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Real Estate advice - small inheritance
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treypound Offline
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Post: #1
Real Estate advice - small inheritance
I haven't had much time to log on here recently, as I had two deaths in the family, including one of my parents which I had to tend to. I found out a week or so ago I was listed as the beneficiary for my father's life insurance policies he had at his job and through his bank, and in the upcoming weeks will have a decent sum sent to me (won't disclose exact #s for privacy).

What I can say is that I will be looking to move in early 2019, and buy real estate. What I am trying to decide is where exactly I will go. I am putting a cap on my purchase at $300,000 cash, and will likely purchase in late January, starting to look seriously in early December.

Where would you go in the U.S if you had that money to buy a house, and were focused on not borrowing any money (no mortgage) ?
11-24-2018 10:56 AM
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TheFinalEpic Offline
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Post: #2
RE: Real Estate advice - small inheritance
Real estate market is not doing well in the states currently, if you look at all metrics buying on intent of investment would not be the best thing to do right now.

That being said, if it's a long term hold and you plan on living in it, there are certain markets that you can get something pretty decent for 300k. Look in Arizona, Texas, and Montana. Your question is extremely broad as there are pockets all over the US that have decent housing for this price.

My question to you is "why would you want to buy real estate and lock yourself down to the States?"

That money can do wonders overseas, and depending on your investment savvy, could be extended far beyond what you received as inheritance.

"Money over bitches, nigga stick to the script." - Jay-Z
They gonna love me for my ambition.
11-24-2018 11:54 AM
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treypound Offline
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RE: Real Estate advice - small inheritance
(11-24-2018 11:54 AM)TheFinalEpic Wrote:  Real estate market is not doing well in the states currently, if you look at all metrics buying on intent of investment would not be the best thing to do right now.

That being said, if it's a long term hold and you plan on living in it, there are certain markets that you can get something pretty decent for 300k. Look in Arizona, Texas, and Montana. Your question is extremely broad as there are pockets all over the US that have decent housing for this price.

My question to you is "why would you want to buy real estate and lock yourself down to the States?"

That money can do wonders overseas, and depending on your investment savvy, could be extended far beyond what you received as inheritance.
I don't have any real interest in living outside of the US. Traveling for a vacation here and there, yes, but not likely moving.

Ask me in a year my view may change.
11-24-2018 12:22 PM
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TheFinalEpic Offline
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RE: Real Estate advice - small inheritance
Ok, so then what are your criteria for a place to live and what's your standard of living? In some places in the US, 300k will get you a 3000 sqft home, in others it won't even get you a shoebox. Then you have to obviously consider living costs above and beyond the home, as well as your prospects for a career etc.

Personally, I would go with Texas, but your criteria may be (and likely are) different than mine. Hash this out and then you will get more specific advice.

"Money over bitches, nigga stick to the script." - Jay-Z
They gonna love me for my ambition.
11-24-2018 12:35 PM
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Jetset Offline
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RE: Real Estate advice - small inheritance
I've been in Phoenix all week looking at real estate. REI is new to me but I know the area well, feel free to PM if you want to talk about that.

"He always wanted to drift forever, but through the American Southwest."
11-24-2018 08:53 PM
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Lampwick Offline
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RE: Real Estate advice - small inheritance
Buying a primary residence should be an investment in a place where you already want to live for at least the next seven years. It seems that you've already come to the conclusion that you want to buy a house before knowing where you want to buy it, which is backwards, in my opinion.

Your ideal location depends on your lifestyle requirements. Colorado is pretty nice. You can get a big house for relatively cheap. Clean air, good weather, lots of nature, not too left or right politically. But it's reportedly a terrible place for game. So if you were moving with a wife or girlfriend, that would be ideal, but otherwise probably not.

Then there are places like Atlanta and Houston, where you can also get a lot of house for your money. Those places may be better for game, but are totally different from a place like Colorado.

Overseas is a possibility, but there are potentially a lot of challenges and pitfalls when buying in another country when you're not a citizen. It's best to know people in the country that you trust to help you.

Also, paying all cash doesn't make too much sense. You can deduct mortgage interest payments on your taxes. You are better off putting 20% down, getting a mortgage, and then investing the other 80%. You will be better diversified, have better liquidity, and have a better credit score.

