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I wonder if Kevin sometimes, laying awake at night after eating some wilty lettuce for supper, has moments of realization that he is extremely hosed. "Gotta spend money to make money! " is so ingrained in dumb white young people, some of whom will blow their brains out while most blame "the economy" when things go south, that it's become a joke.
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Oct 12, 2014 17:37
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Professor Shark posted:I wonder if Kevin sometimes, laying awake at night after eating some wilty lettuce for supper, has moments of realization that he is extremely hosed. "Gotta spend money to make money! I like how he even did a margin loan from the brokerage. A good deal of investing is only playing with fun money, money you could afford to lose or at least see a 50% decrease in value due to market volatility. etalian fucked around with this message at 23:20 on Oct 12, 2014 |
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Oct 12, 2014 17:52
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While there are many dumb things that Kevin is doing, I'd be shocked if he wasn't well covering his farmland loan with the rent on it. BC farmland is very constrained and is unlikely to decrease in value. His margin loan wouldn't exist if he didn't have at least double that amount (or more depending on the brokerage) in liquid investments to cover it. Margin loans aren't just handed out, and his brokerage will just sell poo poo if things move the wrong way. Taken by itself, his mortgage is large relative to his income but not unmanageable. His line of credit is stupid and is where the whole thing breaks down. Given his income, I'd wager that it was left out of the article that someone (his parents?) co-signed that loc with him, there's no way a bank would give him one that large on his own income.
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Oct 12, 2014 18:55
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Sassafras fucked around with this message at 08:12 on Nov 7, 2014 |
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Oct 12, 2014 23:07
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Sassafras posted:Has to be the same guy, so more details on this blog. Note that he actually lives with his parents, the condo with a mortgage is currently rented out: http://www.freedomthirtyfiveblog.com/category/fiscal-updates Hahahhahahaha I can't loving wait to see what happens
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Oct 12, 2014 23:36
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Cultural Imperial posted:Hahahhahahaha I can't loving wait to see what happens lol   
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Oct 12, 2014 23:51
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Haha yeah what a dumb making $300,000 over 5 years.
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Oct 13, 2014 00:04
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Kalenn Istarion posted:Haha yeah what a dumb making $300,000 over 5 years. It's basically a very nice money making strategy called over leveraging that worked so well for so many companies like Lehman Brothers. It's great during a economy feast time/credit bubble but not so nice when the house of cards falls down. The whole website is loaded with gullible investing get rich cliches like real estate being a investment that always pays off: http://www.freedomthirtyfiveblog.com/investing/real-estate-investing 
etalian fucked around with this message at 00:08 on Oct 13, 2014 |
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Oct 13, 2014 00:06
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Kalenn Istarion posted:Haha yeah what a dumb making $300,000 over 5 years. Hahaha great point he didn't take any risks at all and isn't wildly overleveraged oh no. I'm sure he also fully understands all of the risks in the investments he is making.
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Oct 13, 2014 00:12
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etalian posted:lol if I think like a duck and walk like a duck, then surely
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Oct 13, 2014 00:13
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Mr 1 percenter wannabe also uses a 10 year investment year window to support his idea that real estate is always a positive investment over time: Perhaps a longer time period would tell a different story? 
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Oct 13, 2014 00:15
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Cultural Imperial posted:Kevin is a 27-year-old Vancouver resident who makes about $50,000 a year as a graphics designer and has $520,000 worth of debt — an amount he feels quite at peace with. Despite my hobby of liking to tease and bait millennials, I'm actually having chest pains after reading this article. Was I trolled? Please say I fell for something....
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Oct 13, 2014 00:27
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I like his stocks articles saying how it's dumb to buy on the upswing mistake but for some reason this strategy makes sense for his real estate "investments".
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Oct 13, 2014 00:37
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Pixelboy posted:Despite my hobby of liking to tease and bait millennials, I'm actually having chest pains after reading this article. I don't think I could handle having that much debt; I'm never going to be rich.
