Posted on October 25, 2008 @ 12:03 am - Written by BawldGuy
Think about the words you use when it comes to investing, or your retirement, or real estate in general. So many people use words which sometimes fail to impart exactly what they’re trying to say. Ever been in a conversation that seems to go around and around, getting nowhere in record time? That can happen for lots of reasons. My experience says more likely than not, the words are not doin’ the job each speaker has employed them to do.
Words mean things. To the real estate investor the word leverage connotes a specific concept. Most would say it means — to control real estate with a relatively small amount of capital.
First of all, what’s small? Then, what’s relatively small? Then there’s the question being begged — is your meaning for leverage the same as the other guy’s? Read the rest of this entry »
Posted on October 17, 2008 @ 11:22 pm - Written by BawldGuy
If you’re unsure about what we’re referring to here, just scroll down to the post immediately below. It’s pretty straightforward.
Let’s skip to the chase here, ‘cuz it’s Friday night, and I’ve got some studyin’ to do. Takin’ care of my periodic requirement for continuing education. It’s an entirely worthless endeavor, but the state has made it abundantly clear they disagree with my assessment. 
To that end, I’m playin’ their game like a good licensee, pretending their silly ‘education’ is worth more than a used Snickers Bar. Boy, did I wander off the reservation with that crud, or what?
Anywho, what loan did you choose? Here’s the bottom line for all three of ‘em. All figures are the for 5 year holding period. And yeah, I don’t make mention of the $2,000 difference in points between #1 and the other two loans. It’s not a factor in this analysis, as loans 2 & 3 both require 2 points. Much of the time points do factor in when deciding upon different loans — just not this time.
Here’s a snapshot of the pertinent info. Read the rest of this entry »
Posted on October 16, 2008 @ 10:39 pm - Written by BawldGuy
The rules — no pros allowed. Unfair advantage. Robert? That means you, OK?
OK, here’s tonight’s pop quiz.
Yer buyin’ an income property. 20% down. The lender offers you many choices but recommends the two they think best of the batch. The price is $250,000 The NOI (net operating income) is $19,175. Project a five year holding period. All loans fully amortized. Your primary goal is capital growth.
Wonder why I’m havin’ to analyze a buncha new loans this week?
BawldGuy Axiom: ‘Cuz lenders lend. That’s why. Even now. They have no choice. If they don’t figure out a way to lend? Then they’re not lenders. They don’t like that. So they lend. ‘Cuz that’s what they do.
You have everything you need to make your decision. Which loan is better?
Option #1 — 7.75% interest 30 years 1 point.
Option #2 — 6.75% interest 30 years 2 points.
1. Which loan do you prefer?
2. Why did you pick that loan?
What if, at the last minute, there was a third alternative? 7% interest 20 years 2 points.
Do whatever analysis you think appropriate. Pick a loan and tell us why/how you chose that one.
Meanwhile, back at BawldGuyRanch, we’re analyzin’ some new stuff — loans that is. Separating the talk from the walk is always a challenge when it comes to lenders. Speakin’ of talk, why don’t you contact me and we can do just that. (Pretty smooth, huh?) We already know the loans best suited for each transaction. Have a good one.
Posted on October 15, 2008 @ 12:10 am - Written by BawldGuy
Yesterday I asked four simple questions — all starting with ‘Where would you be today if…’
The following are very credible answers to those questions. They’re by no means the only credible answers. We’ve been comfortable with them.
Let’s begin. All time periods will begin in 1995. The 10-15 year window works well with that starting point. And yeah, the pics are simply to give you a quick break. This is a long one, but worth it.
1. Where would you be today if you’d invested in real estate 10-15 years ago when you first had the capital to make it happen? Read the rest of this entry »
Posted on October 8, 2008 @ 11:13 pm - Written by BawldGuy
Yes, lenders generally have tightened the reigns on real estate investors. As usual, the pendulum has travelled too far in it’s swing back from sub-prime, no-down nonsense. Now? 10% down is becoming more endangered than oil drilling off the California’s coast. And yet, we’re still closing transactions for our clients using 90% loans. Truth be told though, many have been converted into 80% loans. A lot of our cocky attitude has been adjusted for us, so to speak. Ain’t the first time.
Sometimes ya just gotta tip yer hat to the market, and go with the flow. Swimmin’ upstream is fun, but after awhile your admiration for the whole salmon saga rises. Is buying half a dozen income properties at 10% down better than three at 20%? Uh, yeah. But buyin’ those three is way mo betta than nothing.
Go with the flow. For the vast majority of small to medium investors, capital growth is the name of the game. Though I’ve seen this movie a few times before, and loved the part when the buyin’ gets really fun, this is different. This market, in my experience, is the most target rich environment I’ve seen in real time.
How would a real estate investor describe a beneficial perfect storm? Read the rest of this entry »