is real estate really better than stocks and mutual funds?

Hi i am a self-employeed healthcare provider in the late 20s that has
about 60k to invest. i 'm interested in getting into real estate but
don't really have the time to do reasearch since i have a full time
job that brings in 150k/year net income(hence hard to give it up to do
real estate full time) i talked to some friends tha are builders for
commercial properties and they said the yearly return is about 8%.
that is lower than index fund's yearly return...any suggestion on how
i should get my feet wet? TIA
joon

Re: is real estate really better than stocks and mutual funds?

In article <>,
joon <> wrote:

> Hi i am a self-employeed healthcare provider in the late 20s that has
> about 60k to invest. i 'm interested in getting into real estate but
> don't really have the time to do reasearch since i have a full time
> job that brings in 150k/year net income(hence hard to give it up to do
> real estate full time) i talked to some friends tha are builders for
> commercial properties and they said the yearly return is about 8%.
> that is lower than index fund's yearly return...any suggestion on how
> i should get my feet wet? TIA

Figure out how much you want to lose the first year, then either
donate that to charity, or simply flush it down the terlit. That
will be a lot better than what will happen if you go out in the
real estate market today full of cash and totally ignorant of
the profession. That would be like me coming to you saying that
I had to do some brain surgery today, but I don't have time for
medical school because I am too busy hustling marks at the pool
hall.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: is real estate really better than stocks and mutual funds?

joon wrote:
> Hi i am a self-employeed healthcare provider in the late 20s that has
> about 60k to invest. i 'm interested in getting into real estate but
> don't really have the time to do reasearch since i have a full time
> job that brings in 150k/year net income(hence hard to give it up to do
> real estate full time) i talked to some friends tha are builders for
> commercial properties and they said the yearly return is about 8%.
> that is lower than index fund's yearly return...any suggestion on how
> i should get my feet wet? TIA
> joon

I tend to agree with John's pessimistic sounding but often realistic
assessment. The best way to start would be with your primary
residence.

There is lots of low money down money available at low rates. Learn
your local market by riding around and viewing recent sales, not asking
prices.

The old addage about location should be burned in your memory. Keep
moving up every couple of years when you find deals you can't resist.
The deals are out there, it's the financing that becomes an issue.

Maintain a high credit score so you can take advantage of deals when
the time comes. Never believe real estate can "only go up". I bought
my first new house in Florida in 1984 and couldn't sell it to break
even until 1990. If I had purchased an existing home in the best
school district near the water that never would have happened.

Re: is real estate really better than stocks and mutual funds?

joon wrote:
>
> Hi i am a self-employeed healthcare provider in the late 20s that has
> about 60k to invest. i 'm interested in getting into real estate but
> don't really have the time to do reasearch since i have a full time
> job that brings in 150k/year net income(hence hard to give it up to do
> real estate full time) i talked to some friends tha are builders for
> commercial properties and they said the yearly return is about 8%.
> that is lower than index fund's yearly return...any suggestion on how
> i should get my feet wet? TIA

First you need to buy your own home.

Next you need to decide if you want to be hands on or hands
off. You do NOT need to go full time to be hands on, but you
will need to keep your cellphone active.

If you want to go hands off look at REITs. Real Estate
Investment Trusts. They are sold like stocks or mutual funds
on the regular stock exchanges. They are listed so their
price histories, dividend histories and public records can be
looked up rather like a stock. An REIT is a company that
invests in a lot of buildings so it's sort of a mutual fund of
buildings.

If you have a metric ton of cash and metric gram of knowledge,
the way to go is a portfolio of stocks, bonds and REITs.

Re: is real estate really better than stocks and mutual funds?

Joon, investing requires knowledge or having experts in the field. The rate
of return on real estate investments is a lot higher than 8%. I suspect the
8% quoted to you is rate of return based on the net income generated by the
investment. This is a conventional myth that I also see here on this
newsgroup being expressed so often. The overall rate of return includes the
return you stated but it also includes tax savings due to deprciation and
appreciation in the form of capital gain at the time of sale and there is
more. If you figure out the overall rate of return of the real estate
investments, it will beat the index funds return any time. Unfortunately,
not many real estate "professionals" present this concept clearly.
Regarding timing. It is always a good time to invest since investing
implies buying at the right price and selling at the right price.


