108

EDITED after OP added more details. no taxes have been taken out yet. 24% will probably be withheld, taking you down to 38K. The organization that ran the sweepstakes must withhold 24%. It's the law, and of course you have to claim it on your tax return, whether or not they withhold anything. Because they'll withhold, they'll send you a W-2G saying ...


97

I think this might be an instance of "survivor bias" in that you only tend to hear from the people who were successful at it and made a lot of money off of it. Conversely you don't hear as much from the people who lost their shirt trying to flip a house or those who couldn't secure tenants at a good price. If you're interested in the idea of passive real-...


93

No. Just no. This is a cheesy sales pitch from someone who wants you to take their course on real estate investing for the low low price of $499. It's a non-sequitur: the conclusion does not follow from the premises. Population generally increases: true. More and more real estate will be needed to house them: true, with caveats. And thus you should go ...


91

Wholesaling is basically the act of standing in at an auction and "buying" a home on behalf of a yet-to-be-determined buyer. You put a down payment on the purchase, and then, you go out, find that actual buyer, and basically get them to close the sale - but at a higher price than you bid for it, so you can pocket the difference as profit. It works because ...


72

It's important to differentiate between "living below your means" and being smart about money. Buying a used car with low mileage is generally a smart financial decision considering every car becomes a used car the second you drive it off the lot. Financially, there are only advantages to living below your means. You will save more money which can be ...


70

You did not add a country tag, but in most countries, a plot of land and any buildings built on it become one inseparable unit which usually can not be sold separately. If you sell one, you also have to sell the other. That means if your bank forces you into foreclosure, they will auction the house, the plot of land and the other things you build on and ...


63

What is the truth about this? Pretty much no truth. At 48 years old, I received an offer for a job where I was paid far more than any other employment I had previously. I chose it over two other competing job offers that were offered at a very similar time. While I was laid off from that job, rather abruptly, I had a new job within a short time at age ...


55

Where is the risk? The short answer is... Property damage from weather, termites, tenants, whatever. How about tenants who stop paying the rent and you need to go through legal channels to evict them? It doesn't cost a fortune but you had better not need that rent to make the mortgage. How about another GFC (Global Financial Crisis) like 2008 when ...


55

Several other good answers that get into the details, but I think there are a few obvious things that need to be said here: Real estate isn't a risk-free golden ticket - investing in real estate involves a lot of risk. It's easy to fail at it, and then you have nothing to fall back on. Having a career with a skilled job isn't as dismal as you've made it out ...


54

First congratulations and well done in both your salary and investment. Hopefully there will be more of this in the future. First I applaud your initial approach. Give some, spend some, save some. The disagreement with your wife is standard. One member of a partnership tends to be more conservative than the other; the disagreements help bring balance into ...


47

You make $50/hr and are in debt? This is a serious problem! The $50K is a distraction. This is what I'd do: Pay off any high-interest debts (say 7% and above) up to ~$40k (saving some for taxes, ignore if they're already withheld). Stick remainder in a High Yield savings account (e.g. Ally) and forget about it. Discontinue use of credit cards, if you're ...


47

I grew up working in auction houses in a rural area - family owned on most of them. I was young - so I was not the auctioneer, nor the management staff. But I did see how things work and I did help sell - mobile homes, regular homes, cars, kids toys, business liquidations, clothes, antiques, paintings, rugs, seasonal business leftovers - whatever. I met ...


40

the highest offer we could make is substantially below the asking price by around 5%. I wouldn't necessarily call that 'substantial', especially if the property has been on the market some time (I surmise this from "sales in our local area are slow"). That you are ready to proceed also makes you a strong contender, and reduces the window of opportunity for ...


39

The sales pitch: A few decades ago, I had a friend that was starting out in real estate investing. He explained his reasoning like this: Buy a starter home. Get a decent house/condo with the best rates because it is an owner occupied purchase. Live there for 5 years. Buy another house, get some renters lined up for the first place. Renters cover the ...


38

It doesn't feel savvy to offer without Conditions Precedent like Financing Condition, Subject to Appraisal Inspection, Legal Review, Survey. For the average buyer, those typical conditions are very important. But for a team of investors, they are handling many of these internally. The purpose of visiting the house before making the offer is to do an ...


