Advice: Buy MORE Gold/Silver or hedge with Real Estate?

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TommyHolly's picture
TommyHolly
Status: Bronze Member (Offline)
Joined: Nov 9 2010
Posts: 90
Advice: Buy MORE Gold/Silver or hedge with Real Estate?

Hello all,

I'm out here in Afghanistan and saving my money.  When I come back home I have a decision to make...  Buy MORE Gold/Silver or start to hedge with real estate rental properties?  I was hoping you guys could give me insight on this one.

So I can get the usual advice out of the way, here are just some of the things I have already prepared for:
- Emergency food supplies
- Water filtration units
- Solar and Natrual Gas/Propane energy sources with battery backups
- Various transportation including a long distance BMW motorcycle
- Paid off all my credit cards and everything (except my mortgage in the house I live in)
- Medical supplies, community network, guns & ammo, Silver/Gold bullion, fall back locations...ect

Here's my situation:  Some friends of mine do extremely well buying houses and renting them out to Military and College students.  (No Section 8)  I have an opportunity to buy a few houses with them (on credit of course).  I am worried that putting myself into hundreds of thousands of $$ of debt like that could be a bad decision with an eventual collapse of the economy.  Most people I've spoken to seem to think that it shouldn't be a big deal because as the economy gets worse, the number of people buying houses will drop and renters will increase. I brought up the fact that the military and college students are both paid by the Gov who will be completely broke sometime soon.

>> With an impending economic collapse at some random time in the future, should I be looking at purchasing rental properties?

>> Should I just buy even more Gold/SIlver instead?  (I'm leaning this way even more as I write this...LOL)

I appreciate the feedback.  I read through a number of other threads and the others who have asked similar questions hadn't yet prepared like I already have.  I've taken care of pretty much everything and need to invest.

Thanks!
-Tommy

Doug's picture
Doug
Status: Diamond Member (Offline)
Joined: Oct 1 2008
Posts: 2792
maintenance

Your choice is, of course, your own, but one thing that always occurs to me is that PMs are maintenance free.  Having lived in student apts back in the day and later owning rental property, I can say without equivocation that I hate being responsible for apt maintenance, particularly when the renters don't care as much for your property as you do.  If you don't mind calls in the middle of the night, or repair jobs on weekends when you would rather be doing something else, then go for it.  I know a lot of people who have made a lot of money with the kind of rentals you suggest.  I'm not one of them, and that's just fine with me.

Doug

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Where are we on the housing map of prices?

Where are we on the housing map of prices?

I boast about making 6 figures on RE in 90 days---what I neglect to mention is the 12 months of mentoring I got from one of the area’s most successful CREI’s.  What I learned is that you make your money buying when you sell.  In other words, if you don’t steal it on the buy don’t bother.

With FC’s and short sales you can buy right.  But I’m seeing that chart in the 50s until hyperinflation kicks in, and who knows if that’ll be next week or 2 years from now?

Another thing: Inventory.  We have 12% of homes vacant.  30% of FY2-6 buyers were subprime---they’re gone.


§ 

Also, you mention renting to school kids.  You might read up some on college being the next bubble. Fully 55% of those aged 18-24 (and 4% of 25-34 year olds) say young adults are having the toughest time in today’s economy


§ 

A quarter of adults aged 18 to 34 (24%) say that, due to economic conditions, they have moved back in with their parents in recent years after living on their own. 

 

Also you have the entire Linda Green thing and who knows how foreclosures are going to wind up later on down the road.  In other words: Are you going to retain title?

Hope that helps.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
ps

I like to beat dead horses, what I'm driving at here is 54% employment these kids are going to get smart fast and not take on debt.  Living in dad's basement with debt is worse than living in mom's basement without debt.

How much difficulty are borrowers having paying back their debts? Of the 37 million borrowers who have outstanding student loan balances as of third-quarter 2011, 14.4 percent, or about 5.4 million borrowers, have at least one past due student loan account.~Source

StudentLoans1

StudentLoans2StudentLoans3StudentLoans4

TommyHolly's picture
TommyHolly
Status: Bronze Member (Offline)
Joined: Nov 9 2010
Posts: 90
I'd be depending more on the

I'd be depending more on the business of renting to military assigned to temporary duty...  However, with the way the GOV is goinng broke so fast, I'm not sure that is such a hot idea either... Hmmm.

I think maybe expanding on my Gold bullion would be a safer bet.  This is so incredibly frusterating operating in a Socialist society where I am actually afraid of starting up a business. rrrrgh

lacourre's picture
lacourre
Status: Bronze Member (Offline)
Joined: Dec 11 2008
Posts: 38
Learn from the past

Tommy,  

Have you looked at how landlords have fared in other countries (Germany, Argentina, Zimbabwe, etc.) when experiencing a currency crisis?   I am currently reading the book When Money Dies  to try to understand what people experienced during the Weimar Republic's fiat disaster.  It is my impression that at some point landlords won't be able get paid what they want for rent... increasing unemployment and rising prices make me wary to be a landlord.  I know renters that have recently agreed to "stay another year" as a renter if the landlord dropped the price for them, which he did.