If you're not sure how to invest the money, or if you're worried that you will blow it, then you may want to look into getting a financial advisor. Finding a good one can be a minefield, and you can get ripped off if you're not careful. It's best to find one that charges based on a flat rate, and that isn't getting commission to push you into specific financial products. All things being equal, you should use passively managed index funds, rather than actively managed funds. And stay away from annuities or things like that.

It sounds a bit like this money is burning a hole in your pocket, and you're not quite sure what to do with it. In this case, a professional may be able to provide some guidance.
11-24-2018 09:04 PM
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BaatumMania Offline
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RE: Real Estate advice - small inheritance
Texas for weather + COL + cheap housing + diversified economy. It's a pretty clear winner to me.

Under stricter criteria or looking for specific things then there's Florida, Oregon, Washington State and a few others.
11-24-2018 09:20 PM
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jordypip23 Offline
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RE: Real Estate advice - small inheritance
(11-24-2018 10:56 AM)treypound Wrote:  I haven't had much time to log on here recently, as I had two deaths in the family, including one of my parents which I had to tend to. I found out a week or so ago I was listed as the beneficiary for my father's life insurance policies he had at his job and through his bank, and in the upcoming weeks will have a decent sum sent to me (won't disclose exact #s for privacy).

What I can say is that I will be looking to move in early 2019, and buy real estate. What I am trying to decide is where exactly I will go. I am putting a cap on my purchase at $300,000 cash, and will likely purchase in late January, starting to look seriously in early December.

Where would you go in the U.S if you had that money to buy a house, and were focused on not borrowing any money (no mortgage) ?

Generally speaking where is your homebase in the US currently?
11-24-2018 09:22 PM
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treypound Offline
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Post: #9
RE: Real Estate advice - small inheritance
(11-24-2018 09:22 PM)jordypip23 Wrote:  
(11-24-2018 10:56 AM)treypound Wrote:  I haven't had much time to log on here recently, as I had two deaths in the family, including one of my parents which I had to tend to. I found out a week or so ago I was listed as the beneficiary for my father's life insurance policies he had at his job and through his bank, and in the upcoming weeks will have a decent sum sent to me (won't disclose exact #s for privacy).

What I can say is that I will be looking to move in early 2019, and buy real estate. What I am trying to decide is where exactly I will go. I am putting a cap on my purchase at $300,000 cash, and will likely purchase in late January, starting to look seriously in early December.

Where would you go in the U.S if you had that money to buy a house, and were focused on not borrowing any money (no mortgage) ?

Generally speaking where is your homebase in the US currently?

To help answer some of the questions - For the past few months have been focused living close to family in the DC/MD area. I don't plan on staying here.

No wife or gf to worry about, however I would want to be in a city with diverse female population. States with a warm climate and no state income tax is appealing (FL, TN, TX) and among those I have been to Dallas, Houston, Tampa. Anyone have any insight on the current culture in Nashville?

Being near a major airport is a must.

Regarding Real Estate - I would likely live in the property I plan to buy as a primary residence for the next 3 years, and then rent it. I did that with a townhouse I owned in Virginia to after living in it for 5 years buying it during the recession. That is a place I could liquidate now however I don't "need" that money, and only hope to repeat that success with the next purchase.
11-25-2018 05:32 AM
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jordypip23 Offline
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RE: Real Estate advice - small inheritance
(11-25-2018 05:32 AM)treypound Wrote:  
(11-24-2018 09:22 PM)jordypip23 Wrote:  
(11-24-2018 10:56 AM)treypound Wrote:  I haven't had much time to log on here recently, as I had two deaths in the family, including one of my parents which I had to tend to. I found out a week or so ago I was listed as the beneficiary for my father's life insurance policies he had at his job and through his bank, and in the upcoming weeks will have a decent sum sent to me (won't disclose exact #s for privacy).

What I can say is that I will be looking to move in early 2019, and buy real estate. What I am trying to decide is where exactly I will go. I am putting a cap on my purchase at $300,000 cash, and will likely purchase in late January, starting to look seriously in early December.

Where would you go in the U.S if you had that money to buy a house, and were focused on not borrowing any money (no mortgage) ?

