Thread: Need some advice on making a my first real investment

Originally Posted by Neekowahhhh

One Major reason I love this community is because of the number of successful individuals we have here. Many folks here are wise when it comes to investing, and I'm sure a few might even be extremely lucky. Either way, I am looking to make my first major invest ment, below you can read my dilema and possibly be able to give me some insite. Sorry for the long write up, but I figured it best to explain as much as possible to show how serious I am about thinking, and preparing for my future.


Here's some background to my story.
I recently acquired a property that is worth 35-40k. I only paid about a quarter of that since it was sort of a "gift" to me.

My dilema lies here.. I am a hardworking and motivated 21 year old who hopes by the age of 25, to acquire my first home. I was going to sell off the land I have and use it as a down payment on my first house. However, I've been thinking and listening to people who talk about the housing market lately, and everyone is saying that it is still looking like it is headed on the downslope for the next few years. That being said, if said prediction happens, my property will decrease in value as well, and I may as well lose any profit I gained just sitting around on it.

I have been looking into gold lately and have seen that it fluctuates but since 2009 (the long run), it has gone up, with the exception of the decrease in the last few weeks. They say the price of gold goes up, as the market continues to go down.

Would it be smart to invest the initial 10k in gold, or perhaps the profited 25-30k, and put the remainder in a safe CD that wont technically make me any money, but will gain slight interest.

I dont mean to sound like many of our "trolls" that we come across on the daily, and as you can tell by my join date and post count, I have been quite active here. I am simply looking for some advice from the best.

Thank you and warmest regards!

you bought your house at around 10k and its worth 30k and you mentioned prices might go down further.... do you really think prices will hit 0?
besides, the good thing about property now is the rental yield you get. say a 35k house getting a 800/month rent. assuming take home profit of 400/month that is still a 13% return on investment annually.thats wayyy better than investing in a CD.

As mentioned also, the economy is pretty bad right now, that means people are not willing to buy houses. Therefore, rent is probably the ideal way for having a place to stay and will be for a while. This increase in rental demand would make it easy for you to
rent out your house, depending on the kind of house it is(if it is livable or not)

Originally Posted by DialM

Even just a 3% annual increase in rent yields $380,000 more rent over 30 years than the 0% assumption. And anyone paying a 6% commission is an idiot.

My point is that it's all a numbers game. Depending on what you think the housing market will do or not do, rent increase pricing, real estate commission pricing, etc, there can be advantages to renting. Like I said though it is a case by case basis, and that was just one calculation. People think buying a home will net you $1m in 30 years and that simply isnt the case. I'm not trying to argue a few % here or there to justify theadvantage/disadvantage, I am just stating my opinion that it's not what it use to be. Who knows maybe I am wrong

With rates this low, and rents this high (relative to purchase prices), it would be very difficult to justify renting over buying right now. That is all I am saying. With price-to-rent ratios below 15 in so many markets, the math does the talking.

Originally Posted by DialM

With rates this low, and rents this high (relative to purchase prices), it would be very difficult to justify renting over buying right now. That is all I am saying. With price-to-rent ratios below 15 in so many markets, the math does the talking.

You are exactly right, just have to do the math on each individual basis and a lot depends on the market you live in and what return you think you could actually get. Everyone has an opinion of course, and I am the minority on this, but land doesn't have the sparkle it once use to have

Thank you all gentleman for your input.

M6, thank you especially for the time you took putting in that write up.

The thing is gentleman, when I purchase my first house, it is not simply because I want to do so. With a first starter house, I also look to live there for a bit and have room mates pay my mortgage if I can get a good monthly, depending on what houses are going for at the time, and how much I have to put down. After acquiring this house and siting on it for at least 2 years, I look to rent it out and hold on to it for a while. Some say it's a buyers market for the right buyers. M6, like you said earlier, renting may be more beneficial, and that may be the case, but if I can acquire a few lower prices condos, and homes, with renters and money coming in monthly to put away for property tax, repairs etc. how does that sound?

Ok! now this will go against convention wisdom but i truly believe for young people it could change your life.

first off all we are all taught to go to school, get a good degree, get a job at a big company, buy a nice house, pay off your mortgage retire at 60 and be comfortable. 2 kids 1 wife and 2 pets etc.
The world has changed. lifetime employment is no longer a possibility at most companies. The world has flattened and the thnings that worked before dont work.

One of them is the old saying that a HOME IS UR BIGGEST INVESTMENT. This is wrong. Besides a decade here or there. homes have rarely been a good investment creeping up basically at the same rate as inflation. Yeah 20 years ur home mgiht be worth double but guess what at 4% inflation your gas will be triple your food cost 5x more etc etc.

The biggest INVESTMENT YOU SHOULD EVER MAKE IS IN YOURSELF. SAY A HOME COSTS 300K. WELL THATS 100K DOWNPAYMENT. FOR MONEY YOU WILL NEVER SEE AGAIN!
downpayment gone 100k
closing costs 3-5k
maintenance per year 2-5k
YOUR STUCK IN THAT HOUSE. what if your lfie changes.. u need to move to find a job. Your aspirations change or your dreams and you want to travel? now ur stuck with this thing.
its illiquid. you get sick or god forbid your parents in their old age need medical help and your assistance. WEll the 100k your worth is tied up in this house.



