<p>I do not think that they are going to rise. They are already very high. But I don’t think that they are going to tank either.</p>
<p>Intel is on a two-year cadence: 14, 10, 7, 5 - that means that they will be able to fit 16 times the number of chips on a wafer in 2022 compared to today. They have to make massive fixed costs to achieve those reductions in variable costs too and there are power and performance benefits to making things smaller. It is unclear as to whether or not their competition can keep up. If they can’t, then Intel may well be able to command premium prices for their products relative to ARM. Would you be willing to pay an extra $10 for a phone with an extra couple of hours (or days) of battery life?</p>
<p>There are other chips that go into phones and tablets besides the CPU. Intel just won a contract to supply the LTE radios for Samsung’s S4 phone. Their process advantage isn’t only for CPUs.</p>
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<p>Jim’s son. He doesn’t display as much of an ideological bent as his father does. He seems to provide more of what’s important for trading in less time but perhaps less entertainment value. I prefer listening to the son than the father but that’s because of efficiency.</p>
<p>Paid off a mortgage with a 6% rate this week that I couldn’t refi because I didn’t have enough equity.</p>
<p>But this <em>does</em> give me enough equity to refi the 2nd on it from 6% down to 3.25%.</p>
<p>Thank you Uncle Ben…</p>
<p>The plan now is to pay down some other mortgages as fast as possible with the goal to have a bunch of them paid off in 3-4 years, which will free up enough cash flow to give me the option of not having to work if I don’t want to, or taking a much lower-paying job in a different field.</p>
<p>notrichenough, how much equity will you have, including the second mortgage? Will you have 80%, reasonably?</p>
<p>I ask, because PenFed has some amazing deals. 5/5 ARM at 2.5%, 0 points/0 origination, they pay the closing costs. The very best deal going, if you’re up for an ARM, and they will give cash out at the same rate. The 5/5 adjusts in 5 years, but can’t go up more than 2% (and stays there for 5 years). Need higher LTV for jumbo loans, don’t need to escrow taxes and insurance.</p>
<p>What are the returns in your area of Buying residential properties with debt and renting them out? Have the returns declined? (I know returns depend on how much debt is used). I want to know if opportunities have changed drastically. For example, if a buyer could buy a place two years ago with 30 percent down and get a 12 percent return, what are the returns now?</p>
<p>Property values and rents can vary wildly from mile to mile. In many areas it is impossible to make even 5% because the acquisition costs are so high.</p>
<p>There are places where you can make 12% or more, but these areas have older housing stock, it’s B to C level properties, and so you get B to C level tenants, which has its own challenges. Plus, many of these houses have significant deferred maintenance, so even if you get it for a good price you have to pump a lot of money in. 15 vs 30 year mortgage makes a big difference in cash flow, I’ve refi’ed all mine to 15 year because I want them paid off by the time I retire.</p>
<p>Prices have climbed some on these kinds of properties from the bottom, and rents really haven’t, so it is tougher to get high returns. There are still bargains to be had, but they will require some hands-on work to get the returns.</p>
<p>My best properties gross around 18%: (rent - mortgage - taxes - insurance - water)/investment. There is always some repair and maintenance costs which will lower this, on the other hand 50-60% of the mortgage payment is principal and I can never decide how to count that when calculating returns. These were REO properties we got after the crash.</p>
<p>You can take excess cash and payoff existing mortgages.
Or you can take excess cash and buy properties using more debt…</p>
<p>Which choice gives you the higher return?</p>
<p>If you are paying down mortgages that have lower rates then the returns you will make buying properties, then maybe buying more properties makes more financial sense then paying off low interest rate mortgages. </p>
<p>Of course there are other factors besides money.</p>
<p>One of my personal favorites is Abby Joseph Cohen. Her shtick is almost always the same–“The market is going to go up! The market is going to go up!” For this she makes millions every year at Goldman.</p>
<p>EMM1, borrowing money and throwing that money into liquid investments increases the chances of losing. </p>
<p>Notrichenough wants to retire. I doubt he wants to increase his risk profile. I doubt he is going to prefer my suggestion over paying off the mortgages.</p>
<p>Abby Cohen making over 1 million a year is one of the mysteries of life.</p>
<p>I’ve been riding the current stock market bull run from 2009. I’ve ridden other bull markets too. It’s just riding a trend and you don’t have to be particularly smart to do that. There are lots of people out there that like to call tops and bottoms. You look like a genius if you can do that. Lots of people like to look like geniuses. I just want to make a few bucks.</p>
<p>I don’t need to get on TV shows.</p>
<p>Got some nice dividend payments yesterday. Looking forward to lots more.</p>
<p>I think that the question of risk is complicated, depending a) on the question of nature of the liquid investment b) one’s assessment of the risks associated with holding rental property and c) whether you are talking about risks to cash flow or risks to the underlying value of the investment.</p>
<p>To use a simple example, suppose that what is really important to a potential retiree is a secure cash flow of 5% on his existing investment. I would have a high degree of confidence that investments in vehicles such as PFF, HYG and PCEF would produce a yield on cost of at least that much, although the face value of the investments might fall considerably.</p>