Investing 101
Tuesday, August 31st, 2010Author Tex Norton
Tony just posted a 2-part article entitled “How to Get Rich.” I wrote a comment supporting his recommendations and offering some other ideas for your consideration. One of the recommendations I made was to remain in-control of your investment portfolio. Yes, you can hire advisers but you must remain in-charge overall. Below, therefore, I offer more detail on one investment approach you can take in your efforts to become financially independent while retaining full control of all aspects of the investment process.
Much of the main-stream financial advice you hear these days decry real estate as a viable investment vehicle. When I read something like that, I just have to laugh out loud. Where do these idiots come from? They certainly walk among us.
I bought my first commercial store-front property in Garden City, MI in 1957. I did so as a favor to friends who were starting a retail house-paint business and didn’t have enough capital for both the inventory and the property. They bought the property from me a year later as their business prospered.
That got my attention. I then read Bill Nickerson’s book “How I Turned $1000 Into $1 million in my Spare Time in Real Estate” in 1958. In my opinion, there has never been a better “how-to” book written on any subject. I’ve never looked back.
Why would some so-called advisor tell you not to invest in real estate today? Could it be that they just don’t know how to do so profitably? Good answer! So what is really involved to do it correctly?
The following discussion will refer to investment property exclusively as opposed to personal residences. Translated, that means income properties. Please note the operative word “income.” Far too many high-current-income investors overlook that critical concept. It isn’t income property if you have to feed that dog every month. It may provide a tax loss for income tax purposes, but that’s just a plain-stupid way to pick an investment. You make an investment (in anything) because first and foremost, you believe it to be a good investment. Then, if it also happens to have some tax benefits, so much the better – frosting on the cake if you will.
The basic formula is to first compute the Scheduled Gross Income (SGI) of the property. SGI is the total rental income projected as though the property was 100% occupied for the entire year. SGI would also include other incomes such as coin operated on-site laundry facilities. Then subtract the operating costs against that property. These operating costs include property taxes, fire insurance, maintenance, utilities, management, and vacancy factor for the specific neighborhood. There may be many other potential expenses unique to a specific building for which you also need be aware, but these are the basics.
After you subtract the operating costs from the gross income, you have left what is called Net Operating Income (NOI). The NOI is the critical number in any income property evaluation. This is THE number that determines the price you’d be willing to pay for any income property (having already verified that the replacement cost would be higher). How so?
First you have to decide what investment return rate you’re willing to accept on the investment. I’ve never (knowingly) purchased any property that showed less than a 10% Net, Net, Net return. That means that after I’ve paid all the building expenses, I still have 10% of the original purchase price left as in-pocket net spendable each year. From this net spendable, I then subtract any financing charges such as a mortgage. But the key number is the 10% triple-net or whatever minimum return you’re willing to accept.
Believe it or not, some folks are willing to accept less than 10% for their efforts. Don’t ask me why. I wouldn’t even consider such an investment. This doesn’t seem to apply to properties known as “pride-of-ownership” which are usually classified as Class A buildings. I guess somebody has to own them (such as Donald Trump) but just not me. The serious money is made in Class B and Class C+ properties. Class D by the way represents “war zones” which you should avoid like the plague. The only investors I know of that prosper in war zones are affectionately (NOT) known as slum lords.
For a quick numerical evaluation, consider a property that shows a $10,000.00 per year NOI. Recall that all operating expenses have been paid and this is the net amount left over. You would then multiply that $10,000 by the factor 10* (meaning that you want at least a 10% investment return) and you come up with the figure of $100,000.00. That $100k amount is the most you would be willing to pay for this property. Hopefully, you will be able to purchase it for less than $100,000 thus increasing your investment return. Just for giggles, suppose you were able to purchase this property for only $80,000? You still get the $10,000 net annual income but now for just an $80,000 investment expense. Ten thousand dollars divided by $80,000 then equals a 12.5% net return to you.
Here is another way to look at these numbers. If you accept my 10% minimum as your operating number, then you get one-tenth of the cost of the property back from net rents each year. So after ten years, the building has completely repaid you the dollars you originally paid for the building. At the 12.5% figure from above, your building pays for itself in only 8 years.
