What to do with affiliate monies? (Disregard liabilities, acquire assets)



One guy (won't say any names) bought a few pizzerias and pays his childhood friend about $100k to manage them for him. They bring in about $350k profit so he's making a quarter mill/year profit with no work and unrelated to Internet, all while employing a good friend of his. Win/win. Not sure how much money you're talking about but investing offline is always an option.
 
Cracker said:
I have no idea what to do with it now. I already have the house I want, vehicle I want, and all of the computers, electronics, etc. other depreciating shit I could ever need/want.
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EDIT: lot of text below. tl;dr - real estate is a great option depending on location, market and budget and ETF's are a decent alternative to physical gold and silver (but make sure you know ETFs and don't go spending all your monies on SLV).

Step one should be to put off the stuff you really want until you have assets of some sort. Over the past year so many guys have gone broke, or severely cut down their lifestyle, because they decided to get depreciating assets now, and worry about actual assets at a later date.

... Anyway not sure what kind of advice you're really looking for here. Hopefully you recognize the fact most people giving their opinions are in no way qualified. If I were you I'd hit up guys you think do well, or from previous posts seem knowledgable, and ask their advice whenever they have time.

Depends a lot on your area and budget as to your investment options. Personally I don't view online acquisitions as really "investments" but merely part of my business (which due to my corp structures is true).

I love real estate (residential rental properties) and live in a relatively cheap and stable area. Investing in real estate is easy enough but it's all about the fine details that'll help you do well.

For instance knowing what's considered "commercial". Here anything over four units is and so if you have a five unit you'll be taxed higher, charged for garbage removal, etc. So all my properties are four units and that can be the difference in the initial years between making 10k profit yearly from a building or 15k.

Also know your banks. Banking relations are crucial for me especially with mortgage regulations here in Canada getting tighter and tighter every month it seems. Just yesterday they continued to regulate and put a stronghold on new home owners.

... Doesn't affect me at all. But too bad because it'll eventually kick the markets ass when demand is there but the financing isn't.

I have very good relationships with two banks (you should have two or three) and get through basically whatever I want. 20% down-payments are a requirement so I usually get the house mortgaged a bit above the purchase, front the 20%, do some renos, get it appraised for substantially more, go to bank 1 or 2 and re-mortage it for the higher appraised value, pay off the first mortgage and then draw out near the 20% + renos put into it. Rents are upped as well. My goal is always for the old rents to pay off the new mortgage still so the upped rents are just gravy.

Doing similar financing and re-financing has gotten a lot of heat in the past mainly due to folks in boom + bust prone areas doing this with single family homes and new constructions hoping for the value of the home to inflate while the renos are going on.

The increased value of my building means absolutely nothing to me. My rents and vacancy rate is what matters. Every building at least pays for itself and of course over time as the mortgage wears off the amount I make increases.

Again, the house price itself means nothing to me. Especially given the fact housing prices across the board haven't gone up much against any fixed form of currency (like gold or silver). It's mainly due to the increased money supply that creates the deadly illusion your home is really worth "more money".

If you're interested in real estate also look into "low income housing" projects done in your city (if there are any). I believe I mentioned it back awhile ago on the forum. It's scandalous but very profitable for home owners.

Basically for every unit I'll get 25-35k to fix it up as long as I promise to rent it to low income housing folks for 10-12 years (price and years needed to rent are directly related).

... Around here that goes along way and when the building was only $300-400k. It's an incredibly injection of free money. Here's the kicker, my province will pay MARKET rent as deemed by yourself (to be reviewed, but whatever you say usually goes) and the low income person will pay a set amount and the province will kick in the rest to make it up.

So basically I make what I would anyway, or more, but get to do completely redo some of the units.

AND the province has a list a mile long of names to get into these projects and they'll set them up in your apartments for you.

I'm scouting for a house downtown to do this on now. Already approved for $25k/unit for 10 years, just have to find a good house. If you do this however make sure you get a management company to collect rent from the tenant and deal with them.

