Risk
October 11, 2006
The latest post on ARRDPD is about risk. Here’s my favourite quote:
Then again late night Saturday I was sitting at a No-Limit Texas Hold’em Poker tourney. I had done fairly well to become chip leader with 9 players left. I began to tighten up. I had all these chips and I didn’t want to lose them. An hour later I was the short stack. Wow! How did that happen? I was playing not to lose.
I commented about my grandfather and how he is extremely risk-averse, and would not invest in a franchise that would have doubled his normal ROI (he invests in zero-risk bonds, GICs and the like).
What’s your risk tolerance? I’m a fairly wreckless person, I admit to driving too fast, drinking a bit too much, and my investments show it. But, I’m only 26 and can afford a lot of risk at this point (financially). My belief is that you can’t succeed in life without taking some risks.
Risks (in no particular order):
Income Statement – Property #2
October 11, 2006
Idea Senator had the following comment on my previous post:
Your expense seems kind of high. Can you tell me why and any ways of reducing it?
So, I thought I would break down the income and expenses for Ppty #2.
Income: $395/rm * 5 = $1975/mo
Expenses:
Mortgage Interest – $460
Condo Fees – $110
Ppty Taxes - $133
Electricity – $100
Cable & internet – $75
Total Expenses: $1173
Net Income: $1097/mo
Mortgage Principal – $295
Cash Flow = $802/mo
So, my yearly cash flow is about $9600, and my net income should be $13164. Not bad for a $30,000 investment. The mortgage payments are high because we only have 25% equity in the house, and it is slightly accelerated due to paying for 13 months in a 12-month period because the ’guru’ who set up the mortgage calculated at 4 weeks per month when determining our weekly payments.
Now… I can’t wait for these 18-years to be up so my interest and principal payments drop to zero and my net income climbs to $18,684/yr.
Any further thoughts on this IS?
NG