What happens to your investment when we hit hard economic times such as today? You get wiped-out, right? Wrong! You bought the property on a very stable cash-flow basis. The worst thing that might happen is that you’d have to lower your rents somewhat. We’re still working with a building for which you paid $100,000 but now, instead of $10,000 per year net operating income, you’ve had to reduce your rents by 20% (to keep your tenants). You’ve had to lower your NOI from $10,000 to just $8000 per year. Eight thousand divided by $100,000 is only 8%. Now, instead of getting a 10% return on your building, you’re only receiving 8%. Horrors! End of the world! Not! Couldn’t you live with 8% on your money for a period of time until the economy recovers and you can again increase rents? Does this lead to bankruptcy?
Maybe. It all depends on how you financed your building. Recall that we’ve already covered all the operating expenses. The only additional payment we have is your mortgage payment of principle plus interest (PI). So your financial solvency depends on how much in-hock you went to acquire this property. And this is where the real estate problems lie. All those so-called hot shots out there used so much leverage, that they didn’t leave themselves any room to cover mortgage payments in case of an economic downturn. If you were financed to the hilt based on $10,000 per year income and had to reduce the rents to only $8,000, yes, you might find yourself short of the full mortgage payment. So the correct answer is just don’t over-leverage any property. Isn’t the credit crisis we’re currently suffering a direct result of debt – too much borrowing? Isn’t that how we got into this mess in the first place? So just don’t do it. Be patient and finance a smaller portion of each property so you don’t get caught in this type of squeeze in the first place.
I own several income properties. The lowest net return I have currently is 25% and my highest return is just over 40% net. Yes I’ve owned these properties for years, but I bought them out-of-the-box at these return percentages. It can be done, and you can do it. Anyway, suppose I now have to cut my rents in half just in order to keep my tenants. The upshot is that I’d only be receiving 12.5% to 20% return on my initial investment. I think I could live with that. Did you note that if you can get a 25% return, the property pays for itself in only 4 years? After 4 years, 100% of the NOI is pure operating profit in your pocket. Could this sort of investment program help you establish a more stable retirement program for yourself? Would you really care that the hot shots can’t make a profit in their real estate portfolios? Could you laugh all the way to your bank?
Cheers, Tex
*Footnote
Numbers tend to frighten many people. To save you time and to facilitate quick calculations, I’ve computed the multiplication factors to be used based on what minimum investment return you are willing to accept. To use the numbers listed below, pick the minimum investment return percentage you would be willing to accept. Then use the multiplier factor that I list and multiply that number times the NOI of the building you’re considering to find the maximum price you’d be willing to pay. As you would expect, the higher the return you demand, the less you are willing to pay for the property. This is just a convenient shortcut calculation method.
MINIMUM INVESTMENT RETURN MULTIPLIER FACTOR
6% 16.66
8% 12.5
10% 10.0
12% 8.33
14% 7.14
16% 5.26
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Steve Foste says:
August 31st, 2010
4:31 pm
I fell for the Carlton Sheets no money down, or at least not your money down system. Let’s just say I paid for some of their information. I will admit I did learn a few things, I also figured out that it was extremely risky.
The things that drive me nuts about many of the financial Guru’s is that what they did for their success, most times, is not repeatable by the typical individual investor. That is not to say the success is not repeatable, but the cookie cutter system doesn’t work for all people all the time. They all think differently, and what works for one person is more in tune to the way they think and make decisions.
I don’t think that these Guru’s set out to skin the public, alot of the information was very valid and valuable, but putting it to work was a differnt story.
I liked the article, it covered the basic of what to look for in a very straight forward way, and I know your are right.
I just never had the available cash to approach real estate in this fashion, plus I never really wanted to be a landlord.
I had a customer years ago who is now wealthy, over twenty years he build one home per year and either rented them out or sold them, both sweat equity and income. He was a really neat down to earth person whow did it the right way. He didn’t take risk.
I am not going to say I missed the boat in Real Estate, I just never had the money or could afford the risk to start.
