What % of your portfolio is in Real Estate??

[Gold River]

Hi Mike,

            This achievement has taken 12 years to get to, and the fortunate increase in the commodities market in Gold, Silver, Copper and Coal is what's done it!

When I started in 1999 gold was $317 an ounce and we were producing gold for about $150 cash cost per ounce! Our pre-tax profits were $167 an ounce or about 52% returns! Today gold is $1662 an ounce and we are producing it for $350 cash cost per ounce average! Our pre-tax profits are $1,312 an ounce or about 374% returns!

We started mining coal in 2004 in Pennsylvania in a little underground mine producing about 500 tons a day from two shifts using older hand cutting and tracked mucker loading methods and hauling out in a tracked ore cart. That original coal mine is still producing today although production has increased and the price of coal increased, we were operating at a 50% pre-tax profit margin in 2004. Now we also operate underground and open pit and the price of coal has trippled in 8 years and because we produce with heavy equipment above ground we have increased our margins to over 100% pre-tax returns on our production!

Because of the commodities prices and by nothing I have personally done the profits have increased significantly, now using profits for real estate purchases we have been buying for example one property for a dollar lets say with 25% down and a new commercial loan for $0.75 cents and buying another property for all cash of roughly the same size, then we have been applying all the NOI from two properties to the loan on one, then at 5 or 7 years when our mortgage is due paying off the left over mortgage all together.

We have also been achieving margins by developing some of our own projects, along with selling some developments we also have been building and developing projects and refinancing them at 75% of value, hopefully over the next 10 years we will reduce our debt margin further, but I am very comfortable below 25% LTV.


                          GR



 

[allagash]

thanks for the recap!

gotta hit the road:

http://www.youtube.com/watch?v=Q8Tiz6INF7I

nobody else is gonna get the work done.

-Mike

[jmd_forest]

allagash;

I generally buy direct from owners since, in my experience with properties in my target areas, MLS properties will not cashflow. I've put in bids on around 20 different MLS properties over the past few years, mostly REO, short sales, or pre-forclosures, and not a single success.

To generate leads I employ a semi-consistent marketing scheme. I say semi-consistent because I can't keep up the marketing while I'm in the middle of a rehab project that have taken from 4 months to a full year and I've temporarily stopped marketing a few times for personal reasons. When I'm working at it, my marketing consists of:

1) Advertise semi-weekly in the local "Ad-Lines" (known in other area as the "Pennysaver") paper.
2) Blanket my target neighborhoods with "We But Houses For Cash" flyers 3 to 4 times a year
3) Research the notices in the surrogates office for estates in my target area
4) Driving for dollars

In 3 years of marketing I found and bought 4 properties. I flipped one and have kept the other 3 as long term rentals. I do admit that I have some tough (unreasonable?) criteria for purchase, but I've also kept track of a few of the REO properties I was outbid on and there is only one that I regret not purchasing at the price it was eventually sold for.  I don't know how the buyers of the other properties made enough money to be worthwhile and I'm sure that several lost money and I'm not in business to lose money.

jmd_forest

[allagash]

jmd,

great job....you're further along than me.

one thing I have done in the past.....unrelated to rei......is a ton of marketing.

I love fdjake's comment.......gotta let it rot.....so they can find it when they need it.

That's almost as good as Ron Popeil's "set it and forget it".....:37:

http://www.youtube.com/watch?v=tLq27iOW0R0

-Mike

[allagash]

We started mining coal in 2004 in Pennsylvania in a little underground mine producing about 500 tons a day from two shifts using older hand cutting and tracked mucker loading methods and hauling out in a tracked ore cart.

What’s next?  Taconite?



Worked on this boat:

http://dlund.20m.com/images_2008/JLK041308k.JPG

...from 2005 to 2006 as it’s gateman, (basically the guy down in the bowels of the ship who works the hydraulic levers that spill the 27k tons of (taconite) cargo onto the self-unloading conveyor, (belt).

http://finance.yahoo.com/q/pr?s=CLF+Profile

Too time consuming!  Would much rather trade it's equity...

Thanks again for the post.....coal and gold....nice basket....

btw....if you're ever in need of custom oxygen generation equipment for your gold mining....have a good friend, (former Praxair guy), who specializes in those types of applications.  On a recent trip to a gold mining client in Mexico.....he had to lease a twin prop to leave from a mountaintop air strip, (too much carjacking down there...especially when you see dead bodies along the highway).

-Mike

[Estrogen Hostage]

I generally buy direct from owners since, in my experience with properties in my target areas, MLS properties will not cashflow.

This is interesting. This has NOT been the case for me. My last three purchases were MLS properties, and they all cashflow plus several hundred per month.

I am interested in the other strategies too, maybe I can buy even cheaper yet!

[jmd_forest]

Estrogen Hostage;

I  WISH I could buy cash flowing properties off the MLS. In my target areas (the Burlington/Camden county border areas of South Jersey) rents are  relatively low compared to market values and there is stiff competition from other investors. Not only is it tough to get cash flowing properties in these areas from the MLS, the competition makes it  tough to buy foreclosures direct from the Sheriff's Sale! I guess I could/should expand my target areas but, as a hands on rehabber and rental manager, I don't want to wast too much time traveling to/from properties as well as I believe I know this market area pretty well.

In my experiences, although finding discount properties to buy direct from owners is tough, it is the only way to actually make money. I think most of the participants on the forum will agree that, in general, the best deals are those that are never advertised for sale.

[John_in_NC]

Estrogen Hostage;

I  WISH I could buy cash flowing properties off the MLS. In my target areas (the Burlington/Camden county border areas of South Jersey) rents are  relatively low compared to market values and there is stiff competition from other investors. Not only is it tough to get cash flowing properties in these areas from the MLS, the competition makes it  tough to buy foreclosures direct from the Sheriff's Sale! I guess I could/should expand my target areas but, as a hands on rehabber and rental manager, I don't want to wast too much time traveling to/from properties as well as I believe I know this market area pretty well.

In my experiences, although finding discount properties to buy direct from owners is tough, it is the only way to actually make money. I think most of the participants on the forum will agree that, in general, the best deals are those that are never advertised for sale.

Holy cow, you are a Camden new jersey slumlord? You have my utmost respect from a fellow Raleigh slumlord!!!

[jmd_forest]

No Camden properties. One of my overly strict criteria is to only buy properties I could stand to live in (when I finish rehab). I work the Marlton, Mt Laurel, Medford, Shamong, Tabernacle areas of Burlington County and the Berlin, Voorhees areas of Camden County.

Camden really is slumlord territory.

[DaveVelasco]

Hmm. For now I am actually thinking on how would I put into a percentage of my investments or money in RE. I don't know but may a good starting percentage is at 25%? Maybe?

[DaveVelasco]

I am currently having 25% on real estate during this time, and planning to increase it maybe next year. Or it depends.