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Well , I’m not a stock guy, I just can’t do well

By: bigballss

There. I invest in real estate exclusively . Even my IRA’s are in a self directed ira that I have invested in real estate loans I made, and some of it I used to buy real estate. Hardly keep any cash sitting in the bank. If I don’t have a Property to buy I loan it out on a short term real estate loan. I charge 5 points on average and 9.95 annual rates. I could get a higher yield, but I don’t want to get greedy.The investment return when you factor the 5 points in loan fees is about 18%. I can’t get that anywhere else but real estate. When I buy a property I put 20% down, with purchase prices in the $400k range, it takes about 100k to buy a property. That uses up cash pretty quick. I haven’t been in the habit of refinancing to get the cash out, which I probably should. I’m always looking for more cash, I have more investment opportunities than I do cash. I don’t solicit investors or accept investor money, I don’t need that stress. Lots of deals out there. I don’t have a problem with finding ways to invest my cash, so I don’t have it sitting around. Now when the market turns and the credit spigot is turned off, i really have to scramble to find money. I always find it but it gets expensive. In 2010 I was buying properties and borrowing 100% of the purchase price @ 10% rates, that hurt. Rates are in the 3’s right now. That is cheap money. So I use cash for down payments, and borrow to complete the transaction. I don’t have cash sitting around other than working capital. Cash is king when credit is tight. When credit is loose, cash flows freely. It is a dilemma, Because you will need cash when credit tightens but do you let it sit around making you nothing until that happens? A lot of smart people miscalculate. As I said, I don’t let cash sit. I loan it out. If you have $300k do you plunk it into one property or do you buy 4 properties with it, use it as down payment and borrow the rest. I prefer to buy 4 properties that generate cash every month and continue to appreciate.
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