Leverage in Real Estate

Taking a step back - so why is real estate a good investment? Because you can make a lot of money with not so much money.

Let's take the case of the guy who's renting for $1,000/month. If he purchased a $200,000 house, with 10% down, his payments would be about $1,400/month (assuming 6% interest rate). After taxes, the actual out of pocket difference is minimal between the mortgage payment and rent. It's worth pushing yourself a little bit here. The payments may start off a bit difficult for you, but they get easier as you adjust and make more money. Work for that raise or promotion!

So, this guy needs $20,000 to start. But there are loans where you can buy a house for as little as 5% down. The monthly payments would be higher, but now you only need $10,000 to start.

Now, in a hot real estate market, that $200,000 property could go up $50,000 a year. Maybe even more. Year after year. And even though you've only put 5% or 10% down on the property, you get 100% of the appreciation. That $10k could turn into $100k after a few years. That's a lot of leverage. And the risk is low. Real estate inevitably goes up over time. In the worst case scenario of real estate taking a nosedive, well you still need a place to live anyway, so ride it out. Even in the area I live, which was thought to be topped out, I read in the paper that real estate appreciated 11%.

So, compare this to the stock market. Let's say you invest $20,000 into the market, and your securities go up 10% for the year. That's a great return and you've just made $2,000. Now compare that to the scenario above. You use the same $20,000 as a down payment, and your house appreciates 10%. You've made $20,000, or 100% of your investment! Not to mention, if the house is your primary residence, you won't have to pay taxes on your gain for up to $250,000 worth of profits, unlike stocks where you will have to pay taxes on any gains you make.

But certainly, real estate is an investment, there is risk. Do your homework and scope out different areas, their rate of appreciation, jobs moving in, the city improving or expanding. Look for a place that you can fix up a bit and immediately increase the value of. As you've heard, location is important. And a rundown place in a great location is ideal - new paint, carpet, tile, etc. is cheap, but somehow increases the value of your place by tens of thousands immediately.

Half of the "so-called" experts say the market is heading down. The other half say the market is strong and will stay that way for a long time. The real estate market is comprised of local markets. Any statement made about real estate in general doesn't make sense to me. There are always spots that are appreciating like crazy, while other spots are stagnating. Granted, rising interest rates can slow down housing in general, but guess what. If rising interest rates make loans too expensive, then people end up renting. Now the rental market strengthens, and if you own rental properties, well your appreciation may be slowing but you can raise rents.

My next post will be about the mistakes I made on that first purchase. Even though I made money on it and it would help me with my next move, I should have done things differently. Lessons learned coming next.

An education in gambling at Gambling PHD

One of the more interesting gambling sites I've run across is Gambling PHD. It's a site that offers some interesting articles on gambling, as well as some interesting links.

Gambling PHD approaches the gambling site from a different perspective. Instead of acting as merely the splash page to a game, the site acts as a mini-portal, allowing gamblers to not only go to suggested links, but to also read articles about gaming, from its history to psychology to basic rules, and provides some online casino reviews. There is even a section regarding the signs of addiction and what to do if you become addicted! Although it could use a slightly better design, the site is perfect for what it does, which is to get you playing as quickly as possible without looking too foolish for your first time, or to give experts a slight edge, and any experienced gambler knows that even the slightest edge can be valuable.

Gambling PHD is definitely one that you should check out. It offers some decent information, as well as some great games.  It offers solid online casino reviews to help you choose a site. You should check it out at least as it could be an interesting addition to your gaming links.

Making Money in Real Estate #2

Ok, you're making some money, you've saved some money, and you've got some credit. Here comes the next step - MY FIRST HOME PURCHASE.

If you're renting, you should look into buying yourself your own pad. Of course, there are a ton of variables here, but what if the rent you're paying could just be a mortgage payment and you own the place? If you're making decent cash, then the interest that you pay on each monthly mortgage payment (which is most of the payment) becomes tax deductible. So, the net effect is you're paying less taxes and you can adjust your withholdings with your employer to receive a bigger paycheck (in anticipation of paying less taxes). So, rent of $1,000/ month could be comparable to a mortgage of $1,300-$1,400/month (this depends on your tax bracket, etc - an accountant can run numbers for you).

