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Investment Property or P-car?

 
Old 02-10-2019, 02:19 PM
  #1  
gumanow
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Default Investment Property or P-car?

I've been searching for my first P-car now for over six months. Folks on this forum have been really helpful. Great bunch of people. Super patient and committed.

I'm now faced with a decision to shelf my dreams for a bit and purchase an investment property that is too good to pass up but will take most of the savings I've made over the last few years. I'm hopeful the positive cash flow of this will lead me to an even better p-car than I had budgeted for in the recent past, and that the good ones are not all snatched up and put on ice as collectibles.

Were any of you faced with these same dilemmas, or currently facing these same decisions?

Do I get something that makes me feel good on my daily drive one hour each way to work, and pass up pulling in an extra $1000 per month, but give up most of my savings? Where else can I make $1000/month on my money? Surely a p-car isn't going to appreciate like that in value, if at all? Hopefully, those funds will get me closer to the car of my dreams faster?

This will be my second investment property, besides the house that I live in. That first property more than doubled in value. So you see...

g.
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Old 02-10-2019, 02:25 PM
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steam_mill
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Investment property. I will go a step further. If you need to make a choice, then the cash flow decision is the correct one.
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Old 02-10-2019, 02:35 PM
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David993S
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It's a no-brainer...........investment property.
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Old 02-10-2019, 02:37 PM
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Property.
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Old 02-10-2019, 02:39 PM
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Agree with everyone....If you can wait....When I was younger all decisions were to increase networth….now I can get whatever I want and I am sure there are many on these forums that did the same. I think your thinking is spot on.
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Old 02-10-2019, 03:04 PM
  #6  
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If you are in a position that is going to wipe out your savings or leave you with no emergency fund then an investment property isn't a good idea. What happens if you lose your job? You say you will make $1000 extra a month but did you account for an sort of maintenance budget? Are you hiring someone, taking care of it yourself? Do you have 1-2% of the property value at all times tucked away for repairs? What happens if the renters bounce and leave you with no renters for months? There is not enough info here to make an informed decision. Right off the bat for me its a no go if you are wiping out your savings.
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Old 02-10-2019, 03:07 PM
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wildbilly32
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Originally Posted by gumanow View Post
I've been searching for my first P-car now for over six months. Folks on this forum have been really helpful. Great bunch of people. Super patient and committed.

I'm now faced with a decision to shelf my dreams for a bit and purchase an investment property that is too good to pass up but will take most of the savings I've made over the last few years. I'm hopeful the positive cash flow of this will lead me to an even better p-car than I had budgeted for in the recent past, and that the good ones are not all snatched up and put on ice as collectibles.

Were any of you faced with these same dilemmas, or currently facing these same decisions?

Do I get something that makes me feel good on my daily drive one hour each way to work, and pass up pulling in an extra $1000 per month, but give up most of my savings? Where else can I make $1000/month on my money? Surely a p-car isn't going to appreciate like that in value, if at all? Hopefully, those funds will get me closer to the car of my dreams faster?

This will be my second investment property, besides the house that I live in. That first property more than doubled in value. So you see...

g.
As others have said do the investment. Regarding the part about "all snatched up and put away as collectibles" my opinion is you won't have to worry about that for many-many years on the 996-997 versions except for the high end rare variants.
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Old 02-10-2019, 03:58 PM
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az968gpw
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"Show me the money".
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Old 02-10-2019, 04:08 PM
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LexVan
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You can easily make a $1,000/month with zero risk with today's interest rates. One of my credit union accounts is already a tick over 2.1% and going up slightly each month.

Hopefully your work 401K/Roth 401K is fully funded ($18K) and your self directed IRA (another $6K) too. I assume you're under 50 y.o.

*check my numbers, they may be off for 401/IRA by $500.
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Old 02-10-2019, 04:26 PM
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I used proceeds from real estate transactions to buy a 911. Have your cake and eat it too, albeit patience needed.
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Old 02-10-2019, 04:29 PM
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It depends. How old are you? How much money do you make? What are your expenses? What is your financial situation? How is your health? Whats the state of your current car? Is this a toy? So many factors...

There is no correct answer. Its all about priorities.

