I can't wait until this real-estate market collapses.......

[SeeGeeWhy]

Originally Posted by Sylvanfan

So what are you investing your money in than to make more interest than what you're paying to borrow it?

I am a member of a group that purcahses established businesses through the method of vendor take back.

[Incinerator]

Originally Posted by fredr123

BW says pay down debt: Why put $10 in a savings account or GIC or whatever earning X% interest when you have loans that need to be paid down and are costing X=Y% interest?

Listen to the boss, she can't be any more correct. The money you leave rotting in your GICs and saving accounts will devalue over time due to inflation AND it will never catch up with the interest on your loans!

[Red]

Originally Posted by SeeGeeWhy

Have a story to share with us, Red?

I know for a fact that I don't have the stomach for real estate right now, so I stay out of it.

I know people that lost. Not huge money, but still. Maybe they'd be ahead by now, but for them it was easier on their health to get out and cut their losses. It's an amazing feeling when you're losing a lot of money day after day and you have no control over it. It takes a toll on people. Of course, you'll never read that in any of the get rich quick books. They focus on positives only.

My take on this is this; investing is not for everyone. I've seen way to many Danald Trumps around lately spewing crap they read in the latest Rich Dad Poor Dad release. These Trumps have no idea what kind of stress is involved in having the equity of your home trying to beat the market. It's ugly, but some people don't mind the pressure and make money on it. Most are just not cut out for it.

[Sylvanfan]

Originally Posted by JiriHrdina

Maybe its because its too complex? Not sure. But I would rather them spend more time teaching youth how to get their financial **** together rather than a lot of the other material that was in there instead.

I recall spending an entire class where we had to brainstorm all the different slangs for various body parts and sexual acts. Funny stuff when you are in high school, but hardly valuable from an education standpoint.

Well the thing is in highschool they seemed to stress that everyone needed to learn how to speak French, or What happened in 1400's Europe. But you could goof off in Bussiness education (at least thats what they called it when I was in school). When I was in grade 10 they made it into a mandatory course, but they also assigned the shop teacher to teach the class (although he probably was the only teacher who had relevant real world skills so he probably was best suited to teach that class!) and more or less gave the impression like it wasn't an important class. I used to do my work first, than I would do my sales copy which wasn't as good and had blatent mistakes. Than I'd duplicate that copy and sell it to the other kids. Than the teacher would get me to mark all the work for him because we usually had 4 classes to do what was like a half hours work.

[photon]

Originally Posted by Red

He didn't tell them everything. He forgot to mention that most casuals lose money on the markets, are too knee jerk to sustain any flactuation, are not disciplined enough to make it work and for most part would never come ahead.

Only a few are willing to invest borrowed (against their home) money and even fewer can actually make money on it.

And only a few will ever go beyond having a job as their primary source of income until they retire and depending on the government and/or family to live out their years. We're not talking about those people.

I would never suggest someone borrow against their house and use that money to play the stock market themselves; unless they had a proven track record of success at it, why on earth would they try it?

Always have professionals helping at every stage, be it a mortgage broker, a financial planner, tax accountant, or professional real estate investor.

The resources are out there to go beyond. For the majority who have very low risk and no appetite for getting their hands dirty, there are still options. I know of lots of poeple who will give a 50% ownership position in real estate just for putting up the down payment, no hassle, no tenants, no details, just quarterly reports and ROI.

[photon]

Originally Posted by Red

I know people that lost. Not huge money, but still. Maybe they'd be ahead by now, but for them it was easier on their health to get out and cut their losses. It's an amazing feeling when you're losing a lot of money day after day and you have no control over it. It takes a toll on people. Of course, you'll never read that in any of the get rich quick books. They focus on positives only.

My take on this is this; investing is not for everyone. I've seen way to many Danald Trumps around lately spewing crap they read in the latest Rich Dad Poor Dad release. These Trumps have no idea what kind of stress is involved in having the equity of your home trying to beat the market. It's ugly, but some people don't mind the pressure and make money on it. Most are just not cut out for it.

That stress doesn't come from having the equity in their home being used in another property, the stress comes from not knowing if they've done the right thing, not having any idea at all if their investment is going to grow or shrink.

That's the kind of investor that's simply rolling the dice and hoping for the best. Of course investing home equity in that situation is stressful! If I bet my house on black, I'd be stressed too.

Investors are people who've taken the time to understand their chosen area and find and use the methods that work. I couldn't do what SeeGeeWhy does; I don't understand businesses and all the things around them. Choosing one to buy would be like rolling the dice for me and would cause me no end of stress.

