Thread: I feel stupid for saying this.

Originally Posted by andviv

I have to strongly disagree with this statement.

If this were true, people that have cash (think of MJ, or RussH when he retires, or any other entrepreneur who has cash out) could only make money by working hard again.

This is going against the passive income goal.

Any deal has many components. Know-how, experience, cash, time, opportunity, work are needed in order to make a deal/investment successful.

A would bring the cash.
B would bring the know-how, time and work to make it happen.

No deal can work without these ingredients.

It is about synergy.

It must be this virus that has me down, but I can't explain all that is wrong with this statement.... where is bflbob when you need him?

I'm not going to defend myself, but you have to have some sort of clue what is going on with what you are investing your money in. You can't just say "Oh, yeah, here you go. Here is some money. Go make me some more with it." Personally I like to have my hands in what is going on at every level, otherwise shit never gets done right. People get lazy and very few people can be trusted to start with.

You mentioned people "with money" that can maybe afford to throw a little cash at things like this, but for small guys like the majority here, they need to seriously get involved and not just throw money at something.

Even someone with no knowledge of the stock market doesn't just call some stock broker up and say "Here you go, Joe. Make me some money." I monitor every investment I have and also speak with the broker as to why or why not we should go ahead with something or pull back.

I own 2 duplexes within 30 minutes of where I live. I don't pay a property manager to do anything. I spend less than 10 minutes a month with each tenant, and that is typically when I collect rent. And of that, I'd say that 9 of the 10 minutes is spent shooting the shit with them afterwards. If something small breaks (plumbing, etc) I take care of it myself. Why pay a plumber $75 to come out when I can take 30 minutes of my day or less and fix the problem for $4? If it's something I can't fix, I call someone who knows how to do it. I have a wife and 3 children yet still manage to be able to pick up the phone rather than pay some scum realtor/manager to call for me. The only time I would ever consider paying a manager is if I didn't live in the same area. Obviously, with an apartment complex, one would need hired help, but I would still be 100% sure of what was going on at all times. Owning property can be extremely passive if you are willing to put in a little work. Both of my duplexes were remodeled and tiled by yours truly. Yeah, it took a lot of my evenings and early mornings and weekends, but I was getting my income "passively" much sooner than if I had just thrown some money at people and said "fix it and rent it." The $20,000 and elbow grease I put into them would yet to have yielded profit if I had paid for everything to be done.

So yes. Your obvious recipe of 1 part cash to 1 part knowledge works to an extent that one can synergize and be the money half while someone else does the brute, but it's not that easy and 9 times out of 10 ends badly. I said nothing of having to "work hard" on every new venture someone starts, but any investment that someone just throws money at expecting an easy return is probably about as good an idea as a left handed football. Nothing comes easy and a guy has to be an idiot to think he can make long term income on something he is unwilling to at least learn the ropes of at first.

Forgive me and correct me if I am wrong master Ryan Drake but arent penny stocks supposed to be for long term investments just like regular stocks?

Master Drake? xD

No dude, you can do anything with any stocks. Not all regular stocks are held as long term investments, plenty of people hold stocks for a day, a week, a month, or even a minute. I'm going to be starting to day trade penny stocks.

Originally Posted by RyanDrake

Forget real estate. Why put up so much capital for $200/month cashflow?

Ah...that may be true now. But when I started, I got 115% financing on my first property (a 5-unit). That was an 80% mortgage and a 35% line-of-credit. Back then, the place did cashflow.

Then a tenant committed suicide in one of the places. That took a bit to clean up. The next tenant trashed the place. The next one didn't pay after a couple months. Etc. Then the roof leaked and the ceiling fell in -- while it was vacant. So we remodeled, and the next tenant fell onto hard times. The roof needed more than patching, and the exterior needed painting.

No more cash flow. Well, no more cash flow in our favor.

My second property, a 4 unit, I bought for no money down. The bank extended my line-of-credit, and I bought it for all cash.

So, all said and done, I got in excess of $205k in financing to buy $155k in buildings. Better than no money down.

They cash flow great on paper. Just not in real life.

I've increased rents. A lot. But not enough to cover all the costs.

I'll agree that the PM is eating me alive. But the PM is keeping it passive. Lose the PM, and I'm there painting, shoveling, mowing and showing the apartments every few days. Not so passive, now.

Unfortunately, that's where I'm headed. Probably right after the B&P.

I just dread it when the interest rates start to climb. $205k at 20% interest is a big nut to cover.

