4 ms·

Timescales: How long do you have to turn your 100k into 1mm? (I'm assuming here we're not considering inflation. ) If you need it in 10 years, you're going to

Timescales: How long do you have to turn your 100k into 1mm? (I'm assuming here we're not considering inflation. ) If you need it in 10 years, you're going to need an annualized 25% or so rate of return. That's unlikely. If you need it in 25 years, you can get by with 10%. That's definitely possible, if you follow good principles. On the other hand, if you can put in an extra 50k a year, You should have close to $1mm in 10 years. (550-600k in investment, 400k in growth). Given that you hate people and are super smart, and have a self described penchant for gambling, I would suggest you not try to grow your business, and also that you stay away from the stock market as long as you think timing it is a great plan. All that adds up to (in my mind) buying some real estate. You live in a beautiful vacation spot, and could find property managers so that you don't have to deal with tenants. Your 100k could easily buy a 300k small property, with some left over for unforeseen problems. Try it! It won't fluctuate in value like your previous stock market purchases, that's for sure.

vessenes 16y ago
p.s. Flipping real estate -- eventually, you're going to want income. Transaction costs for real estate are high, man. I guess my major advice is "Slow down. Value stability and income. Keep socking away the money, and invest it in areas unlinked to your primary earning potential (programming)."
- wagerlabs 16y ago
  Buying to rent should result in income uncorrelated to programing.
  - vessenes 16y ago
    Exactly!
  - pontifier 16y ago
    It's not that easy. Ideally yes, but when you get into it you find the scum of the earth will grind your property into the ground and laugh at you as you try to collect a months back rent and damages from an unemployed single mom in court while your newly trashed and un-rentable home sits vacant because her 5 kids ripped it to shreds and it will cost the thousands you spent on repairing the last place to repair this one. But otherwise right on.
wagerlabs 16y ago
Thanks! I don't hate people, I just get tired of lots of people around me and need the solitude of my office. My timeline is 10 years or less and I could, likely, add 50K a year. I don't have a penchant for gambling, I traded twice in ... ugh... 15 years or so. I stopped because I figured I didn't know enough and wasn't capitalized well. Real estate is great long-term. There are some awesome deals to be had in Tenerife as a lot of people are giving up their speculatively bought houses. You can buy a 1-bedroom apartment in a well-travelled tourist area near the beach. This will cost less than 100K in foreclosure. Buying one apartment a year and renting it out to tourists is a great option, so long as the market has hit bottom, more or less. I don't think the Spanish real estate market has hit bottom, though.
- vessenes 16y ago
  No problem, I understand completely, and sorry to call you out on gambling, incorrectly.. : ) You might like this book: http://www.amazon.com/Retire-Early-Live-Million-Dollars/dp/1580622011 http://www.amazon.com/Retire-Early-Live-Million-Dollars/dp/1... He gives some advice about real estate investing for income, and suggests that a 'safe' amount of margin is 50% if you may want income from them to live off. So, you could possibly buy two of those apartments now. If the market drops 30% next year, and you have another 50k, buy another one. The first two are still going to cashflow, and you're making a long-term bet here. In my experience, it's hard to time the market, really any market. I remember being desperate to buy a place in Cambridge, MA while the housing boom was going on in the late '90s. 800 square foot condos were selling for $500k+, in two to three days. Now, 10+ years later, you might have made a little money, net. Meanwhile, in 2008, real estate looked 'risky'. Thinking about asset value first, market pricing second can fundamentally change one's decision matrix; this is one of the big points that Value Investors make, repeatedly.
- roel_v 16y ago
  If they are that cheap, don't buy one paid in full, but buy three with 60% leveraged. Try to rent them out to long term tenants, or at least two of them, and maybe try your hand at the tourists with the third one, see if it can make a significantly higher ROI and get a feel for how much work it is. With real estate, you need to be in it for the long haul. Let your tenants pay the mortgage and put the bit you have left over away so that you can buy a new unit every year or two. Real estate will appreciate with inflation and after 20 or 30 years (or 15 if you want to pay off aggressively) you'll be mortgage free and can retire on the rent. Or you can finance new properties with a mortgage on the equity in the other ones in 5 years... Real estate is awesome like that, but you'll get burned if you see it as a get rich quick scheme.

vessenes 16y ago

p.s. Flipping real estate -- eventually, you're going to want income. Transaction costs for real estate are high, man. I guess my major advice is "Slow down. Value stability and income. Keep socking away the money, and invest it in areas unlinked to your primary earning potential (programming)."

wagerlabs 16y ago
Buying to rent should result in income uncorrelated to programing.
- vessenes 16y ago
  Exactly!
- pontifier 16y ago
  It's not that easy. Ideally yes, but when you get into it you find the scum of the earth will grind your property into the ground and laugh at you as you try to collect a months back rent and damages from an unemployed single mom in court while your newly trashed and un-rentable home sits vacant because her 5 kids ripped it to shreds and it will cost the thousands you spent on repairing the last place to repair this one. But otherwise right on.

wagerlabs 16y ago

Thanks! I don't hate people, I just get tired of lots of people around me and need the solitude of my office. My timeline is 10 years or less and I could, likely, add 50K a year. I don't have a penchant for gambling, I traded twice in ... ugh... 15 years or so. I stopped because I figured I didn't know enough and wasn't capitalized well. Real estate is great long-term. There are some awesome deals to be had in Tenerife as a lot of people are giving up their speculatively bought houses. You can buy a 1-bedroom apartment in a well-travelled tourist area near the beach. This will cost less than 100K in foreclosure. Buying one apartment a year and renting it out to tourists is a great option, so long as the market has hit bottom, more or less. I don't think the Spanish real estate market has hit bottom, though.

vessenes 16y ago
No problem, I understand completely, and sorry to call you out on gambling, incorrectly.. : ) You might like this book: http://www.amazon.com/Retire-Early-Live-Million-Dollars/dp/1580622011 http://www.amazon.com/Retire-Early-Live-Million-Dollars/dp/1... He gives some advice about real estate investing for income, and suggests that a 'safe' amount of margin is 50% if you may want income from them to live off. So, you could possibly buy two of those apartments now. If the market drops 30% next year, and you have another 50k, buy another one. The first two are still going to cashflow, and you're making a long-term bet here. In my experience, it's hard to time the market, really any market. I remember being desperate to buy a place in Cambridge, MA while the housing boom was going on in the late '90s. 800 square foot condos were selling for $500k+, in two to three days. Now, 10+ years later, you might have made a little money, net. Meanwhile, in 2008, real estate looked 'risky'. Thinking about asset value first, market pricing second can fundamentally change one's decision matrix; this is one of the big points that Value Investors make, repeatedly.
roel_v 16y ago
If they are that cheap, don't buy one paid in full, but buy three with 60% leveraged. Try to rent them out to long term tenants, or at least two of them, and maybe try your hand at the tourists with the third one, see if it can make a significantly higher ROI and get a feel for how much work it is. With real estate, you need to be in it for the long haul. Let your tenants pay the mortgage and put the bit you have left over away so that you can buy a new unit every year or two. Real estate will appreciate with inflation and after 20 or 30 years (or 15 if you want to pay off aggressively) you'll be mortgage free and can retire on the rent. Or you can finance new properties with a mortgage on the equity in the other ones in 5 years... Real estate is awesome like that, but you'll get burned if you see it as a get rich quick scheme.