Downsides of real estate

[Nutria]

Donald Trump might be the most famous real estate mogul of all time. Then again, you might think he's Stupid.

We'd call him Stupid if drove multiple companies into bankruptcy.

[TexasHusker]

We'd call him Stupid if drove multiple companies into bankruptcy.

That is a myth. A few of his casinos filed for Chapter 11 reorganization when Atlantic City hit the skids. Donald Trump did not drive "multiple companies to bankruptcy."

Those casinos were barely a blip on the map of the various trump companies. This was a Hillary talking point more than anything else. And an effective one for her sheeple.

Sheeple know just enough to be dangerous.

[disneysteve]

Who says you need to borrow to get into investment real estate?
We don't borrow to make our stock market investments.

True, but most folks aren't making 6-figure investments in the market at one time.

[Nutria]

That is a myth. A few of his casinos filed for Chapter 7 reorganization when Atlantic City hit the skids. Donald Trump did not drive "multiple companies to bankruptcy."

It's darned poor planning -- and sniffs of wishful thinking -- to build elaborate casinos in a HCOEA (high cost of everything area) like New Jersey.

Those casinos were barely a blip on the map of the various trump companies.

Says you.

This was a Hillary talking point more than anything else.

Supporters regard everything negative about a candidate as nothing more than enemy TPs.

And an effective one for her sheeple.

Sheeple know just enough to be dangerous.

That sounds like an insult.

[TexasHusker]

I will add to that, that the Trump companies are/were publicly traded. Had those casinos not filed for reorganization, the board of directors would have breached fiduciary obligation to the shareholders and the shareholders would have sued their asses silly.

[TexasHusker]

It's darned poor planning -- and sniffs of wishful thinking -- to build elaborate casinos in a HCOEA (high cost of everything area) like New Jersey.



Says you.



Supporters regard everything negative about a candidate as nothing more than enemy TPs.



That sounds like an insult.

I'm no Trump supporter. But b.s. is b.s.

I grow tired of people regurgitating sh*t they hear from some politician without doing any of their own fact checking.

[james.hendrickson]

Nutria,

You are correct, the context is key here. Trump had something like 3,000 companies for his various interests, less than a couple of hundred went bankrupt, so as a percentage its very low.

Also, Trump way over-invested in the Taj Mahal in Atlantic City. It started losing money after the 2nd month - that was well before the gaming industry started to shift away from Jersey.

[TexasHusker]

Nutria,

You are correct, the context is key here. Trump had something like 3,000 companies for his various interests, less than a couple of hundred went bankrupt, so as a percentage its very low.

Also, Trump way over-invested in the Taj Mahal in Atlantic City. It started losing money after the 2nd month - that was well before the gaming industry started to shift away from Jersey.

Those companies were not Trump's. They were/are publicly traded. Which makes my earlier point: Trump is leveraging other people's money as is every other Fortune 500 CEO in America.

Good grief why / how is the concept of leverage so difficult. It's not sinful, shameful, or immoral. It's how business works every hour of every day in America.

[GoodSteward]

as soon as you borrow just one dollar against a house you no longer own it outright. If you default on that one dollar you have to answer to a bank. For just one dollar, they can own it. After borrowing it you have to pay it back to maintain all of the investment.

Who says you need to borrow to get into investment real estate?
We don't borrow to make our stock market investments.

I was speaking of someone who primarily has real estate as their retirement and plans to live off the rental. I am not bashing it, or discrediting it. I was simply stating that I don't lump pulling equity into the same category as pulling from 401k, or similar.

It's the same as borrowing aginst your paid for house to buy a car. It puts you in a bind because you owe the bank now. If someone had that same value in a cash account it wouldn't necessarily put them in a bind to pull the same amount of money from their "equity" (savings) to pay for the car. There is no third party involved that would potentially remove all the equity due to the risk of a loan default.

I would like a passive income myself, but I also want a large savings/retirement. I wouldn't consider the house equity part of my retirement cash options. It would be a last resort, or have to make a lot of sense such as trying to avoid pulling too much from your investments and hurt your monthly income too much. But, for just normal practice, like replacing a car or roof, equity isn't a good option during retirement.

That's just my 02 cents. I wasn't trying to discredit real estate in retirement. I was speaking primarily about tapping equity like it's cash, because it isn't.