I was commuting to work (1.5 hour drive each way) for about a year while I saved some cash. I then bought my first house at age 26, this was 8 years ago. I bought a house close to work, which was a requirement for me, being in IT, and having to run to the office for every goddamn computer glitch. I bought the shittiest house on the best street/neighborhood I could find. The house cost $225,000 - it was 950 square feet in Redondo Beach. I had to come up with 10%, which was like $23,000. I chose to buy a house, rather than condo/townhouse because there's no homeowners association fee (HOA) monthly payment with a house, and I own the land + house, not just the house. I thought this would end up meaning greater appreciation in the property (house vs condo/townhouse), which is still usually the case but not always (so don't limit yourself).

I would recommend an 80-10-10 loan. What this means is that you come up with the 10% down payment, borrow another 10% for the down payment, and then borrow the 80%. You'll end up with a 1st and 2nd mortgage. But by borrowing that extra 10%, you'll avoid paying Mortgage Insurance (which you MUST pay if you put down less than 20% of the purchase price). Mortgage Insurance is not tax deductible, but the interest on the payments on your second mortgage (which is 10% of the purchase price) IS tax deductible. This is usually a better way to go.

Now, for those of you who are commitment phobic, buying a home is not signing a contract with the devil. Don't feel you're trapped or restricted. A year lease at some apartment can be just as big a commitment. I owned this first house for LESS THAN ONE YEAR. This property appreciated from from $225,000 to $280,000 in less than one year. Sure, I had to pay taxes on the short-term gain, but I was able to offset the gains by improvements, etc to reduce that tax payment.

In the end, I made money on this place, lived in my own house and enjoyed it, and the appreciation in that property would set me up to invest in my next house...

BTW - if you invest in a 401k at your work, you can utilize that money to put down on your FIRST home purchase - without the monster penalty of an early withdrawal!!! This is a worthwhile endeavor if you've already invested in that 401k (talk to an accountant!).

Finding the right place for you...

Moving can always be interesting. The first thing to ask is: Where? Just ask yourself what you are looking for, and then gravitate towards buying real estate there. For example, if you are like being in the center of things, you may want to check out Atlanta real estate. Although there is a heat and humidity issue, you would nonetheless be in one of the best cities, especially when it comes to education, fine cuisine, and night life. One of the nice features about Atlanta real estate is that it's also near some of the finest outdoors areas in the nation, allowing for some great hunting and camping.

If Atlanta real estate doesn't sound interesting, Arizona real estate may be more your thing. Arizona real estate tends to be a bit more isolated, and the area is more relaxed. As it is also near Mexico and a number of reservations, Arizona real estate is also a multicultural experience.

If you want something else entirely, then consider Austin real estate. It's more of a college town, and the center of the independent movie industry. Austin real estate has all of the advantages of Arizona real estate, but is more of an urban setting. There is also the advantage that Austin real estate is in the center of Texas, so that you also have the advantage of urban night life.

Just remember to go where you love; you shouldn't have to live where you hate it!

Buying a dishwasher shouldn't be a chore!

Dishwashers have become a necessary part of modern life. They simplify our lives, and make dinner clean-up quicker. The biggest problem is that there are so many different models with so many different features that buying a dishwasher can be a chore in itself.

When you are looking at any particular dishwasher, you need to know what issues you need the dishwasher to deal with, and if that dishwasher will deal with those issues. Because of this remember to make a list of features that you need. Keep in mind that being quiet or how the dishwasher organizes the dishes.

Also establish a budget, with two amounts: What you are willing to spend, and what your limit is. A dishwasher should clean your dishes, not clean you out. As long as you stay within that budget, you should be fine.

Lastly, keep in mind the design factor: Will this dishwasher go with my kitchen décor? If necessary, take a few pictures and take them with you when you are shopping, or even if you look for dishwashers online; this should help prevent disasters of the “But it looked so good in the showroom!” kind.

Keep those items in mind, and dishwasher shopping may actually be fun!

London Travel

Many people dream of traveling to London and experiencing the richness of English Culture.  Singles are drawn to London for the booming nightlife, posh Hotels and thriving party scene.  However, London isn't only for the single traveler, but is just as well suited for a family trip.  The attractions of London are endless and a London trip may just be what you need to escape the monotony of everyday life.

 

Attractions: Buckingham palace is one of the most recognizable tourist attractions London has to offer.  Witness the changing of the guards in all their glory, soak in the breathtaking architecture and once you've had enough, grab a bite to eat and stroll through Hyde Park, my personal favorite hangout in London.  For those looking to experience a famous Guinness beer, venture into one of the many pubs lining the streets.

