HOW.....will you prosper.....

[Cat Man Du]

This came out of the $1,000,000, etc. THREAD.

WHAT are you doing to position yourself in this NEW economy??

HOW...will you prosper......WHAT steps have you OR you are going to take?? Regardless of either INFLA. or DEFLA.?? :coffee:

 

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[Rem]

I am actually thinking of positioning myself as a farmer. I will provide food in exchange for money and tangible assets.

 

[GlobalWealth]

I am actually thinking of positioning myself as a farmer. I will provide food in exchange for money and tangible assets.

I went to a finance conference in Zurich in February and Jim Rogers was one of the speakers. He suggested this and and made a great argument for farming. If you look at many agricultural commodities, they are currently trading at very low prices. Coupled with low prices for RE and cheap mortgages, this might actually be a good time to become a farmer. Not sure if you were joking or not, but this could be a real opportunity.

 

[Forza]

If the world economy collapses why don't they say, 'Screw this gold standard/bartering system, that's damn hard. Let's just print a new currency and give everyone $1,000. Milk costs $1 per litre, etc, etc'?

 

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[Cat Man Du]

This is WHAT I’m DOING!

RE-FI’S

As part of my property portfolio I have 2 SFH that I re-fied. 2 years ago.... giving me my total cash back that I invested into these homes. I have them rented which covers my carrying costs ( PITI )& maintenance, and now gives me very little cash flow, but I have NO MONEY tied up in them. I am now using that CASH to purchase REO’s at a price that gives me much better returns than I ever received before. My last purchase was a SFH for $25,500 and even after some minor re -hab costs gives me $850 rent a month. No mortgage on the property as I used my re-fi money to pay for it so most of the rent is free & clear increasing my ROI dramatically.

LINE OF CREDIT

Back a few years ago I read in RDPD and other real estate books about the importance of having a line of credit or lines of credit. Now I’m a cash guy and had my own, but I secured both a business and a personal line of credit. The business one had never been used since I obtained it. I ran across an inexpensive REO - to make a long story short ... I used the credit line for the purchase and minor re-hab. Total $ about $32,000 - flipped it for $62,000. I did a chicken-little and got the bank to knock off another $6,000. I was proud of this because I used NONE of my own funds - used the banks funds to purchase their REO and make my profit. Cost was 3.25 % ( $ 260.01 interest paid for 3 months) Paid it off at the second closing. In and Out - NO money out of pocket. REO purchases that have CASH as the purchaser --- GETS the banks attention. CASH TALKS to banks.

I am keeping a good amount of cash in the bank for future purchases -- doesn’t matter the interest paid - It’s only there for the liquidity use.


To expand on this......................I'm now buying the $50,000 to $75,000 properties.

My nitch is the age restricted complexs 55 years and over.

I resell to DINKS......d ouble i ncome n o k ids. These clients can either pay their rent or are able to purchase.

I will do several of these this year. 

 

[CommonCents]

I'm at a social venture capital conference in Miami this week focusing on Latin America and Caribbean. There is some good oppty so far. I like the mobile payments area, many third world countries are already doing it out of necessity from lack of infrastructure. I think it'll be big in the US as well.

 

[thetalover]

Wow. Interesting thread. More ideas more ideas! I'm loving this.

 

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[Rem]

I went to a finance conference in Zurich in February and Jim Rogers was one of the speakers. He suggested this and and made a great argument for farming. If you look at many agricultural commodities, they are currently trading at very low prices. Coupled with low prices for RE and cheap mortgages, this might actually be a good time to become a farmer. Not sure if you were joking or not, but this could be a real opportunity.

Yeah I am dead serious. My wife is a Veterinarian and she would do farm calls and small animal. I would work to sustain a farm to sell food. I would have a lot of competition up my way though. There are many farms here in my area. I would have to offer something different.

 

[GlobalWealth]

I posted this in another (slightly controversial thread), but will recap it here. I won't go over what I did leading into the economic crisis, only what I am doing now.

