Money Wonk question
mhammerman
Posts: 3,769 ✭✭✭
Has anyone heard of Life Styles Unlimited? It's a realestate investment club. I know a couple of folks in it and they are quite pleased but it costs some buks to do. I just thought to query my no BS PM buds to see if anyone has any feedback on the situation with these folk?
Got CASH?
Got CASH?
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Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
If you're not already investing in real estate, my advice (as a pretty successful real estate investor) is to buy 2 or 3 books on real estate investing. There's a highly rated one from the Dummies series. I really like the Unofficial Guide to Real Estate Investing. It's less than $12 on Amazon. These are quick and easy reads, baked for mass consumption. I'd avoid the GET RICH TOMORROW!!!!! books. They contain good advice, too, but they downplay the negatives too much and you need to be aware of the negatives.
Read them. Cover to cover. If you're serious about real estate investing but unwilling to read a couple of books--you're not serious about real estate investing.
After reading them you'll know for sure if real estate is what you want to pursue, and if you need a formal program (which I doubt).
--Severian the Lame
BTW Tony Robbins has a blub in the website.
run for the hills
if i paid $250k or whatever the fee is to join a Real Estate club and it sucked...would i admit it?
it all sounds like a sham
and the Tony Robbins thing....OMG everytime i hear his voice on XM....i change the station.
The main pitch was that they help you buy properties and get them fixed up with their support contractors, bankers, agents and teach you how to work the agents, get reasonable rates from the contractors, get low down financing and cash backing for repairs and expenses, and they have a mentoring program. They even have a contractor membership in the club where you can get Sears contractor prices for new appliances. What's not to like? Once again, a familiar presentation where they explain the virtues of using other peoples time, other peoples money, and other peoples knowledge...right out of the middle 1900's self help books. Then the "90% of all wealth in the US was made with RE", "70% of all millionaires gained their wealth with RE", "This is totally a buyers market with 90% of sales being Bank Owned Property and foreclosures that you get for fractions of the tax valuation.", "Historically, RE appreciates at 8% a year and if you've priced the return on a bank CD lately, you can see that is pretty good money on your investments.", hammer, hammer, hammer.
The basic deal goes like this: You find a property for 85K, put 10 into it (most bop's and foreclosures have problems) and have a paper value (taxable value and comps) of 120K. You hold it for a year and a day and sell it and net 35K. You use this money to get another property, lather rinse repeat until you have 10 properties. You parlay the single family rentals, through sale or equity loan, into purchasing an apartment complex, lather rinse repeat. It's basically a 5-year plan to wealth. Then, I was thinkin...if you put 20% down on 85K or 17K cash, you dump 10K cash or loan into closing, fixing, leasing, insuring, Inspecting, then you are really looking at a positive equity of actually 8K above what you have into it as cash...that's if everything goes good. Then, you live off of the 200-300 buks this thing spits out every month, providing it's leased to good tenants. So you get ten of these things and you're looking at 2K or so a month in income...oh yes, you need a cpa too and you better do your lein diligence on each property or you're buying a situation but...that's what the club is for, they save you from these pitfalls. Then you sell the prop and pay the agent their 6%, or about 7K+change and best I can tell this looks like a wash.
But it is a good looking club so no issues with the organization. As an example, one of the seminars is from the constable about how to evict bad tenants. It appears though (and I don't know the particulars of this) that at some point there is a $10,000 payment that you make to the club that is refunded, in part, each time you purchase a property through the club. They did mention that if you do buy a property and hold it for a year and a day before you sell it, then you are just taxed on long term capital gains from investment income and he mentioned a few tricks that results in paying no taxes on any gains made in RE in addition to the fact that since it's investment income and not wages, it does not affect your social security distribution. His explanation sounded reasonable but I'm not sure if I'm ready to do a face down with the Ir s over capital gains...not a preferred strategy.
So, I have a couple of friends that have joined and they are very stand-up, decent wherewithall type folks so after the seminar, I went to speak with them about my experience. One was glowing...He's a retiree with an excellent pension, 401, and savings and he (they) own property around the country so he is not stressed about the buks. He reminds me that I can use my wifes 401 to invest in property (subconscious alarm goes off in head). He has 8 rentals and is looking at another one. It gives them something to do and they make a few buks.
The other friend is my brother in law and his wife that had joined the club a couple of years ago. I saw them last night at a downtown perfromance but we didn't have much time to talk about business but they both gave me some feedback. I took a few things from the conversation...One, the sister in law said "Don't do it!, don't do it!" The brother in law stated that the program is what they say it is, it will cost you 10K in club activities (cash) that you will get back eventually as you purchase properties with them, but...he asked if I have noticed the RE market lately? He said no one is buying full valued property right now, he can't sell any of the 7 properties he has so he's stuck fixin' these things, running bad tenants out, working the books, and running interference with all the expenses for things that break and wear out like A/C's plumbing, homeowner association issues on the leased property, and meanwhile, he's stuck with it while he humps his real job (oh, yes, his wife is not happy). He couldn't sell any of his properties for what he has in it and he's dried up and not buying any more.