Most of the Guru programs are not about no money down, they are about using other peoples money.
Lets Talk About The Never Ending Retirement Plan : Stock Market Educator says:
September 1st, 2010
2:01 am
[...] Investing 101 | The Texas Ring [...]
Tex Norton says:
September 1st, 2010
10:15 am
Steve-
I don’t mean to pick on you but…..
This series started because Tony wrote a 2-Part article on what it takes to become wealthy. I thought to add a few comments to show what can be done by ordinary folks. After all, that’s how I learned; by watching and reading about other successful folks.
My concern, not only for you but for the entire American population, is summarized in your statement:
“I just never had the available cash to approach real estate in this fashion, plus I never really wanted to be a landlord.”
I wonder if you realize just how damaging that statement can be? What do I mean by that?
With no punches-pulled, I interpret that to mean “I want to be rich but I don’t want to make any effort to get there. I don’t want to get my hands dirty. I’m not willing to do what it takes to become successful. I’ll just fund my retirement by buying lottery tickets.”
Harsh words, I know, but isn’t that how this attitude translates? Do you think my objective was to become a landlord? Do you think I looked forward to cleaning toilets for tenants? After working hard to make a residence attractive for a tenant, do you think I didn’t care that the tenant then proceeded to trash the place? So why would I subject myself to such abuse?
As you might guess, I’ve heard these identical words from hundreds of folks over the past 50 years. And now 50 years later, those same folks are still wondering why they’re still broke. After all, they’ve worked at a “job” and perhaps even saved a few dollars. They just failed to notice that their “job” translates into “just over broke.” They didn’t make the effort to learn the “how” to become wealthy or if they learned the “how,” they weren’t willing to make the effort it then takes to accomplish.
One of my lifelong guiding principles has been: “Life is too short to spend it doing something you don’t enjoy.” It doesn’t say life isn’t worth doing the work it takes to get to the enjoyment part. I’ve had three (3) major careers and a dozen minor ones thus far and I don’t even know what I want to be when I grow up. The reason for these multiple careers is that I continued until they were no-longer fun. Then I quit and found something else to do that was fun. I expect to continue this process for the remainder of my life. But I also worked very hard at each and every career while I was enjoying that career. I got my hands dirty.
The beauty of the American-way-of-life has always been the choice or option to do what works for you. Work doesn’t have to be a “four letter” word. But you do have to work.
Tex
Steve Foste says:
September 1st, 2010
4:27 pm
Tex,
Thanks for the comment and I do not feel picked on.Points well taken. I won’t even put up a defence, it would sound like whining.
I do hope you didn’t take offence at what I had written, I wasn’t putting you in the context of the midnight infomercial.
What I shoul have said was, In a few short paragraphs you laid out a plan that says more than the 1000′s of dollars spent for information.
I kept the same job for 25 years becaus I felt it was the right thing to do, I felt the investment in the retirement plan would get me to the point of a reasonable retirement, not rich but sustainable, at this point it appears to have been the wrong choice.
I will not argue with a man who reads between the lines so well I will mull over your comments
Thank you!
Oldmanriver says:
September 2nd, 2010
6:26 am
Tex,
While I completely agree with you, a person has to be very honest with themselves before embarking on something like investing in realestate. It would probably be worse for someone to invest in something like that not really wanting to do it from the get go than to never do it at all. If the person or a spouse doesnt have complete buy in on the goals and the road being taken it can lead to bad decisions and losing large amounts of money rather than profit. Some people dont have the personality to be a landlord. It takes a certain kind of person. While anyone can do it some people just dont have or havnt developed a personality that goes with that sort of thing. That being said thats not the only way to go about doing things. I think that as a nation we need to reassess the whole retirement ideal. Its very obvious that not everyone is going to be able to do it in the traditional sense. Some people are just going to have to work until they die which realistically there should be nothing wrong with that. Unfortunately we see that as some how failing in life here in the USA.