I was in similar situation and I chose to get the car. Here are reasons in a rambling order:

- Its still a seller's market and prices for real estate too high...rather save money and buy on the dip
- Unable to locate what I considered a profitable deal
- Many well known real estate pro's are liquidating due to high prices
- Not enough time to invest into real estate due to personal projects and first kid..the best way to make money in single family homes is to buy run down properties and renovate them cheaply to increase equity to then refinance etc... this takes lots of time and is more of a job than passive income
- It varies on markets, but in many areas the return on investment made on rental property is very low when accurately estimating costs...this includes allocating paying yourself to manage (if you do) and other 'hidden' expenses you might not consider when analyzing deals
- Stocks were performing well and that was a better place to park money
- The equivalent property I could have purchase instead of a car was not a significant profit
- Renting single family homes doesn't scale and its easy to be upside down if margin is too close (especially older homes)
- Using personal money and mortgage to finance a deal is risky...the smart people setup LLCs and use other people's money
- You SHOULD NOT dump a bunch of cash into a car (via down payment or buy out right)... meaning you could finance and buy both
- The smartest way to purchase real estate is using 30 year mortgages for cash flow, meaning that's how long before money is freed up. The ability to get additional loans is reduce for 30 years (meaning you might not quality got the car if you're financing)
- Cars are paid off in 2-3 years freeing up credit and ability to borrow more. They can also be used as leverage to secure funds.
- If you make 100-200k per year and depending on your financial situation, the number of mortgages traditional backs will give is less than 5
- Considering that you must own and drive a car, the additional expenses of driving a Porsche is less than it seems (unless you are willing to drive an unsafe/unreliable 15+ year old clunker, you're still going to be paying for a car)
- People take you more seriously in real estate if they think you have money...real estate pros, contractors, meetings etc
- Say for example you made 1000 per month pure profit by spending 150000 cash on a home. It will take you 12.5 years to make the money back and then START making profit. This is not considering expenses and other complicated math, nonetheless, it wont make you rich or fulfill any desires. Spending 150000 cash on new GT3 will and you would even flip it for profit.
- You can't bank on appreciation and especially in this market
- The real money in real estate is made on big deals (large apartment buildings) and often by middle man in syndicates (including real estate agent)... the investor is the pawn
- I drive a lot (also 1 hr to work and 1 hr back, though only 3 days a week) so having a nice car is a priority to me
- Car interest rates are really low and its easy to make more... not a priority to pay off
- Things happens and there is always an excuse to not buy a sports car...best to get it out of your system earlier
- You're not losing much buying a used car... worse case you can re-sell it (say if you lose your job)
- A real estate property gone bad isn't liquid... bank will get their money or foreclose (meaning you can kiss the opportunity to be financed a Porsche car for 7 years)
- Typically real estate is a way to diversity or hold money and there are other ways of investing - many don't mind they don't a tiny lose
- The best deals are in mid west and I don't want to move there... remote purchase not my thing
- A car is a tool that is required, but a real estate property is something extra
- If you own any high interest loans, it often makes more sense to pay them off instead of investing
- Real estate investing works best when you have a team and its best to get associated with people before jumping in
- Lots of properties out there with chronic problems that many people miss and it will bight them many years later
- Tenants trash properties...frustrating and doesn't help you sleep at night
- Contractors are THE WORST to deal with...stressful and doesn't enrich your life
- Managing properties is a job even if you hire property manager (must manage the manager who doesn't view you as a priority)
- Moderate income, saving, and investment wont replace your job or let you retire early... a high income will allow this
- You can pay as little as 5k down on a car, but need 30-40k+ (20%) to finance real estate
- Buying cheap run down properties with cash (often in bad shape or too cheap for bank to finance) bad neighborhoods is a bad idea... looks good only to a novice investor who doesn't understand how to properly calculate expenses...often problem tenant and negative ROI long term even if a little more cash short term
- Living with regrets and not fulfilling desires is unhealthy

I'm all for investing in real estate, but you must know what you're getting into. Not to say anything thinks this, but its not as simple as dumping money and suddenly it grows exponentially. There's plenty of people out there giving advice that might be sound, but in reality the only reason they succeeded is because they got lucky and bought during the crash...or they just know the right people that helped them out. Many smart and hard working people (including Dave Ramsey) get screwed. Lots of competition out there.

First flag I see is found a deal 'too good to pass up.' Possible, but I'm skeptical - bet I could figure out everything wrong . I would NOT give up most of your savings for a real estate deal OR a car. I'd NEVER use up all my savings and buy real estate...you NEED cash reserved for yourself, other things, or for that same deal. Hopefully use less than 50% of your savings to purchase or you can't afford it...
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Old 02-10-2019, 04:36 PM
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if you are hesitating between the two, then in my opinion the answer is to go for the property investment.
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Old 02-10-2019, 04:57 PM
  #13  
Tommy Tuite
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Invest in property to park a Porsche
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Old 02-10-2019, 05:11 PM
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Property, hands down.
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Old 02-10-2019, 05:14 PM
  #15  
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Originally Posted by minthral View Post
I would NOT give up most of your savings for a real estate deal OR a car. I'd NEVER use up all my savings and buy real estate...you NEED cash reserved for yourself, other things, or for that same deal.
Yep, this is my opinion also. Buy them both, with someone else's money....

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