Generally speaking where is your homebase in the US currently?

To help answer some of the questions - For the past few months have been focused living close to family in the DC/MD area. I don't plan on staying here.

No wife or gf to worry about, however I would want to be in a city with diverse female population. States with a warm climate and no state income tax is appealing (FL, TN, TX) and among those I have been to Dallas, Houston, Tampa. Anyone have any insight on the current culture in Nashville?

Being near a major airport is a must.

Regarding Real Estate - I would likely live in the property I plan to buy as a primary residence for the next 3 years, and then rent it. I did that with a townhouse I owned in Virginia to after living in it for 5 years buying it during the recession. That is a place I could liquidate now however I don't "need" that money, and only hope to repeat that success with the next purchase.

Seems like you're already honing in on the types of states / cities that would make sense for you. At that point it might come down to the industry that you wish to work in. Texas probably has the greater number of economic opportunities but Florida has its tropical allure + somewhat faster flights to the DC area. I agree that you should also check out Tennessee. It could be a really tough call in the end, but you strike me as the type of guy to think through this type of decision quite carefully. Best of luck!!!
11-25-2018 07:08 AM
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RE: Real Estate advice - small inheritance
Buy in a place you wouldn´t mind living. One of key principles of real estate investing. Don´t buy in places which will be hot in some years. Unless you would have the magnitude to make it happen by yourself.

The rates are going up so prices will come down. If you buy prime location properties prices come down but bounce up again. If you buy just because it´s cheap and there´s a recession you might never get you money back.

Also leverage. Leverage. Real estate is about leverage. If your investing just hard cash put it on the stock market in a REIT. Real estate only advantage regarding securities is leverage. Without leveraging I have no idea why someone would put money in real estate instead of a REIT. Why? So you can deal with tenants? A REIT will give you 6-8%.

https://investor.vanguard.com/mutual-fun...ions/vgsix

If you want to invest 300k. And would leverage it. You could reach 1,5M. Probably buy multiunit. Also you can negotiate a fix rate. Anyway prices will probably come down. So you will need to hold the property. But if your receiving rents. Which should also come down. You don´t care about prices unless you need to sell.

Best place to invest in real estate right now is Greece.

Chinese are buying houses in Greece with their visa cards for fuck sake.

https://www.ft.com/content/ac95453a-e02d...22a430c1ad

"Greece’s central bank is investigating a series of unusual transactions by Chinese citizens who used their credit cards to buy property in Athens and join the EU country’s flourishing “golden visa” scheme.

The credit card purchases were made through two leading Greek banks, National Bank of Greece and Eurobank, a central bank official said.

The deals were arranged by an Athens-based real estate company, Destiny Investment Group, that offered apartments and villas in the Greek capital to overseas buyers with a starting price of €250,000 — the minimum property investment required under the visa programme.

The golden visa scheme was introduced in 2013 at the height of Greece’s financial crisis in a bid to increase tax revenues and stem a sharp fall in property prices.

The probe comes as the cash-strapped Syriza government debates whether to extend the scheme to other investments such as Greek sovereign bonds and companies listed on the Athens stock exchange.

A senior banking official said more than 250 property transactions were made by Chinese buyers using credit cards, “potentially violating Chinese regulations on capital movement and Greek law on issuing golden visas”.

“This is not a trivial matter but the investigation will determine whether any illegal actions have taken place,” the same official said.

More than 9,000 non-EU citizens and their close relatives were given renewable five-year residence permits in the first nine months of this year, compared with 6,200 in the whole of 2017. Half the visas issued this year went to Chinese citizens, according to the Greek ministry for migration.

Several southern EU member states operate golden visa schemes, among them Spain, Cyprus and Portugal which all require non-EU citizens to invest more than €300,000 to qualify for a residency permit.

Destiny acquired credit card terminals with roaming capacity from the two banks to be used by Chinese buyers for property purchases in Greece. The company sent several terminals to Beijing to facilitate such transactions, according to the senior banking official.

Evangelos Papaevangelou, a prominent Athens businessman and founder of Destiny, has denied any wrongdoing.