Yeah, a lot of deals made sense 4 years ago that are killers today. I feel very fortunate to be fully rented and cashflowing in today's real estate environment. A lot of my buds are having a tough time.

Ryan, you are young. What makes sense today will not work tomorrow. I am still learning that. Problem is, with some investments, it's tougher getting out than getting in. I don't know enough about penny sticks, hedge funds, and futures to advise anyone. I will say this, all of this investing stuff is easy on paper. Not so easy in application. I wish you well.

@ryandrake. are you really 18?

Originally Posted by Bozigian

@ryandrake. are you really 18?

Yep, same age as you, why?

Originally Posted by Runum

Yeah, a lot of deals made sense 4 years ago that are killers today. I feel very fortunate to be fully rented and cashflowing in today's real estate environment. A lot of my buds are having a tough time.

Ryan, you are young. What makes sense today will not work tomorrow. I am still learning that. Problem is, with some investments, it's tougher getting out than getting in. I don't know enough about penny sticks, hedge funds, and futures to advise anyone. I will say this, all of this investing stuff is easy on paper. Not so easy in application. I wish you well.

I totally agree. Theory and Practice/Execution are completely different beasts.

I've been studying paper assets and technical systems for a few months now, as well as networking within the industry (my eventual intent is to manage my own hedge fund).

Once I'm comfortable I'll be entering the markets (for now I'm working on Ecommerce).

@RyanDrake I never expected you were 18 because you talked like you had experience with real estate or is that blfbob. And plus that picture of the horse and the car on your default gives the first impression that you are a man. then i looked at age and it said 18 and i was like 'oh it must be a mistake with his profile'
but yes i have been looking at an ecommerce store. but im doing affiliate marketing for now.

you should check out warriors forum. just type it in google.

Originally Posted by Bozigian

@RyanDrake I never expected you were 18 because you talked like you had experience with real estate or is that blfbob. And plus that picture of the horse and the car on your default gives the first impression that you are a man. then i looked at age and it said 18 and i was like 'oh it must be a mistake with his profile'
but yes i have been looking at an ecommerce store. but im doing affiliate marketing for now.

you should check out warriors forum. just type it in google.

The horse is mine (his name is Duke lol). The car is my step fathers.

It was blfbob.

I have no knowledge of Real Estate (Theoretical yes, but not practical) I did make around $25,000-$35,000 in stocks when I was 14-16, but haven't done much since. (I basically bought AK steel and rode it up, then dumped it)

I used my uncle's money and bought it at around $10 and sold it at $55. It's trading at $16 now =p

AK Steel Holding Corporation Co Stock Chart | AKS Interactive Chart - Yahoo! Finance

Yup warriors is a pretty sweet site

Damn already making money at 14? Thats sweet. my hats off to you.

I remember when I was 14. I was a gamer who had no social life and no chance with girls and would eat hotpockets each day and be scared to come out by people looking at my pimple face/

Now the game has changed. Its amazing how things and people change within time

Originally Posted by Bozigian

Ok gang I know here in the real estate section people have been in real estate for quite a long time. Me as an 18 year am still young and have lots to learn including real estate. Now forgive me if i sound stupid for my question.

Suppose (person A) has a large sum of money and wants to invest it in real estate but has no knowledge of it what so ever. And this person wants to give the money to (person B) who is in real estate and decide to buy an apartment complex. Now (person A) wants to get monthly income without doing any of the work or maintenance and (person B) agrees to take care of all the issues with the apartment while both getting part of the monthly income as well.

What would this be called? I mean if (person A) had money to hand over to (person B) who would take care of everything while both get monthly income from the people renting their apartments.

Would that be called a pitch?

There's nothing stupid about your question Boz, as you say, your still young and still learning more things.
And about your question, the situation talks about Joint venture. Doing JV means you trust the person whose your dealing with.

Man this is crazy.....

I started this thread back in January and now its May.

I didnt know crap back then.
I can honestly say that now I know a more about stocks (penny, large cap) and RE.

Maybe first I should buy a mobile home and rent it out and see how it goes when I have more money.

Boz, your thinking about private investors which is great because you always want to use other people's money to purchase and rehab properties. As for your situation right now avoid a REIT, because it will involve a ton of paperwork and you may have to file with the SEC once you reach a certain amount of investors.

What you want to do is form a limited liability partnership and sell shares to raise money. You can form the LLP as the overall and then form an llc under the LLP. Let me know if you need anything and good luck. Roc