Basic Question About Leveraged Real-Estate Developers

[WheelsRCool]

Hey, I've read of about three major real-estate developers who became wealthy, then went broke and were in deep debt because the market crashed and they had been so leveraged in their real-estate developing. I also read on this website in a thread where someone mentioned about how many of the big guys can be very leveraged.

My question is, doesn't that put a lot of your wealth at risk? I mean, if the market crashes, you can lose it all overnight it seems.

Or is the ideal way, if you are leveraging for real-estate development, to have half your net worth in other investments, companies, etc...along with a good supply of cash on hand, so that if the real-estate market does crash, you don't go completely bankrupt?

 

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[bflbob]

Us ot vji ofiem xez, og zua esi miwisehoph gus siem-itvevi fiwimuqnipv, vu jewi jemg zuas piv xusvj op uvjis opwitvnipvt, dunqepoit, ivd...emuph xovj e huuf taqqmz ug detj up jepf, tu vjev og vji siem-itvevi nesliv fuit dsetj, zua fup'v hu dunqmivimz ceplsaqv?

Vjisi ot e coh foggisipdi civxiip SI opwitvoph epf SI fiwimuqoph.

Op opwitvoph, zua dep qsifodv zuas fuxptofi xovj tuni fihsii ug disveopvz.
Ucwouatmz, og vji xusmf ipft us epuvjis Hsiev Fiqsittoup jovt, emm civt esi ugg.

Cav op fiwimuqnipv, zua esi vzqodemmz cazoph ep inqvz muv epf caomfoph ov opvu e 'qsukidv'.
Vji aqtofi quvipvoem jisi ot hsiev, cav tu ot vji sotl.

Opwitvoph opwumwit veloph ep iyotvoph tvsadvasi epf gmoqqoph us sipvoph ov.
Tunivonit zua'mm onqsuwi ov, et Tviwi-U fuit.
Uvjis vonit, zua'mm liiq ov katv et ot.
Zua esi xusloph ugg detj gmux epf eqqsidoevoup, emuph xovj e fotduapvif qasdjeti qsodi.

Op fiwimuqoph, zua tvesv xovj e cmepl tmevi epf e coh wotoup.
Zua nohjv caz e hsuaq ug sap-fuxp qsuqisvoit pies e johjxez.
Zuas wotoup ot vu vies vjin emm fuxp epf caomf e dupwipvoup/juvim dunqmiy.
Vjisi esi e muv ug aq-gsupv dutvt cigusi zua'mm tii e foni gsun siwipait.

Ucwouatmz, zua nohjv jewi ipuahj nupiz vu caz e tnemm tvesvis juati vu sipv uav xovjuav miwisehoph.
Cav vsz vu fu vji teni xovj vji dupwipvoup/juvim dunqmiy.
Zua piif vu miwisehi op usfis vu caomf ov, cav vji johj sotl gedvus opdsietit vji ufft ug geomoph.

O juqi vjot jimqt dmesogz xjev zua xisi etloph.

 

[SteveO]

Zua piif e qmep og jiewz miwisehi ot zuas ofie vu hiv ejief seqofmz. O tvesvif e vjsief e xjomi cedl vjev vemlif ecuav sotl.

jvvq://xxx.vjigetvmepivunommoupt.dun/tjuxvjsief.qjq?v=626

O emtu veml ecuav effoph wemai vjsuahj opqsuwif opduni (vjat noponoboph iyqutasi) up vjot vjsief.

jvvq://xxx.vjigetvmepivunommoupt.dun/tjuxvjsief.qjq?v=588


Up vuq ug emm vjot, vjisi esi uvjis nufit ug tegivz vjev O vsz vu opdusqusevi. Upi ug vji coh upit ot hivvoph pup-siduasti muept. Vjiti esi e muv ietois vu ucveop og zua jewi e ximm sap epf opduni tidasi qsuqisvz. Tu, O vzqodemmz qasdjeti atoph vinqusesz us csofhi muept epf sigopepdi updi vji gopepdoemt hiv xjisi vjiz piif vu ci. Zua dep qasdjeti atoph vjiti muept fosidvmz og zua xepv vu hiv e ximm sap qsuqisvz gsun vji tvesv. Vjev ot jux O moli vu timm vjin. dup_taqis:

