Top Trader Questions

FAR 038

Topics:

Real Estate News

Investor Uh-Ohs

Contractor Fails

Investing SCAMS

The Trader’s Top Questions :

  1. What is the acquisition cost?
  2. What are the holding / improvement costs?
  3. What is the selling price?
  4. What will the cash outlay be if I use leverage?
  5. What is the return on investment?
  6. What is the return on my cash?
  7. What is my return on effort?
    1. Wages, whether salaried or hourly are 1 to 1.
      1. Hours
      2. Time
      3. Completed work
    2. Start a small business and to begin with it’s as low as ½ to 1.
      1. Add employee to get back to 1 to 1.
      2. Each employee slightly reduces your effort to increase your bottom line.
        Capitalism is based on the exchange of effort for a living wage. The employer pays a fair wage but it always less than the return that employee will ultimately bring to the company.
    3. Active real estate investing (flipping) still involves effort, but opens up returns in the form of unlocked equity or value creation through improvement.
    4. Active rental investing requires effort but theoretically offers more rewards than exchanging that effort with someone else.
    5. Passive investment has a return of many to 1. Hard to quantify, but the continuing effort put forth is small in comparison to the return.

Emails:

Toni from Orlando: How do I decide whether to install hardwoods or just replace the carpet? Carpet is significantly cheaper.

Chastity from Dallas, GA: We bought a house where the old garage has been converted into a family room. The room really adds some needed interior space, but it was poorly done and not to code. It will cost as much to make it right as it would to just make it back into a garage. What would you do?

Evan from Harrisburg, PA: I have a found what looks like a good funding source online. They say they will provide capital for my business and funding for my deals. I filled out the paperwork and then they told me I just needed to submit $2500 to process the account and set the paperwork up.

Bob from Pittsburgh, PA: Should I use one of those 25 year paint products for the exterior of my flip house or just paint it?

Francis from Denver: We bought an old one – got into it and found major problems that the GC missed in his original estimates. No way we can make money now. What do we do?