If you do go into this business, in addition to what others have offered, brush up on the eviction laws in your area, how much notice to give a tenant if they are deliquent on the rent, court costs to file, police costs for actual evictions, etc.  Cost to repair damage left behing by the evicted tenants.  My family had many rentals as a business and had some crazy stories about this.  It didn't happen often, but it did happen!

Also, how is the market in your area... are housing prices stable, rising, or falling?  What about rents?  How have rentals costs been over the past few years?   Is rental demand increasing or decreasing? 

Would some arable land be another option for real estate investing? A small lot that wouldn't cause you to be debt ridden... to hold, farm, or sell later? Or starting a CSA (Community Supported Agriculture) on some productive property?

I wish all the best in whatever you choose!

 

lacourre's picture
lacourre
Status: Bronze Member (Offline)
Joined: Dec 11 2008
Posts: 38
TommyHolly wrote: I'd be

TommyHolly wrote:

I'd be depending more on the business of renting to military assigned to temporary duty...  However, with the way the GOV is goinng broke so fast, I'm not sure that is such a hot idea either... Hmmm.

I think maybe expanding on my Gold bullion would be a safer bet.  This is so incredibly frusterating operating in a Socialist society where I am actually afraid of starting up a business. rrrrgh

I would assume that renting to military would give you a more responsible, reliable base of renters!  But, there may still problem of what to do when the rental is vacant.  Maybe start small, with one rental first?  Business is sure different that it used to be!

agitating prop's picture
agitating prop
Status: Platinum Member (Offline)
Joined: May 28 2009
Posts: 734
TommyHolly wrote: Hello

TommyHolly wrote:

Hello all,

I'm out here in Afghanistan and saving my money.  When I come back home I have a decision to make...  Buy MORE Gold/Silver or start to hedge with real estate rental properties?  I was hoping you guys could give me insight on this one.

So I can get the usual advice out of the way, here are just some of the things I have already prepared for:
- Emergency food supplies
- Water filtration units
- Solar and Natrual Gas/Propane energy sources with battery backups
- Various transportation including a long distance BMW motorcycle
- Paid off all my credit cards and everything (except my mortgage in the house I live in)
- Medical supplies, community network, guns & ammo, Silver/Gold bullion, fall back locations...ect

Here's my situation:  Some friends of mine do extremely well buying houses and renting them out to Military and College students.  (No Section 8)  I have an opportunity to buy a few houses with them (on credit of course).  I am worried that putting myself into hundreds of thousands of $$ of debt like that could be a bad decision with an eventual collapse of the economy.  Most people I've spoken to seem to think that it shouldn't be a big deal because as the economy gets worse, the number of people buying houses will drop and renters will increase. I brought up the fact that the military and college students are both paid by the Gov who will be completely broke sometime soon.

>> With an impending economic collapse at some random time in the future, should I be looking at purchasing rental properties?

>> Should I just buy even more Gold/SIlver instead?  (I'm leaning this way even more as I write this...LOL)

I appreciate the feedback.  I read through a number of other threads and the others who have asked similar questions hadn't yet prepared like I already have.  I've taken care of pretty much everything and need to invest.

Thanks!
-Tommy

Boy, that's a tough one. There are some tremendous opportunities to buy short sales and then sell them back to the previous owners who are on the verge of jingle mail. .Many of these poor souls are ready to swim away from houses that aren`t just under water, but scraping the sludge at the bottom.

Say they paid 250,000 for a house in 2005 with a minimum down payment and it's only worth 80,000 today.. The bank isn`t going to renegotiate the principal with them. Bank will deal with you and your partners if you have cash. You buy it for 80.000 and sell it back to the owners for 120,000, at 10%. Everybody`s happy, but you need cash!

Taking on debt in hopes that renters will magically appear in great numbers, is optimistic, but more likely you are going to see schemes like I`ve outlined above take the piss out of the rental market. Being a landlord is hell in the residential market.

TommyHolly's picture
TommyHolly
Status: Bronze Member (Offline)
Joined: Nov 9 2010
Posts: 90
Arrrgh, the internet

Arrrgh, the internet connection in Afghanistan sucks...  this is my 3rd and last attempt to reply.

Lacourre,
I added that "When Money Dies" book to my Amazon Wishlist.  I am very interested in learning more about what happened during the Weimar Republic collapse since I fully expect that to happen to the USA at some point relativel soon. 

agitating prop,
I have definitely benefitted from a surplus of skilled tradesmen looking for odd jobs for cash.  Buyers market for sure!  Getting back to my friend's rental plan...  My friends plan for the renters is reliable for now since they focus on a certain type of military customer.  However, the military is paid by the government and the government is going broke.  That is my main reason for being cautious and not jumping in like the others.

Lets hop this goes through this time...LOL!

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