Steve, rather that worry about retirement, continue with your plan but also think about an alternative to your present work that you have always wanted to do. This is the time of your life when you have a certain amount of freedom. Its not like when you were 20 when there were many paths open to you, but you dont have the responsibilities that you did when you were raising children. You may have to work the rest of your life, thats no biggie but perhaps you should do something that you really enjoy. I dont know how you feel about your current job, maybe its doing that. I would try to think of this time in your life as a way to engage and enjoy life as much as you can. Recognize that you are limited but dont let that stop you from having a good time. When its all said and done its just money and you cant take it with you.
Tex Norton says:
September 2nd, 2010
1:01 pm
Hey Guys:
If I gave the impression that real estate was the “only” route, I apologize. I used real estate as an example of what can be done by regular folks. Want to talk about stocks? I bought my first stock when I was age 10 and am still an extremely active investor so maybe I can offer some competent advice in that area too? What about classic cars? I’ve been restoring cars all my life for both fun and profit. Doesn’t appeal to you? Tell me what you think you would find interesting and within your capability? The point I was trying to make (and the point I think Tony was trying to make) is just do something. What that something happens to be is unimportant. Most folks spend their lives in the “coulda-woulda-shoulda” camp. It’s amazing what can happen if you just step slightly out side of your comfort zone and attempt to be counted.
I had to laugh when I read the “not everyone is suited to be a landlord” comment, OMR. You think I was? I was a totally introverted engineer who knew how to talk to a slide rule; period! I had no social skills. Talk to people? Heaven help me! So guess what? I forced myself to learn. I forced myself to change. I invested the time it took to “fix” that part of my life so that I could feel more comfortable for the balance of my life. It was hard work but I was goal oriented; not means oriented. The objective was far more important to me than what I knew I would have to go through to get there.
I just finished reading the autobiography of Sam Wyly entitled “$1000 dollars and an Idea.” Sam made it from a cotton farm in Louisiana to billionaire status and the Forbes list of the most wealthy folks in the world. He’s 8 months older than I. Sam didn’t have any money either, Steve. But he didn’t let that stop him from accomplishing what was important to him. Couldn’t I now feel sorry for myself because I didn’t make as much as Sam? Do you recall that Col. Sanders was broke at age 65 yet went on to make a fortune with KFC? It’s the fire in your belly; not the stake in your wallet; that makes the difference. Find something that really gets you excited and then go for it! Don’t let the naysayers discourage you. They will do their best to prove you wrong. Just don’t buy that crap.
OMR observed that perhaps not everyone should retire. I agree. My own wife is a perfect example. Try as I might, I could never get her to think seriously about what she’d be doing after retirement. As a result, she is floundering. She’d have been better-off to continue working because she really did enjoy her job. I, on the other hand, had a to-do list as long as my arm when I retired. Every time I cross-off something at the top of the list, I add 3 or 4 more items to the bottom of that list. I’m immortal since I can’t die until I finish the items on my to-do list. I’m so busy being retired, I don’t know when I ever had time to go to my office for regular work. To each his own.
Tex
Oldmanriver says:
September 2nd, 2010
1:27 pm
LOL yes those skills can be developed …it tends to help though when your back is against the wall and you dont have a choice…seems to speed the whole learning process up lol..I wasnt saying that they cant be developed but there are some people out there who simply do not have what it takes to do certain things. I have seen many people follow their dreams and have them turn into nightmares.
On retirement I know people who are retired that are busier than when they were working full time jobs on the other hand I have known many who die after 6 months of watching tv basically because they serve no useful need anymore. Course thats a whole nother issue. Humans werent made to do nothing and just relax, its unnatural. I think having plans and goals is very important folks really need to give a good hard look at what is fullfilling to them and use that part of their life to do that very thing. Not that you shouldnt do that with your entire life but there are a lot of people, I would say most that are in a job because it pays the bills. After your kids leave the house it should be katie bar the door Im doing what feels good for me now.
Linda Brady Traynham says:
September 2nd, 2010
2:56 pm
Guys…If there were ever a reason I urge others to come on over here and see the lively exchanges we have, this set is it. You’re all wonderful and you’re all right. Let me add…don’t ever get too old to stop learning, and I don’t mean just paying attention to what is going on around you. I mean doing it actively, picking up on what you see in articles and researching, and thinking, “It would be fun to…” and “I’ve always wanted to try…” Or even, “Sure sounds like that’s possible…” and “I’ll get a couple of books on that.”