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Oct 13, 2014 01:20
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Dreylad posted:I don't think I could handle having that much debt; I'm never going to be rich. To become rich you need to think and act like a rich person. Make sure you kick over a homeless man's collection plate tomorrow on your way to work.
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Oct 13, 2014 01:43
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etalian posted:To become rich you need to think and act like a rich person. There are plenty of rich people that only act like assholes to people from afar. Usually they're not old money though.
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Oct 13, 2014 01:45
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Kalenn Istarion posted:Haha yeah what a dumb making $300,000 over 5 years. You haven't made any money until you cash out, things like equity isn't money in the bank. Good thing in his case most is tied up in illiquid assets like real estate debt.
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Oct 13, 2014 01:53
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quote:“From a tax perspective, bad debt would be money borrowed for a non-invested purpose: your house, student loan. Good debt would be money borrowed for an investment purpose: to buy a rental property or invest in a business or stocks and bonds because the interest is tax-deductible.” Any person I've ever known (friends and family included) who claims that "good debt" exists has always been up to their eyeballs in debt. They refuse to accept how dire their debt situation is, and whenever they talk about "good debt" it starts to sound like they've developed a strange form of Stockholm Syndrome with their creditors. And people who talk about "cheap debt" are never any better. melon cat fucked around with this message at 02:12 on Oct 13, 2014 |
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Oct 13, 2014 02:03
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Basically the silly get rich/good debt scheme is driven by good old fashioned over-leveraging of investments. Not to mention of course it looks good when the investment window for the scheme is only 5 years: 
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Oct 13, 2014 02:14
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melon cat posted:Any person I've ever known (friends and family included) who claims that "good debt" exists has always been up to their eyeballs in debt. They refuse to accept how dire their debt situation is, and whenever they talk about "good debt" it starts to sound like they've developed a strange form of Stockholm Syndrome with their creditors. And people who talk about "cheap debt" are never any better. Debt that is yielding a stable return of cash (not capital appreciation) is good debt though.
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Oct 13, 2014 02:22
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on the left posted:Debt that is yielding a stable return of cash (not capital appreciation) is good debt though.
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Oct 13, 2014 02:31
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Kalenn Istarion posted:Haha yeah what a dumb making $300,000 over 5 years. That's 60k/yr. I get that that's above the median, but it's by no mean earth shattering. I made more than that right out of college.
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Oct 13, 2014 03:27
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melon cat posted:I'd honestly like to hear some examples, because I'm definitely not convinced that "good debt" exists. To a lot of people, classifying debt into 'good' and 'bad' seems more like a coping mechanism instead of a reasoned, logical argument. You could look at higher education as an investment in your future earning potential. Med school degree = good debt. Journalism degree = bad debt. Farmers buying seeds at the start of the season, very good debt considering they usually get crop insurance. Going into debt to tile your fields to improve yields and land value, probably good debt especially because you can write it off.
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Oct 13, 2014 03:34
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FrozenVent posted:That's 60k/yr. Yeah IMO only cash matters since illiquid assets like real estate/farm lane isn't the same as cash.  Also for obvious reasons he doesn't tell how much loan payments he has associated with all his debt, which will make his total cash flow of 60,000 CDN per year much less. He also has only $3400 in total savings since he believes in investing most of his leftover money. So he's basically over leveraged, with minimal liquid cash savings and basically sucks at basic fiancees such as including negative cash flows in his equation. Any sort of serious accounting such as a businesses will take into account monthly negative balances such as loan interest payments, bond payments and other money sinks. etalian fucked around with this message at 03:40 on Oct 13, 2014 |
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Oct 13, 2014 03:37
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FrozenVent posted:That's 60k/yr. Yeah but you actually worked a stable job for it instead of borrowing 10x your annual income and investing it to live off the equity. Overleveraging works great until it doesn't.