In a statement, Mr Papaevangelou said the transactions were legitimate on the grounds they had been approved by the banks that owned the terminals and by the institutions that issued the cards. Destiny stopped the transactions in September after a request by National Bank.

Chinese property investors are now required to make a purchase by transferring funds through a bank to a Greek lawyer and notary acting on their behalf.

Recommended

Money laundering
EU prepares crackdown on ‘citizenships for sale’
Last year China UnionPay, the Chinese state-owned bank card network, explicitly banned the use of its credit and debit cards for property purchases. Analysts in China said a significant portion of Chinese foreign spending classified in official data as overseas consumption is actually disguised capital flight, including investment in property.

A Eurobank official said “only a small number” of unusual transactions took place before its internal monitoring system triggered checks by compliance officers. Eurobank asked Destiny in May to stop using its terminals for Chinese property transactions.

Greece’s supreme court has ordered the anti-corruption prosecutor to carry out a separate probe of the transactions to determine whether any money-laundering has taken place.

Most applicants for golden visas are middle-class Chinese investors taking advantage of a boom in tourism to Athens to buy properties that can generate income as short-term holiday rentals, according to local real estate companies. The visa law specifies that purchases can only be made through bank transfers or cheques.

“We’re not catering for the Chinese super-rich, our investors are prosperous middle-class city dwellers who want a European base from which they can travel to western Europe on their golden visa,” said the owner of a small Athens real estate company who declined to be identified. “For €250,000 they can buy a three-room apartment with a view of the Acropolis or the Aegean Sea. They see it as an attractive opportunity.”


My 2 cents and keep the change.
11-25-2018 09:26 AM
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treypound Offline
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RE: Real Estate advice - small inheritance
Visiting Nashville next weekend and Houston/Dallas the weekend after to see if I can eliminate one of those cities.
11-25-2018 08:24 PM
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Off The Reservation Offline
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RE: Real Estate advice - small inheritance
If you pay cash for a primary residence it will reduce your monthly outflow in terms of not having rent or a mortgage, but you are in essence still spending the money on consumption.

In some towns, 300K will still buy a small apartment building or small office building. If you are up for such a project you could create an income for yourself and still own the asset.

What do you think of this idea?

Roosh Wrote:Only full digestion of the red pill can make these situations come out in your favor.
11-25-2018 10:29 PM
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Australia Sucks Offline
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RE: Real Estate advice - small inheritance
Off the Reservation, not that I am a real estate expert or anything (although I do own some rental properties), but I am not convinced your idea is a sound one. In a developed economy like Australia or U.S.A. buying an apartment complex or office building (even a small one) for $300,000 U.S. dollars would be well below the replacement/construction value of the building (not even considering the land value). During a global financial crises/recession when real estate markets are depressed it might be a viable idea. But at this point in the real estate cycle you will likely be looking at dogs with some pretty serious fleas on them. If you find such a property with such a price tag most likely it will either be a dilapidated building which needs serious repair/renovation, a declining/dying town, a place with crippling property/land taxes, a place with horrible tenants, etc. Such a strategy may work for an experienced and professional/semi-professional real estate investor but it is unlikely to be a good strategy for a real estate novice. It would be like a stock market novice trying to invest in junior mining stocks.
(This post was last modified: 11-26-2018 04:11 AM by Australia Sucks.)
11-26-2018 04:10 AM
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RE: Real Estate advice - small inheritance
(11-25-2018 09:26 AM)bigswingingdick Wrote:  The rates are going up so prices will come down. If you buy prime location properties prices come down but bounce up again. If you buy just because it´s cheap and there´s a recession you might never get you money back.

Also leverage. Leverage. Real estate is about leverage. If your investing just hard cash put it on the stock market in a REIT. Real estate only advantage regarding securities is leverage. Without leveraging I have no idea why someone would put money in real estate instead of a REIT. Why? So you can deal with tenants? A REIT will give you 6-8%.

https://investor.vanguard.com/mutual-fun...ions/vgsix

If you want to invest 300k. And would leverage it. You could reach 1,5M. Probably buy multiunit. Also you can negotiate a fix rate. Anyway prices will probably come down. So you will need to hold the property. But if your receiving rents. Which should also come down. You don´t care about prices unless you need to sell.

This is all on the right track.

