John T. Reed’s news blog

Income stock versus growth stock Rental property was the equivalent of an income stock—one that pays dividends like utility stock—until 1971. Then rental property turned into the equivalent of a growth stock—no dividends, just stock price increasing, like Apple. Double-digit cap rates To put it another way, before 1971, cap rates were double digits. My first rental property in 1969 had net operating income of $1,711/year and cost $14,000 for a cap rate of $1,711/$14,000 = 12%. It had been on the market for a couple of months for $16,000 when I offered $14,000 and got it. Average deal then. The first book that...

For decades now I have watched wannabe real estate investors and beginner real estate investors say their goal was to accumulate enough properties that they could live off the cash flow from them. Is that possible? Yes, but in the sense that you can live off the cash flow from a savings account. Let’s make $50,000 a year the target cash flow. The median household income in the US today is $79,900. HUD Savings account On 8/18/21 Internet said you could get .5% on a savings account. To get $50,000 a year before tax, the amount in the savings account...

AirBNB renters are sometimes using false identities, stolen credit cards ,and planing to violate the no-parties rule big time. An 18-year old was fatally shot at one with at least 150 party goers in Sunnyvale, CA last week. Five were shot dead in Orinda, CA near where I live in 2019. In the two years since, there have been about 100 shootings at such short-term rentals in the UC and Canada. AirBNB makes the usual hearts and prayers cliche pronouncements and vowed to stiffen rules and all that. The problem is insufficient due diligence on the identity and reputation of the renter and non-existent on-site adult supervision. It is unsolvable because...

Tax-free positive ‘cash flow’—and no tenants Single Family Home Zillow say my house would rent for $6,000. Invitation Homes says it costs them 38% of the gross to operate their collection of rental houses. Applying that to my house means I have to pay 38% x $6,000 = $2,280 to live there. We also have a small mortgage with a $1,900 payment. So positive “cash flow” of $6,000 - $2,280 - $1,900 = $1,820. That is how much I, in effect, get owning this house and living here. Rent that I do not have to pay is equal to incoming cash. Only it’s better. Receiving cash rent from a tenant is...

The ton, literally, of my new books, An American Principal Residence is the Most Advantaged Investment on Earth: Maximize Yours, was delivered today. The pre-orders are also being shipped today. Thank you for your order if you bought one of them.