[sc40]

Hi all,
I was looking at my bank statement and I want to stop wasting time with money in the bank. I want to find other, better ways of passive income than interest.

the list i have so far is

interest

very safe, little gain


Stock Market

Not as safe,
Harder to use the money earned IMO as it is tied up in stock instead of cash.


Rent

Lots of money up front
looks like a safe way of makeing some money on the side.






I am 20 now, and I need to start planning for the future, I am worried more about havening an established form of income (although less than a true "job") than I am about just saving for retirement. Now is the time for me to start my investments a bit more risky and hope for the best


as always thanks for the help guys

[fzjchase]

Originally Posted by sc40

Hi all,
I was looking at my bank statement and I want to stop wasting time with money in the bank. I want to find other, better ways of passive income than interest.

Rent

Lots of money up front
looks like a safe way of makeing some money on the side.

I'm in the same boat as you are (I'm 19). I've got a good amount of $$$ saved up as well. I tried the stock market using imaginary money and what not for a couple of months, just to see if I can get the hang of it. Lets just say that I didn't do so well....

Mutual Funds... safe, but I can get a better return on my money.

Real-Estate. Something that I know, and runs in the family. By summer, I'll have my first peice of real-estate. Looking at some Condo's in Boulder, Colorado. Put 10% down, rent it out, have the rent go towards the mortgage, and bang... your making money on your money. I would keep flipping every 3-5 years though (depending on the market) to maximize your gains. I'll rent it out until I finish school and if I want I could move into the condo, or I could sell it and buy a place where I want.

My 2 cents.

[bad_religion_au]

real estate is pretty safe...

but so is the market if you go in for the long term, instead of trying to flip a quick buck by speculating

[sc40]

can someone (landpimp) please chime in if you have any experance or tips on like renting condo's apartments, ect.

also if anyone knows another venture to go..............

[koop]

I'd wheel the six dog.

[OZCAL]

I've always wondered how things like vending machine routes do. Might be worth looking into.

[uzj100]

Real estate. I wish I had done more before a family. I know you are not suppose to pay the property off however a couple paid for makes life a lot more interesting. I mean collecting $500 or $1000 or $2000 every month without going to work would be sweet.

I am not sure of your market, maybe something near a college, so you always have renters. Not to cheap or old because you spend a good chunk on repairs.

Also, there are huge tax benefits to owning real estate. I am not for cheating on taxes at all, I do believe there are certain things that can be done to lower your taxes, like owning real estate or having a farm, etc.

uzj100

[tcb]

Can you afford to have a property sit empty for months at a time? I've known several people who have gotten their asses in a sling by buying "rental properties" without being able to truely afford the cost of owning such property.... i.e. if the place did sit empty or something major went out like the AC, they were fawked.

I have another friend who makes a decent living with his rental properties, however, his are all commercial properties.... and he lives in the Katrina Zone, so anything still standing has a waiting list of tenants.

Just my .02....

Kind of personal questions, but I feel like we need more info...

How much coin are you talking about?

What rate of return are you trying to beat?

Typical brick and mortar banks don't pay shit on savings accounts... What are you getting?

[re_guderian]

I'm not sure I'd consider being a landlord "passive" (or vending routes). To make that passive, you need some serious $ saved up so that you can put enough down on the property to have positive cash flow so that you can pay a mgmt co. to deal with day to day junk (find renters, collect rent, field phone calls at 3AM about a backed-up toliet that spilled crap everywhere, etc.), and $$ to pay someone else for repairs/maint. Factor that in, especially if you're going to own out of state, or a long ways from where you live.

Like others have said, it depends on your goals and ability to tolerate risk. I've gone the real-estate development route, with upscale golf course homes. No long-term residual income, but in 18-24 months I've got my money out and on to the next one, thus limiting my risk to downturn in prices (which has happened here in PHX about 10% this year). And it's pretty darn close to passive. Not very many hourse involved, but takes some $ up front.

[rick_d]

real estate deal:
the game of rentals (residential) seems like a major pita. tenants do not own, and most do not love their residence like an owner does- so they trash it.

like home ownership, things break- and you pay for it. Paying management kills annual income so only hope is long term sale gains.

depreciation (over 27 years) allows an offset to annual ordinary income- but you still have to take the "loss" upon sale.

...and state landlord-tenant rules far favor the tenants

as a realtor I have discussions with numbers of other cohorts on the subject and most agree it is not a desired route. The ONLY way is to but a small 4-10 plex you can sole-manage with bomb proof long term tenants (multi year).

Commercial can be worse, 39.5 year depreciation, higher overall taxes, maintenance, etc. You can "NNN" (triple net lease) and have tenant pay everything, but unless you are in a high demand arena it's hard to keep filled. Then you have to jump to modified or gross lease which take more out of your pocket to keep up.

I personally believe in land. Buildings are a liability. No income, but other than taxes little in carrying costs. You can write off annual inspections if you itemize, and if it's cool enough you can have fun on it as well.

and if you enter in any one of the above, you must take advantage of the 1031 tax deferred exchange unless you feel the 15% long gain (or +/- 36% short under 12 month) will be more in the future.

Home owners get the $250,000 single person or $500,000 married couple exemption- which may not last. 2 out of last 5 years home must be primary residence- if a part time rental- depreciation must be calc'd.

I have been burned in the stock market and do NOT like trading fees- but don't have all day to learn trading.

Hard money lending can gain 8-14%, but there are minimums- normally $25,000.

Commodities (especially gold/silver) one should never take possession. Ammo is something you should have stored, not 1,000 oz of silver. Futures are the way in this zone.

...speaking of ammo, class III weapons may be speculative, but certainly a strong market exists.

as always, seek professional tax advice and legal advice before entering into any of the above investment ideas.

