[Matt Flynn]

Hi Lucky,

First if you want my take on real estate, it'd be nice if someone with tech know-how would post a link to my comments in Redux and the other thread about real estate. Yeah, I know, hit edit ands stick it in - whatever I haven't tried it.

1. When did I start playing high-stakes nl. Tommy Angelo mentored me into 20-40 limit from 6-12 and took 20% of me (wins and losses) four years ago. Through him I met Alex, who taught me no limit - specifically how to think about no limit, paying extra attention to pot control, stack sizes and commitment. The fundamentals. I jumped straight into the 10-10-20 nl game at Lucky Chances and lost 30K that year in nl. I won more than that playing limit. Keep in mind I had a full time job with commute and a child, so those are big numbers for the amount of time I put in. Fortunately with the internet and tons of cash games there's no reason to jump straight into the mix now. You can work your way up. Plus the book knowledge is far better than it was, and so is 2+2, and that 10-10-20 game is easier, so you might jump straight into it and do well. And I hope you do.

2. I do not have world class concentration, memory or talent. Fact of life. I do not play short against Prahlad unless there are fish in the water or I am in zen mode or have been drinking. I work a 50+ hour week, then look for real estate, play with my kids and work on customizing the medical records software I bought. Poker has a lot to do with unwinding for me. Were it my primary job I would spend a lot of time studying individual players and the game. Plus there is no way today (barring big tournament wins, which I don't play) that I could make more money playing cards than I can working.

So from there you see my incentive to make myself financially independent as opposed to playing ever-higher stakes poker. I could elaborate about what it's like being a doctor, but nobody cares nor will they until half of us are out of business, which will be 6 years from now if the planned Medicare cuts aren't eliminated. Even if they are smart people are stupid to go into medicine nowadays so you lose either way. At least I can protect myself and my family healthwise, plus my specialty pays well and has relatively low hassle and risk. If the cuts in Medicare go through and the poker games decline only moderately, I will turn pro five years from now.

Real estate cuts my future risk dramatically. It is foolsih for me to play higher stakes when (a) I can make more working, (b) there are such good investments available, and (c) UB 25-50 requires a 200K bankroll in my rubric assuming I do not play shorter than 5-handed. Keep in mind I will NEVER replace my poker bankroll from earned income. In that way, I am a professional poker player. If I go broke, it is back to $0.25-0.50 nl. Or rather heading there, since I've never played that low.

3. My foray into single family dwelling rental properties is coming to a pause because I have spent my available cash. If you are a stock market investor, you should look hard into investing in duplexes, apartments and single family dwellings. Stay away from condos and townhomes with HOA dues as a general rule. I am closing on five more houses (all under 130K for you California types whose eyebrows just shot up) over the next three weeks. They are 95% or 100% financed. Each will run, after management fees, repairs and other costs, about $140/month on average cash-flow negative with $140 going into principle. Breakeven at first but requiring cash infusion. Each will require eventually 6-10K additional funding before rents rise enough to cover all costs. I will own them outright in 19-23 years. Outright ownership is generally not the best strategy. However, for the office and houses I currently own, my goal is outright ownership so that nothing can touch the base income on which I will live. Each house will provide the future equivalent of over $500/month net passive income in today's dollars once they are paid off.

Everything I have done to date is buy and hold. My next purchase will likely be either beachfront property in NC (which remains grossly underpriced) or ultra-custom medical office space. The former would be to flip. The latter is long-range, but with periodic refinancing to allow for positive cash flow earlier on. Prime is now 5.25%. I can remain positive cash-flow on medical space up til about 8.0% on a 20-year amortization. After that the properties would still make good money but would require cash infusion. In 1989 prime hit 10.75%.

I do not do informercial stuff but have nothing against it. The main difficulty is that many real estate agents aren't stupid and will buy great properties before they are listed, and the transaction costs remain artificially high.

My wife and I put the maximum allowed into 401K plans each year. Stockbrokers recommend low-yield bonds as a hedge. We use stocks as our hedge.

If you are young and can afford it you are foolish not to buy real estate. Some factoids for you:

1. You never need more than 5% to close a house.

2. Always roll closing costs into the loans. You merely pay more for the house and get cash back towards closing. There is no financial difference for the seller.

3. Never pay points on an owner-occupied house mortgage. (Points are money you pay up front to get a lower interest rate on your loan.)

4. It is relatively uncommon for people to live in the same home for over 7 years. Therefore, if there's more than a half-point spread between 30-year fixed and a 5-year ARM mortgage (which holds one interest rate for 5 years then jumps to match the market, and usually still works on an imaginary 30-year amortization), you should choose the 5-year ARM as long as it does not trigger private mortgage insurance that you would otherwise not have to pay.

5. Buy houses in decent neighborhoods with decent schools. Schools really, really count.

6. At current market rates and with average or slightly high taxes and insurance, if you put 5% down you end up paying about $640/month for every $100,000 borrowed for a conforming loan, which I believe now means under $330K. That's principle, interest, taxes and insurance.

Check out Loci's post too please.

Matt