All Forum Posts by: Ahmad H.

@George Smith I am with you on this. Some event will likely trigger a crash in the next 5 years. It might be a crisis in Europe that exposes the vulnerability of the over-leveraged economies and drag the world economy down with it just like the housing market did in 06.

@Patrick Britton Very nice breakdown. Thank you!

Good questions Jay. 

If I understood correctly the warranty is only for the principal and those re-performing notes offer high returns (12%+) so all it takes is 8 years or less to have made your principal. After this PPR owes you nothing so I would argue there is a math based buy-back period. 

This warranty does NOT mean you cannot lose! If the note goes south, yes you get your principal back but in my eyes you still lost due to the opportunity cost of investing this money in a lower risk lower return investment. An example would be buying a 10k note with a monthly payment of $100 and collecting 100 payments and then the note going south. You got your principal back but you could have invested this 10k in stocks @ 6% making your investment worth ~16k in the same time frame. 

As for how they afford this warranty, I speculate that PPR can offer this warranty because performing notes are a small portion of their overall sales (I get the impression from their website that they mostly sell non-performing 2nds). They also probably offset the cost of the warranty by charging a significant premium for the work they did to get this note re-performing.Their warranty also states that they can replace your note with an equivalent note so if one fails and they don't want or have the money to give you your principal back they can just give you another note and buy themselves more time.Their business is also growing at a fast pace and they are betting the growth will offset any losses(low chance of them losing though after the premium, low volume of performing notes, and ability to replace notes) and the warranty helps grow it faster.

This is how their warranty makes sense to me. I hope Dave Van Horn can chime in and give us more insight. I am curious to know what PPR considers an equivalent note and what happens to their warranty if PPR was to go out of business.

Cool graphics.

Purchase price + rehab equaling ARV is not the most favorable but I would still proceed if you are confident about the area, the ability to get good tenants, see a good chance for appreciation, and if you are in for the long haul. Buying at ARV means you have to hold it for a year or two depending on the market to just to get your money back after selling costs.

Start young, save, leverage reasonably and repeat the cycle. 

I would say from early 20s to mid 30s do real estate and safer investments until you have enough safe income to survive without a job.

Then from mid 30s devote your full time to look into riskier investments like betting on a certain stock or opening a business or funding a start-up. 

Be worldly and open to investing anywhere, if you limit yourself to the US for real estate cycles you might get two in a lifetime but if you are also open to other countries you can get 4 or 5 cycles.  Maybe bet on Africa for appreciation, also be willing to invest in China when the real estate market bottoms out there. 

Network, read, listen, and devote your attention to something and you'll do fine.

Nice to see a fellow investor in the Capital Region. 

I agree with you, there is so much to learn in real estate and staying active on BP and in local REI groups is a must to retain information and maintain important networks.

Since you are close to having enough for a down payment, have you started your property search? Any particular area you are focusing on? Will you mainly be using the MLS?

Congrats for jumping in! So far so good with the 1st month's rent payment but I think it takes some time to get to know the tenants. Whereabouts is the property you bought? Any particular reason why you chose Schenectady county?

@Mary june Martillo I own properties in the vicinity and I agree with Shane about the different neighborhoods. In 12209 you want to be on Delaware Ave or preferably west of it. 12208 is the area around Albany Med/Law schools which has a lot of good neighborhoods but prices are higher and cap rates are low.

Being a recent college graduate I got to see first hand what majors are worth it and what aren't. You are right on the money with CS, engineering, and accounting.

Also be careful with student loans if you need to take any. My experience has been that the school you go to does not really matter that much in getting a job as long as its accredited and you really make an effort to learn as much as possible .At the company I work for, there are engineers who have similar jobs and similar pay, some have went to Ivy League schools and have 100k+ of student loans and others went to public school and have no loans.

Best of luck!