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Oct 13, 2014 03:44
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eXXon posted:Yeah but you actually worked a stable job for it instead of borrowing 10x your annual income and investing it to live off the equity. Yeah it's a wonderful way to make money during a feast economic cycle but the idiot will be wiped out in the next downturn due to over leveraging. There's lots of ways to get rich such as starting a good small business(assuming you don't fail) but for most people it's having a decent job thanks to education that allows you to start socking away fun money in investment accounts. It also helps to live within your means such as avoiding things like a luxury car, big gambling debts, paying in everything with credit or lavish vacations. Also he doesn't realize that a majority of those 1 percenters actually inherited most of the their money and weren't the traditional self made man. Having a snobby degree plus millions of dollars in trust fund assets makes getting rich really easy.
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Oct 13, 2014 03:52
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Starting a small business is way more risky than renting out farmland. Farmland is not going to be a really highly cyclical asset, and governments are usually quick to subsidize people who own farmland. The condo and margin investments are pretty dumb, but the farmland is a wise investment.
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Oct 13, 2014 04:30
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eXXon posted:Hahaha great point he didn't take any risks at all and isn't wildly overleveraged oh no. I'm sure he also fully understands all of the risks in the investments he is making. Did I say that? Being levered from 2008 through no wish has been an excellent place to be. He's now far enough ahead that he's not likely to blow up. This will not work out for everyone but it is not an inherently wrong strategy for investing if you're willing to take the risks. It's just a hyper-aggressive one. FrozenVent posted:That's 60k/yr. You probably put a lot more effort into it than he did though. on the left posted:Starting a small business is way more risky than renting out farmland. Farmland is not going to be a really highly cyclical asset, and governments are usually quick to subsidize people who own farmland. The condo and margin investments are pretty dumb, but the farmland is a wise investment. This right here. The farmland is actually relatively liquid, farmland is in short supply, and relative to many things very, very unlikely to decrease materially in value. Sounds like he lives in the condo so while it's not a great idea purely as an investment it's not wrong to benchmark its value and include its market value in your net worth. If he's smart, he'll be watching like a hawk and unload it the minute it starts to turn. If he's dumb, he'll not do that and maybe lose a bit, but he's already well ahead. Using margin for investments is not dumb inherently. Without seeing what he's invested in it's hard to say whether he's using his margin appropriately. If he took his margin account and bought penny stocks then he's an idiot, but most brokers won't even let you do that, they'll assign margin levels based on specific stock loan values, more for stable stocks and less for volatile stocks.
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Oct 13, 2014 04:44
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He's done well but let's see how well he's doing 3 years from now. Someone do a recursive wget of his site and archive it plz so we can laugh at him in the future
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Oct 13, 2014 04:54
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Kalenn Istarion posted:This right here. The farmland is actually relatively liquid, farmland is in short supply, and relative to many things very, very unlikely to decrease materially in value. I don't know much about farmland but even if it's such a great investment you would figure that it's priced appropriately. It may be low risk but what does it matter if it's not generating enough income/appreciating enough to offset his (not well documented) borrowing costs?
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Oct 13, 2014 04:56
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Cultural Imperial posted:He's done well but let's see how well he's doing 3 years from now. Someone do a recursive wget of his site and archive it plz so we can laugh at him in the future lol http://www.freedomthirtyfiveblog.com/2014/04/vancouver-most-affordable-city-in-canada.html Also another negative you need to account is taxes due on everything from rent income, property taxes and also dividend income. The basic interest alone on 500,000 total in debt would also eat a good amount of his yearly $60,000 pre-tax cash flow. Basically he didn't include lots of red in monthly progress report since it would really expose his dubious financial future. A variable 2.2% 5 year APR on the mortgage alone would be $850 a month without any extras such as property tax and also misc costs. etalian fucked around with this message at 05:12 on Oct 13, 2014 |
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Oct 13, 2014 05:03
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eXXon posted:I don't know much about farmland but even if it's such a great investment you would figure that it's priced appropriately. It may be low risk but what does it matter if it's not generating enough income/appreciating enough to offset his (not well documented) borrowing costs? The fact that it's strictly limited in supply and farming efficiencies make it more valuable every year makes it relatively safe. The annual returns are probably pretty close i his mortgage payments but, like most farmers that own their own land he's making significant capital appreciation. It's also cheap to borrow against due to, wait for it, government subsidized lending via farm credit corp. Farmland where I used to live increased from in the $1000/acre range when I was growing up to nearly $10,000/acre now (call it a 20 year period, through a whole range of economic cycles). Since farming is subsidized through a whole buttons of programs (NISA and crop insurance were the main ones when I was a kid) the odds of a farmer failing to make his rent payments is almost nil, especially because you can just tell him to gently caress off next season and rent to his neighbor if he does fail to pay. Even better if your land is proximal to an urban centre and you can rent it to some dummy from the city who wants to hobby farm and doesn't care whether it's profitable or not.