While reflecting on the seminar and the conversations that I had afterward about if I should do this or not I got to thinking about my PM stash...Yeah!
Got CASH?
Edited to add: Commem, the babe situation was thin; must be a better way to gnab chicks.
If you are fortunate to find the next wave and ride it to shore, you're golden. Everything else is reality.
P.S. - I rode the precious metals wave in '77-'80. I'm riding it again. Ye-ha!
I knew it would happen.
The toughest thing is getting that first one and making it positive cash flow. Going from zero to one is the hardest, then you'll know if you like it and want zero, one, or two or more...
I've got one rental that nets $600 a month, takes about 20 hours a year to manage, and gets favorable tax treatment for expenses and depreciation.
Currently shopping for a second one
Liberty: Parent of Science & Industry
Scamarama Seminars and "Programs," Bad.
Owning free-and-clear real estate is the road to wealth and freedom.
The public library has all the books you need to get started.
Yogi Berra
It can be done, and you don't need to join a club. In fact, some of the "benefits" you mention seem more like negatives. I'd pass.
I have 3 single family homes, two duplexes, a four and a six-unit building, and am 75% through rebuilding a 100 year old 9-unit, 18-bedroom mixed use with 2300 sq ft of commercial space. In September I sold a 12-unit, 40-bedroom building. I quit my day job last year and essentially retired at 41.
A couple weeks back I helped (mental & emotional, not financial) my 24-year old nephew buy his first place. It's a 3-unit that he'll live in and rent out. He's already looking for his next place. I'm encouraging to look for his next next place and even his next next next place
--Severian the Lame
Read up and do your homework first.
Put some leather into learning the ropes.
Investigate opportunities.
Put your team together.
Make your numbers work.
Do the deal.
Then, do a better deal.
Lather, rinse, repeat.
I'm going to do this, not with the club 'cause methinks I can figure it out but I'll know more after some reading...and, thanks for the short reading list. I so appreciate the comments, hopefully all can gain from this little exchange. This seems to be a very target rich environment and the RE deals are likely going to keep get better for at least a couple of more years. Those with cash or PM are at a distinct advantage during this current situation.
Real Estate, good.
Capital and will.
Got CASH?
Especially because the days of putting nothing down but your signature, or even 20% for investment property, are over.
It would be tough, I imagine, for someone to get a LTV (loan-to-value) mortgage of more than 70% on a place they don't live in, unless they have lots of other collateral
Liberty: Parent of Science & Industry
these jokels. Also, why would you sell a property and incur a capital gain after one year when
you can do a 1031 exchange and have no capital gain or taxes due? I don't think they are being
above board with the participants. Now this guy does this once a week and maybe more. So,
12 people sign up each week. 6 people get bummed and drop out and don't go further and 6
people actually try to buy a house. But, since they are buying foreclosures and the banks want
owner occupied or investors with cash or a huge down of say 70%, three folks drop out. Now,
there are 3 that buy a property and that makes 12 a month, each and every month. All have to
be rehabbed and their contractor will give you a break! Oh, sure he will. He's probably the only
contractor in town doing this with this guy (and you) and he's giving everyone a discount? I think
that would not be the case. In fact the head guy gets a piece of the contractors business for sending
business his way. So, the price just went up!
Real estate can make folks very rich but it's just like any other job. Hard work, learn the business,
read the books, make your own connections and go slow at first. Not a get rich scheme, especially
in this market.
We have a huge number of foreclosures here in Vegas and last month in my area of 7,000 homes
there were 170 on the market. 40% are bank owned or short sales. There were about 20 BO
sales and ALL were for CASH. Not one had a loan. Investors. Short sales accounted for zero
solds. Banks are sitting on short sale offers even if they are above the asking price. They don't want
to mess with short sales. They force foreclosures. Then the owner is the bank and they are in charge
and don't have a seller to screw with. 95% of short sales end up in foreclosure and being bank owned.
If you have stellar credit and strong in assets you might get one for 30% down with the right lender.
More than likely it will be hard money (not at owner occupied rates) or B paper. Long learning curve.
There are good Realtors that specialize in rentals and investment properties. Go talk to them. There
is a learning curve, so: read and read some more and then go get 'em!
bob
Worry is the interest you pay on a debt you may not owe.
"Paper money eventually returns to its intrinsic value---zero."----Voltaire
"Everything you say should be true, but not everything true should be said."----Voltaire
Cruised my wife's kindle to search amazon titles this weekend and found some books that I would like to read. Hummmmmm, $750 for membership in the club and attending the wonk seminar or $50 for 4 titles and a little leather...no brainer. I do have a good acquaintance that I've used a few times and she is a butt kicker RE agent. Once I get up to running speed here with my reading and study, I'll give her a call. My wife and I can take her to a nice dinner. At that point, I'll likely have $150 in the whole deal unless, of course, the girls start drinking Pinot noir. Plenty of fun for not much buks.
Thanks, all.
i do think the rental market (to purchase) is strong right now. i'd be afraid to leverage with all those other factions of RE agents, contractors, eviction experts, etc. i'm of the K.I.S.S. crowd