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  #1  
Old 07-27-2005, 07:26 AM
Doug in NC's Avatar
Doug in NC Doug in NC is offline
 
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I am just wondering what kind of return one could get from government bonds monthly on a million dollar principal investment? (not that I have a million bucks, if I did I wouldn't be appraisin' )
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Old 07-27-2005, 09:15 AM
Karl Karl is offline
 
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I think I know the point of your question. Seeing so many Invest in Real Estate with Rentals. Purchasing brand new with HOPES of selling for more than paid. & the problems that can create. I too wonder IF you got the CASH as many in MLS are listed as how they paid. course subject to change once see recorded Doc's WHY wouldn't you put that money in a simple no hassle Bond. Watch Stock Market pretty much stagnet as most are now turned to the BIG money maker R.E.

Some of you other Investors (I stopped RE investing over one year ago) help me out here WHY would you purchase a Duplex for 205,000 with average Rent being 550? & a vacancy rate of 30%?? Why would you by a BRAND NEW home for 131,000 with a Rent of 900 Maximum Most are getting 775. on a street that has 6 houses for rent? Thinking prices are going up for the Resale MAYBE!!! OOOOPS have 7,000 + Lots still available for building. with another 75,000+ lots within 5 mile area.

Why would you pay 70,000 for a 3.3 Acrea lot that has over 10,000 3.3 Acrea lots left available. in an area that is 25 miles from nearest store. less than 100 population, Fire Department that responds to this area is 66 miles away. Police station is also 66 miles away This is the major route for Illegals entering AZ heading to Phoenix. Febuary of this year this lot sold for 7,000 Prices are escalating at 25,000+/- per month. (supposedly per MLS) Ladies there is NO phone service except ONE Cell Phone company. & on MOST lots you have to Haul Water.

Had a lender lasst year when did a REO on 3.3 with Manufactured home for 25,000, Lady from Boston call me saying I can't seem to find the Haul Water Company. I told her that is one special type lady that will Haul water.

Think Maybe there is some bank going to take a BIG fall?? When the guy brings his wife out from NY CITY ( Yep thats where the guy that bought 2 NOT 1 BUT two of these PREMIUM lots with Fantastic views lives! 2 lots are in two differnt locations not even side by side) One to live on the other to RESELL!!(All info he got was from RE Agent & seller He got PICTURES!! none of the water trailer I bet) WHEN he brings her out & she wakes up from the exciting 100+ mile open desert drive from Phoenix ( trying to adjust to 3 hour time change), to this SUPER view lot in MIDDLE of NOWHERE. with some 1970 Trailers scattered about YES JoAnn TRAILERS. (there is ONE nice home down there guy sold it after living one winter with loving wife (sold it to keep wife loving) First DUMB words will be look HON what WE bought!! look even got you a water trailer so every Sat you can haul water with the other girls!! IF the bank doesn't take a fall, I'm betting he does down one of the 4 vacant Mine shafts available.
  #3  
Old 07-27-2005, 09:28 AM
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Robert Anderson Robert Anderson is offline
 
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Doug,

The rate varies depending on the length of the bond. The following are the rates for U.S. Treasury bonds as obtained from the Bloomberg site.

2-Year 3.97%
3-Year 4.01%
5-Year 4.08%
10-Year 4.25%
30-Year 4.47%

http://www.bloomberg.com/markets/rates/

Although it does not provide information on government bonds, the following site is helpful in determining rates on CD's, mortgages, and the like:

http://www.bankrate.com/brm/default.asp

Bob Anderson
  #4  
Old 07-27-2005, 09:46 AM
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That's what I'd want to do. Invest a million for 30 years to get $2,813,000 (rounded) and change back in return when the taxes are eating up at 25% or more. [I think I did that right]
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Old 07-27-2005, 10:11 AM
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I think the guys parking small amounts (1-10 million) in safe rate instruments are using brokers and popping them in selected tax exempt municipal bonds. How long, how liquid and how safe are we talking?
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Old 07-27-2005, 11:38 AM
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Hmmm. You said monthly, as in 30 day liquid? Just in case you meant that short of a term, I'd use ten banks/CUs and get ten jumbo CDs insured to 100K by FDIC.

Kind of a pain in the butt. It should get you in the threes.
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Old 07-27-2005, 12:34 PM
Ghost Rider Ghost Rider is offline
 
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Quote:
Originally posted by Otis Key@Jul 27 2005, 09:46 AM
That's what I'd want to do. Invest a million for 30 years to get $2,813,000 (rounded) and change back in return when the taxes are eating up at 25% or more. [I think I did that right]
Sensing sarcasm?? Think cost of living increases also, and inflation - I don't see much of an upside for that kind of long term investment.
  #8  
Old 07-27-2005, 12:53 PM
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Karl, you're "problem" is our "gain". I never did understand how rental property was purchased with double digit appreciation, cause you know the rents don't go up that fast. It seems like a lot of you city folk (sellers) have been buying in my market over the past two years, sight unseen. Single family homes at $130k that rent for $1,300/month. "Let's buy 10!!!". Duplexes, 4-plexes, condos is the same story. I hope all these city people don't actually move here (or else I might actually have to wear shoes on inspections in the future...).
  #9  
Old 07-27-2005, 01:20 PM
John Hassler John Hassler is offline
 
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Quote:
Originally posted by Karl@Jul 27 2005, 06:15 AM


WHY would you purchase a Duplex for 205,000 with average Rent being 550? & a vacancy rate of 30%?? Why would you by a BRAND NEW home for 131,000 with a Rent of 900 Maximum Most are getting 775. on a street that has 6 houses for rent?
Those are absolutely juicy rates of returns compared to some areas!

Pop and I were just talking about this. One of his SFR rentals has a GRM of 340 and his cash on cash return is less than 2% after expenses (it's free & clear and fully depreciated). We talked about putting the money in a CD but the tax hit is about 25% (15% Fed and 10% State). Exchanging into six $130k SFRs in MO doesn't sound all that bad. Using your numbers of $775 rent, 30% vacancy, and new depreciation schedules pop could effectively make an extra grand per month. Now do you see why some people would condsider this option?
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Old 07-27-2005, 02:22 PM
Karl Karl is offline
 
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Thanks John, your saying exchange can you eloborate??

Hey cc I seen your area; you are in the same boat we're in here. Super Hot market buy now while there is something left to buy. How much undeveloped you have left out there?? In fact I think you have National Recrteation Properties in your area Starring Eric Estrada right??
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