Saw this on Stumble, its subversive.
Monthly Archives: November 2008
How To Make Millions In Real Estate In Three Years Starting With No Cash
While browsing around Powells Books in Portland, Oregon, we picked up a copy of Tyler G. Hick‘s “How to Make Millions in Real Estate in Three Years Starting With No Cash“. After leafing through it, we decided to give it some ink.
The main idea behind Hicks book is that no money down real estate can accelerate your wealth building processes. The book has 15 chapters, but the bulk of the discussion is devoted to locating money making multifamily properties and buying them using no cash down purchasing techniques.
These techniques include: taking seller financing, organizing first, second and third mortgages, scoring a gift downpayment or renting collateral.
Something for nothing…sounds bogus, right? Well, not so fast. Acquiring streams of passive income is a sound financial strategy. Its essentially the strategy that Warren Buffet follows when he buys profitable businesses. Indeed all landlords use this same strategy. Hicks argues that for his approach you need to be cash flow positive – your rents from real estate should cover ALL expenses before taxes. Thus under the right conditions, you should be able to leverage yourself into a money making situation.
There are some serious problems with the idea, but they center on practicality. In any event, more debt means less profit. Today, current economic conditions make a no money down strategy exceptionally difficult. After the sub prime mess many banks won’t lend unless a 20% down payment is evident. Also, the housing boom has inflated prices to the point where many investment properties are not cash flow positive. So, the underlying idea isn’t so problematic as is the feasibility of the method under current economic conditions.
Finally, many people condemn get-rich-quick-in-real-estate types as fraudulent. There is a lot of truth to this, but what How to Make Millions does is sell inspiration as much as teach one how to make money in apartment buildings. This means the work touches on themes t
hat are a quintessential part of American dream – social mobility and financial security. In this regard, you might pick up a copy of the book, but do it to refresh your faith in the wealth building processes, not for a study of technique.
Check out Tyler Hick at Powells.com
Investment Ideas For A Choppy Market
Hi All,
Its been a rough few weeks for investors. However, if you’re still interested in making money on the market, here are a couple of ideas that have come up in conversations we’ve been having with knowledgable people.
1) Hospitality Property Trust: Interested in a 26% dividend on shares that beat the pants off of Q3 earnings projections?
Consider the Hospitality Property Trust. This company is a REIT, or real estate investment trust. It owns a number of hotels and travel centers primarily in the United States. Their business strategy focuses on acquiring cash flow properties and signing management agreements to handle the hotels, giving the trust one of the best balance sheets in the industry. If you’re worried about a downturn, checkout HPT’s preferred shares. They trade under symbols HPT-PB and HPT-PC.
2) Municipal Bonds: If you don’t want your money on the stock market and aren’t hot about the low yields on money market funds, you might consider a municipal bond. Right now municipal bonds have at least two advantages. First, their yields are often tax free. Second, these bonds are yielding around 5.7 – 5.9% percent annually. This is better than the 3.2% you’d get in a money market account or the 3.8% 5 year CD’s are offering. The only catch is you’ll probably need at least $5,000 to get started get in this asset class.
So here is our weasel wording: Any purchase you make should be appropriate for your portfolio and risk tolerance. You should also do your due diligence, e.g thoroughly research any investment to be sure its financially sound, etc., etc., etc.
Also, we also don’t own any of these investments, but do think they look promising.
Best,
James
HAPPY THANKSGIVING
Best holiday wishes from the DINKs to you and your family.
Frugal Thanksgiving Tips for Saving Money
Like many Americans, I’ve waited for the last day to shop for Thanksgiving. Before I head out the store, I wanted to research and plan my menu for the day. I had thought that with the current economic situation I would find a lot of great resources to learn tips myself and pass them on to you. In the end I would say that most sites didn’t have many real tips. So I ended up coming up with my own tips to pass on. I did find some good content over at beingfrugal.net
Otherwise here are my basic tips for those other last minuters.
Less side dishes. Save money and reduce your stress by limiting the number of side dishes. Everyone wants the mashed potatoes, gravy, yams, and cranberries, but you can likely skip things like fresh salads and additional sides without anyone going hungry.
Frozen and canned items. Know what things you can buy frozen. For instance spinach and peas are items that work well frozen. Canned pumpkin is well worth the price. I can’t do canned cranberries.
Cranberries. Okay, so this one isn’t frugal at all, but it will make you love cranberry sauce more than ever before. Here is my basic recipe for cranberry sauce. Start with a bag of fresh cranberries, throw in a can of pineapple (with juice), a can of tangerines (with juice) and cook it down. The juices help to add flavor texture, and keeps you from having to add lots of sugar. Add a bit of cinnamon and a clove or two if you have them. You can sweeten to taste with honey or sugar and then top it with the whip cream (see below) to cut the edge of sourness.
Gravy. Make your own, it is easy and you will love it so much more. We aren’t doing a turkey this year, as it is just the two of us, but otherwise I would make my own. If you haven’t done this, it is easy. There are more complex recipes out there, but it’s best to keep it simple. All you do is take the turkey drippings into a small sauce pan, heat this up, and then mix in a bit of flour and season to taste (i.e. pepper if you like it, but it will already have plenty of flavor naturally).
