Teaming Up

[speedfreeksteve]

If you have money and want to play the stocks , go ahead blow your brains out, but the vast majority of people are better off just paying off the mortgage and keeping out of the stock game.  There is people paying 28% interest on a credit card and yet going out and buying stocks..shake your head violently

If the average person simply focused on paying off the mortgage of their house they will be miles ahead of any other method of investment. Even if the market collapses, you will lose 20% at max ( 2 or 3 years EQUITY) and it always comes back and averages back to 7% a year..no stock investor can claim the same. Lets not mention that your house is capital gains exempt so the 7% is tax free
 

Long rant there! Everyone is entitled to their opinion though.

I think the problem with stocks is that the "average joe" are now all investors and just buying whatever the guys on TV are telling them to do... this created a bunch of less sophisticated investors that didn't know how to react when things went sour. Then you have the bunch of people that are "investors" but they're really just gamblers but its more acceptable if your addiction is risky stocks.

20 years ago.. buying stocks on a daily basis was 99% left to the pro's.

Also, paying off your mortgage faster when its extremely low interest like it has been at least for the last 12 years, is a crazy idea... ok maybe that's a harsh word.. I'll say "overly conservative".

You can get a better payout in a number of ways (bonds, preferred shares, etc). Psychologically, sure its nice to pay the mortgage off.. but long term its better to just look at the whole balance sheet and make your money work for you EVERYDAY.

Nothing wrong if you end up with $500,000 in a brokerage account (conservatively invested) and a $100,000 mortgage.

On that note, real estate in the US has become the new stock market. I was in Florida last week and saw parents buying their 25 yead old kids living at home houses for $30000 just to get them out of their own house.

If you use the reasoning of paying down your $250,000 mortgage on a home and then its worth $75,000.. then what do you do?  I'm glad my mortgage (and most others on here) is in Canada at least.

[Driver]

Hello Everyone,

I have been watching with interest the many varied comments that have been made in the "teaming up" but now "pros and cons of investing" and have finally decided to comment.

I lost my job trucking within the auto industry and have decided to go on my own into the income property market. I have other skills but refuse to live in a tent in the bush, thank-you very much. We bought a house 3 years ago for $45K (POS, not tax sale) with tenants which has done us well. It allowed us to pay off our mortgage and now have a $200,000 secured line-of-credit that I would like to use as leverage in placing cash offers on du,tri and fourplex properties. Offers that are conditional upon financing seem to scare away sellers in todays market. Once my cash offer is accepted, I would work with my mortgage broker, pay off the line-of-credit with a mortgage on the income property and do it again. No CMHC, lower purchase price, save money. Right? Anyone wishing to throw a wrench into my plan, please do so.  Free advice gratefully accepted.

I have built my own house and shops over the years. I am much better at swinging a hammer and twisting wrenches than reading the financial post. Someone suggested going to Edward Jones, which I did. She recommended to not borrow to invest in stocks, bonds, mutuals, etc. If I wanted to try smaller amounts ($10-20K) after I own properties, that is fine, but stay away from bigger $$$. That was good to hear. We had some investments ($30K) a couple of years ago with a "financial counsellor" at TD bank. What a joke. Withdrew everything and now very glad that we did.

Great site. Lots of info. Best of luck to all.

[Frank]

now have a $200,000 secured line-of-credit that I would like to use as leverage in placing cash offers on du,tri and fourplex properties.

I have a bud that has done exactly that and over the last 30 years has accumulated two dozen singles that he owns and rents out.  Tenants are paying the mortgages, and properties have appreciated in value.  He has occasional problems with bad tenants, but is generally very picky on his rentals, and never advertises them since that brings in the unwashed and if you refuse them you have potential law suits.  This is his retirement plan.  It has worked for him very well...word of advice, stay away from anything bigger than a fourplex, and don't rent to students (housing that would appeal to them would have to be close to a University, and therefore carry a premium anyways, and the insurance will be ten times normal)...unless you want to buy the one that I have for sale of course.

[Driver]

Morning Frank,

Thanks for the response. My mortgage broker warned me of the 5plex and larger. Gets into the commercial end of things and the rules change. That is my plan also, making this my retirement income.

We have a line-of-credit now but in the process of bringing it up to the max. The bank wants to charge me $500 to do this. I refused to pay their exorbitant fee and we are still battling over it. Should have it all worked out today. Is $500 normal to put a charge on title?

Thanks

[Sasha]

A house for 45K 3 years ago?  Where? Or did you mean 450K?

[Driver]

$45,000. In Vienna. It was a power of sale. The bank started out at $89K. The price continued to drop and when I got it the listing price was $55. The RE agent suggested I put in $45 and they took it. She told me after that they just turned down $47 the week before. I got lucky.

