Real Estate Strategy

[SHELLY]

She discussed some real estate investment groups and thought of joining one to learn more about the area and the possibilities.

:roll: She's watching too many Late-Night Infomercials..huh?

How old is your friend without the "normal" job--and is that $160K cash all she has saved up for retirement/living expenses/emergencies?

IMO, given the info you provided:

(1) your friend should NOT become a homeowner now or anytime soon

(2) your friend should simply rent and work hard accumulating as much cash as she can in preparation for the hard times ahead and her subsequent retirement (there's not much demand for "artists" during a recession/depression).

(3) your friend needs to avoid any and all "RE Investment Groups"

(4) your friend (with no "normal" employment and irregular income) will have a difficult time trying to convince a banker to lend her "other people's money."

If she insists on getting tangled up with one of these "investment groups" or tries to invest on her own, I suggest you save her some time, effort and heartaches and just flush her $160K down the toilet now.

This woman has "renter" written all over her (which isn't a bad thing). She's obviously drank the koolaide that these "RE Investment Groups" are dishing out...do her a favor and talk her down off the ledge now.

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[Bobby J]

Good advice Shelly. If you have that many questions it is probably best to rent.

 

[mikecat adjuster]

To Shelly's question/statement: "How old is your friend without the "normal" job--and is that $160K cash all she has saved up for retirement/living expenses/emergencies?"

As stated, she's 40ish and to be honest, while 160,000 isn't a lot of money by any means, all is not all too bad. I am 40 and know of plenty people in my age range who don't have $160,000 saved up. I know from your past posts you seem to have a firm grasp of virtually every single subject matter that exists. So I'm sure you know that most people owe on their credit cards and $160,000 probably looks pretty good to them. I actually saw a stat that of the people between the age of 34 and 44, 50% of those people have less than $25,000 in savings. So your question asking whether all she has saved is $160,000, I think is a bit... well. I'll be sure to tell her to work harder too



I personally am renting in Seagrove.

 

[scooterbug44]

$160K goes pretty fast when you're buying/maintaining Sowal real estate and don't have income coming in.

If your friend is just living on those savings w/ no income in this area it may only last her 3-8 years* w/o any large purchases and that doesn't leave much for retirement (which is within 10-15 years depending on her age).

You may not like Shelley's tone, but it's the plain truth more people need to heed.

*That still only allows her to spend $27-53K a year

 

[mikecat adjuster]

$160K goes pretty fast when you're buying/maintaining Sowal real estate and don't have income coming in.

If your friend is just living on those savings w/ no income in this area it may only last her 3-8 years* w/o any large purchases and that doesn't leave much for retirement (which is within 10-15 years depending on her age).

You may not like Shelley's tone, but it's the plain truth more people need to heed.

*That still only allows her to spend $27-53K a year

I totally agree with you. I wasn't saying that $160,000 was a lot of money, it was basically the tone. Shelly seems to be a very intellegent and knowledgeble person, and I have enjoyed and appreciated many of his comments to threads, but yes, the comments are many times, well... there are different ways to say things.

Pertaining to the amount, I know $160,000 can be gone in a flash, particularly if a medical issue comes up and one doesn't have insurance. And obviously you are right that people should be more inclined to save their money, look at the shape of things today in this country. But as I pointed out, at her age 50% of people have less than $25,000 in savings. So while things could always be better, they could also be worse and she's not doing that poorly. And even as to her being 'an artist'. He's 100% right about that not being good in a recession. 100% right. But maybe she's happy and I'm not sure there is a price tag on that.

But as far as buying, I would think, personally, that if she bought something in the 100,000 dollar range she'd be fine. I'd agree that she should probably wait and definately not rush into things. But at $100,000 I've seen things in PC. Not nice like here on 30-A obvioulsy and maybe to some around here that might sound trashy. I'm just saying. That would be enough cushion with $60,000 left over and how she lives, frugally. 10 years down the road, paying rent at $1000 a month would come out to $120,000 and she'd have nothing to show for it. I just don't see renting as a long term option. I know home ownership has worked out well for me. I currently rent but don't see doing it for much, much longer. I almost feel like I'm throwing money away. But only almost, because the way prices are dropping, I guess I'm actually ahead of the game.

 

[scooterbug44]

I am not saying rent forever, just a year or two until she gets a better idea of the area, what is available, and the economy. That gives more time to shop around, suss out deals, neighborhoods she likes and dislikes, and as you yourself have stated - it's a good time to be a renter. From the sounds of it, she is looking anywhere from Crestview to PC and north of the bay to the beach. That's 3 counties of real estate to sift through.

Someone with no income or solid prospects putting all their financial chips in one basket is a bad idea - no matter what their fiscally irresponsible peers may be doing. Per financial planners, if your friend was making $80K a year, she should be putting over 20% of her income towards retirement. Instead she is making $0 and looking at a major purchase w/ continuous and escalating expenses in an uncertain market. The news is full of people who thought they would be guaranteed a major profit on their house and are now SOL.

 

[SHELLY]

As stated, she's 40ish and to be honest, while 160,000 isn't a lot of money by any means, all is not all too bad. I am 40 and know of plenty people in my age range who don't have $160,000 saved up. I know from your past posts you seem to have a firm grasp of virtually every single subject matter that exists. So I'm sure you know that most people owe on their credit cards and $160,000 probably looks pretty good to them. I actually saw a stat that of the people between the age of 34 and 44, 50% of those people have less than $25,000 in savings. So your question asking whether all she has saved is $160,000, I think is a bit... well. I'll be sure to tell her to work harder too

$160K as a stack of money gathering dust in a drawer is fantastic.

