[Uncle Erik]

Quote:

Originally Posted by chesebert /img/forum/go_quote.gif Dirt investment is such a pain, you not only have to deal with renters, you will have to maintain the property, pay property tax and deal with nasty home associations. The worst part is your income is taxed at ordinary rate so you lose 40% right there assuming you are in the top bracket (I am assuming you are not putting your properties under a Roth IRA custodian). Sure you can depreciate your property and deduct your expenses, but when you sell your property, all your depreciation gets added back to your basis . The one good thing I like about real property investment is you can leverage up (although that's what got us in this situation in the first place). To put all your eggs in one asset class is not very prudent IMO.

You make some valid points, but it's not as bad as you make it out to be.

We do our own maintenance and screen renters. You only need to run a criminal check on renters - that tells you everything. People with bad credit but without a record tend to pay rent.

We also do the maintenance and upkeep. I won't go into the detail, but if you
set the places up right, you can paint, recarpet and clean the places in about 24 hours for a couple hundred.

As for taxes, etc., you get a boatload of writeoffs. Part is held in trust and we have a corporation for the rest. It's a little complex, but it works.

As for securities, this is the only time since I've been investing (roughly 25 years) that I've pulled out of the market. I don't like what I see. In three or four years, I will go back. Right now, I think security and preservation are most important. My focus is on tangible assets that retain value.

There are other aspects I won't comment on publicly that make this worthwhile, too.

 

[ericj]

Detailed statistical analysis of the behavior of very successful funds vs. less successful funds reveals that the very successful funds just got lucky.

This should come as no surprise, since it's essentially gambling, but fund managers have a hard time believing it.

Which is not to say that a good hedge isn't a decent way to do things - just that if a fund is doing extremely well, that doesn't mean that they are smart - it's more likely that they are either breaking the law and/or lying to you, or it was just dumb luck.

 

[nealric]

Quote:

Soon enough gold is king

That's what they were saying in the early 80s. Those who bought in lost their shirts.

 

[ericj]

Quote:

Originally Posted by nealric /img/forum/go_quote.gif That's what they were saying in the early 80s. Those who bought in lost their shirts.

What's interesting is how closely the price of gold tracks the wedding season in india.

 

[chesebert]

Quote:

Originally Posted by Uncle Erik /img/forum/go_quote.gif You make some valid points, but it's not as bad as you make it out to be. We do our own maintenance and screen renters. You only need to run a criminal check on renters - that tells you everything. People with bad credit but without a record tend to pay rent. We also do the maintenance and upkeep. I won't go into the detail, but if you set the places up right, you can paint, recarpet and clean the places in about 24 hours for a couple hundred. As for taxes, etc., you get a boatload of writeoffs. Part is held in trust and we have a corporation for the rest. It's a little complex, but it works. As for securities, this is the only time since I've been investing (roughly 25 years) that I've pulled out of the market. I don't like what I see. In three or four years, I will go back. Right now, I think security and preservation are most important. My focus is on tangible assets that retain value. There are other aspects I won't comment on publicly that make this worthwhile, too.

I see you have thought this through. As for the "nonpublic benefit" I can guess the "potential benefits" but you probably want to pm me so I can see if I "got it right"

I suspect your Return on Asset net of all tax is no more than 5-6%. This in itself does not scream "great investment". Part of the reason I suspect why you think real estate is the "go to" asset is (1) you are calculating return assuming using a high leverage ratio and (2) real estate will not go down further. Well (1), you can always do that with any asset class, and (2) we have already seen the black swan once (residential real estate can actually go down in value), and who says it won't appear again soon?