Long Position on Silver and Gold?

[MrPrena]

Seems like you are comparing below securities investors VS above average real estate investors.
Just look at Forbes richest 400.

Let's look at the fee:
secondary market $10mil comission is ~$9.99.
$10mil Real estate commission is ~6% ($600k)

securities are liquid
real estates needs 6% again to sell, if they can sell it.

I don't need to worry about tenant suing me. FEE on ROTH/IRA? Sure, I only pay $9.99 for a fee. It cost far less than fixing a door knob for tenants.

One of benefit I see on real estate investment is the rental income. Oh wait.... I can always write/sell Way out of money call/puts (some calls it Lotto Options) to create income too with nano/pico risk!

Apple and orange as discussed before. One is a leverage, the other one is speculative / pure gambling for profit.

You want real profit as in dividend, get into 30-50 rental units as starter... The dividend is in the $200k a year. For the same amount of investment, I would never see that kind number in stock. And we aren't even talking about the speculative part itself which is Capital/stock gain and loss.

Stock is the biggest loser in my book. 30% tax, highly unstable, elementary for those who wants to start to 'invest,' highest fee (401k, Ira etc) and worst the so called experts in stock make the same mistake every decade or so.

All about leverage.. Because bank is taking 90% of the risk of your portfolio. It's better than trading a stock margin account as if my house burns down, insurance company sends me a check... When the stock market crashes, does your broker care?

Furthermore with leverage, your initial investment aka Downpayment doubles every 12 months or so and mostly written off by your depreciation etc for tax reason.

Finally with rental portfolio, whenever the housing market crashes, rental fee goes up (more profit) and bank takes all the risk on the capitalization, yet when the market is hot, rental fee doesn't go down and YOU gain value. It's almost bullet proof IMHO.

Now back to silver, silver is something I have that is liquid enough and much more stable than cash in the bank.

[sellersm]

Again, I'd encourage you to look at PMs as currency, NOT investment. The rules for each are way different, and to confuse them will lead to undesirable results.

If you want to acquire some physical gold, it's a great time to buy!!

[ChunkyMonkey]

Seems like you are comparing below securities investors VS above average real estate investors.
Just look at Forbes richest 400.

Let's look at the fee:
secondary market $10mil comission is ~$9.99.
$10mil Real estate commission is ~6% ($600k)

securities are liquid
real estates needs 6% again to sell, if they can sell it.

I don't need to worry about tenant suing me. FEE on ROTH/IRA? Sure, I only pay $9.99 for a fee. It cost far less than fixing a door knob for tenants.

One of benefit I see on real estate investment is the rental income. Oh wait.... I can always write/sell Way out of money call/puts (some calls it Lotto Options) to create income too with nano/pico risk!

Not an analysis or market expert like many claims to be, but I do have comparison in real life experience after losing 180k over night during the internet bubble and making it back up in short time in real estate. Fixing door knob etc is property manager's job on each property. You are still thinking capital gain, which I used to too. Forget the capitalization, instead, think dividend. A fair comparison in your post would be between a daily trader and a fix and flipper (both are high risk imho).

Here is another recent real experience of my long time buddy who I finally convinced to leave the market... He had close to $100k in 2 different 401k - which had doubled the past 10 years or so. I convinced him to transfer them into self directed IRA account, since he insisted on not cashing out, or paying the capital gain and get over it.

So he used the 100k in the new self directed IRA to put down payments on 8 different rental units. With today's low low rate, he nets roughly $5000 a month after mortgage, insurance, some HOA, and 8% in property manager fee.

The math is extremely simple, he goes from doubling his retirement in 10 years, to doubling it in 2 years thanks to bank's leverage. Most of all, these are real asset that leverage against inflation, unlike paper money or stock. By switching his portfolio from the stock into housing market, his growth is going 5x as fast. Now, he is learning his mistake. If he wouldve cashed out his 401k instead of going IRA, he doesn't have to pay 30% in the future whem his portfolio will be much larger.

Now keep in mind, in rental units, you must ignore 'capital gain' as everything is for long term (traditional market trend shows that your house will gain 100% of its value every decade or so http://2.bp.blogspot.com/-xy8GnkXGKB...3-jan-2013.png). You can compare this part with stock market (dow jones was at 10000 in 2003 and now barely passed 16000 - 60% gain average).

Of course, most stock brokers/ daily traders love to argue that his picks are much higher than average. Hell, I used to do that during the mid 90s..until the crash and got schooled by a college friend when he showed me his 300 rental unit portfolio. Best part is, anyone with a descent credit can do the exact same. Those days of staring at 3 CRTs are long gone.. !