$160K in a fully-employed 35-year-old's 401K or IRA is pretty damn good.

$160K as the total assets of a 40-year-old with and "irregular" job that can result in a zero paycheck is OK--but only temporarily.

$160K in the hands of a Real Estate Investor is petty cash.

A person with no clue about real estate and $160K in liquid assets is shark bait to real estate investors.



Don't get me wrong, I think it's admirable that she has accumulated $160K in cash; but $160K doesn't go very far when there isn't any steady income refilling the pot--and it gets worse if one blows the whole wad on a rental and the renter skips out on the rent; trashes the place; the air conditioner breaks down; the insurance increases 3-fold; and the tax bill is overdue.

Florida (and the nation) are littered with people who looked to real estate as "an opportunity for long term investment for their retirement." She should maybe discuss her ideas with a few of these people--they're easy to spot, they are the gray-haired, burnt-out, elderly folks hunched over the fry station at the McDonalds' nearest to you.

Unless she has kids willing to support her in retirement, or a full-time wage-earning fiance in a secure job, she needs to rent a small, comfortable place, keep that $160K nest egg close to her vest and go out to work and continue to add to it.

<P.S. Those indebted 35-44 year olds with <$25K are screwed...talk about setting the bar too low :roll:>

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[SHELLY]

Shelly seems to be a very intellegent and knowledgeble person, and I have enjoyed and appreciated many of his comments to threads, but yes, the comments are many times, well... there are different ways to say things.

...not me and not about this situation.

Pertaining to the amount, I know $160,000 can be gone in a flash, particularly if a medical issue comes up and one doesn't have insurance. And obviously you are right that people should be more inclined to save their money, look at the shape of things today in this country. But as I pointed out, at her age 50% of people have less than $25,000 in savings. So while things could always be better, they could also be worse and she's not doing that poorly. And even as to her being 'an artist'. He's 100% right about that not being good in a recession. 100% right. But maybe she's happy and I'm not sure there is a price tag on that.

But as far as buying, I would think, personally, that if she bought something in the 100,000 dollar range she'd be fine. I'd agree that she should probably wait and definately not rush into things. But at $100,000 I've seen things in PC. Not nice like here on 30-A obvioulsy and maybe to some around here that might sound trashy. I'm just saying. That would be enough cushion with $60,000 left over and how she lives, frugally. 10 years down the road, paying rent at $1000 a month would come out to $120,000 and she'd have nothing to show for it. I just don't see renting as a long term option. I know home ownership has worked out well for me. I currently rent but don't see doing it for much, much longer. I almost feel like I'm throwing money away. But only almost, because the way prices are dropping, I guess I'm actually ahead of the game.

Sounds to me like you're the one encouraging her to take on this RE investment and you're looking for support to back up your recommendation.
<P.S. I'm sure there is a different way to say this too, but I'm expressing my gut instinct. Please prove me wrong.>

 

[traderx]

An individual has maybe $160,000 cash. She does not have 'normal' employment. She is an artist, a painter, where she makes minimal money, and she works elsewhere in an irregular position where she may make anywhere from zero-60,000 plus a year.

She loves the Emerald Coast, but might also want to travel a bit. She sees that the economy here is depressed and housing prices have fallen significantly, and sees an opportunity for long term investment for her retirement. She is 40ish.

Where does she have the money parked?

In the years when she makes "minimal money" from an "irregular position" how does she live? Does she rob her savings?

 

[mikecat adjuster]

...not me and not about this situation.



Sounds to me like you're the one encouraging her to take on this RE investment and you're looking for support to back up your recommendation.
<P.S. I'm sure there is a different way to say this too, but I'm expressing my gut instinct. Please prove me wrong.>

You are funny, Shelly. It's been interesting to watch you over the time I've been associated with this site. You must be a lawyer. That's just my gut. Please prove me wrong.

As far as encouraging her to invest in real estate, I simply was looking for input from those on this site. There are some people here that have lived here a long time, seen many things, and who I look forward to hearing from. I got some great input initially, and then... well, then my friend became the game to play instead of simply looking at the issue I raised.

I personally think she'd be wise to wait. I have not encouraged her to do anything. I just see renting as throwing your money away, although, as I've stated, I think she should rent now while things are in flux and she is uncertain. I myself tend to procrastinate in life, very slow to make decisions, even whether to spend a buck in a covenience store to buy a drink or piece of candy. So you couldn't be more wrong about me encouraging her to make such a big purchase. I think she should get with her company, which is where I work, and beg for work. Then I think she should work as steady as she can for the next several years and thenmake a purchase, because I think then that real estate will be even lower. "Prove" you "wrong"? Are you kidding me. Can I really do that? Or will you keep disecting anything I say, maybe try to point out an inconsistency, demonstrate how I'm trying to lead my friend down the path of who knows what, and trying to justify my wayward logic.

And about "setting the bar low". I know, I'm a low life and well on the bottom end of the bell curve and to site a statistic about my friend doing well compared to the vast majority, is well, setting the bar too low. I think I'll ask that this thread be taken down because quite frankly Shelly, you've infected it. That's just my gut too.