[Pfm1011]

47K houses wow .Im in oakville...47K  wont get you a garden shed

[Pfm1011]

20 years ago.. buying stocks on a daily basis was 99% left to the pro's.

Thats my whole point of the rant..The average person should just stay away from shares and leave it to the pros who can afford to and expect to take a hit once in awhile. My uncle made millions in stocks over 60 years and  I used to help him at year end..and watch him take 500K losses and laugh " I will make it up next year" Total pro who could afford the ups and downs. He had millions in real estate , mortgages , bonds etc so the stock was just a small part of a balanced portfolio.

Any pro reading my rant didn't lose in the last 3 months as they shorted RIM or can write down the loss against previous  gains or other investments. But the average person who is the target victim ( Edward Jones in strip malls..wake up people, your financial adviser is beside a variety store and a pizza pizza) Cannot afford, and should not play with stocks.

The increased scamming of the general public has turned the market into a joke and a suckers bet. Day trading ( 96 % lose money) , 5 dollar trades, bullboards , etc etc

I don't know if you noticed but over the last 3 months there has been a ton of ads on TV by banks and financial advisers ...absolutely insulting..""I know you lost 50% in sept..come to CIBC for advice from our 1 week trained adviser ( bank teller with bonus if she meets victim target)

CIBC doesn't mention all their client lost the same, Its just a scam. Edward Jones steal CIBC client, CIBC steal Jones client,  One frying pan to another frying pan..keep sucking the blood till dry

Nothing wrong if you end up with $500,000 in a brokerage account (conservatively invested) and a $100,000 mortgage

Absolutely..but what about the other 99% of the population who have a 300K mortgage on a 340 house, 20K in credit cards and , 30K in stocks that is now worth 10 if they are lucky. You forget that the average person is 3 months from financial failure due to credit load..These people should not be in the market or taking equity out of the house.

"Conservatively invested"  Say Bell, Rim, RBC, Exxon and Barrick,Teck ,IBM and Microsoft. Very conservative portfolio...Probably  only down 50%, Dump the rim and teck and probably only 40% of you life savings gone.
 Unfortunately most people cannot afford to buy the bargains as they have no liquid left and they aren't getting bailout loans like the banks.  We finance the bay street bailout..we don't benefit from it.

Two years ago  the government let American banks come into town and sell 40 year, no money down mortgages..they banned it a year later but they can still sell them until this April. ( that will be the death blow to the condo market) Yes thats right, anyone who took them,,6 billion in canada ..is now 20% negative in their equity..Spring should be fun.

And for you pro's , did anyone notice that  July  07 the US markets eliminated the up-tick rule and 4 weeks  later the subprime crash began..all to the delight of the shorters...nothing suspicious there at all

"The rule had been in effect since 1938, but the SEC removed the rule on July 6, 2007, after saying it was ?obsolete.? 

August 07 the subprime collapse and all the banks get shorted, ....means all the general public gets screwed out of your life savings and the entire world economy collapses...

If you in anyway believe that the stock market is based on free market economy, you are a fool. It is a complete insiders game.

"If you are at a poker table and you don't know who the sucker is..its you"


yet another rant, time to get a hobby

[Dogma]

Interesting concepts.

And I think investing - we are looking for "honest" well run companies..for the stock market shares that are offered.

Horse races are a different story. ..betting on horses you take your chances.

The current regulators will never be able to keep up with Wall Street,

The internet "blog world"...will help.

The media has also been slashed, no business, or in depth investigation anymore...
no one can afford it anymore....buyer beware more than ever!

The basic's still applies.

1) We all need a roof over one families head
2) Food on the table
3) Insurance to cover what you own.

Paying down your home (is) the best thing to do asap. The money saved on interest even though at 6% is significant. paying it off 10 years early can save you thousands, more than the stock market mutual funds will ever do. Flipping property? You need "extra" money to such a risky business. You have to be prepared to take a loss. Or infact able to afford to take a loss..Because really property take money, financing and costs to hold..over a period until it is resold. Especially rentals, it needs maintenance and finaning costs! Anyone telling  you differently is as niave as your "dream" to become independently wealthy over night.   

Unfortunately the public that buy 250-300k houses, and carry debt on credit cards, buy new cars and compete with the "Smiths" really are naive in terms of what one "really" needs or can afford (see latter).

My family has never considered buying a "home", car or anything of significant investment - over our budget. I have always bought USED cars, USED houses, USED furnishing etc. Why one would buy a new home not only creates "debt" but urban sprawl, it is NOT Toronto the good anymore. Its all about MONEY! That's why I left T.O in 1998, just in time...to know the difference one is missing with manyof you there! 

To me an investment is not just one for ROI. Or for "flipping".

Paying down your home IS the best thing the general Joe can do...especially when a home is bought within ones means!

The "flippers" here may have a different reality...but frankly I think the main issue is people buying beyond ones means.