All Forum Posts by: Karen M.

Here's a question -- if you are going back and forth to Spain, would it makes sense for you to simply rent your residence when you are there, rather than own 2 properties in 2 countries?  Think about what is efficient for your life, and look at all the costs.  :)    Can you (is it economically sensible to)  rent out your current Canadian home when you go to Spain, or are you going to sell it? 

I think that first, you should pick your country to live in, and then progress from there.  Have fun with it! 

Mario, congrats on your new money.

I am not a real estate investor yet, but I wanted to share some simple thoughts.

1.  How is real estate doing in Spain!  Spain is wonderful, btw.  Learn your own markets and see if that seems like a fit.  If your prices are going low, or super-low and you have an opportunity to get beach property, well… keep an eye on your market!!!  

2.  I would suggest you talk more with Engelo, just because he started from Australia and then moved to the US to start his company.  I have not worked with his company but his stories are interesting as to how he got started.  He is on one of the BP podcasts.  Try to meet some of the other international investors here and see if they like who they are working with and see if you can't get started working with some of them.

3.  If you are interested in the stock market, I would suggest Motley Fool Options / Motley Fool Pro services. (They have a whole bunch of services but I stick to the more conservative ones)  I have been with them for one year and it's fantastic.  Great community, very solid advisors.  I am just a customer there, no salesperson, no nothing.  But its another path you can check into if you like.  They should have a money-back trial period if you want to check them out and see if it feels like something that fits your style and goals. 

BE CAREFUL NO MATTER WHAT YOU DO!  

That's all I got.  All the best to you!!!!   Let us know if you figure out something great, I want to learn too.  :) 

I'm going to set up a trade soon that is a diagonal, or calendar spread on Coca-Cola.  In this trade (as I understand it, still a newbie)  I will use leverage control shares of KO without owning them, and I will generate income from my "virtual" shares by writing covered calls against them. 

KO is not going to go poof!  This is sort of, kind of like real estate income in my mind, although I admit I am still new and getting a handle on it.  

It's an interesting alternative to real estate investing, for sure.  However, I have great admiration for all the people here who are doing great with real estate.  There are many ways to build wealth! 

I am so glad you asked this question.  Here is a rambling answer.

Last year I started investing again and I started looking into real estate.  I also began investing in the stock market again. 

I have found out what I like about stock investing, I found a great advisory service that I have high confidence in, and I have been learning to use options for income, as well as margin buying power and protective hedges. 

I sought out advice about options investing in particular because Kiyosaki says if you are going to do stocks, you had better learn options.  I am learning about options with a conservative, investor's approach (not a trader's approach) and I am making income with options.  It has been a GREAT experience.

Not everything has made money, but I am doing well in the big picture, and I am learning from the mistakes I've made. I actively watch the stock market and read and try to keep learning.  

My income on options is looking a lot to me like income from an investment property -- I can make hundreds of dollars a month of income from tactics like sold puts and covered calls. 

I also have a few nice dividend payers that might compare well (appreciation + dividends) with some of the lower cap rate properties out there. 

Your danger with the stock market is if the market swings and you bail, you are locking in your losses.  Your other danger is if you are buying wrong (overpriced, or a poor quality business.)   Not many companies go poof!  

In all honesty, I may be happier overall with stock investing vs. real estate investing, but I am still learning about real estate investing and may go there. 

I am lured by the bigger returns 15%, 20%, 25%, etc.  from real estate.  My thinking:

If I can buy a high quality company with a 6% dividend trading near it's low with  no tenants, toilets and trash, why would I bother with a low cap rate property? 

So if I go for real estate, I'm going to be greedy and want the bigger returns.  And maybe that is coming with much  more risk.  It is more of a business. 

I have learned some important things in the past year. 

1.  With stocks, there is *no way* I would go it alone without a great advisor.  My fees are not huge and I credit "my team" with helping me invest wisely and safely.  

2.  It takes some time to learn how you want to invest.  At first I tried a service that was more high growth and high risk.  It did not suit me.  I later found the right fit and I feel great about where I'm going now. 

3.  I think it is good to jump in -- a little.  I did not know exactly what I was doing with my first options trades, but practice increases understanding.  I am learning and it is great, it feels good. 

Last -- it is VERY possible to lose money in the stock market.  Don't mess around with it.  It sounds like you have a system you are happy with that is working for you.  That is good.  

Like with a real estate investment, don't forget your stock investments. You have to know what's going on. 

I am not sure yet where my head is at with real estate investing.  Based on my experience with stocks, I might be inclined to try to find a great partner to learn from.   I might be inclined to focus on very high quality investments that will appreciate and cash flow.

I love the flexibility of stocks. I have the opportunity to make small mistakes that are easy to fix or undo, usually quickly and cheaply.  With real estate, I hear it is "forgiving", but I am not sad about taking my time to learn and if I never start in RE, I will still be happy with stocks. 

Good luck!  Have fun and keep learning. 

I think it may be better to focus on one or the other and get really good at one strategy.  However, I do like the BP community a lot!  Fun place to hang out with the RE folks! 

P.S.  If they want to lower the price and seller finance, maybe we should talk!  ;-)  

Hi Arnie,

I wanted to give you a vote just based on the title of this thread!   As a new investor, a quality neighborhood and property is VERY appealing -- but you have said it -- these properties sitting for $250 with $800 or $900 rents don't make sense.  I have also wondered if the owners of these properties have just never raised the rents over their many years of ownership.  Of course, there is a ceiling for how many raises you can do…

This leads into @Ben Leybovich 's blog discussion of ability to raise rents (he is talking about under $30k single family homes) -- it seems that the nice neighborhoods WOULD appreciate and have rent increases -- but still I see the nice neighborhoods (sometimes older duplexes) sitting with rents that feel way too low.

