Take a Walk in My Shoes

[GoodTiMes]

Early 20's.
Living in California with parents.
Looking to invest...
No experience in investing.

Interested in out of state investment properties.
Poker is sole source of income.

Considering taxes and my unique spending habits I have around 200k free to invest.

What should I do...

Probably not looking to buy a property in Cali
Looking for good hot spots around the country.

Also, should I consider buying a franchise. Don't know anybody who's ever done this...

[Ed Miller]

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No experience in investing.

Interested in out of state investment properties.

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Why?

[Sniper]

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I have around 200k free to invest.

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Where is it sitting now?

[squiffy]

I don't think this is a good time to invest in real estate. The market is quite high, way too high in many places, and interest rates are rising.

And if you are going to buy and manage something yourself, it's better to get something close by, so you can be familiar with the market and visit and maintain and rent out the property on your own.

Getting involved in something out of state is much more risky. You have to find someone else to manage it and you won't be able to easily verify the condition of the property.

[chisness]

also, what are these "unique spending habits"?

[midas]

You should get a grip on reality, buy your own home and move out of your parents house.

haha good one /images/graemlins/smile.gif

[buffett]

Since Ed has already made the *exact same* post that I was originally planning to make, I'll do this one instead....

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Looking for good hot spots

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Why?

[GoodTiMes]

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You should get a grip on reality, buy your own home and move out of your parents house

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Houses cost a lot over here now (Southern Cal)...
If I move out I may just rent until things change.
I'm looking to invest my money in something low risk were I don't have to micro manage it too much.

[Peter666]

Property is a pain in the ass to take care of. Dealing with renters, leasers, and contractors can be a serious chore. Ditto for starting a franchise. You will have no life with all the hours you have to put into it.

I would invest in a good mutual fund and start learning about the stock market through good books listed in this forum.

Buy a pre-construction home from one of the big builders, KB, Pulte, Frontier or Forecast.

hello 2004 called it wants its quick money back

It depends on where you live. You can still make $$ through these pre-construction homes. In my area you can still buy one of these homes at below market value and turn around and sell. If the price goes down before I move in, I just abandon my very small deposit. Risk vs Reward. I will risk 2k anyday to move into a house that has 85k equity built in before I move in. I have done it before and am currently doing it. It helps to have a RE license so you save money on the commission when you turn around and sell.

[DesertCat]

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It depends on where you live. You can still make $$ through these pre-construction homes. In my area you can still buy one of these homes at below market value and turn around and sell. If the price goes down before I move in, I just abandon my very small deposit. Risk vs Reward. I will risk 2k anyday to move into a house that has 85k equity built in before I move in. I have done it before and am currently doing it. It helps to have a RE license so you save money on the commission when you turn around and sell.

[/ QUOTE ]

This worked in Vegas until a year ago. This worked in Phoenix until about ten seconds ago. Sunday paper had nice story on how builders have started to beg realtors for buyers, whereas previously they put the screws to realtors commissions since they had all the buyers they needed. I'm guessing flipping is no longer profitable here...

Its a simple math problem. I buy a home that will be built in 6 months for 350k. If the home values go down drastically in price to make the deal unprofitable, I bail and lose my 2k deposit.

Current comparable prices for the same type of home in the same area are going for 400K-435k.

The builder pays my closing costs if I use their lender. I use an 80/20 loan. I have paid nothing out of pocket. I put the home up for sale and take the 3k per month hit paying off the mortgage until I sell. My wife is an agent so I don't have to pay a listing agent, only the buyers agent. That takes out about 9k out of the deal. Assuming I have to hold onto the home for 4 months before it sells, this is what I stand to gain.

410k Sales Price - 350 PP - 9k commission - 0 closing costs - 4 *(3k) monthly payment = 39K profit

It still works if you know what you are doing and live in the right area.

[Scotty O]

ETF
Exchange Traded Funds
Good Tax advantages