Okay, so we’ll fall down and skin our knees sometimes, but we’ll learn from every failure and we won’t always fail, either. The Texas Ring is a monument to “We can do it,” and what we mean around here by “I can do it” is “I can do it well.” (Ayn Rand quote, of course.) I was just having fun writing letters to the Editor when Gary Gibson’s boss told him to develop some new talent. Flatteringly, he thought of me and asked me to submit an article. Lots of people would have freaked and thought, “I can’t write for an international audience! I haven’t got anything to say all those people want to read. What if they laugh at me?” Not around here! I jumped right in, had a lot of fun, and started roundin’ up mavericks out of th’ underbrush because Gary had asked me to write regularly AND develop new writers. Did it matter that I had never done either? Naw.
Other than the magnificent Tex Norton (whom Gary found just as he did me) EVERY LAST ONE of the writers here on the Ring I found in reader mail. No, that doesn’t mean I’m wonderful. (ROFL; we take that as given, right?!) It means that ALL of you jumped in and gave first. You either said something so perceptive and brilliant I grabbed you or you said something so well I thought, “This is a person who could become a friend and a writer,” and I held my hand out in return. OMR is our resident soft lefty but I first asked him to write an article at least 15 months ago. He has settled on writing long comments which does fine. He’s our stirrer-up and shaker-around. He keeps us from becoming complacent and comes up with good facts.
I am INTENSELY proud of every last one of you, and new readers? All you have to do is say something smart, or just show that you like us and enjoy what we’re doing. This isn’t the Mensa try-outs or anything.
I/we did such a good job that we had more W&G-quality articles than we could use, so Gary suggested we needed to spin off our version of “The Jeffersons,” as he put it–and even I knew The Jeffersons did better than “All in the Family.” Now, this could have been a problem because you all know the only reason I’m more computer-literate than Smidgett, the black kitty from Okinawa, is that I type better, but out of nowhere rides El Cid, or El Publisher, Michael Rough. He didn’t even blink, just twitched his magic fingers, and here we are. (Not to denigrate his beautiful work, just saying that to me the nearly impossible was cleaning up the kitchen or driving a car to him.)
The only mistake we made was not coming up with a better name for ourselves; Gary dubbed us “The Texas Ring,” even though all of us don’t live in Texas, and it had stuck by that time.
Thought about Mensa…ARE any of you members? I suppose so, although it doesn’t matter if you’re not because (Oh, I can be so vain!) you’re all smart enough to be MY friends, and that’s what counts! I am NOT a member, and neither is my son. My husband was and my daughter is. Dancing eyes…Andrew and I think it is “snobbier” NOT to belong. He qualified at 6 and again at 9 when he made the highest score ever posted for admittance to Tacoma’s full-time gifted program, but (like me) he thinks that’s “normal.” Andrew was well into his teens before he finally had to accept that not everyone is “smart.” People still live up to his expectations.
Y’all want to make me mad you start insulting your own intelligence. Have you heard my story about trying to get into graduate school? The connection here is that my score on the MAT elicited a card from Mensa congratulating me for meeting their standards (hah. Plus close to 50%.) and inviting me to join. No, thank you.
What’s FUNNY is that Boston U had to be cajoled into granting me admission. I scored 96/100 (and I know how to do the other 4 now; has to do with hunting vowel/consonant patterns, which I think a perversion of one of the greatest games in the world, analogies) and they said the average score was 18 and they were looking for 22. They didn’t think I’d be happy! Look, people, I can be happy all by myself, so just let me sign up for classes, okay? Oh, gasp…I was young and not NEARLY as nice as I am now, and I got annoyed enough to promise one of them I’d act as stupid as they pleased if they would just let me go to classes.