The reasons for REI are three-fold:

1) Sweat equity. Do work supporting the property, pay yourself.
2) Leverage. Let the bank multiply the power of your money.
3) Tax benefits. The list of potential write-offs is huge.

With that said, OP is interested in paying cash for a primary year-round residence, which eliminates leverage and significantly reduces his tax options. As I understand it, primary residences can deduct property taxes and mortgage interest, and he can add improvements to the cost basis of his home, but all the other tax adventures are closed off. It's a much narrower question.

"He always wanted to drift forever, but through the American Southwest."
11-26-2018 08:48 AM
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Post: #16
RE: Real Estate advice - small inheritance
Example of tax optimization. All cases are different so a consultation with tax lawyer and accountant is advised. Don´t think this can be pulled off with primary residences though:

https://www.zerohedge.com/news/2018-10-1...axes-years

Step 1: The Purchase

Kushner Companies buys a property. The majority of the money for the purchase comes in the form of mortgages and personal loans from banks.

Step 2: The Write-Off

Under the federal tax code, real estate investors can write off the purchase price of the building — excluding the cost of the land — over a period of decades. Although Kushner Companies has spent little or no cash of its own, the firm takes large annual deductions based on the theoretical depreciation of the building.

Step 3: The Loss

The property generates cash for the Kushners. But any earnings, which would be subject to the federal income tax, are swamped by the amount that the company is taking in write-offs for depreciation. The result is that Kushner Companies records a net loss for tax purposes.

Step 4: The Investors

The company passes on that loss to its owners, including Mr. Kushner and his father, Charles.

Step 5: The Offset

The loss can be used to offset the Kushners’ income in the year it is recorded, and it can be carried forward to cancel out future income or to get refunds for taxes they paid in previous years.

Step 6: The Deferral

When Kushner Companies sells a property, it can use the proceeds to finance a new acquisition. If done within the right time frame, the company can indefinitely defer any capital-gains taxes it might owe on the sale of the original property.

Step 7: The Result

The outcome is apparent in Jared Kushner’s tax returns, which were summarized in the documents reviewed by The New York Times. Here’s an example from 2015.

Income

W-2 income: $198,000.
Taxable interest: $536,000.
Dividends: $1,000.
Capital gains: $974,000.
Deductions

Tax losses from real estate and other partnerships: $3.5 million.
Tax losses carried forward from previous years: $4.8 million.
Total adjusted gross income

Negative $6.6 million.
Tax refund

$4,000.
11-26-2018 09:04 AM
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RE: Real Estate advice - small inheritance
(11-26-2018 09:04 AM)bigswingingdick Wrote:  Example of tax optimization. All cases are different so a consultation with tax lawyer and accountant is advised. Don´t think this can be pulled off with primary residences though:

I didn't want to pontificate to OP unless he expressed interest, but he could also put all of this money into a tax-managed mutual fund like VTMFX and make his mortgage payments out of that. There might be some bumps but the expected return over a longer time horizon should fully offset his mortgage payments. At the end of the mortgage term, he has his original principal and his house, plus he enjoyed the mortgage interest deduction. This would be a very conservative form of leverage that requires minimal effort, and when he rolls over to his next property and starts cash flowing this property, he can just roll the automatic payments over with it.

"He always wanted to drift forever, but through the American Southwest."
(This post was last modified: 11-26-2018 09:26 AM by Jetset.)
11-26-2018 09:22 AM
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RE: Real Estate advice - small inheritance
My condolences to your loss.
11-26-2018 05:11 PM
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Spectrumwalker Offline
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RE: Real Estate advice - small inheritance
(11-24-2018 10:56 AM)treypound Wrote:  Where would you go in the U.S if you had that money to buy a house, and were focused on not borrowing any money (no mortgage) ?

Southern California. Rents are sky high, constant demand for rent. And you can sleep with a smile on your face knowing your tenants are most likely liberals who are sending you a check every month.

Downside, property taxes are ridiculous. You may still have to work to cover property taxes. Not sure but housing prices may be higher now, but still worth investigating.