[MrPrena]

Maybe you looked at the people with below average experience with securities, and I looked at the above average securities investors/traders.
Yeah, you do not need to go to Top 5 MBA Finance school with CFAIII and/or CMT to be an market expert.
Again, cap gain isn't the only way to play market. You can get a consistent income from market as well with less capital than real estate.
Don't get me wrong. People around me do all sort of deals besides securities.
Some people make more during Bull market, and some just do better during bear market.
As you mentioned the 2000 internet bubble, I've seen lots of people who lost majority of their $$. In contrast, I've seen people making tons of $$ by shorting and puts on high earnings multiple stocks to nearly zero.

I recently had a failed acquisition on private equity deal up north. I do value the residential/commercial real estate as well, and know the perks.
Although, I am not a "private capital/equities" or "Leverage Buyout" expert, but I do know some enough to make some $$ for a company I use to work for when I was in late 20s.

I believe your friend is definitely better off invest heavier on residential/commercial real estate than a market.
I do know a kid who is in grad school at CU, and he is making about same net on selling out-of-money puts (again lotto options) with far less capital. He does that every month to collect premium.

Your friend doubling his retirement in 2 years on a real estate from bank's leverage is impressive.
Apple with ~550% in 5yr average is impressive? I am sure people who ONLY invest in real estate would say it is LUCKY.
Forget 550% in 5 years. Would you believe me if I told you that my wife had approximately 2000% CALCULATED (no luck) return her retirement within 6 years off of her ESPP/401K alone?


To reply your last statement. Why are you comparing a real estate to a DJIA? I am sure you know better.
Indicies or Index funds ETFs are for people who just want to have a ride to the market. S&P500 with < 50% gain?
Even a no brainier stocks like NFLX or BBY with LESS THAN 2.0 risk multiple had over 150-320% gain YTD. Oh yeah. that is just on Investing LONG without making INCOME off of writing call/put.

I think people should compare $X/yr income real estate investor to $X/yr income securities investors. Not $X/yr real estate investor to Negative $Y/yr securities investors.

Not an analysis or market expert like many claims to be, but I do comparison in my real experience after losing 180k over night during the internet bubble and making it back up in short time in real estate. Fixing door knob etc is property manager's job on each property. You are still thinking capital gain, which I used to too. Forget the capitalization, instead, think dividend. A fair comparison in your post would be between a daily trader and a fix and flipper (both are high risk imho).

Here is another recent real experience of my long time buddy who I finally convinced to leave the market... He had close to $100k in 2 different 401k - which had doubled the past 10 years or so. I convinced him to transfer them into self directed IRA account, since he insisted on not cashing out, or paying the capital gain and get over it.

So he used the 100k in the new self directed IRA to put down payments on 8 different rental units. With today's low low rate, he nets roughly $5000 a month after mortgage, insurance, some HOA, and 8% in property manager fee.

The math is extremely simple, he goes from doubling his retirement in 10 years, to doubling it in 2 years thanks to bank's leverage. Most of all, these are real asset that leverage against inflation, unlike paper money or stock. By switching his portfolio from the stock into housing market, his growth is going 5x as fast. Now, he is learning his mistake. If he wouldve cashed out his 401k instead of going IRA, he doesn't have to pay 30% in the future whem his portfolio will be much larger.

Now keep in mind, in rental units, you must ignore 'capital gain' as everything is for long term (traditional market trend shows that your house will gain 100% of its value every decade or so http://2.bp.blogspot.com/-xy8GnkXGKB...3-jan-2013.png). You can compare this part with stock market (dow jones was at 10000 in 2003 and now barely passed 16000 - 60% gain average).

Of course, most stock brokers/ daily traders love to argue that his picks are much higher than average. Hell, I used to do that during the mid 90s..until the crash and got schooled by a college friend when he showed me his 300 rental unit portfolio. Best part is, anyone with a descent credit can do the exact same. Those days of staring at 3 CRTs are long gone.. !

[ChunkyMonkey]

Maybe you looked at the people with below average experience with securities, and I looked at the above average securities investors/traders.
Yeah, you do not need to go to Top 5 MBA Finance school with CFAIII and/or CMT to be an market expert.
Again, cap gain isn't the only way to play market. You can get a consistent income from market as well with less capital than real estate.
Don't get me wrong. People around me do all sort of deals besides securities.
Some people make more during Bull market, and some just do better during bear market.
As you mentioned the 2000 internet bubble, I've seen lots of people who lost majority of their $$. In contrast, I've seen people making tons of $$ by shorting and puts on high earnings multiple stocks to nearly zero.

I recently had a failed acquisition on private equity deal up north. I do value the residential/commercial real estate as well, and know the perks.
Although, I am not a "private capital/equities" or "Leverage Buyout" expert, but I do know some enough to make some $$ for a company I use to work for when I was in late 20s.