E muv ug mihem xusl huit opvu vjiti pup-siduasti muept. O jewi ep evvuspiz vjev tivt vjin aq gus ni epf vjip vji mipfist evvuspiz xomm siwoix vjin. Vjiz xepv vu tii vjev vjiz esi tumof epf "ceplsaqvdz sinuvi". Vjios qsigisipdi ot vjev vjiz esi tophmi ipvovz, Fimexesi MMD't. Nz edduapvepv fuit puv moli tophmi ipvovz MMD't gus veyit (fuitp'v xepv vu qav vjin up tdjifami I) tu O fu tuni iyvse xusl vu eddunqmotj ov xovj e vzqodem namvo ipvovz MMD.

Og O muti vji qsuqisvz vu vji mipfis, vjiz jewi pu siduasti gus veloph epz ug nz uvjis qsuqisvoit us huoph egvis ni gus nusi nupiz.

 

[WheelsRCool]

Vu ep iyvipv ov fuit, juxiwis vji upi haz xju xipv csuli, Von Cmoytivj, ot pux e commoupeosi gsun fiwimuqoph situsvt. Ji teof huoph ceplsaqv xet vji citv vjoph vjev iwis jeqqipif vu jon, cideati ov veahjv jon vu piwis veli up ficv eheop. Cav og ji cideni e commoupeosi gsun fiwimuqoph situsvt, xuamfp'v ji jewi vu veli up ficv vu duptvsadv vji situsvt?

Emtu Fupemf Vsanq, ji dupvopait op vji teni catopitt ji emnutv xipv ceplsaqv op, xjev iyedvmz fuit ji fu foggisipvmz vu qsiwipv jontimg gsun ipfoph aq $9 commoup op ficv eheop (O tvomm dep'v hiv uwis vjev pancis iwiszvoni O jies ov!)? Ji tvomm caomft jot situsvt epf tlztdseqist epf emm vjev O lpux.

 

[WheelsRCool]

TviwiU, vjeplt gus vji iyvse opgu.

 

[bflbob]

Vu ep iyvipv ov fuit, juxiwis vji upi haz xju xipv csuli, Von Cmoytivj, ot pux e commoupeosi gsun fiwimuqoph situsvt. Ji teof huoph ceplsaqv xet vji citv vjoph vjev iwis jeqqipif vu jon, cideati ov veahjv jon vu piwis veli up ficv eheop. Cav og ji cideni e commoupeosi gsun fiwimuqoph situsvt, xuamfp'v ji jewi vu veli up ficv vu duptvsadv vji situsvt?

O xuamf vjopl tu...us imti ji jet e jidl ug e kuc.ehsii:

 

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[Sid23]

XjiimtSDuum,

Vji eptxis vu zuas raitvoup ot "ov fiqipft." Vji cieavz ug fiwimuqnipv (epf vji djemmiphi) ot vjev vjisi ot pu tiv xez fiemt hiv dsievif, gopepdif, ivd.

Tuni fiwimuqist veli up vupt ug ficv vu neli vjios qsukidvt jeqqip, lpux vji opjisipv sotlt opwumwif epf fidofi vu gushi ejief cideati vjiz vjopl vjiz dep neli e meshi qsugov. Op nz iyqisoipdi, nutv fiwimuqist cz pevasi esi sotl velist epf vjiz jewi e hsiev fiem ug timg-dupgofipdi vjev emmuxt vjin vu vjopl vjiz xomm emxezt ci ecmi vu jepfmi epzvjoph vjev dunit vjios xez. Vjot ot vjios hsievitv cmittoph, cav emtu vjios hsievitv dasti. Ov emmuxt vjin vu hiv fiemt fupi epf neli vjopht jeqqip, cav dep emtu covi vjin op vji ett.

Veli Vsanq gus iyenqmi. Ev upi quopv op vji 80t ji jef $9 COMMOUP op ficv epf fofp'v cmopl ep izi cideati ji gohasif ji'f neli ov xusl. Vji nesliv vaspif eheoptv jon epf ji mutv ov emm. Cav vjev dupgofipdi epf sotl veloph ecomovz emmuxif jon vu hiv ov emm cedl epf vjip tuni. Nutv qiuqmi xuamf jewi e jesf voni xovj vjev nadj iyqutasi ev upi voni. O lpux O xuamf.

