Author Topic: Accredited Investors - Why A 4% SWR?  (Read 64483 times)

SnackDog

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Re: Accredited Investors - Why A 4% SWR?
« Reply #250 on: September 12, 2015, 05:38:31 AM »
If I was so motivated to invest in smart business propositions, I wouldn't just invest my own money, I would borrow as much as I could to invest.  In fact, I might ONLY invest money I had borrowed, via an LLC to protect my own assets in the case of a meltdown.  I would probably quit my day job to do this and try to get rich.  Many people work this way.   But most of such investments are cyclical and when the bottom falls out, as it inevitably does, the losses can be staggering.  I know many small business investors in Texas who have done well but most have been bankrupt at some point, despite all their hard work.  The only people I can think of who have weathered the storms of the past 30-odd years fairly well have had solid family income from land ownership with mineral rights.  YMMV.  Good luck!

arebelspy

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Re: Accredited Investors - Why A 4% SWR?
« Reply #251 on: October 23, 2015, 12:12:05 PM »
Since I was accused of "talking too much" and not "listening" by Sol I have not posted much in the last several months and have participated quite passively.

Thank you.  I appreciate your willingness to show you're listening as well as sharing.  I, too, would be interested in your year-end summary (and the year after, and after).  Best of luck!  :)
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mr_orange

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Re: Accredited Investors - Why A 4% SWR?
« Reply #252 on: April 14, 2017, 07:36:00 PM »
Two and a half months is not the time frame I had in mind.    The Silicon Valley market is slowing down and I'm betting that Austin has started to slow as well.  Let's see how many of these projects that are going on the market over the next few months do.  Some nail biting and price reductions should curb a little of your enthusiasm.  Do a year end review and let us know how you finished.

Okay....Is 1.5 years long enough?  We are finishing up our projects with roughly $600k in profits. 

NathanDrake

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Re: Accredited Investors - Why A 4% SWR?
« Reply #253 on: April 16, 2017, 03:47:59 PM »
Good for you.

However, there's no free lunch.

Try keeping this up for 60 years and you can be the next Warren Buffett.

mr_orange

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Re: Accredited Investors - Why A 4% SWR?
« Reply #254 on: April 16, 2017, 04:43:15 PM »
Good for you.

However, there's no free lunch.

Try keeping this up for 60 years and you can be the next Warren Buffett.

I'm glad you told me there wasn't a free lunch since I was under the false impression there was one.  The last 14 years of developing my business had me spellbound. 

After analyzing my budget more closely over the last few years I can safely say that another $2k/month in savings could be obtained riding a bike 20 miles to and from work, planting food in a garden, etc.  Let's round up and make that $25k annually.  That means I'd need another 24 years to obtain the same quantity of money by cutting expenses instead of focusing on increasing income to increase money available for investment. 

Another Reader

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Re: Accredited Investors - Why A 4% SWR?
« Reply #255 on: April 16, 2017, 05:19:43 PM »
My timing was off and you were lucky.  The good news is you are running out of inventory just as your market is running out of steam.

In the next round. try to keep more of the profits.  You are working very hard for your investors.  Heck, I might even be tempted to point some cash your way if you keep this up.  ;-)

mr_orange

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Re: Accredited Investors - Why A 4% SWR?
« Reply #256 on: April 16, 2017, 05:25:04 PM »
My timing was off and you were lucky.  The good news is you are running out of inventory just as your market is running out of steam.

In the next round. try to keep more of the profits.  You are working very hard for your investors.  Heck, I might even be tempted to point some cash your way if you keep this up.  ;-)

Hah....No argument on me not keeping enough of the profits.  I'm totally with you there.  The next cycle I'll have more funding, ample lines of credit, and a crowdfunding platform to help keep more.  I'll probably do straight equity for the next cycle too to avoid contingent liabilities. 

I really don't think I was lucky, but luck never hurts.  If we had better builders when I started we probably would have made 50% more than we did with less effort.  There will be another cycle to rinse/repeat at some point. 