I believe your friend is definitely better off invest heavier on residential/commercial real estate than a market.
I do know a kid who is in grad school at CU, and he is making about same net on selling out-of-money puts (again lotto options) with far less capital. He does that every month to collect premium.

Your friend doubling his retirement in 2 years on a real estate from bank's leverage is impressive.
Apple with ~550% in 5yr average is impressive? I am sure people who ONLY invest in real estate would say it is LUCKY.
Forget 550% in 5 years. Would you believe me if I told you that my wife had approximately 2000% CALCULATED (no luck) return her retirement within 6 years off of her ESPP/401K alone?


To reply your last statement. Why are you comparing a real estate to a DJIA? I am sure you know better.
Indicies or Index funds ETFs are for people who just want to have a ride to the market. S&P500 with < 50% gain?
Even a no brainier stocks like NFLX or BBY with LESS THAN 2.0 risk multiple had over 150-320% gain YTD. Oh yeah. that is just on Investing LONG without making INCOME off of writing call/put.

I think people should compare $X/yr income real estate investor to $X/yr income securities investors. Not $X/yr real estate investor to Negative $Y/yr securities investors.

You made my point.. No luck, no skill, and easier money on the real estate side. The last statement was to answer your direct comparison between capital gainer to dividend earner. My friend doubled his initial investment in just dividend, not counting the value increases.

You are still comparing capital gain vs dividend earner. In that case, my best deal are 2 properties here in Denver metro area that I purchased for $14k and $32k. Both are still producing me dividend of $800 a month for the last 5 years with increasing rate annually and many fold over in value. Show me one stock that give you that kind of yield on monthly or annual basis on top of the value gain

Doubling capital with just rental income in 2 years is norm in rental business. Especially now that fnma allows 10% on certain investment loan and hard money guys are jumping back in. These folks are not top 'investors' as you put it.

Best of all, bull or bear, we the lowly landlords still get our dividends.

Back on the topic, I look at silver as insurance. I am not sure how some people buy it for the gain of its value.

PS..sorry didnt mean this to become pissing contest lol

[MrPrena]

LOL. no problem on your PS. I deal with this kind of questions at least once a month at a social gathering.
I do somewhat agree that it might be slightly easier to make $$$ on real estate side. It all depends on experience, and which side of headache investor/income collectors are more tolerable.
My parents did that when they were rich. (obviously not rich anymore).


Okay. Stock/Stores/Private Eq/Real estate has to work MORE than a purchase ALONE in order to generate any types of income.
This is probably best way to compare it, because securities investors can generate much higher income than their .01% annual dividends.

CAPITAL GAINS (Comparison in order)
-Buying a company (private equity/capital/or a small store) and selling it for a cap gain only (flip).
-Buying a stock only for a cap gain only.
-Buying a residential/commercial real estate only for a flip (cap gain) only.

DIVIDENDS/INCOMES (Gotta do MORE than a purchase of ANY investments)
-AFTER Buying a company (private equity/capital/or a small store), YOU are operating it for an income at xyz entity.
-AFTER buying a stock, you are writing options (option strategies) based on your position + collecting dinky little dividends, and/or decent one time dividends. <-------
-AFTER Buying a residential/commercial real estate, you are renting the property to a tenants.

You made my point.. No luck, no skill, and easier money on the real estate side. The last statement was to answer your direct comparison between capital gainer to dividend earner. My friend doubled his initial investment in just dividend, not counting the value increases.

You are still comparing capital gain vs dividend earner. In that case, my best deal are 2 properties here in Denver metro area that I purchased for $14k and $32k. Both are still producing me dividend of $800 a month for the last 5 years with increasing rate annually and many fold over in value. Show me one stock that give you that kind of yield on monthly or annual basis on top of the value gain

Doubling capital with just rental income in 2 years is norm in rental business. Especially now that fnma allows 10% on certain investment loan and hard money guys are jumping back in. These folks are not top 'investors' as you put it.

Best of all, bull or bear, we the lowly landlords still get our dividends.

Back on the topic, I look at silver as insurance. I am not sure how some people buy it for the gain of its value.

PS..sorry didnt mean this to become pissing contest lol

[ChunkyMonkey]

DIVIDENDS/INCOMES (Gotta do MORE than a purchase of ANY investments)
-AFTER Buying a company (private equity/capital/or a small store), YOU are operating it for an income at xyz entity.
-AFTER buying a stock, you are writing options (option strategies) based on your position + collecting dinky little dividends, and/or decent one time dividends. <-------
-AFTER Buying a residential/commercial real estate, you are renting the property to a tenants.

You got it backward my friend. Stock/investment/daily trading takes up your time.. just as much as 8-5 job unless you are in the hundred millions column. Real estate portfolio is on the opposite side.