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Oct 13, 2014 05:11
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etalian posted:Also another negative you need to account is taxes due on everything from rent income, property taxes and also dividend income. Not quite, you only pay taxes on net income. He can actually use the loss to avoid paying tax on $800 of his part time income. quote:He grows his wheat and sells it on the open market while paying me cash rent at roughly $5,000 a year. Meanwhile the cost of owning the farmland for me costs about $5,800 (interest on loan, property tax, etc) Which means I have a net loss of $800 a year running this farm. But I’m not concerned about negative cash flow because all I need to break even is for the farm to appreciate at least 0.5% each year.
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Oct 13, 2014 05:18
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Ikantski posted:Not quite, you only pay taxes on net income. He can actually use the loss to avoid paying tax on $800 of his part time income. it's basically negative gearing a la Canada, Australia has similar great investment concept of buying rental properties to run at monthly loss but hoping for long term speculation to make up for it, while avoiding taxes in the present. Also:  Yes bond holders are higher up in the bankruptcy food chain but you are still talking about only getting pennies on the dollar. etalian fucked around with this message at 05:27 on Oct 13, 2014 |
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Oct 13, 2014 05:22
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Meh, I admire his gumption.
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Oct 13, 2014 07:26
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Cultural Imperial posted:exterminate all mainland chinese Kafka Esq. posted:exterminate all black people Brannock posted:exterminate all white people http://www.dailymotion.com/video/xv6ehg_blackadder-season-02-episode-01-bells_shortfilms&start=1012 Also, lol at that guy. He took out a loan at 4% interest (for now) to get bonds with a 6.8% annual return, but which only mature in 2018? How is this different from gambling (that interest rates stay low forever)?
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Oct 13, 2014 07:32
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I had some good debt. .9% financing on my car rather than paying cash which I put into an investment that's paid 10% over the 2 years of my financing putting me about 2k ahead. That was good debt. Or when the government takes advantage of super low interest periods to go into debt to invest in needed infrastructure that will more than pay for its self in the future. Lots of situations where good debt exists. It does not though exist in the world of Canadian real-estate.
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Oct 13, 2014 07:32
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FrozenVent posted:That's 60k/yr. There's a rather big difference between having a pre-tax income of 60k/year and accumulating 60k of assets per year.
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Oct 13, 2014 09:37
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Baronjutter posted:I had some good debt. .9% financing on my car rather than paying cash which I put into an investment that's paid 10% over the 2 years of my financing putting me about 2k ahead. That was good debt. That was almost certainly not the true interest rate on the car loan, btw. Since no one in the car value chain can borrow that cheaply - the actual cost of the financing would've been partially rolled into the vehicle principle.
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Oct 13, 2014 15:11
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http://mobile.reuters.com/article/idUSL2N0S70CP20141013?irpc=932quote:Canada condo boom rolls on as buildings fall apart These pearl clutchers are severely lacking in vision. You're not going to get rich buying real estate if you focus on inconsequential details like build quality. You need to think big and embrace your pride of ownership.
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Oct 13, 2014 16:09
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