Stuffing. I’m not a stuffing fanatic, but certainly make your own rather than buying it. To make a thrifty turkey stuffing, fill a bag with bread bits (use any older bread or heels and whatever as well) and beat the bag with a rolling pin until it looks like stuffing. Place in a large bowl. Saute onions, celery and season with sage, parsley, salt and pepper. Moisten with chicken broth or water and put it in the turkey. Super easy and cheap, you can’t get more filling than bread and celery.
Pies. If you want to save some money but don’t want to deal with making a whole pie, consider buying a pie crust and then making the filling.
Whip cream. I always make my own whip cream, as pumpkin and pecan pie just isn’t the same with out it. If you haven’t done it before, all you need to do is put in a bit of sugar (to taste), a bit of vanilla, and start whipping. You don’t even need a mixer. I’ve done it plenty of times with just a fork, though it is easier to make a small batch when doing it by hand.
Potluck. As the big day is tomorrow, this won’t work, but there is no shame in asking guests to bring their favorite dish and plan the meal jointly. Particularly since this often involves family. This will save you money and time. Best of all, it makes it a group contribution as it should be.
Remember to take time for games in between cooking, and making other fun Thanksgiving traditions.
Miel
Reject Pessimistic Thinking
Hi All,
Like you, we DINKs try to stay on top of the news. Well, today’s headlines don’t offer a lot of optimism about America’s fiscal health. For example,
1) The Drudge Report is running a headline predicting the US is going to collapse.
2) CNN is reporting a drop of nearly 17% in housing values.
3) Bloombergs big story this morning is the Federal reserves commitment of $800 billion to improve business lending.
This adds up to a picture of doom and gloom for the economy.
I want to urge our readers to decisively reject this kind of pessimism. Despite everything that’s happened over the past few years, America still has an exceptionally flexible system of democratic capitalism. Relative to European countries like Germany and France, the United States remains an excellent place to make money, invest or start a business.
Pessimism hinders your wealth building and closes your mind to making money. The personal finance literature is very clear, a major difference between the first generation rich and others is an optimistic attitude. Also, you’ll need to effectively adjust to current economic conditions. Despair limits your ability to do this. If you are out of work, do some things to make extra money. If you don’t have an emergency fund, build one up. But, whatever you do – don’t let pessimistic thinking allow your wealth building to be derailed.
Best,
James
Citigroup
I just bought 77 shares of Citigroup at $6 a share. I wanted to buy yesterday but had to transfer funds to my brokerage account. Hopefully this will offset the 69 shares that James bought for $18 a share. I guess that puts us somewhere in the middle if you split the difference. Hopefully we’ll both recover over time.
Miel
Competition
When you are gone for awhile, you tend to notice various changes in your surroundings. One of the changes in our neighborhood that has struck me is the amazing growth that we’ve seen in the past year. The economy might be in the tank, but we have new businesses all over the place that have cropped up over the last year that I was in Afghanistan.
Within walking distance there is now a new Target, Best Buy, Radio Shack, Bed Bath & Beyond, Harris Teeter’s (Grocery), Yes! (Organic Grocery), and CVS.
While there are certainly advantages to having these shops closer, you can’t help but wonder how they’ll fair in the current economy. More than the big box stores, the small mom and pop markets have even more to survive.
We’ll keep our fingers crossed that they’ll all make it through.
Best,
Miel
Cost of the Bailout: 7.4 Trillion?
This story is burning up the blogsphere. Evidently someone at Bloomberg added up government’s lending to prop up the economy. The grand total is nearly $7.4 trillion dollars – or half the total GDP of the entire country in the last year.
Thats hardcore economic interventionism. The worst part is that most of it being done through the Federal Reserve bank, which doesn’t exactly have a reputation for transparency.
Click here for the story.
Best,
James
It’s Official: The Feds Are Bailing Out CitiGroup
Hi All,
This is hot off the presses. Several agencies of the federal government are working together to bailout Citigroup. The deal is that the Fed will dump $20 billion of the TARP bailout funds into Citi as well as bail it out of any its losses. In return the bank will give the government preferred stock at 8%.
Citigroup needs the help. Last week its stock was trading at less than 4 dollars a share.
Best,
James
——————————————————————————–
Press Release
Joint Statement by Treasury, Federal Reserve and the FDIC on Citigroup
———————————————————————-Washington, DC— The U.S. government is committed to supporting financial market stability, which is a prerequisite to restoring vigorous economic growth. In support of this commitment, the U.S. government on Sunday entered into an agreement with Citigroup to provide a package of guarantees, liquidity access and capital.
As part of the agreement, Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $306 billion of loans and securities backed by residential and commercial real estate and other such assets, which will remain on Citigroup’s balance sheet. As a fee for this arrangement, Citigroup will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.
In addition, Treasury will invest $20 billion in Citigroup from the Troubled Asset Relief Program in exchange for preferred stock with an 8% dividend to the Treasury. Citigroup will comply with enhanced executive compensation restrictions and implement the FDIC’s mortgage modification program.
With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy.
We will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks. The following principles guide our efforts:
We will work to support a healthy resumption of credit flows to households and businesses.
We will exercise prudent stewardship of taxpayer resources.
We will carefully circumscribe the involvement of government in the financial sector.
We will bolster the efforts of financial institutions to attract private capital.
Attachment:
Summary of Terms (PDF Help)
Media Contact:
Andrew Gray (202) 898-7192
FDIC PR-125-2008