... Low income, ironically, are the biggest hassle out of anyone so I'm told. I actually have a management company collect rents, fill vacancies, etc on all my properties so little headaches are involved.

Anyway what I'd do, if you live in an area where real estate is an option for you and not incredibly expensive, is meet with a city counsellor, real estate lawyer and two different bank branch managers.

Between all of them you'll get a very good idea for the type of programs you can take advantage of, rules, laws, money available, etc.

Also make sure to give back. Same goes in the online world but offline when I bought my first building getting a mortgage from HSBC (as a 19 year old, meaning just the age of maturity in my province) was incredibly difficult.

They were all assholes to me and it took months to get financing and two deals fell apart because I couldn't get financing (probably the most embarrassing thing ever).

But after I finally got it all through I just sent a little catered lunch/snack from a nice little bakery in HSBC's building over with a card thanking everyone.

Cost like $150 for fruit platters, chocolate, etc to come in on a silver palate thing. I couldn't tell you how many great e-mails and phone calls I got from that little thing.

Now, like I said, I get pretty much everything I want within reason from the two banks I work with. They know I don't do anything risky so things wouldn't be a problem anyway, but everything goes so fast now.

That's about it for non-specific advice.

Also you don't need to invest in physical precious metals... just invest in ETF's or leveraged ETF's. Whatever you decide to put your money into just make sure you understand it.

... I'm putting more and more money into the stock market because I haven't been finding too many properties around I like recently (and it can be a lot of work when renos are involved). I like real estate because I have an element of control over it that I don't have with stocks. Plus I find it very fun.

Just make sure you fully understand, track and test what you're doing with your money. Personally I love dealing with my money opposed to making more money from campaigns, etc and I'm sure you'll end up the same way the more you get into it. The more you learn and the more guys you talk to in the investment side of the industry the more you'll fall in love.
 
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Andrew Scherer said:
am I correct in thinking that normally people wouldn't be able to do this but because you have solid banking relationships you can?
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Yeah, I misspoke there. It used to be quite a bit bigger paragraph so I copied and pasted some stuff out and forgot about that.

I do 80% give or take of the purchase price, then after the renos (if any) I'll get it re-appraised and then draw a mortgage of up to 90% on the appraisal value or whatever value I want (if lower; i always ensure the rents cover the mortgage nicely so if I only need to do 70% of the appraisal I will instead of drawing cash out and running a deficit monthly after expenses on the building). Always enough to cover the first mortgage obviously so you just have a bigger one at the second bank.

As for the banking relationships I didn't want it to sound like they'll do anything for me -- because they won't. The main reason you want them is to ensure your first purchase goes smoothly and you don't have a situation like mine AND second so your shit goes through fast.

I really have no benefit (other than the branch manager usually e-mailing me in advance about foreclosures before they come up in case I'm interested) besides my stuff just getting done when I need it every time. Banks, just like any other institution, can really hold things up and I know I've had stuff passed through ahead of other people's and that makes it well worth the odd chocolate plater.
 
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Cracker are you married? Did you hire your wife and max out her retire plan? Do you have kids? Have you maxed out your kids 529's? Have you considered setting up a pension? You can write off a huge amount each year with a pension. You could also set up a life insurance policy that has a guaranteed rate of return each year. After the the policy is funded you can borrow against the policy and you do not have to pay taxes on the gains. These are are all pretty conservative ideas but its a good foundation for capital preservation.

If you want to me more aggressive you could invest in discounted corporate bonds. However you need to put up $50,000 and up per transaction and the risk is higher than some other traditional investments.
 
FTC-hater - now there's someone who knows the local legislative environment, as well as how to get all the other relationships in place. Awesome.

Amazing how some communities are pro-rental property owner, while others treat them like criminals.
 
Considering how the economy is developing, buy investment gold bars from a secure source, don´t brag about it, and then dig them down in your garden!
 
thanks for the clarification dude

I've finally got around to start stacking for the down payment on a multiunit down here and you're making me rethink how to approach it. Refi after putting in some sweat equity makes a lot more sense than buying an already polished piece of property and having your capital locked up in it.
 
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