My consulting firm provides asset protection planning for entrepreneurs and investors. I truly believe that we will see a surge in entrepreneurship and thus a surge in investment in productive assets in the future. Because of this, my firm capitalizes on helping entrepreneurs legally structure their assets to minimize litigation risk and maximize tax benefits. We also help clients diversify their assets by offering more complext structures for higher net worth individuals like private placement life insurance, capitive insurance, and various offshore services. Sorry if this sounds like an advertisement, but this is what I am doing and why.

My firm is diversified globally as I have clients from around the world and I am paid in almost any currency. This allows me to hedge my currency risk and exchange funds between currencies. Right now, I am mostly interested in commodity producing currencies like the Canadian dollar, Aussie dollar, Brazilian real, and Russian ruble. Speaking of Russia, I recently became a columnist for the largest Russian business magazine and fully intend to gain many more Russian clients due to this relationship and exposure. My first column doesn't publish until May though as I missed the April deadline (oops).

In addition, I also manage a small investment partnership. I invest partner funds through various investments. From this perspective I do see significant inflation coming and therefore I plan my portfolio to gain from this. Without going too deep into my methods for portfolio management, I basically keep less than 30 holdings at any one time. As long as you diversify your portfolio among different industries, countries, currencies, there is no need for a larger portfolio. You actually don't gain any statistical benefit from holding 100 stocks, contrary to popular belief.

Within the portfolio, I tend to invest in market leaders within their industry as they tend to suffer less in downturns if they have the leadership position. I invest mostly in companies that pay dividends and are consistent dividend payers and growers. Right now I am capitalizing on the low interest rates with a couple MBS REIT's (also discussed on another thread). I am heavily invested in commodity based investments with gold and silver miners, gold and silver ETF's, natural gas pipeline companies, and a couple of shipping companies.

Additionally I sell options for income and to reduce my cost basis on existing holdings. I then use the cash to buy other income producing assets like dividend paying stocks. I also reinvest dividends through the companys' DRIP plans. I do have a few speculative plays, but for the most part, the portfolio is very well diversified and well hedged. I also track my trailing stops on each position and sell without emotion. This is very critical, don't love your stocks, use them. Right now my portfolio holds a bit over 25% in cash and it is still up 7.7% since January 1st compared to 2.3% for the S&P500.

 

[GlobalWealth]

Yeah I am dead serious. My wife is a Veterinarian and she would do farm calls and small animal. I would work to sustain a farm to sell food. I would have a lot of competition up my way though. There are many farms here in my area. I would have to offer something different.

I have thought about this a few times, but 1-I'm not interested in RE investing, and 2-its kinda hippie-ish. But here goes;

Build a self-sustaining apartment community. One that has some sort of energy producing capacity, ie wind, solar, geothermal, etc. Have each unit built with 'in-unit' trash disposal that takes it to a central pick up or compost location. (I have actually seen this with in a few neighborhoods where there are physical pipes in the home where you put your trash, push a button and it works a bit like flushing the toilet). Have entertainment on site; pool, theater, hiking trails, fitness center, etc. Have a small farm on site where each unit owner/renter is a co-op owner of the yield. I would also have a community well(s) instead of relying on municiple supply.

I think this could be very appealing to some, but you may find the 'customer' base to be too small. There are lots of other ways to improve this idea and other things to add to the community, but this was just a start.

 

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[Rem]

Apartment community would be cool. I have thought about this before but not too heavily. Never looked into actual figures and costs etc. Just the concept.

With the economy south for a sustained period it would probably be easy to find tenants.

 

[andviv]

With the economy south for a sustained period it would probably be easy to find tenants.

This is a statement I am not sure of... i mean, I am seeing more defaulting renters, so long-term leases may not mean that much anymore...

Of course, disclaimer... RE is 100% local, so what happens in one place is not the same somewhere else.

 

[Cat Man Du]

Global said:

I also track my trailing stops on each position and sell without emotion.

This is the KEY..............can be applied to any endevor...any business! Thanks Globe

This is a statement I am not sure of... i mean, I am seeing more defaulting renters, so long-term leases may not mean that much anymore...

Of course, disclaimer... RE is 100% local, so what happens in one place is not the same somewhere else.

BECAUSE of the influx of renters....you now have the pick of the CROP. We now have tenants that were middle-class homeowners....in most cases THE BEST you could have!:smxG:

 

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