential victimhood.  No doubt there are countless people who are able to make money while abdicating this responsibility to others but you can also do this in a way that you control it and understand it fully.  

Single family homes inherently aren't as good for rental properties as mulitfamily rentals.  If you are in the rental business you are better off using the same vendors, some locations, same office, same everything for the sake of efficiency.  Single family homes will have nicer fixtures, appliances, carpeting etc.  Mulifamily are designed to make money.  You usually won't find a chandelier in an apartment dwelling.  Also, you are just way better off as a landlord if you deal with economies of scale.

You never think it will happen to you, but I have shown countless properties over the years and I have been in some extremely uncomfortable situations.... and I am a man.  Even if only 1 in 1000 is a regrettable encounter, if you show a lot of properties like I have it is only a matter of time before you run into scary situations that may involve theft, kidnapping or worse.

I think a good thought process is to determine whether you need capital gains or if you need income (cashflow). Of course, we often need a "nest egg" that we can generate cashflow with.  I don't know about you, but I would much prefer doing work once and then getting paid over and over again through income.... and that is my ultimate goal. If you have little money to work with, I would suggest doing some fix and flips until you have a bit of capital to work with.  Otherwise, I would work with a group of investors to put together either a) a larger deal that will generate cashflow income or b) a larger deal that will generate capital gains so that I have capital to generate cashflow income with.  I've known a lot of super intelligent people over the years who have made massive amounts of money only to loose it because they've always had the "broker mentality".  I suppose that it is only human nature to be optimistic that the party will always continue, but the long term play is definitely to invest for income asap and then when the hard times come or the market turns you will be able to continue to keep paying your bills.

When markets change I find that one must change with it and adopt different strategies and ways of doing business. The "one size fits all" approach will only work in certain market conditions.  Autodealers are a prime example of this.  When times change, their promotions and strategies change with them.  Let's not forget that a market is a market.  As long as there is demand for a product the savvy business person finds a way to provide the supply.