However with real estate I've done lots of research. I know the economic fundamentals that are driving the current boom in Alberta. I associate with others who are more experienced than me at it and have been successful for the right reasons, I find out what they did and why it worked, and reproduce it.

I'm not a big fan of Rich Dad Poor Dad and those books. While they are good motivation and are good for getting the point of how to look at money across, I don't necessarily think they're that great from an investors advice point of view. There's a lot of crap advice out there, and a LOT of people wanting to sell you their advice. It's better to work with people who actually do it, rather than people who want to sell you how to do it.

[brownie]

Originally Posted by photon

That stress doesn't come from having the equity in their home being used in another property, the stress comes from not knowing if they've done the right thing, not having any idea at all if their investment is going to grow or shrink.

That's the kind of investor that's simply rolling the dice and hoping for the best. Of course investing home equity in that situation is stressful! If I bet my house on black, I'd be stressed too.

Investors are people who've taken the time to understand their chosen area and find and use the methods that work. I couldn't do what SeeGeeWhy does; I don't understand businesses and all the things around them. Choosing one to buy would be like rolling the dice for me and would cause me no end of stress.

However with real estate I've done lots of research. I know the economic fundamentals that are driving the current boom in Alberta. I associate with others who are more experienced than me at it and have been successful for the right reasons, I find out what they did and why it worked, and reproduce it.

I'm not a big fan of Rich Dad Poor Dad and those books. While they are good motivation and are good for getting the point of how to look at money across, I don't necessarily think they're that great from an investors advice point of view. There's a lot of crap advice out there, and a LOT of people wanting to sell you their advice. It's better to work with people who actually do it, rather than people who want to sell you how to do it.

Just wondering if there are any good books out there on these topics???

[photon]

On which ones, investing in general? Or real estate specifically?

[brownie]

Originally Posted by photon

On which ones, investing in general? Or real estate specifically?

Real estate.

[photon]

Hm, I haven't read many on it lately that I'd recommend, at least beyond this one: http://www.amazon.ca/Real-Estate-Inv...e=UTF8&s=books

[Flames in 07]

Folks, the thing is, nobody is being more or less risk adverse by getting into the market vs standing on the sidelines.

If person A wanted to buy a house, they are not taking on any more risk than person B who has been waiting for prices to go down.

If person B has been waiting since about 04, that person has had an opportunity loss that is the same as person A's gain.

You cannot create nor destroy risk ... you can shape it in ways you might like but you have risk weather you like it or not.

The only thing that is important is your view of the future. My thoughts are that as long as prices are strong, you will see more and more internationals moving here who are used to prices way higher than this, vs what we saw in the 80's and 90's where U of S and U of L grads were moving to Calgary. Around the world, large cities with economys half hot as ours, prices can be way higher. I think the biggest risk of them all is continuing to wait for prices to go down ... every month you'll save a thousand or two for a house, but your entry house went up by 3-4 thousand.

[SaskaBushFire]

Sell in Calgary for 400k and buy a house the exact same in the same neighborhood in Saskatoon for 150k

Only catch is you have to live in S'toon!! But 250k in your pocket... omg!

[Flames in 07]

Originally Posted by photon

That stress doesn't come from having the equity in their home being used in another property, the stress comes from not knowing if they've done the right thing, not having any idea at all if their investment is going to grow or shrink.

That's the kind of investor that's simply rolling the dice and hoping for the best. Of course investing home equity in that situation is stressful! If I bet my house on black, I'd be stressed too.

Investors are people who've taken the time to understand their chosen area and find and use the methods that work. I couldn't do what SeeGeeWhy does; I don't understand businesses and all the things around them. Choosing one to buy would be like rolling the dice for me and would cause me no end of stress.

However with real estate I've done lots of research. I know the economic fundamentals that are driving the current boom in Alberta. I associate with others who are more experienced than me at it and have been successful for the right reasons, I find out what they did and why it worked, and reproduce it.

I'm not a big fan of Rich Dad Poor Dad and those books. While they are good motivation and are good for getting the point of how to look at money across, I don't necessarily think they're that great from an investors advice point of view. There's a lot of crap advice out there, and a LOT of people wanting to sell you their advice. It's better to work with people who actually do it, rather than people who want to sell you how to do it.

I read one of those rich dad/poor dad books several years ago, I didn't really like them either, but the book I read did do a good job of walking through the concept of 'cost of capital' for people who are not familiar with it. It's a good way to get out of Income statement type thinking about your finances and towards balance sheet type thinking.