 

Families can enjoy the many shopping options on the famous Oxford street, including Harvey's and other Nicols and then take picture perfect photos in front of the astounding Big Ben clock tower.  The one reservation people have when traveling to London is the cost of accommodation. We have the solution for all London travelers below.  Find cheap, quality hotels in London with Cheaper Than Hotels.

 

Accomodations:  One of the challenges of a trip to London is securing a comfortable and affordable accommodation.  Hostels and Hotels are the main two choices for travelers, but for a family a hostel may not provide the necessary accommodations.  There are thousands of agencies and even more individual choices for hotels.  The biggest complaint for travelers is the actual expense of London accommodation.  Don't worry, we have found the most amazing London Hotel Website.  You can also get Kensington and Knightsbridge hotel information from the website. Visit http://www.cheaperthanhotels.co.uk/United-Kingdom/London/ for up to the second deals on the cheapest accommodations in London.  With group discounts, car rental options and superb customer service, you don't have stress about expensive accommodation in London again.

Making Money in Real Estate #1

I received a request to share some of my experiences with real estate. I thought I would just post my thoughts here in case others are interested, and so I can continue to add more posts as they come to me. This is my perspective, based on my knowledge and experience. Take it for what it's worth. I'm 34 years old. You're never to young or to old to start. I hope this can help some of you.

Like poker, you need a bankroll for real estate. So for the college guys here, you've got to graduate and hunt down a good job. This, of course, is where (for those of you who don't have money...yet) you start to build your bankroll. Save a few dollars. But more important than that, make MORE.

Work hard at your job to get promotions, or after a couple years, switch jobs to make more money. Most big leaps in salary come from switching jobs, not from staying with one employer. This has been my experience as well. And keep saving. But again, more important than saving, just make EVEN MORE.

Of course, you can add to your real estate bankroll from your poker bankroll, and if you already have money, then you can skip all this.

But not only do you need your bankroll, you need a tight image. And I'm talking about credit scores. This is important once you're ready to invest in real estate. Establish your credit by opening a couple credit cards, using them, and paying them off (you only need a couple). If you already have credit, pay your bills on time and avoid collections. You need a credit score of 720 or higher to get the best loans available. This equates to dollars saved and flexibility. Do not accumulate big balances on credit cards, this doesn't look good, and obviously it's best for you to maintain low balances. My credit score is at 800, which is a very high score, and which also gives me power and flexibility.

You've got the bankroll, you've got the image, but don't go pro! Like poker, you can do real estate as a side thing and not jeopardize too much. You'll know when you don't need that job anymore...that's when the hours you put in are pennies compared to the money you could make in real estate (or elsewhere). Don't risking everything.

Ok, those are the very basics, mostly common sense but just reinforcing ground zero.

Making Money in Poker #1

Play tight - which means only play BIG hands.  Fold everything else.

Use discipline, play tight.

Start at low stakes, get experience.

Be patient, play tight.

Discover FlopTurnRiver.com and start reading.

That is all.

Some Background Info

Hi, I was once the Director of Technology for a major international skincare company. We ran Oracle Applications on HP-UX and EMC hardware. I was in charge of all the hardware & software, budgeting, and staff management.

I bought my first brand new BMW at age 25 and my first house at age 27. Bought my second house at 30.

I worked a lot of hours, spent more nights at the office that I care to remember. And if I wasn't in the office, the nightmares I had while sleeping at home convinced me I was. If my pager/cellphone wasn't waking me up in the middle of the night, the nightmares of my pager going off would wake me up anyway. I was burned out, miserable, angry, unhealthy, and always anxious.

Then my company wanted me to pursue an MBA. They promised me a path towards a CIO title. This company was chewing up my soul, swallowing every last morsel of will and drive I could muster. And now they wanted me to invest even more of myself into them. What is the value of money when coupled with misery? What's the value of owning a multi-million dollar mansion in Hell?

I refused.

I quit.

I sold some real estate so I could survive without working. I found my heart again. I saved my soul. I started an internet business, something I had a passion for, and within a year, was making the same amount of money as my corporate job, while working at home in my underwear.

Within 2 years, I doubled my salary.

Within 3 years, I tripled my salary, working half the amount of time.

I'm going to share some pieces of my experiences on this blog. Hope you like what you hear. I'm also going to ramble about things I think about, reviews of whatever I want to review, and eventually come back to dropping some pearls of wisdom.

Catch you next time.

The blog is back!!