And my darling Charles? Oh, dear, he’s a mess! (In South’n/Texas parlance that’s a good thing to be.) It is more trouble than it sounds like to accumulate something like 170 college hours without ever quite qualifying for a degree in anything! Just his sense of humor. Imagine a bunch of academics musing, “Well, we could give you a degree in this if you had ever taken Speech,” and “You qualify for a degree in that except you need one more elective,” or “If you had just…” The Navy didn’t take any nonsense; they told him firmly that he qualified as a “degreed” Electrical Engineer and this was his new job, go do it.
I don’t know how I got off on this, exactly, except that one of the things I love about all of you (in addition to how smart you are) is that we don’t take ourselves seriously. We’ve never lost our sense of child-like wonder and we don’t worry about failing. We make our own fun…you’re all so grand. Thank you for being my friends and making TTR what it is, and what it is going to be.
Hugs, Linda
Steve Foste says:
September 2nd, 2010
7:15 pm
Ya know Linda, Tex, OMR, Linda says,
(in addition to how smart you are)
I gotta tell ya I feel a bit dummer all the time, I really think at times that I have forgotten what I knew, but then I think did I really never know it. But then I think well times are just changing and maby what I think and know are not valid today. Does anybody really listen. Have ya all ever noticed how the kids generally never listen until a problem arises, and then they say OH! I see now.
And maybe that is where I am in my life now OH! I see now. Along with possibly 1000′s to millions of Americans today.
This economic crisis will affect and has effected many people in many different ways. And it is very difficult time. Wnat we don’t know is how we will come out of it one way or the other.
I am happy to have met and be a part of The Texas Ring, and no the name is not wrong, go with it and build with it, Texas has a ring to it. It stands for freedom and liberty and we will fight for that, Texas has a stigma of strenth and resolve. Yes I am from Colorado, but that inspires beauty and tourism and skiing and cow town. The Name Texas inspires strength and leadership.
What I was about to say TTR and the various newsletters, and the struggling economy, plus a very dynamic election in 2008, has foreced me to reevaluate my thinking. The plan before was to work, raise the kids, and save for retirement. That may have changed. I now feel that the plan was wrong, the plan maybe should have been to figure out how to be self sufficient in all ways other than just financialy. the old plan was to save enough to survive old age, and maintain until you got there.
My struggle now is change in thinking. How best to do what I think I would like to do and how is that self sustaining. I still run into that old wall, Job security and the cost of self sustenence. How to be independent, but yet not bet the farm, how to not rely on anyone but yourself, no employer to pay into the 401(k), no empoyer to write the check every week. That is a challange to overcome.
I understand the work, the work doesn’t scare me, the risk does.
I am not looking for retiremtent to do less, for some reason I have in my mind to do more. I have no desire to quit working, I love learning, my biggest problem is my iterest change weekly, I want to know this, I want to know that, I want to do this, but also doing this would be nice.
I am going to write a story about “Steve’s Coffee Shop” maybe TTR will publish it for fun. I think it would tell you who I am, what I think at this time in my life, and what I would like to accomplish in my later years.
What you may find in this story will be the all emcompassing value of
THE TEXAS RING. AT least from my standpoint.
The comments above are a bit overwhelming, and I thank you all for the comments, insights, advice, and friendship.
Steve
Kurt says:
September 2nd, 2010
7:41 pm
Smart?!?!? Us?!?!?!? Ya mean we’re not just smart a**es? Yea, I can go with some of the peeps around here being smart. Some. Lol. I know I’ve picked up a thing or three. I can relate to that though Steve, the older I grow, the dumber I feel.
I wish I had stuck to my guns when younger, and saved/invested more. No, real estate was not my cup of tea. My dad was a broker, and he used to tell me that it would always go up, they weren’t making any more of it. I never had the money to work it though, and the thought of a bad tenant burning down the place, or the government adding regs, or…., left me a bit of a lack of taste for it. And I still can’t come to believe that it will always go up for some reason.
But there were times I was offered chances to get in on things. And I could have at least saved more and put it into silver, which I first owned before it spiked. Even buying into stocks would have left me with something. I have to admit I’m in the coulda, shoulda, woulda crowd. It could be a lot easier to prep now, if I had used more wisdom then lol.