East River Guide

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Re: Accredited Investors - Why A 4% SWR?
« Reply #257 on: April 16, 2017, 06:03:46 PM »
What's the balance between diversification and control?   Seems like on the crowd funded options you have no control, too many participants.  For a hard money loan, how does control work, and how big a check do you have to write to get some?

mr_orange

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Re: Accredited Investors - Why A 4% SWR?
« Reply #258 on: April 16, 2017, 06:08:03 PM »
What's the balance between diversification and control?   Seems like on the crowd funded options you have no control, too many participants.  For a hard money loan, how does control work, and how big a check do you have to write to get some?

Well I own my own platform so my control is greater than what you'd get passively.  I also have a partner that is a 3rd generation banker than gets tens of millions of dollars of deal flow every month so we can be quite choosy. 

I think control really only matters a lot if you're making large investments.  When I invest passively I want to do smaller investments across more deals, but there is a tax here evaluating investments so that certainly needs to be balanced. 

Check sizes vary by sponsor, but $5k checks are pretty commonly the entry price.  Most opportunities are completely passive. 

frugledoc

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Re: Accredited Investors - Why A 4% SWR?
« Reply #259 on: April 17, 2017, 03:49:06 PM »
I confess I'm pretty addicted to crowd funded asset backed lending.  I've been doing it for 2 years getting rates 10 - 16% and have a 200k portfolio with 1-3% in each loan.  No defaults to date but I'm happy that loan to values < 70% will get a good chunk of capital back.


East River Guide

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Re: Accredited Investors - Why A 4% SWR?
« Reply #260 on: April 17, 2017, 04:43:59 PM »
I confess I'm pretty addicted to crowd funded asset backed lending.  I've been doing it for 2 years getting rates 10 - 16% and have a 200k portfolio with 1-3% in each loan.  No defaults to date but I'm happy that loan to values < 70% will get a good chunk of capital back.

Anyone have any companies they recommend?

mr_orange

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Re: Accredited Investors - Why A 4% SWR?
« Reply #261 on: April 17, 2017, 05:17:41 PM »
I confess I'm pretty addicted to crowd funded asset backed lending.  I've been doing it for 2 years getting rates 10 - 16% and have a 200k portfolio with 1-3% in each loan.  No defaults to date but I'm happy that loan to values < 70% will get a good chunk of capital back.

Anyone have any companies they recommend?

I'll abstain given the conflict except to tell you to avoid Fundrise and RealtyMogul.  They're doing Title IV funds now, which really defeat the purpose of direct placements IMO.  You'd be better off just investing in an index fund.

Undecided

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Re: Accredited Investors - Why A 4% SWR?
« Reply #262 on: April 17, 2017, 10:10:29 PM »
Read the passage again.  It means what it says.  $10k/month won't sacrifice our standard of living any.  Below that I think it probably will.  My budget is right there in the other thread for anyone to review.

I am curious about the monthly-funding numbers in your signature---are they based on the 6% SWR you ponder near the start of this thread?

frugledoc

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Re: Accredited Investors - Why A 4% SWR?
« Reply #263 on: April 18, 2017, 12:25:23 AM »
I confess I'm pretty addicted to crowd funded asset backed lending.  I've been doing it for 2 years getting rates 10 - 16% and have a 200k portfolio with 1-3% in each loan.  No defaults to date but I'm happy that loan to values < 70% will get a good chunk of capital back.

Anyone have any companies they recommend?

I'm in the UK, so don't know about US.

mr_orange

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Re: Accredited Investors - Why A 4% SWR?
« Reply #264 on: April 18, 2017, 07:29:10 AM »
Read the passage again.  It means what it says.  $10k/month won't sacrifice our standard of living any.  Below that I think it probably will.  My budget is right there in the other thread for anyone to review.

I am curious about the monthly-funding numbers in your signature---are they based on the 6% SWR you ponder near the start of this thread?

No....they're based on 4% to keep things conservative.  I do track 6% in my weekly spreadsheet though to see what the numbers look like.