35

The basic premise of what your father is saying is equivalent to: Buy land. They ain't making any more of the stuff. - Will Rogers And probably, if you look at this at the timescale of centuries or millennia, it's probably roughly right ignoring volcanic islands. But There are some complicating factors to this: Not all property grows in value at the ...


34

What you do with your income, and with your windfall, should be based on your retirement goals, which you have not mentioned. For many people, a paid-off residence and $1M in the bank would mean retirement could already start. But it seems your lifestyle (young children, Porche 911, etc.), won't quite allow for that. So you acknowledge that you will be ...


34

Other answers do a good job explaining direct financial disadvantages, so here's another point of view: Living frugally might negatively affect your social life. For example, if your friends like going out for expensive dinners, choosing not to join may damage your relationship. Appearing to be rich, for example by driving a nice car, may increase your ...


34

I know this from Poland. This is a semi-legal poaching technique used by estate agencies. It's semi-legal because the agencies (company) cannot impose a buyer, but an agent (a sole representative) is not forbidden from doing that. This is used to create leads for them they could then show to their clients. It works because buying direct, with cash, makes ...


30

Depends what your father meant when he said "real estate was a good business" and that "real estate prices mainly go up." You could be a real estate agent, a landlord, a commercial property investor, or even the guy with a hardhat and hammer who builds houses. Each of these folks can have radically different outcomes from being in the real estate business. ...


30

It depends on the circumstances of the sale, the jurisdiction, and the auctioneer. It also depends somewhat on when or how the buyer backs out. Skip to the very bottom if you just want an answer to the exact scenario you've presented in your question. Given your mention of real estate, my answer focuses on real estate auctions specifically, and is written ...


27

The "We Buy Houses for Cash scheme" is targeting desperate and misinformed property owners (like elders and minorities) through pressure purchase tactics to rip them off by taking the low ball offer with cash. In the process, the scheme maker (some are real-estate agents) actually already has a willing buyer, and this allows them to sell the house with ...


25

Compound interest is only relevant when you get paid interest and you reinvest it. In cases where you buy, hold and sell, with no income generated during the holding period, there isn’t any income from the investment to reinvest. There’s no interest, and hence no compound interest. The ‘growth’ of home values is just a ‘paper’ (re)valuation. If you paid $...


25

where is the risk? Losing renters Damage done by renters Unexpected maintenance Legal liability Capital losses Other factors that should be included in expenses: Routine maintenance Paying the landlord (essentially a part time job for him) I'm not saying it's a bad investment - and it sounds like he has a decent property for an amazingly cheap price, ...


25

I'd go ahead and use your agent for both sides if you trust them to look out for your interests and I feel that you do. At a superficial level a buyer's agent has the same motivation as a seller's agent. That is get you, the buyer, to pay as much as you are willing to for a home. On a superficial level both sides are benefited from you spending more, not ...


23

Actually, mortgages do not "compound" at all. Compounding means that interest is charged on top of past interest, which is not true for mortgages. Conforming mortgages in the US use simple interest, where interest is calculated based on the principal amount remaining, and late/unpaid interest is not added to the principal (unlike a credit card, for example). ...


21

The biggest problem your friend has isn't the risks associated with real estate per se, and the existing answers have covered those pretty well. The problem is that your friend is about to sink their entire net worth (or some appreciable fraction thereof) into a single asset class. Not a great plan. The problem is systemic risk: for example in this case ...


19

The big financial disadvantage is likely to be the risk that the low priced home you purchase appreciates more slowly (or declines in value) compared to the better house you could have afforded. This is obviously very location dependent but there are, for example, plenty of neighborhoods in Detroit where home prices haven't recovered since the 2008 ...


19

I think your broker is correct. Item 2 is to clarify expectations and prevent any perception that discounts or repairs are being offered. It does not say that the buyer forfeits the earnest money just by asking for a change in terms. The contract has been accepted by both parties; either of you is free to propose changes (attempt to renegotiate), and unless ...


18

Not sure if I've read properly, but 50k is not all that much, even moreso as existing debt is involved (was it maybe 500k, and I misread?). Insofar, the mere idea "Should I buy property or start a business or something" makes me go "WTF?!", sorry. Debt, especially debt with high interest rates (credit cards?) eats away your assets, and it does that ...


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