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The Investment Thread

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Offline  Re: The Investment Thread
Posted: December 29, 2020, 2:12 PM Post
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owbc said:
As someone who lives in a tech city it sometimes feels like 'everyone' works in tech now. So it's interesting to hear these perspectives. With Amazon giving out so much stock-based compensation I think it is causing everyone else in tech to do the same. Even for mid-level managers.

Getting back to the 'investment' perspective, I've seen a number of friends take 'Funemployment' time after working in tech for a few years and saving those lofty bonuses and stock grants. I have another friend who is practicing 'FIRE' and hopes to retire in his 40s. Although I think he's too intellectually curious to do that.


I worked for Motorola as a software engineer in the late 90s and was getting stock options somewhere around my third year in the company. They used it to keep their best talent (not bragging, but only the top-rated engineers got them). So it isn't like that is new.

What is FIRE?

I used to by much bigger into investment; even being one of the first online trader accounts on eTrade. I read nearly everything Motley Fool put out (still a lot of good advice there). I did ok but realized how much time I was spending at doing it (enjoying it or not). So I stopped and simplified my approach: Mutual funds and index accounts, dollar-cost averaging, max out 401k matching, etc. have all done me very well. Someone mentioned working hard to get a 10% return but that is about what I've been getting without working at it at all.

Now I need to start looking at switching gears being 8-14 years from retirement and start preparing for that switch.

One thing I'd take advantage of right now (if you haven't) is to consider refinancing your home mortgage. For the first time in my life, I paid points on a loan to drive down my rate to 2.25%. My required monthly payment went down, but I'll plan to pay the same monthly amount. Thus, I'll pay off my loan 4.5 years earlier then my previous loan (saving myself about $75k). The refinance costs will pay back in 39 months, but I have zero plans on moving so that shouldn't be a problem. Step one to retirement is completed. [smile]


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Offline  Re: The Investment Thread
Posted: December 29, 2020, 2:21 PM Post
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CheezWizHed said:
What is FIRE?


Financial Independence Retire Early

It has a bit of a cult following online, but the basic idea is to save at least half your income by living simply and investing enough to retire very, very early.

As you can imagine, it's popular with some in the 20-something tech crowd who are living in studio apartments while bringing in six-figure incomes.


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Posted: December 29, 2020, 2:27 PM Post
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Yeah, I've seen those. There is a balance to life, which is one reason I stopped focusing on it so heavily - go live it instead. But investing early is ALWAYS good. Even if you have to start small.

Each pay raise, I'd take part of it and increase my 401k contributions for my 529b contributions. With each tax refund, I'd pay off more debt (never had CC debt, but paid off vehicles that way).


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Offline  Re: The Investment Thread
Posted: December 30, 2020, 1:14 PM Post
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Anyone have a vacation rental that they own and produces income for them? I am looking to invest but want something that I can use for fun and maybe make a few bucks as well.


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Posted: December 30, 2020, 1:58 PM Post
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My folks have a second house in Glendale that they rent out. They hire a cleaning lady, a landscaper and a rental agent. It pretty well pays the mortgage but not a money-maker. Pretty good number of folks who rent it for 2-4 weeks at a time. But certainly a better deal than leaving it empty for 10 months out of the year.


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Offline  Re: The Investment Thread
Posted: December 30, 2020, 2:08 PM Post
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GAME05 said:
My folks have a second house in Glendale that they rent out. They hire a cleaning lady, a landscaper and a rental agent. It pretty well pays the mortgage but not a money-maker. Pretty good number of folks who rent it for 2-4 weeks at a time. But certainly a better deal than leaving it empty for 10 months out of the year.


Was thinking more like Vegas or somewhere warm. A place that I could visit for a week or two a year and then rent it out other times. I know it wouldn't be a big money maker.


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Offline  Re: The Investment Thread
Posted: December 30, 2020, 3:20 PM Post
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I should have noted it's Glendale, Arizona. Can't get any warmer. Amazingly they were rented out through the summer this year.

They won't rent to locals anymore. Locals are only there to party and end up making a mess and/or leave cigarette burns in leather couches. The last straw was when the cleaning lady came in and found 100# of marijuana in the bathroom. Guess the renters thought they had an extra day rented.


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Posted: December 30, 2020, 4:06 PM Post
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I've always looked at a vacation home as similar to owning a boat--the more friends of mine that buy vacation homes and boats, the better. But personally, heck no. I do like renting other people's AirBNBs. However, the real advantage is to be able to bring your pets along and lately it seems like hotels are more pet friendly than vacation homes are.

Do people actually rent AirBNBs in Vegas??? Hotels are so cheap there. I would be terrified of renting my house there given how people party in Vegas.


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Offline  Re: The Investment Thread
Posted: January 03, 2021, 2:25 PM Post
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Still no discussion here about Bitcoin or other Cryptos...that tells me there is still a long runway to the next peak.


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Offline  Re: The Investment Thread
Posted: January 03, 2021, 2:43 PM Post
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There is a lot of stress/work and expense into a non local rental property like that. The most success I have seen with it is at higher end properties that attract more laid back people. Not million dollar homes/condos, but not something that college kids and cheap families will be seeking out either.

It can pay for the mortgage IF it is in a highly attractive area that is pretty year round. Phoenix area is really really good for that. It’s affordable to get a vacation property and attract renters pretty year round. I know someone that snow birds and they say even the non peak time sells really well for them and helps pay for the place.


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Offline  Re: The Investment Thread
Posted: January 03, 2021, 3:39 PM Post
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thebruce44 said:
Still no discussion here about Bitcoin or other Cryptos...that tells me there is still a long runway to the next peak.


