I would not invest in anything that is "hot" right now. The smart money has already made its growth. How about real estate? There is a lot out there, and it is relatively cheap. Of course you don't have to do anything until you are ready. Don't be in a hurry. My credentials: I collaborated with the CEO of CISCO in a $117M stock transaction. Unfortunately, he was selling just before the bubble broke, and I was buying (just a pittance, but still...). Uhmmm...
Working on it, but it's gonna take some time. We've only been in it a little over a year. I was actually thinking about that. There's a 10 acre lot for sale directly across the street from a new high school that's being built. I have to believe the value of that property will only increase once that school is opened, right?
I know next to nothing about real estate, but I would think that would already be priced in at this point.
To make the big money in real estate you have to have the capital to buy a property and hold it a long time until the profit is there, even if it brings in no income. It's tough for most folks to invest in real estate without buying a REIT.
I would disagree. Buy and hold is only one way to make money but really isn't the best in my opinion. It takes a long time and the returns can fluctuate greatly once you factor in all of the carrying costs. There are other ways that are less capital intensive such as home rehabs, foreclosures, etc. On top of that, buying and then subdividing can work too. These methods require more knowledge, but are more reliable with respect to earning power. Real Estate doesn't have to be capital intensive but you have a lot of studying and work ahead of you to make that work. I've bought a few pieces of property with no cash out of my pocket but it's harder these days. Right now, I've found that borrowing money from private investors is working well. Real Estate prices are somewhat depressed and making 7.5% to 8% on your money is pretty damn good right now so you can find some people who will invest with you if they believe in you and the property. I always believe that you can find the money if the deal is good so it's not something that I worry about right away. Prices are moving back up though, and there aren't as many deals as there were 18 months ago.
I should have said Easy Money in real estate requires tying up some capital for indefinite periods. An entrepreneur with skills can surely make a buck flipping undervalued properties or subdividing, with the inherent risks, of course. But the average investor just wants to put some money in affordable real estate with the hopes of selling high later on. I have a mutual fund that mostly rents commercial real estate and it has done very well for me. They buy and sell property profitably and keep rental occupancy high. The Easy Money that I was alluding to is the ability to wait decades for values to change. Vitter got rich in Baton Rouge because he inherited vast tracts of land around here but waited until they reached prime commercial value before selling each of them and got a maximum profit. If I were filthy rich today, I'd be tempted to quietly buy up all of the abandoned commercial properties, blighted lots, condemned houses, and sheriffs action properties in some carefully targeted downtown, south baton rouge, and midcity areas. They ain't worth the property taxes that will have to be paid on them now and for many years. I'd have to have deep pockets. But when oil prices get to $10 and $15, all those people that commute from outlying parishes are going to need places closer to their jobs and support businesses will move with them back into towns and cities. city property will skyrocket. It may take 40 years . . . I'd have to be rich and young.
I agree. I would add that the different sectors of real estate are cyclical and it's best to choose the best fund for the economy. Most funds focus on retail, or warehouse, or multifamily, or value added. I personally would focus on things that are somewhat down and have a hedge against inflation. That would be multifamily and value added type of stuff. Commercial tenants don't turn over as fast as multi family but the rents don't increase as fast either. As for value added, the fund manager is the key here.[/quote] It's still not easy money but it is lazy money. You know as well as I do that you can sit on something for years and not make any money inflation adjusted. That's the risk. Plus it's illiquid.
40 years? That is some serious patience. Even if I was 30, I'd be too old to REALLY enjoy the money I made, if I even made it to 70.