"joon" <> wrote in message
news:
> Hi i am a self-employeed healthcare provider in the late 20s that has
> about 60k to invest. i 'm interested in getting into real estate but
> don't really have the time to do reasearch since i have a full time
> job that brings in 150k/year net income(hence hard to give it up to do
> real estate full time) i talked to some friends tha are builders for
> commercial properties and they said the yearly return is about 8%.
> that is lower than index fund's yearly return...any suggestion on how
> i should get my feet wet? TIA
> joon

Re: is real estate really better than stocks and mutual funds?

"MD" <> wrote in message
news:
> joon wrote:
>> Hi i am a self-employeed healthcare provider in the late 20s that has
>> about 60k to invest. i 'm interested in getting into real estate but
>> don't really have the time to do reasearch since i have a full time
>> job that brings in 150k/year net income(hence hard to give it up to do
>> real estate full time) i talked to some friends tha are builders for
>> commercial properties and they said the yearly return is about 8%.
>> that is lower than index fund's yearly return...any suggestion on how
>> i should get my feet wet? TIA

There are some things you can do and still be pretty much a "hands off"
investor in real estate. Think about vacation property. Buy a small house or
condo in some resort area where you like to vacation. Maybe two of them.
Hire a property manager to look after them and rent them out to tenants when
you are not there. Keep them long term. You will not get rich quick that
way, but after a decade or two the places most likely will be worth far more
than what you paid. Or buy a house just down the street from where you live
(which very likely will satisfy the location, location idea, because you are
living there, right?) and keep it rented for many years.

Re: is real estate really better than stocks and mutual funds?

Joon, investing requires knowledge or having experts in the field. The rate
of return on real estate investments is a lot higher than 8%. I suspect the
8% quoted to you is rate of return based on the net income generated by the
investment. This is a conventional myth that I also see here on this
newsgroup being expressed so often. The overall rate of return includes the
return you stated but it also includes tax savings due to deprciation and
appreciation in the form of capital gain at the time of sale and there is
more. If you figure out the overall rate of return of the real estate
investments, it will beat the index funds return any time. Unfortunately,
not many real estate "professionals" present this concept clearly.
Regarding timing. It is always a good time to invest since investing
implies buying at the right price and selling at the right price.

www.AmericanWest.biz


"joon" <> wrote in message
news:
> Hi i am a self-employeed healthcare provider in the late 20s that has
> about 60k to invest. i 'm interested in getting into real estate but
> don't really have the time to do reasearch since i have a full time
> job that brings in 150k/year net income(hence hard to give it up to do
> real estate full time) i talked to some friends tha are builders for
> commercial properties and they said the yearly return is about 8%.
> that is lower than index fund's yearly return...any suggestion on how
> i should get my feet wet? TIA
> joon

Re: is real estate really better than stocks and mutual funds?

CalNeva wrote:
> Joon, investing requires knowledge or having experts in the field. The rate
> of return on real estate investments is a lot higher than 8%. I suspect the
> 8% quoted to you is rate of return based on the net income generated by the
> investment. This is a conventional myth that I also see here on this
> newsgroup being expressed so often. The overall rate of return includes the
> return you stated but it also includes tax savings due to deprciation and
> appreciation in the form of capital gain at the time of sale and there is
> more. If you figure out the overall rate of return of the real estate
> investments, it will beat the index funds return any time. Unfortunately,
> not many real estate "professionals" present this concept clearly.
> Regarding timing. It is always a good time to invest since investing
> implies buying at the right price and selling at the right price.
>
> www.AmericanWest.biz
>
>
> "joon" <> wrote in message
> news:
> > Hi i am a self-employeed healthcare provider in the late 20s that has
> > about 60k to invest. i 'm interested in getting into real estate but
> > don't really have the time to do reasearch since i have a full time
> > job that brings in 150k/year net income(hence hard to give it up to do
> > real estate full time) i talked to some friends tha are builders for
> > commercial properties and they said the yearly return is about 8%.
> > that is lower than index fund's yearly return...any suggestion on how
> > i should get my feet wet? TIA
> > joon