[Slava]

Originally Posted by Red

He didn't tell them everything. He forgot to mention that most casuals lose money on the markets, are too knee jerk to sustain any flactuation, are not disciplined enough to make it work and for most part would never come ahead.

Only a few are willing to invest borrowed (against their home) money and even fewer can actually make money on it.

Well to be fair Red, this thread is about real estate and investing just kind of sprang up from there; fact is though that if you borrow properly and invest properly your break even is about 5.4%. A good mutual fund will eclipse that easily.

[V]

Originally Posted by photon

In the case of the house, the faster I pay down a house the more of my own money is in that house and the less of the banks money is in that house, so as the value appreciates it's my own money working for that appreciation, when my goal is to have other people's money working for me.

Now, are you talking about your principal dwelling here, or a rental? Because it's hard to borrow against your house if you don't owe a whole lot of it. I think I get what you're saying, though. You're of the school of mind that spreads your own money over as much as possible so as to increase your gains. Paying down a rental property with your own money means you won't have the cash to spend on another house. And another, and so on. That works if you have the cajones.

[V]

Originally Posted by Slava

The only thing to add to the "leverage your debt" point is that if you are investing this debt into the right things then you can also write off the interest, so you really don't even need to earn as much to make it worthwhile (don't need to be as risky).

Is this correct? I've heard that if you use a HELOC to put a downpayment on a house the interest on the mortgage of the house is tax deductible, but the interest on the HELOC is not. I really gotta get a hold of an accountant.

[Flames in 07]

Originally Posted by V

Is this correct? I've heard that if you use a HELOC to put a downpayment on a house the interest on the mortgage of the house is tax deductible, but the interest on the HELOC is not. I really gotta get a hold of an accountant.

If you invest in something you can claim any cost associated with the investment against any earning.

IE if you borrow money ( can use your house to back the loan ) all borrowing costs can be written off. That way if you have a 5% loan (or say a second mortgage) and your marginal rate is say 30%, all you need is a 3% return to break even.

It is rediculous to say most people don't have the stones to invest available capital collecting dust in a home. I don't have the stones not to.

[V]

Did you quote the wrong post?

As for your post there, of course people should invest that capital, but I'm talking about stretching yourself thinner than I'd be willing to do. Like guys that buy 13 houses in a year to start out. I couldn't do it. But that might be why I'm not a millionaire yet.

[Flames in 07]

No, the last sentance was in reference to others being 'risk adverse'

The rules I've always lived by are:

maximize RRSP contribution ... it's a free loan. The gov't gives you money now by way of reducing taxable earnings now, to be paid back later. You gain time value of money and maybe pay back when you are at a lower marginal rate
the second is to keep all of your money working. Including equity in a house and then structure it in a way where you can deduct the interest.

[Red]

Originally Posted by photon

That stress doesn't come from having the equity in their home being used in another property, the stress comes from not knowing if they've done the right thing, not having any idea at all if their investment is going to grow or shrink.

That's the kind of investor that's simply rolling the dice and hoping for the best. Of course investing home equity in that situation is stressful! If I bet my house on black, I'd be stressed too.

Investors are people who've taken the time to understand their chosen area and find and use the methods that work. I couldn't do what SeeGeeWhy does; I don't understand businesses and all the things around them. Choosing one to buy would be like rolling the dice for me and would cause me no end of stress.

However with real estate I've done lots of research. I know the economic fundamentals that are driving the current boom in Alberta. I associate with others who are more experienced than me at it and have been successful for the right reasons, I find out what they did and why it worked, and reproduce it.

I'm not a big fan of Rich Dad Poor Dad and those books. While they are good motivation and are good for getting the point of how to look at money across, I don't necessarily think they're that great from an investors advice point of view. There's a lot of crap advice out there, and a LOT of people wanting to sell you their advice. It's better to work with people who actually do it, rather than people who want to sell you how to do it.

All of that is true, but at the same time it's not easy to find help out there that's not looking to just make money off of you. Truth is, win or lose they still make money.

It's easy to invest someone elses money, even in a risky investment, if it pays off then great, but if it tanks it's your money going down the drain. That's the harsh reality of hiring proffesionals.

Flipping houses, investing on the markets etc has far more losers than winners. Always has and always will. But no one writes books about it so it's not getting much exposure.

BTW, I have some investments on the market and am thinking to buy land soon (retirement property) so I am obviously not against investing. I just don't agree with people risking their homes to do it. Most of those people don't have the funds to withstand any downfalls.