Dreams are like horses; they run wild on the earth. Catch one and ride it. Throw a leg over and ride it for all its worth.
Psalm 25:7
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11-26-2018 05:22 PM
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RE: Real Estate advice - small inheritance
(11-24-2018 10:56 AM)treypound Wrote:  Where would you go in the U.S if you had that money to buy a house, and were focused on not borrowing any money (no mortgage) ?

Southern California. Rents are sky high with a constant demand for rent. And you can sleep with a smile on your face knowing your tenants are most likely liberals who are sending you a check every month.

Downside, property taxes are ridiculous. You may still have to work to cover property taxes. Not sure but housing prices may be higher now, but still worth investigating.

Dreams are like horses; they run wild on the earth. Catch one and ride it. Throw a leg over and ride it for all its worth.
Psalm 25:7
https://youtu.be/vHVoMCH10Wk
11-26-2018 05:24 PM
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Off The Reservation Offline
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RE: Real Estate advice - small inheritance
(11-26-2018 04:10 AM)Australia Sucks Wrote:  Off the Reservation, not that I am a real estate expert or anything (although I do own some rental properties), but I am not convinced your idea is a sound one. In a developed economy like Australia or U.S.A. buying an apartment complex or office building (even a small one) for $300,000 U.S. dollars would be well below the replacement/construction value of the building (not even considering the land value). During a global financial crises/recession when real estate markets are depressed it might be a viable idea. But at this point in the real estate cycle you will likely be looking at dogs with some pretty serious fleas on them. If you find such a property with such a price tag most likely it will either be a dilapidated building which needs serious repair/renovation, a declining/dying town, a place with crippling property/land taxes, a place with horrible tenants, etc. Such a strategy may work for an experienced and professional/semi-professional real estate investor but it is unlikely to be a good strategy for a real estate novice. It would be like a stock market novice trying to invest in junior mining stocks.

I wasn't writing to you, Investment Troll. There are millions of commercial buildings in the US, and many markets and many situations.

Your broad generalizations and down talking to the readers (fleas / dogs / etc) is just more of your whining. Your post does not amount to more than a tiny wasted server space. Let the 1s and 0s be in peace ready and waiting for an actual response pls - A sound idea!

Should the OP or someone else be interested it could be a valuable conversation. Everyone knows there are horror stories possible and no one is suggesting that type of investment nor do we need your dismissal of the idea all the way from Sydney, a dismissal formed from regurgitating financial talking heads.

The only thing that sucks is your attitude.

Add this post as Blame the Market:

(10-26-2017 08:30 PM)Off The Reservation Wrote:  ....
The rules of game repudiation / game envy:

Blame the city.

Blame the country (your username.)

Blame the circumstances.

But never, ever blame or work on your self.

Roosh Wrote:Only full digestion of the red pill can make these situations come out in your favor.
(This post was last modified: 11-27-2018 02:57 PM by Off The Reservation.)
11-27-2018 02:56 PM
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Laner Offline
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Post: #22
RE: Real Estate advice - small inheritance
Up here in the north west there are more high paying jobs than people to fill them, and yet more people to fill the jobs than there are apartments to house them.

As long as you can keep your mortgage small and pay a reasonable HOA you can cash flow pretty good up here. Stay in the high end condo market in a great location, market to the tech scene, and look for guys on 1 year contracts.

Downside is 2bdrms in good locations are $750k - $1mm.

I know a guy who owns over $30mm in real estate, all the while living in his 2bdrm apartment. He played the AirBnB game and used the cash flow + super tight rental market to keep leveraging. But if the market crashes and vacancy rates go up, he is one of the first ones to be screwed. But if he keeps killing it and paying down these mortgages, he is gonna win bigly.
11-27-2018 03:50 PM
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Off The Reservation
Australia Sucks Offline
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Post: #23
RE: Real Estate advice - small inheritance
Off the reservation instead of calling me a troll do you care to list some viable examples (e.g. weblinks) of the types of properties you speak of? Care to talk about the process of finding such properties and where to look, etc? That would add far more information to the thread than calling me names. Otherwise your post is completely useless and information free (the same thing you accuse me of doing) without some examples to back it up. I have no desire to start a pissing contest with you. You gave your personal opinion and I gave mine.
(This post was last modified: 12-02-2018 05:05 AM by Australia Sucks.)
12-02-2018 04:58 AM
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