8% is about right and fairly well accepted as the long-term
appreciation rate for real estate. 8% compound return rate means your
investment doubles every 9 years. However how much you are leveraged,
whether taxes and carrying costs exceed the alternatives, and lots of
other factors muddy the actual returns. Some argue that they only put
10% down, so if the investment doubles in value they get a 20 fold
return. Except in the 9 years they paid a billion dollars in interest
and taxes and then 6% to a RE agent and tons on repairs and
maintenance. Its not that cut-and-dry. For example right now it costs a
LOT more to own in South Florida than it does to rent; in NYC you can
buy a $million condo and rent it for more than your carrying costs;
while in FL you generally have a negative cash flow. There's a lot more
demand to live in NYC than there is in SoFl, and a much larger pct of
owners in FL are investors, so the market is likely to be more volatile
as well. Its a very complicated calculation.

Stocks are a capital gain too so if you use that argument it isn't
correct. If you know what you're doing, stocks *should* be a better
investment in terms of return because you can make adjustments from one
investment to another as trends change (most people paying attention
can beat the indexes), whereas in RE its not practical to do so; you
have to ride out the slow times. Of course you can enhance your RE
investments by upgrading the properties, buying run-down units or from
desparate sellers at bargain prices.

Re: is real estate really better than stocks and mutual funds?

"Steve" <> wrote in message
news:
>
> CalNeva wrote:
>> Joon, investing requires knowledge or having experts in the field. The
>> rate
>> of return on real estate investments is a lot higher than 8%. I suspect
>> the
>> 8% quoted to you is rate of return based on the net income generated by
>> the
>> investment. This is a conventional myth that I also see here on this
>> newsgroup being expressed so often. The overall rate of return includes
>> the
>> return you stated but it also includes tax savings due to deprciation and
>> appreciation in the form of capital gain at the time of sale and there is
>> more. If you figure out the overall rate of return of the real estate
>> investments, it will beat the index funds return any time.
>> Unfortunately,
>> not many real estate "professionals" present this concept clearly.
>> Regarding timing. It is always a good time to invest since investing
>> implies buying at the right price and selling at the right price.
>>
>> www.AmericanWest.biz
>>
>>
>> "joon" <> wrote in message
>> news:
>> > Hi i am a self-employeed healthcare provider in the late 20s that has
>> > about 60k to invest. i 'm interested in getting into real estate but
>> > don't really have the time to do reasearch since i have a full time
>> > job that brings in 150k/year net income(hence hard to give it up to do
>> > real estate full time) i talked to some friends tha are builders for
>> > commercial properties and they said the yearly return is about 8%.
>> > that is lower than index fund's yearly return...any suggestion on how
>> > i should get my feet wet? TIA
>> > joon
>
> Stocks are a capital gain too so if you use that argument it isn't
> correct. If you know what you're doing, stocks *should* be a better

Steve, undoubtedly stocks make money and can exceed real estate in gains
and/or losses beacuse in general the risk factors (Alpha & Beta) are higher.
Further, you are right if someone knows what they are doing in stocks
investing, they could make more but that is also true in real estate. At any
rate, I am certain that smart investors believe in diversification and there
should real estate as well as stocks in someone's portfolio.

www.AmericanWest.biz

> investment in terms of return because you can make adjustments from one
> investment to another as trends change (most people paying attention
> can beat the indexes), whereas in RE its not practical to do so; you
> have to ride out the slow times. Of course you can enhance your RE
> investments by upgrading the properties, buying run-down units or from
> desparate sellers at bargain prices.
>