Go put your house money into it and let us know how it goes. [wink]


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Offline  Re: The Investment Thread
Posted: January 03, 2021, 7:22 PM Post
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I sold my bitcoin a couple days ago. The phrase "record high" frightens me in general. The entire history of it is big gains and big falls, not steady growth.


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Offline  Re: The Investment Thread
Posted: January 03, 2021, 7:27 PM Post
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Location: Phoenix, AZ
MrTPlush said:
There is a lot of stress/work and expense into a non local rental property like that. The most success I have seen with it is at higher end properties that attract more laid back people. Not million dollar homes/condos, but not something that college kids and cheap families will be seeking out either.

It can pay for the mortgage IF it is in a highly attractive area that is pretty year round. Phoenix area is really really good for that. It’s affordable to get a vacation property and attract renters pretty year round. I know someone that snow birds and they say even the non peak time sells really well for them and helps pay for the place.


The housing market in Phoenix is not all that cheap it is actually rather expensive especially in downtown Phoenix, Tempe and Scottsdale. The downtown Phoenix condos go anywhere from $500k to $1m the same for Tempe and Scottsdale. There are some areas where you can get a good deal now but they are extremely far out of the city limit lines and even some of those are rather expensive. If you want to live in a not so great neighbor hood then yeah you can find houses and some apartments for less than $300k but for the most part everything is in the $300-$500k range.

Depending on when they got the property in Phoenix it is probably a good deal I know of some people who bought some houses at about $200k and they are now valued at $500-$700k and they charge about $2000 - $3000 a month for rent. Rent prices have also been increasing here due to the mass exodus from California.


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Offline  Re: The Investment Thread
Posted: January 03, 2021, 7:58 PM Post
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Heck, I’m skeptical of my modest home in Green Bay appreciating by 20% in the last 5 years, but here we are.


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Offline  Re: The Investment Thread
Posted: January 03, 2021, 8:02 PM Post
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I guess I should clarify Phoenix area, not necessarily literally in Phoenix. I guess for a typical Wisconsin person even Phoenix is going to seem expensive. A decent vacation house that will bring in lots of short term renters will cost ~250k at least. I think they couple I know bought around that a few years ago. Obviously has a pool etc. that people would look for.

I don’t think it is a great investment to get into. One is better off just doing Air BnB themselves when they go on vacation. Just invest money in something more worthwhile. More lucrative and less stressful. Not to mention you won’t feel tied down to your vacation rental when you want a vacation. You can just go wherever you want.


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Offline  Re: The Investment Thread
Posted: January 04, 2021, 10:16 AM Post
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I don't recall exactly what my folks charge for rent, but it definitely isn't some bargain. They bought it about three months before the market crashed and immediately lost 40%, but it's probably a $400,000 home at this point. You can walk to the Cardinals and Coyotes arenas, and the development they've done in that area has really helped.

Maybe I'm wrong, but I tend to only think that being a landlord is good if you're able to offer any sort of value to that investment, like being able to do repairs yourself instead of hiring it out, or really knowing the real estate market in the area to pick out underpriced homes and know areas that are growing.


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Online  Re: The Investment Thread
Posted: January 04, 2021, 10:40 AM Post
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In a perfect world, I'd buy a house with an apartment over the garage or a mother in law cottage/carriage house in the back. I would love to rent out something like that on Air BnB. I don't think I'd want to rent out one place while living somewhere else though. I'd for sure want a management company to take care of things if that was the case.

"Dustin Pedroia doesn't have the strength or bat speed to hit major-league pitching consistently, and he has no power......He probably has a future as a backup infielder if he can stop rolling over to third base and shortstop." Keith Law, 2006


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Offline  Re: The Investment Thread
Posted: January 04, 2021, 12:33 PM Post
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homer said:
In a perfect world, I'd buy a house with an apartment over the garage or a mother in law cottage/carriage house in the back. I would love to rent out something like that on Air BnB. I don't think I'd want to rent out one place while living somewhere else though. I'd for sure want a management company to take care of things if that was the case.


I'm hoping to build a detached ADU at some point since I have a huge 1970s-era carport that I would like to downsize. Seattle recently passed some nice legislation to make the process easier, if you pick a pre-approved design you can skip most of the permitting. I think it's a very smart way to address housing shortages without tearing up neighborhoods of single-family homes.

A few companies have come up with some really cool pre-fab concepts for DADUs which are basically giant IKEA furniture that a motivated DIY person like myself can self-assemble.
e.g. https://urbancottageseattle.com/shell-kits/


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Offline  Re: The Investment Thread
Posted: January 04, 2021, 3:25 PM Post
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CheezWizHed said:
thebruce44 said:
Still no discussion here about Bitcoin or other Cryptos...that tells me there is still a long runway to the next peak.


Go put your house money into it and let us know how it goes. [wink]


I did break out $5k to put into Btc and Eth. Everything else will sit on the sidelines for 10 months. Adding that $5k to some Eth and IOTA I've had for a long time.

Looking at historical cycles, I hope that needing to pull money back in the fall will make me not wait too long for everything to fall apart again. Of course, I know this is not sound investing, but at least I'm not putting in more than I can afford to lose.


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Offline  Re: The Investment Thread
Posted: January 04, 2021, 4:27 PM Post
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Bitcoin is classic speculation in action. It behaves like a more volatile form of gold or similar commodities. The anti-correlation with the US dollar index is pretty obvious--BTC bottomed out on 3/16/2020, DXY peaked on 3/20/2020. Will the US dollar keep dropping in 2021? Probably, but not as much as 2020. And then you throw in the randomness of BTC speculation???


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