[NW-sickboy]

Originally Posted by rick_d

I personally believe in land. Buildings are a liability. No income, but other than taxes little in carrying costs. You can write off annual inspections if you itemize, and if it's cool enough you can have fun on it as well.

Home owners get the $250,000 single person or $500,000 married couple exemption- which may not last. 2 out of last 5 years home must be primary residence- if a part time rental- depreciation must be calc'd.

Hard money lending can gain 8-14%, but there are minimums- normally $25,000.

both good suggestions but probably would kill the cash flow of a 19-20 year old.....

Currently have moved a significant amount of my investments to lending and dont see going back anytime soon.

[greytandy]

If you need major liquidity, stay with a bank account.

Real estate is too much of a gamble and a headache.

If you can afford to put some of your money aside, the stock market is the best place for your money. You need to invest for the long haul and don't even try the day-trading bullsh*t. That's a fool's gamble.

If you want income, go for stocks in rock-steady utilities or real estate investment trusts. The dividends will go directly to a money market account and will be as liquid as your checkbook that goes with it.

I must say, that at your age, you will be better served by putting a part of your money into aggressive stock funds. Over the long haul they produce the best results.

[srplus]

All it takes to sour you on RE is one really bad tenant.

We kept the old house and rented it (with the idea of making money and building the asset by someone else paying the mortgage). We had a tenant for four years and it was great. Then we got the tenant from hell and all of her relatives living in our house. It was easier to wait for the lease to expire and have them leave then to try to evict! We ended up selling the house (and the market had gotten sour while we were renting) and netted out less then if we would have sold when we bought the new house.

Think about this... RE market is kind of iffy now.

Think of stocks... Sun Micro is heading in the right direction.

[sc40]

thanks for all the advice, it is looking like real estate might be to much for me right now. who do i contact to start investing in stock market? do i do a mutual fund?

i know shit can happen, but what do you think about moving from the on campus dorms to a house or duplex. I live there and i would have a roommate that is my friend (i know he wont f* stuff up, and he will pay) i would pay some, and he would pay also. would that not be a good way to use my money?

i'd have equity on a house, and a place to stay

[semlin]

buying a house in college and renting out rooms has worked very well for some folks. if you have the right personality to keep things under control and you can cover the mortgage (assuming no summer rent) you can do well.

one thing about real estate is that your risk and reward is higher. $25,000 invested in a $100,000 home where rent covers the mortgage means that a 5% increase in property is a 20% increase on your investment but also vice versa

[Cuerno Largo]

prostitutes? man-whores?

[tcb]

Originally Posted by sc40

thanks for all the advice, it is looking like real estate might be to much for me right now. who do i contact to start investing in stock market? do i do a mutual fund?

i know shit can happen, but what do you think about moving from the on campus dorms to a house or duplex. I live there and i would have a roommate that is my friend (i know he wont f* stuff up, and he will pay) i would pay some, and he would pay also. would that not be a good way to use my money?

i'd have equity on a house, and a place to stay

As a broker, I'd recommend you going to e*trade unless you have a lot more $$$ than a typical college student. They have a good selection of no-load mutual funds, just do a little research, find one with a proven track record of at least 5 yrs... not much to it at all.

I imagine that finding a lender willing to finance for you *might* be a problem unless you have a full time job to go along with your full time course load.

[wsdavies]

LOL...So basically you just shot down all investment options..except ammo. There is nothing wrong with the rental business. It all depends on the price of a place and the properties ability to pay for itself. I've had good luck with rentals and plan on buying/building more. The key is having realistic perspective on what a place will rent for, maint. costs and tenancy rates. Then you'll know what you can afford and what will give you a decent return. The rule of ten is what a lot of rental investors use. Take the monthly rents and then multiply them by 10, and that's what you should look to pay for a place.

Originally Posted by rick_d

real estate deal:
the game of rentals (residential) seems like a major pita. tenants do not own, and most do not love their residence like an owner does- so they trash it.

like home ownership, things break- and you pay for it. Paying management kills annual income so only hope is long term sale gains.

depreciation (over 27 years) allows an offset to annual ordinary income- but you still have to take the "loss" upon sale.

...and state landlord-tenant rules far favor the tenants

as a realtor I have discussions with numbers of other cohorts on the subject and most agree it is not a desired route. The ONLY way is to but a small 4-10 plex you can sole-manage with bomb proof long term tenants (multi year).

Commercial can be worse, 39.5 year depreciation, higher overall taxes, maintenance, etc. You can "NNN" (triple net lease) and have tenant pay everything, but unless you are in a high demand arena it's hard to keep filled. Then you have to jump to modified or gross lease which take more out of your pocket to keep up.

I personally believe in land. Buildings are a liability. No income, but other than taxes little in carrying costs. You can write off annual inspections if you itemize, and if it's cool enough you can have fun on it as well.

and if you enter in any one of the above, you must take advantage of the 1031 tax deferred exchange unless you feel the 15% long gain (or +/- 36% short under 12 month) will be more in the future.

Home owners get the $250,000 single person or $500,000 married couple exemption- which may not last. 2 out of last 5 years home must be primary residence- if a part time rental- depreciation must be calc'd.

I have been burned in the stock market and do NOT like trading fees- but don't have all day to learn trading.

Hard money lending can gain 8-14%, but there are minimums- normally $25,000.

Commodities (especially gold/silver) one should never take possession. Ammo is something you should have stored, not 1,000 oz of silver. Futures are the way in this zone.

...speaking of ammo, class III weapons may be speculative, but certainly a strong market exists.

as always, seek professional tax advice and legal advice before entering into any of the above investment ideas.