At the airport flying to FL, I decided to check out the self-help books, and picked one up for the hell of it called "The Weekend Millionaire's Secrets to Investing in Real Estate" by Mike Summey and Roger Dawson.

I've talked in person with some people who have done this and recommended it, and figured I would see what it's about.

I've only read half the book so far. I'm sure it's more complicated than buying a house for a price that you can make work for you, so that you're making money of renting it, long-term, negotiating etc.

Just wondering who does this, good and bad parts, experiences etc.

I'm prepared for some ridicule. I know it's not a get-rich-quick scheme, it takes time. Holding the house for the long-term for renting and cash-flow, not flipping them.

 

First of all, never take any financial advise you get from books. If these guys knew how to invest they'r be investing and not writing books.

Second, in case you've been living in a cave without TV and Radio, the housing market is in a slump following an easy credit driven boom which pushed housing prices to way overvalued. The correction is still in it's early stages. The market is running out of buyers who can qualify for mortgages even at the very lax criteria being used. There are 1.6 trillion in ARM's due to be reset soon which will cause a lot of people who bought overpriced houses hoping to flip them before their payments went up by sometimes 50% to lose their entire investment.

Wait a couple of years and you might be able to pick up some distressed properties at bargain basement prices but right now there are few buyers and lots of sellers who haven't gotten the message yet.

The best thing to invest in right now is energy stocks and energy commodities. Oil in the ground is priced at around $3-4 bbl while it's selling at over $70.

But don't take my word for it. Find the rich people and companies and find out what they are buying and what they are selling. and quit buying self help books.

Edwin

 

a couple frieds of mine in FL work with Homevestors, they buy older houses and fix them up and flip them for good money, they make great money, im am talkin buying CHEAP and selling for 20K+ profit from what they got in it

 

Edwin...beats me, I just know there's got to be other ways to have money work for me than me working for it, and I'm trying to figure out what my options are at this point.

 

Well lets just take a look at investment properties. If by chance you have managed to buy a physically solid investment property, you still need a way to make it pay for itself. That's where the problems start. With properties dropping in value, mortgage rates so low, anyone that is a responsible, bill paying citizen has either bought or is certainly now on their way to buying property. There are very few individuals who simply rent because they don't want the responsibility of owning. Many...not all...but many people finding they have to rent because they can't afford to buy probably can't afford the rent you would have to charge them to cover your expenses. This as a landlord = many pains in the back....just south of the belt line. Just my 2 cents from being an investor.

 

I have been investing in real estate for the last 30 years. I have made money and lost some (not much). This is the worst I have ever seen the market. My advice to young people is to stay on the sidelines until we see how it shakes out. just my .01cents

 

All time best investment advice= buy low, sell high. If you can float the mortgage while having a zero occupancy go ahead and buy a rental prop. This is very tricky. College towns offer the best rental markets for 9 months out of twelve, year round. These props are usually known to investors and aren't real cheap. They are valuable and hard to obtain. Stay away from the slums. Commercial props are the best, but high priced and vulnerable to local factors. EdwinSmith sounds like he's been there and offers sound advice. If you like books, read Robert T.Kiyosaki, Rich Dad, Poor Dad. A realistic book.

 

I second Rich Dad, poor Dad. Real good starter book. The millionaire next Door is good too. About investing, I'm young 24 years old so I don't have the time in it yet, but I believe you can make money in this field some where, just maybe not your home town. Everyone needs a home. Rich, poor, bad credit, good, married, group of friends, etc., I buy land and then build spec homes on it. My 2nd to last home was on the market so long that my profits were minimal with construction loans being so high in percentage. You kinda have to jump in, learn from your profits and losses, really explore your area before you put up your cash, credit, home equity, etc.

 

wait until the time is right in the mean time stick your money in a liquid spot like a cd for the moment i have been waiting ten years for a slump and parking spare cash in the stock market . record high makes me scared. if you invest always put in stop loss orders so your stock will sell. i am putting cash that i could stand to loose in the solar and alt. energy stuff and if we get a dem. in the white house and some in congress moneys will flow to these guys like honey. but wait for dips to buy these stocks are very jumpy.

 