Oldmanriver says:
September 3rd, 2010
7:00 am
LOL to put me in the same company as Tex, Tony and others does them all a great disservice. They have actually accomplished something. If I know anything its usually because I made some sort of horrible mistake that cost me a pile of money and a lot of pride. I was doing some consulting work last fall and my brother told me that I should make up cards with the heading “Ive made all the mistakes, so you dont have to” lol
James the Wanderer says:
September 5th, 2010
3:25 pm
Greetings from Denver airport, back inbound to SLC…
There is no advantage to admitting that one belongs to Mensa, I suspect. If you are that smart you should be able to avoid bragging or being cornered into admitting it. Some folks get jealous and others get annoyed, so best not to bring it up…]
Having said that, we are a fairly bright bunch (or wouldn’t have survived this long, in the face of severe obstacles). I’ve always felt that the real proof of intelligence is what you DO with it – whether you manage to protect yourself, your family, and those you care about or were overwhelmed with fear, doubt or self-denial to the point the evil-doers won. Clearly, we’re a very bright bunch by THAT definition.
Off-topic, my dad is home from the hospital, doing vastly better, and I’ve been dismissed to return to studies. I don’t know where they keep the can of miracle juice the Vanderbilt medics poured on Dad, but they literally pulled him backwards out of the grave and patched him up enough to be resting comfortably at home in just under a week. Mom joked it was to avoid being caught in the traffic jams from the first Tennessee Titans home game of the season. I am SO grateful…
They’re calling my flight. My best wishes to all, and we’ll try to locate Roy again in a day or two.
Cheers!
Tony says:
September 25th, 2010
7:39 pm
Hi Folks,
Since I seems to have had a hand in starting this thread, p’haps I should contribute.
First of all, let me quote from my paper:
“I would not presume to tell anyone how to invest. The only advice I would give is to find an investment that you are comfortable with and don’t mind spending some time learning about.”
One guy I know got rich off BASEBALL CARDS.
In terms of real estate, there is a simple no risk way to proceed. Buy a trashed house, live in it and fix it up nights and weekends. When finished, sell it. If it don’t sell, live in it until it do. During the Las Vegas land rush, one guy would buy a new house, put in fences, carpet, sprinklers, lawn, etc, and sell it for a profit of $10k 6 months later. Then he would do it again, all the while working at his “normal” job.
I was substitute teaching in a slum school several years ago. One kid told me, “I can’t do this stuff. I’m dumb.” I lowered my voice so no one else could hear me and I said, “Who the hell kicked the sh*t out of you so bad that you lost confidence in yourself? I can teach my dog to do things. You’re smarter than my dog.” I’ll never know if I shocked him sufficiently.
I hope so. I only had one shot at him.
As I pointed out in my original article. If you save 10% of your salary and get 10% interest, you can “retire” at full salary in 23 years. Such doesn’t require any special skills or risk. P’haps a bit of work getting 10%, but relatively safe second mortgages will easily provide that, as will tax liens.
One of my past jobs was reading electric meters. One house required me to go through the garage to get to the back yard. I noticed a neat car there with a new paint job. Two months later, I again read the house. I noticed a beat out car with some collision damage. Two months later, I noticed a 2 year old car in reasonable shape. Two months later, I opened the garage door and the guy was there. I asked, “What’s going on?” He said, “I’ve got a pretty good job. I used to come home, eat dinner, and watch T.V. One day, I thought, ‘I’m wasting my life.’ So, I went down to the Junior College and took a couple of courses in automotive body work. Now,I buy cars from insurance companies, fix them, and sell them. I turn out about one car a month and averaged about $600/car.” I thought, “I make $450/mo. This guy is making more than me working 2 hours a night.” If he couldn’t sell a car, he just drove it until he could. To this day, I wonder where that guy is financially. (At the time, body work went for about$75/hr. It didn’t take many hours before the insurance company totalled the car.)
And, finally, in terms of me “doing something”, the best I can say is that I tried to do as little harm as possible during my stint as a bureaucrat.
rebel without a job,
tony