- Joined
- Dec 5, 2007
- Messages
- 2,880
QUOTE (RedlineBrett @ Jun 3 2009, 08:58 AM) Well this thread was created to see what investors could do in the market right now and I have not seen one post other than yours that reflects the 1% rule and there are a couple hundred views on this thread already. If deals like this were so prevalent we would be hearing more about them. What I will say is they don`t exist in western Canada.
I`m not going to argue your 50% - even if I don`t believe it. You seem pretty convinced of that. What I will take issue with is forcing cash flow to deal with all possible expenses related to a property when the 40 year historical average for my market shows just over 6% capital appreciation per year. Makes complete sense with rising populations and no new land being created so I use that as a base assumption in my selection criteria.
If you are going to include all of the bad you need to include all of the good. I don`t stare at the raw cash flow my properties earn. That is only one piece of the puzzle. The truest measure of a deal is not cash flow at 100% finance it is rate of return - which brings in the opportunity cost of capital and allows you to measure your real estate investments against other investment options. If throwing an extra 10k at a property doesn`t hurt the ROR that badly and provides the appropriate cushion for operations then it is a sound move.
Well like many REIN members I choose to work to put food on the table and consider my investments to be a `retirement plan` and eventually allow me to transition away from sales and to another part of my business. If you are eating off your cash flow then your standpoint makes more sense to me. I am pretty cutthroat with my sales career and I see the same approach in you with respect to your income properties. No problem - I just don`t see it as the quickest path to wealth.
Future wealth and the hope of a better life is why anyone makes any investment. I would bet if you asked all REIN members with 10 properties or more to contrast their wealth vs. that of their `normal` friends that only have one property I bet you would see a very convincing stat. If you have $5,000,000 of assets in a market that has done 6%/yr over 40 years you will gain more than someone with only $500,000. This is why I elect to do a higher volume of thinner deals. You can call it speculation... but you are speculating the sun will come up every morning too!
Brett, Greg,
Just reminding you there isn`t always a wrong or right approach to RE investing. so in a way, no use to trying to convince others. You`re both correct. Brett is simply giving more weight to appreciation/wealth and Greg to cash flow. Therefore, Brett buys more properties with less net income per door and Greg buys less with higher net income per door. Greg is simply more risk averter. Also, sounds like Brett doesn`t mind being an employee another year or ten while others feel they can`t stand another day at work hence (must) focus more on cash flow. Different people have different ways to do what`s best for them because they`re different not because one is wrong and one is right.
(people also make mistakes and we`re all here to help/learn but that`s when they don`t do what is best for them hence not the case here
)
Regards,
Neil
I`m not going to argue your 50% - even if I don`t believe it. You seem pretty convinced of that. What I will take issue with is forcing cash flow to deal with all possible expenses related to a property when the 40 year historical average for my market shows just over 6% capital appreciation per year. Makes complete sense with rising populations and no new land being created so I use that as a base assumption in my selection criteria.
If you are going to include all of the bad you need to include all of the good. I don`t stare at the raw cash flow my properties earn. That is only one piece of the puzzle. The truest measure of a deal is not cash flow at 100% finance it is rate of return - which brings in the opportunity cost of capital and allows you to measure your real estate investments against other investment options. If throwing an extra 10k at a property doesn`t hurt the ROR that badly and provides the appropriate cushion for operations then it is a sound move.
Well like many REIN members I choose to work to put food on the table and consider my investments to be a `retirement plan` and eventually allow me to transition away from sales and to another part of my business. If you are eating off your cash flow then your standpoint makes more sense to me. I am pretty cutthroat with my sales career and I see the same approach in you with respect to your income properties. No problem - I just don`t see it as the quickest path to wealth.
Future wealth and the hope of a better life is why anyone makes any investment. I would bet if you asked all REIN members with 10 properties or more to contrast their wealth vs. that of their `normal` friends that only have one property I bet you would see a very convincing stat. If you have $5,000,000 of assets in a market that has done 6%/yr over 40 years you will gain more than someone with only $500,000. This is why I elect to do a higher volume of thinner deals. You can call it speculation... but you are speculating the sun will come up every morning too!
Brett, Greg,
Just reminding you there isn`t always a wrong or right approach to RE investing. so in a way, no use to trying to convince others. You`re both correct. Brett is simply giving more weight to appreciation/wealth and Greg to cash flow. Therefore, Brett buys more properties with less net income per door and Greg buys less with higher net income per door. Greg is simply more risk averter. Also, sounds like Brett doesn`t mind being an employee another year or ten while others feel they can`t stand another day at work hence (must) focus more on cash flow. Different people have different ways to do what`s best for them because they`re different not because one is wrong and one is right.
(people also make mistakes and we`re all here to help/learn but that`s when they don`t do what is best for them hence not the case here
)Regards,
Neil