It's true that everyone needs a home but where that home is located is key. In areas where the market is hot and prices have been forced up by demand is where the most building has occurred and as a result there are a huge surplus of homes. In other areas like rural Kansas the prices are relatively low but there aren't many buyers. Here in Coffeyville houses stand empty until they fall down. With the recent flood and destruction that may change but it will be short lived. The time to get in it was 6 years ago before prices were bid up and rates were still down. Now that rates are heading back up the market is cooling. These things run in cycles. It has happened before and it will happen again. The world is awash in liquidity because of loose monetary policies. When everyone is telling you it's a good idea to invest in a thing and there are lots of books and news about people getting rich investing in a thing it's a sign that the cycle is already on the back side of the curve and heading down. You need to find something that's a solid bet but is cheap because nobody else is talking about it. Everybody hates big oil because gasoline is so high. But there is a coming shortage of cheap oil. Prices will only go higher. Wars are being fought and more will be fought to control the dwindling oil reserves. If you can get a piece of what's left you could make lots of money. On the other hand the higher prices are spurring development of alternatives such as ethanol and biodiesel, solar and wind power. Nuclear power will make a comeback as people realize that their irrational fears are less than the fear of freezing to death. Buy what others haven't discovered yet while the price is still low. Sell when everybody is telling you that it's the greatest thing in the world. People who bought houses on spec last year are having a hard time selling the while vacancy rate is going up because builders are still building while buyers are dwindling. Lenders are tightening up on requirements because they can't as readily sell their paper to institutional investors which then resell the risk into the derivatives market and nobody knows how big that market is but it is in the trillions.

Edwin

 

Edwin what do you do if you don't mind me asking? Any additional advice for todays market? You sound like a pretty good mentor. Thanks

 

When you're purchasing real property the devil is in the details. Best to do your homework! Don't go by the evening news report. Be more specific, what's happening in your county or region? Just like in English class---who, what, when, where, why, how? That specific information will help you make an informed decision.

I had a friend who was a teacher and lived in a small town nearby. He "tried" to sell his home for about 2 years, and when he did was dissatisfied by the "loss" he felt he took. At the same time he sold his house I purchased a 4-plex in the same town. It was in the nicest part of town and the nicest apts in town in my opinion. He told me I was nuts.

He just focused on his trouble getting rid of his home, how he disliked the town, etc. I saw a power plant with 3,000 employees and outages and expansions going on on a regular basis and those workers had no place to live. Two new banks, new pharmacy, new post office, new library. Had positive cash flow from day one.

 

I am a computer consultant. I study the markets as a hobby and I invest in sound assets. Real estate is a good investment for a long term but unfortunately the speculators have run up the prices because of all the easy credit. Hopefully the prices will come down but right now an investor should look elsewhere. If you already own your home and your mortgage is at a good low rate then keep it, but don't take on more debt looking to flip it or to spend the equity as so many have done and are now finding it difficult to make the payments. Right now I have zero debt.

I'm investing in gold/silver and other hard assets for preservation not profit. There is way to much uncertainty out there right now to take chances. If you want to gamble then you should look at the fundamentals and see what the profit potential of an investment is. Past performance is no indicator of the future. Never has been and never will be. Just because your brother in law made a lot of money in real estate last year doesn't mean you will make a lot of money next year.

Here is an example of the problems in the real estate market from a newsletter I get. "The Mortgage Bankers Association says 0.58% of ALL mortgages entered foreclosure in the first three months of this year. That's the highest level in U.S. history!" That's 1 out of 175 mortgages are in foreclosure! This is not a healthy market at all.

As I said before, if you want a good bang for your buck and you have the money to gamble, look at energy stocks. Especially oil in the ground. If you know of any proven reserves that can be got for a reasonable investment you can sell the oil for over $70 bbl. There is lots of coal out there but it's problematical pollution wise. Natural gas is probably a good bet.

More risky would be solar and wind power. Nuclear power plants will be more in fashion as the energy wars deepen but not yet.

If you have a real penchant for risk look at gold mining stocks. Gold will likely skyrocket if foreign central banks start dumping the dollar. The gold/silver ratio is now at 51.56 which means an ounce of gold costs 51.56 times more than an ounce of silver. This ratio is normally around 16. This could mean that either gold is way overpriced or silver is way underpriced. My take is that both gold and silver are underpriced. If everyone suddenly lost faith in the dollar and tried to go buy gold or silver there isn't enough of both together to begin to cover the amount of money in circulation. This means that potentially an ounce of gold could go to astronomical levels but before that happens the dollar will become worthless or as Walter (John) Williams said, when $100 bills become more valuable as toilet paper than anything else we will have hyperinflation.

My advise to anyone in this kind of uncertainty is to get out of anything that is dollar based before dollars become worthless. It's a telling indicator that the Fed has stopped quoting the numbers for M3 which is a broad measure of how much money is out there. Also given the amount of liabilities the US government has in Social Security, Medicare and made worse by the new Medicare Prescription benefits means that there is no way that the government can pay those bills with tax revenues. The only alternative is for the Fed to monetize the debt which is a polite way of saying they'll simply print the money out of nothing. This is the classical definition of inflation.

This is the historical fate of paper money. Roosevelt started it but Nixon made it much worse when he violated the Bretton Woods agreement and allowed the dollar to float from the previous value of $35.00 per oz. Since then the dollar has lost about 95% of it's value.

Edwin

 

Edwin, thanks for sharing, your info is very insightful and well thought out. Kurt

 

Edwin,you said what I have been thinking for 3 years.Just keep buying the gold coins,2 a month.