Instead. Take that case and INVEST IN YOURSELF. that is the best investment man can make. FOR 100K you can start a wonderful business. you can actually start businesses. Ive started businesses for as long as 500 bucks before! Six-Figure Businesses Built for Less Than $100: 17 Lessons Learned

Invest in your education..doesnt have to be formal education but learn things that interest you. Learn skills that are in demand. Learn how to build brands, websites, connections, relationships.

Im 30 years old. I left the cubicle life at 26 for 1 main reason. I owned no home. No car. No attachments. I lived with my parents kept my expenses low. Then day in and day out i learned and read waiting for my opportunity and then when i saw it i could take it! i had cash in the bank no bills, no debt and a huuuuuuuuge amount of skills that i took years to cultivate.

to this day i own no home. I invest in my business in my family in my friends in travel in my health.

100k down payment on a house. You could turn that into millions potentially in a business and also a lifetime of happiness and a career that makes you feel alive! and can help give your life meaning and structure.

Originally Posted by Neekowahhhh

One Major reason I love this community is because of the number of successful individuals we have here. Many folks here are wise when it comes to investing, and I'm sure a few might even be extremely lucky. Either way, I am looking to make my first major invest ment, below you can read my dilema and possibly be able to give me some insite. Sorry for the long write up, but I figured it best to explain as much as possible to show how serious I am about thinking, and preparing for my future.


Here's some background to my story.
I recently acquired a property that is worth 35-40k. I only paid about a quarter of that since it was sort of a "gift" to me.

My dilema lies here.. I am a hardworking and motivated 21 year old who hopes by the age of 25, to acquire my first home. I was going to sell off the land I have and use it as a down payment on my first house. However, I've been thinking and listening to people who talk about the housing market lately, and everyone is saying that it is still looking like it is headed on the downslope for the next few years. That being said, if said prediction happens, my property will decrease in value as well, and I may as well lose any profit I gained just sitting around on it.

I have been looking into gold lately and have seen that it fluctuates but since 2009 (the long run), it has gone up, with the exception of the decrease in the last few weeks. They say the price of gold goes up, as the market continues to go down.

Would it be smart to invest the initial 10k in gold, or perhaps the profited 25-30k, and put the remainder in a safe CD that wont technically make me any money, but will gain slight interest.

I dont mean to sound like many of our "trolls" that we come across on the daily, and as you can tell by my join date and post count, I have been quite active here. I am simply looking for some advice from the best.

Thank you and warmest regards!

Originally Posted by Neekowahhhh

Thank you all gentleman for your input.

M6, thank you especially for the time you took putting in that write up.

The thing is gentleman, when I purchase my first house, it is not simply because I want to do so. With a first starter house, I also look to live there for a bit and have room mates pay my mortgage if I can get a good monthly, depending on what houses are going for at the time, and how much I have to put down. After acquiring this house and siting on it for at least 2 years, I look to rent it out and hold on to it for a while. Some say it's a buyers market for the right buyers. M6, like you said earlier, renting may be more beneficial, and that may be the case, but if I can acquire a few lower prices condos, and homes, with renters and money coming in monthly to put away for property tax, repairs etc. how does that sound?

Just do the math and see if you can come out ahead with a good return. What Kunal had to say is also something to think about. Good luck in whatever you choose!

thank you gentleman for your input. i am currently working on something that my dad has really been pushing me to do. Business wise. he says im talented and also thinks im not built for school. everyone has always told me that im an entrepreneur and ive never really been one for a 8-5 desk job. Hoping this works out. ive tried quite a few things out, but thats what be young is all about.. trying different things at young age and seeing what takes off right?

Originally Posted by kongzz

you bought your house at around 10k and its worth 30k and you mentioned prices might go down further.... do you really think prices will hit 0?
besides, the good thing about property now is the rental yield you get. say a 35k house getting a 800/month rent. assuming take home profit of 400/month that is still a 13% return on investment annually.thats wayyy better than investing in a CD.

As mentioned also, the economy is pretty bad right now, that means people are not willing to buy houses. Therefore, rent is probably the ideal way for having a place to stay and will be for a while. This increase in rental demand would make it easy for you to
rent out your house, depending on the kind of house it is(if it is livable or not)

Originally Posted by DialM

With rates this low, and rents this high (relative to purchase prices), it would be very difficult to justify renting over buying right now. That is all I am saying. With price-to-rent ratios below 15 in so many markets, the math does the talking.

Now these are both great answers! M6 no offense and all, but you are talking in circles. With interest rates so high and mortgage rates so extremely low, explain what is a better investment than property right now? 300k house will require at least 60k down, with a 30 year mortgage and something around 3.75%... thats perfect for a mortgage rate. once the times get better or later on you want to refinance, it will be much easier for you to qualify for that with a track record or paid bills because of lower interest on the payments. Rent out the house, make monthly cash to counter the mortgage if there still is one, and invest the rest in a comfortable tactical asset allocation plan of some sort. Something that fits your risk affordability mixed with mutual funds or etf's that are already tried and true, you have a whole world of options. Be smart though and make sure that what you are doing is well planned out, other wise you will not be in a good shape. But, since you most likely wont be able to pay less than 20% down payment on a house or apartment, youre looking at something hovering around 175k in price because of the value of your current property. You could definitely rent for the next few years and not worry about the responsibilities of owning a house, put money away monthly and grow a portfolio, and in 4-5 years when you want to buy a house on your own, you will have money at least in line to pay for a house and the bank will appreciate that for sure. But like I said, you still need to be smart and research what you do first.

Taylor

Gold prices should go down as the stock market improves.