Karen

I am a member at Motley Fool Pro / Motley Fool Options and have been learning about options investing (not trading) for the past year.  It has been very interesting and profitable. My interest and success with this method has been one of the things holding me back from getting started with real estate.  I hold a long stock portfolio with options positions as a slice of the portfolio that I can play with to generate income and leveraged appreciation.  I am also learning about hedging and bearish strategies. 

It has not been perfect, I have made mistakes and lost some money on a few wrong trades that I chose to close out and take a small loss rather than salvage. I had a protective hedge that lost 100% of it's value, and I am a little dubious about a short position (my first time shorting) that is taking its sweet time for the thesis to play out, if it ever does. But the gains are definitely outweighing the losses, and I am working in smaller numbers and with a diverse portfolio while I gain experience, knowledge and confidence.  I have more to learn about taxes -- most of my short term income will be taxes as ordinary income (isn't that like a flipper?)  but my longer term capital gains will be taxed at lower rates.  I am investing both within a taxable account and retirement accounts (Roth, Rollover 401k) 

With stock investing, I am very happy that I can get excellent asset quality, and great leadership from the best CEOs in the world, for the price of just a few shares, and the transaction costs are tiny, and my investments are liquid!  

I'm still very new at it but I am very happy with the ongoing coaching I am getting and I feel like options are a great tool to learn.  I would not do it without coaching, however, the hand-holding and support are extremely valuable and a big part of why I'm doing well.

I am still interested in real estate and would like to work with real estate investing.  However, I'm a little torn about splitting my attention between two in-depth methods, or trying to become very, very, very good at just one.  

Perhaps if  / when I invest in RE, I will seek out the same kind of partner / advisory service / coaching that I currently get with stock and options investing, rather than trying to learn it all from scratch and DIY.  

Hi BPers -- I have a Friday question for you!

So, right, I have been hanging around here for a little more than a year now, on and off, getting my head straight on what we want for a rental property.

I am still working to establish criteria and firm up the vision.

Here is where I am at:

1.  We want a property that is close to home.  We will self-manage and I want to learn the business and management side. 

2.  We want a property that won't cost too much to get into.  However, we will likely want regular bank financing for the first one.  So target price range is $50,000 - $100,000 and our down payment / initial out of pocket costs would be $15,000 - $30,000 to get a first property.

3.  Property quality and neighborhood quality matters.  When I buy stocks, I am looking for appreciation and cash flow (I want and buy stocks / businesses that are basically solid, steady, reliable,  cash machines over the long haul. Many stocks throw off dividends and appreciate.)  I want basically the same from rentals.  They have to hold their value.  The neighborhoods have to be attractive long-term.  The homes need to be good homes.  Appreciation can be slow and steady, that is fine.  

So here is the question -- how much cash flow should I target for a first property?  Will I be successful if I get 1.5%?   Will that be pretty much a "sure thing"?   2% is a sure thing, yes?  I remember Brandon saying on a podcast that 1% is the bare minimum.  Do you agree with that?  

Where is your balance between cash flow and appreciation?   Do you calculate solely on cash flow?  

I am in the position where I need the first property to WORK.  It is important to be careful. If you were me, what cash flow percent would you look for?

Am I looking at the wrong metric?  

Right now, I am taking more time to brush up  and organize / automate our personal finances and build more cash cushion / safety net.  I love stock investing and that is still my first focus, but we will diversify into a rental.  I have paused looking at homes on Zillow until I get my financial goals super-clear.  Then I will try to get the neighborhood super-clear.

Thank you for any advice!

Congrats on getting the deal Dawn, you rock!!! :)   Way to stick to your guns with negotiating too, that is awesome.

I have been curious about some south side condos but the prices are not $16k.  I am thankful that you are forging into this experience of working with condos. Good Stuff! 

Hi Nicole,

I appreciate your honest conversation about how it's going for you, and the frustrations you're feeling about getting started as a flipper. 

Question:  What is your vision for how it will work for you?  I'm especially curious about the time-management aspect of it.  If you are working full time and have a toddler, how are you going to manage your business?  

I think that @Jay Hinrichs  and @Bill Gulley 's comments are very interesting (BTW, Bill G, I recently nagged Brandon to get you on the podcast to share your experience and point of view.)  

I am impressed by the effort you have put into networking.  

I think the vision is so important.  This is something I am working on too.  My goal is not quite right yet.  I am struggling with deciding exactly how to start -- I'm trying to get more and more specific so it's easier to recognize an opportunity that is the right fit. 

What is your "next step" like?  I think that Jay's suggestion to become a realtor is an interesting suggestion.  With your full time job and sociable attitude, maybe an evening and weekend realtor schedule will work out great for you. 

When you say you want to work with a partner, it would be helpful to define exactly what you want in a partner, and how that is going to work.  If you were going to sign onto a flip project tomorrow, what would you want to learn from it?  What kind of partnership would work? 

One thing I have been working on is personal finances.  I'd like to improve our savings rate and get our household running very efficiently (time and money) so that there's more of both to spare for investing purposes. 

I love the concept of baby-stepping it a little bit every day.  I have done that with being a fitness instructor, and I believe that a little, regular forward motion does get you places. 

Best wishes!  

Karen

P.S. Have you checked out the Milwaukee REIA? They seem to have a lot of people involved who are into flipping, and they also have some private lenders. It would be a good place for you to continue to get connected with real local people with more experience and more funding.