A recent articl,e Is $1 Million Enough to Retire On?, got me thinking. According to the article, the average American thinks that retiring on $1 million is more than enough.
However, living on a $1 million isn’t what it was a few decades ago. It will only generate between $40,000 and $50,000 a year in income. Assuming that your house is paid off and your kids are independent, that sounds like a decent amount to live on.
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Posted in Real Estate on Sep 13th, 2007 8 Comments »
During the July 4th weekend I went to Las Vegas along with some cousins. Rather than book 3 rooms in a hotel at over $200/night each, we decided to stay in a vacation rental. It worked out to be less than half the price and it was a lot more fun.
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I’ve previously mentioned how much I love investing in Real Estate, with its leverage and all its tax advantages.
But you must have heard about the hedge funds that invested in collateralized debt obligations on subprime residential mortgage-backed securities and are now worthless, mortgage companies like Novistar and American Home Mortgage going bust, home-builders like Beazer Homes (BZH) and WCI Communities Inc (WCI) rumored to be on the verge of bankrupcy, the widespread drop in home prices and a huge spike in the number of foreclosures.
With all this negative sentiment, I bet you’re wondering if it’s a good idea to invest in real estate?
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The past week has seen a dramatic drop in the global stock markets. It first happened in the US and then spread to global markets. It seems to have been started when Bear Stearns announced that 2 of its Asset-backed Hedge Funds where completely worthless.
The two bankrupt funds, the Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. and the Bear Stearns High-Grad Structured Credit Strategies Enhanced Leverage Master Fund Ltd. had bet heavily on subprime loans. (Funnily enough, these sub-prime Collateralized Debt Obligations or CDOs had received AAA ratings from credit-rating companies like Moodys). Most of the investors had no clue what the Hedge Funds were investing in. In fact, the names are rather complicated and misleading too. (Note that investors broke Warren Buffett’s rule of investing: If you can’t explain what a company does to a six year old, you shouldn’t invest in it).
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Continuing on the thread of Mortgages, today’s post is by guest writer Anders Bylund of MortgageLoan.com.
Rampant mortgage fraud has been driving up home prices for years, and it’s not always easy to catch the bad guys in the act. Learn to pick up on the warning signs before it happens to you.
By now, you’ve heard all about the deflating housing bubble. But you might not have heard the whole story. Did you know that some of the inflation in housing prices a few years back came from mortgage fraud on a grand scale? Federal authorities are on the case now, but shady business has been going on for years.
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For most people, their home mortgage is the largest financial commitment they will ever make. However, people will spend more time selecting the kitchen appliances than understanding how mortgages work. Considering that your mortgage will likely be over a hundred thousand dollars, getting a sub-optimal mortgage can cost you tens of thousands of dollars over the life of the loan.
Lets go through some of the common terminology used in the mortgage business.
Fully Amortizing Mortgage : You pay interest and principle payments every month.
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Posted in Investing, Real Estate on Apr 20th, 2007 1 Comment »
In a previous post I discussed the basics of investing in real estate. One of the key steps is having good property management. Property management can make or break your investment. A bad manager will make your investing experience miserable.
Ideally you’d want someone who’s competent, honest and easily reachable. If you can’t reach him or her, your tenants probably won’t be able to either.
Here are the questions you should ask when interviewing property managers or property management companies.
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In a previous post, I mentioned why real estate is such a good investment. However, some people commented that they had gotten burnt by real estate. As with all investments, if you don’t know what you’re doing, there’s a good chance you will lose money. Real estate is no different. So I’ll try to go over some of the basics of investing in real estate.
1. Stick to bread and butter homes
Bread and butter properties are just your basic, no-frills 3 bedroom, 2 bath, 2 car garage homes which are usually around 1250-1500 sq ft. These properties will give you the best rent-to-mortgage ratio.
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Japan’s economy has been dormant for the most of the past two decades but is on the rebound in a big way. It’s the second largest economy in the world and has the third largest stock market after the London Stock Exchange.
Investors have been shying away from Japanese investments in favor of the stronger US economy. This of course is changing rapidly as the US moves closer to a recession and investors are looking to pocket their profits and invest elsewhere.
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Real estate is one of my favorite investments and is great for the purpose of creating wealth. It’s highly leveraged and the government gives you several tax deductions to own it. And if done properly it can catapult you to wealth. What’s not to like?
It all started when I attended a real estate bootcamp in the late 1990s. (By the way, I hate bootcamps that charge you $5,000 or more, but that’s a topic for another post. In short they’re not worth it).
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