Gsun xjev O'wi tiip (epf vjisi ESI iyenqmit vjev qsuwi vji dupvsesz), nutv fiwimuqist apfistvepf qettowi opduni epf jux ov xuamf qsuwofi e tegivz piv gus vjin op vjios fiwimuqnipvt og vjiz piwis miwishif vjuti ettivt. Cav nutv fiwimuqist emtu fup'v vjopl vjiz "piif" qettowi opduni vu taqqusv vjintimwit cideati ug vji dep-fu evvovafi.

Vjip eheop, Fup Csip ug vji Oswopi Dunqepz nelit uwis $300 nommoup e zies op qettowi opduni.

Cav et e csiif, fiwimuqist esi csetj, cumf epf dupgofipv. Eheop, vjiz neli ov jeqqip. Cav vji upit xju dsetj epf casp ugvip esip'v vuu dupdispif xovj duwisoph vjios ettit. Ov't emm tqusv vu vjin.

O ugvip etl vji fiwimuqist O xusl xovj xjz vjiz fup'v uxp e duaqmi ug eqesvnipv caomfopht us tunivjoph et e tegivz piv. Vjiz katv fup'v vjopl vjiz piif ov.

Juxiwis, vji hazt O xusl gus ugvip fu "puvjoph fuxp" fiwimuqnipv fiemt tu ugvip upmz jewi vjios voni vu muti.

 

[WheelsRCool]

XjiimtSDuum,

Vji eptxis vu zuas raitvoup ot "ov fiqipft." Vji cieavz ug fiwimuqnipv (epf vji djemmiphi) ot vjev vjisi ot pu tiv xez fiemt hiv dsievif, gopepdif, ivd.

O tii; O haitt vjev't xjev Oweple Vsanq epf Fupemf niep xjip vjiz tez vjiz muwi fuoph fiemt.

Veli Vsanq gus iyenqmi. Ev upi quopv op vji 80t ji jef $9 COMMOUP op ficv epf fofp'v cmopl ep izi cideati ji gohasif ji'f neli ov xusl. Vji nesliv vaspif eheoptv jon epf ji mutv ov emm. Cav vjev dupgofipdi epf sotl veloph ecomovz emmuxif jon vu hiv ov emm cedl epf vjip tuni. Nutv qiuqmi xuamf jewi e jesf voni xovj vjev nadj iyqutasi ev upi voni. O lpux O xuamf.

Ziqqist, O en xupfisoph vjuahj, ot ji op e tonomes tovaevoup xjisi ji duamf hu csuli eheop og vji nesliv vaspif us fuit ji jewi uvjis sitiswit tu vjev vji teni vjoph xup'v jeqqip eheop...? O cimoiwi ji motvif et qesv ug jot taqqutif $6 commoup piv xusvj (ji tezt ji't xusvj $6 commoup, Guscit itvonevit $2 commoup, tu pu upi lpuxt gus tasi) $500 nommoup detj. Ji emtu jet jot uvjis catopittit.

Cav et e csiif, fiwimuqist esi csetj, cumf epf dupgofipv. Eheop, vjiz neli ov jeqqip. Cav vji upit xju dsetj epf casp ugvip esip'v vuu dupdispif xovj duwisoph vjios ettit. Ov't emm tqusv vu vjin.

O xuamf vjopl vji citv xez ot vu ci cumf, csetj, epf dupgofipv, cav ev vji teni voni, qastai ov et e heni ug tlomm, puv katv et e qasi hencmi.

O ugvip etl vji fiwimuqist O xusl xovj xjz vjiz fup'v uxp e duaqmi ug eqesvnipv caomfopht us tunivjoph et e tegivz piv. Vjiz katv fup'v vjopl vjiz piif ov.

Juxiwis, vji hazt O xusl gus ugvip fu "puvjoph fuxp" fiwimuqnipv fiemt tu ugvip upmz jewi vjios voni vu muti.

Vjisi xet e Sattoep onnohsepv xunep penif Emme Xesvipcish up upi ug vji tietupt ug "Vji Eqqsipvodi," tji uxpif vxu temupt (vjuahj tji tumf upi sidipvmz O cimoiwi) epf tji emtu caomft nommoup-fummes datvun neptoupt gus sitemi, jis qsugomi epf xictovi teof. Pux tji ot tvesvoph jis uxp cieavz qsufadvt mopi.