[GoodSteward]

As far as I'm concerned my RE investment is the same as a dividend paying, income generating stock investment, If you need funds you liquidate stock. Now tapping equity on your personal residence is a different matter imo

I agree with you, except there is a difference between borrowing against a house and selling one. When you liquidate stock, you simply transfer part of it from cash value to cash, and you're done. If you do that with only part of your house, you're not done. You have a debt, and the rest of that "stock" value in that house is part of the collateral that can be taken away. The risk of loss and hassle of owing the bank is a big turn off to me.

[disneysteve]

Folks, please keep the conversation civil and polite. We don't all have to agree but we need to disagree respectfully without making the other person wrong, insulting them, or getting into political matters.

Please back off or this thread will be closed.

[GoodSteward]

All the comments on leveraging make perfect sense, and I would have no trouble borrowing to build a house. HOWEVER, having been involved in the building supply industry for 7 years before my current job, I've seen and heard some pretty rough stuff. One man was doing that building project you talked about, and then the bank had a problem during the recession and the government locked down the bank due to loaning too much money. It's been years and he is still trying to recover from that. That's a rare thing, but part of the risk.

I've also seen men do exactly what you talked about, and the market dropped and they sat on those houses for a long, long time. It wouldn't take but one bad housing market dip, like we had a few years ago, to ruin someone in that business. Especially if he was trying to do it without leveraging. With all the risks, I would never want to try to do this kind of stuff with my cash.

Also, in a bad market, the houses won't appraise for what it cost to build them. My dad runs a building supply store, and he told me people quit building during the recession because it required 60% down just to get a construction loan. Few people had that kind of cash.

I've seen a lot that, at least for this area, doesn't make me want to just jump in yet. I would need to really learn a lot, because I know enough to know it will bite hard if you don't know what you are doing. If you do, you can do really well.

[GoodSteward]

Internet forums are for entertainment. Most of the dialogue is mindless. I'm never going to take anything too serious that I read on a message board. Now I do believe everything that's on TV.

It depends on the forum. This forum is here to help get people on track, save more, and become financially independent. If that is humorous to you, then perhaps your own comments will have less merit from here.

We can have fun here, but I am not here just for the entertainment value. I actually hope to see people improve. It's an outlet for a passion that I have, and that passion is to see people win with money.

[97guns]

I've been exposed to RE investing my entire life. Everyone on my moms side of the family have been investors and all have created a lot of wealth through it starting with my grandfather in the 30's. he was a buy and flipper in Maui making $500-$1000 on a transaction. He moved his family of 4 children to the mainland in the 60's and they all bought RE here, 2 uncles buying commercial properties. One buying 2 RV parks for around $300k and just liquidated in the past 5 years for 3+ million, the other uncle purchased a couple of 3 unit commercial buildings and has 1 left on the market now for 2.1mil.

Both my mom and her sister went the residential route, my auntie ended up with a 4 million dollar estate consisting of 3 duplexes and several houses, my mom has also done very well for herself too accumulating 2 duplexes and 3 homes

In all this time and all the investing that I've seen I have never seen any downside large enough to bust anyone's investment, upside has always outweighed any downside risks

[GoodSteward]

I've been exposed to RE investing my entire life. Everyone on my moms side of the family have been investors and all have created a lot of wealth through it starting with my grandfather in the 30's. he was a buy and flipper in Maui making $500-$1000 on a transaction. He moved his family of 4 children to the mainland in the 60's and they all bought RE here, 2 uncles buying commercial properties. One buying 2 RV parks for around $300k and just liquidated in the past 5 years for 3+ million, the other uncle purchased a couple of 3 unit commercial buildings and has 1 left on the market now for 2.1mil.

Both my mom and her sister went the residential route, my auntie ended up with a 4 million dollar estate consisting of 3 duplexes and several houses, my mom has also done very well for herself too accumulating 2 duplexes and 3 homes

In all this time and all the investing that I've seen I have never seen any downside large enough to bust anyone's investment, upside has always outweighed any downside risks

This is what we need. The learning, experience, and methods developed through generations of success are what all families need. I love reading how families are successful and then pass that success down. Not just financially, but intellectually as well. This is great.