I refuse to let blogs die! Bringing this one back to life with a new theme, a new owner, and a new voice. Stick around and hear my rants and raves about the world we live in and life in general!

Would You Like To Taste My Homemade Morgue

It almost felt like ages…

I am not flaking out; I just couldn’t find the right time to do any updates. Beside there is nothing much to share and whine about and beside I don’t think you guys missing me that much, right? Well I am in a celebratory mood this past couple of days thanks to England missing out on next year Euro Championship. Believe me; things couldn’t get much better than knowing that a bunch of over hype mega-rich footballers couldn’t make it to a major tournament. Pussies…

Anyway, I was reading Give Me Back #2 this afternoon and came across a review of Kias Fansuri demo in it. For those of you who have been living in a cave or something, Kias Fansuri consists of one dude from the mighty UTARID (I am sure the rest of the bands played in some other bands before, but none of them were mindblowing so there is no point in referring them). Yeah I am sure most of you have no idea who UTARID was as well, but what the heck. Go here for some info on Kias Fansuri and here for some info on Utarid. Thank me later ok.

After reading what I believe to be one of the most boring zine I’d ever lay my hand on, I decided to go look for the Kias Fansuri CDr that I got like a year ago or something like that. It was some sort of tour edition CDr that consists of songs from their upcoming releases. It might as well be their first demo because I got it much earlier than the 3 songs demo tape that was reviewed in Give Me Back #2. Although I knew one of the dudes from Kias Fansuri quite well, I couldn’t be arsed to ask him about this fact. Beside I am sure he is busy humping all the groupies he can get his hand on (wink wink) and would not be bothered with something so inane and boring. FYI, the release was limited to 111 and I got number 75, how’s that for some scene point?

After a few spin I concluded that Kias Fansuri deserve to be heard by everyone that are not afraid to let their ear bleed to some kick ass emotive hardcore or to be referred as pussy by their friends who listen to Lamb of God and Hatebreed. I was about to rip my own copy of the release, but this awesome blog have done all the dirty work for me. You can even download Kias Fansuri 3 songs demo off that kick ass blog. Thanks a lot dude, whoever you are. But that is not all; go here and download Shove Records edition of the Kias Fansuri CDr. I know those who collect files will be going gaga over this. Nothing beat those different edition mp3s man…

Since I mentioned Hatebreed, do check out XO Skeletons because that band rules. They even let people download their album for free. Don’t let the Hatebreed connection scares you. Boring tough guy beatdown mosh metal that makes people dance like idiots this is not. In fact, it reminds me of Atom and His Package. If you are down with Atom and His Package, do check out XO Skeletons. That is if you can tolerate something that’s fun.

Headbanger Face Rip!!!

Sorry for the lack of updates. Been busy this last couple of weeks and I don't think that will change anytime soon. But we'll see. Here is something for all you Municipal Waste fan out there. Yeah I know some of you are quite bummed out with the new album but get over it ok. It is still a good listen. Look out for the uncensored version of the video as well... see ya around!

Singing, Shouting, CRYING!!

I’m gutted and lost for words. RIP Chelsea. Thanks for the awesome music.

So What You Think About Hansa Rostok? Hansa Rostok? Like A Pussies! Heavy Metal Pussies!

When are they going to come up with christ-raping indie pop or barbaric twee?

Is this what they call shoegazing black metal? What's shoegazing black metal anyway? Do metalheads gaze at their shoe when they listen to metal? Who the fuck come up with shoegazing black metal? Fuck it!

This is a good album. No joke. Shoegaze/post-rock music from a dude who played in one of those ugly black metal band that your god-fearing parents/teachers/politicians warn you about. Who would have thought a dude like that can come out with a beautiful album like this? And you know what? It is irony free. You don't get things like that when indie hipters come up with something like this. Indie hipsters doing metal is blasphemous. Smart metalheads doing indie rock is good.

***
Jerry's Kids is the real deal. I am not having any of that nu-retro shit that everyone seems to be into these days. That shit is weak. Go here and download their live set from 1983. Check out the rest of that blog as well because that blog rule.

END

I Bet That You Look Good On The Dancefloor

I am not getting my weekly dose of "scene" humor because Ricecooker is still down. Bummer. If this go on for long, I will need to find other way to get my fix. That's bad.

Anyway, see you guys at this show next week. And to those who are buying some stuff from me, meet you guys there. Don't forget to bring your cash or I will beat the crap out of you. Consider this as a warning... and sorry, NO DISCOUNT!