Keep in mind, only fix and flip or fix and rent has to do more work after the transaction. Most portfolio buyer does not do anything other than maybe raising ongoing rent rate when the contracts expire. Same goes with franchise portfolio (smaller margin but huge volume such as McD franchisors. In most instance they buy multiple franchises in order to stay out of the day to day operation side)

An example of ongoing deal...

Multifamily Property For Sale
Braveson Manor

1775 & 1225 West 6th Ave, Craig, CO 81625

• Price:$2,400,000
• No. Units:60
• Building Size:52,272 SF
• Price/Unit:$40,000
• Property Type:Multifamily
• Property Sub-type:Garden/Low-Rise
• Property Use Type:Investment
• Commission Split:3%
• Cap Rate:10%
• Occupancy:92%
• Lot Size:2.33 AC

Description

60 Unit Apartment Building in Craig Colorado. Good unit mix.
Craig CO

Financial Summary

• Actual
• Net Operating Income$240,000

So with net operating income of $240k, 30% down - you double your initial investment in 3 years and earn 30% every year not counting the value gain. No brainer No work needs to be done... part of the cost includes maintenance and property management fee already. Many folks who would rather browse this site or go shooting instead of watching the market find real estate extremely easy, non time consuming, with very minimal risk.

[MrPrena]

I have no doubt in m y mind that you are good at what you are doing. I would love to get some tips to increase my knowledge, so that I can diversify my small/little portfolio that I have (savings which is ridiculously small) into real estate. By means, I am not a Icahn, Ackman, nor Peltz. I am not even close to that.

I almost signed a private cap deal (acquisition) last month; which include a factory and the office up north. For some reasons, I did not go with it.
Yes, I am heavy on securities, and very minimal to no private equities/cap or even a real estates.

I've seen a guy who invested in a motel without too much homework, and they bought a crap hole.
I25 and hwy 119 area is a good example. I know a guy in Castle Rock, who bought a POS motel infested with prostitute and drugee. I am sure he will turn the business around with some renovations.
Church member I know owns a similar type of housing complex in Lakewood, and he is getting sued by tenant left and right, because he didn't allocate his time on doing DD. He got into low income thing with county. lol
This guy has a maintenance crew, but he does some of the easy jobs (such as toilet, light, door fix, etc) on his own on other single family properties at age of 71.
YES. Stock/investment/daily trading CAN takes up your time. However, I am not on the trading floor (for me, home office) every day 9:30-2pm. Maybe I am on the trading desk, when there is some kind of catalyst/earnings. Even that, I can do that off of my tablet/laptop/phone almost everywhere.

I am not saying residential/commercial real estate isn't a bad thing. However, i think there are too much headaches for me.

You got it backward my friend. Stock/investment/daily trading takes up your time.. just as much as 8-5 job unless you are in the hundred millions column. Real estate portfolio is on the opposite side.

Keep in mind, only fix and flip or fix and rent has to do more work after the transaction. Most portfolio buyer does not do anything other than maybe raising ongoing rent rate when the contracts expire. Same goes with franchise portfolio (smaller margin but huge volume such as McD franchisors. In most instance they buy multiple franchises in order to stay out of the day to day operation side)

An example of ongoing deal...

Multifamily Property For Sale
Braveson Manor

1775 & 1225 West 6th Ave, Craig, CO 81625

• Price:$2,400,000
• No. Units:60
• Building Size:52,272 SF
• Price/Unit:$40,000
• Property Type:Multifamily
• Property Sub-type:Garden/Low-Rise
• Property Use Type:Investment
• Commission Split:3%
• Cap Rate:10%
• Occupancy:92%
• Lot Size:2.33 AC

Description

60 Unit Apartment Building in Craig Colorado. Good unit mix.
Craig CO

Financial Summary

• Actual
• Net Operating Income$240,000

So with net operating income of $240k, 30% down - you double your initial investment in 3 years and earn 30% every year not counting the value gain. No brainer No work needs to be done... part of the cost includes maintenance and property management fee already. Many folks who would rather browse this site or go shooting instead of watching the market find real estate extremely easy, non time consuming, with very minimal risk.

[Irving]

One of our mentors looks for crack/whore houses to buy because she gets them at great deals. She has eviction notices up on all the doors within 30 minutes of closing on the property. She bought a place once that was a 9-unit building, full occupancy, and only one tenant was paying rent!

Anyway, so far I've been able to do exactly what Chunky has been talking about, and it has been working out pretty well so far. I think the business will have made $12,000 in profit by the end of the year, and we acquired the property in June. We haven't taken any money out of the business yet, as we will be using it to purchase the next, better property. That's the plan anyway.

[hatidua]