Debate Topic: How Much is "Too Much" Profit? - Posted by J.P. Vaughan

import · January 16, 2000, 8:57pm

Enlighten me, please. - Posted by Brandi_TX

Posted by Brandi_TX on January 16, 2000 at 21:57:35:

Just how is it that Dirk’s relation to the Vaughan’s increased his chances of getting these ladies to sign on the dotted line?

I dare say that your statement shows a hint of jealousy, though I am sure that will be denied emphatically.

To address your search for the “difference” as mentioned in your last paragraph, I will start by stating that I AM a family member to someone charged WAY to much for a vehicle. However, I see the price paid as the fault of the buyer. Though I regret he had to pay that much, I see it as his own doing for not being financially responsible. Had he been, he would have had ALOT more options open to him. I have no ill wishes for the person who sold him this car, in fact - the seller took a HUGE risk on this sale and should get paid for it. As we speak, this loan is in default and my relative has no intent to continue paying. It is my sincere hope that (due to the seller’s high price and rate) that the seller made something on this deal.

If the economy was based on the ability to pay, we would be in serious trouble. The line between business and charity would be unclear. Should this car seller now say to my relative, “Well, it’s ok, I overcharged you anyway.” I do not think so.

Businesses AND charities are both formed to fill a need. One makes money, the other gives it away. Which are you operating?

import · January 16, 2000, 6:50pm

Re:Dirk Roach is a Friend of mine… - Posted by Ed Garcia

Posted by Ed Garcia on January 16, 2000 at 19:50:03:

GL,

I normally don’t get involved in this type of thing, unless it involves me, or one my posts.

But this time, I’m going to make an exception. You see Dirk Roach is a friend of mine.

Now let me tell you, who the two main influences in Dirks Investing career has been. Terry
Vaughan, and myself. Now we didn’t teach Dirk to go and rip off old ladies.

And to be honest with you, he didn’t. Right now as you folks are being judgmental about
Dirk. There is an old lady, who is thankful to Dirk, for giving her a home with the cheapest
payment in town. Affordable living is exactly what it is. Now you may say, she doesn’t know
any better. Let me tell you what she does know. She now knows that thanks to Dirk, she can live
in an area, that she normally couldn’t afford to live in.

Yes, Dirk got a little boastful, because he was excited that not only did he get rid of what he thought
would be one of his problem Childs, but made a nice profit as well.

However lets not over look the fact that Dirk provided a home for two old ladies who not only didn’t qualify for a home, but couldn’t find rent as cheap as their payment.

When the question comes up as J.P. has presented it, How Much is " Too Much" Profit?

The answer is, there is really no such thing, as too much profit.

The question should be, what are we allowed to make as a fair profit?

The answer is, WHAT EVER THE MARKET BARES.

Ed Garcia

import · January 16, 2000, 7:47pm

Re: Possibility of LOSS is often overlooked! - Posted by Bob-MD

Posted by Bob-MD on January 16, 2000 at 20:47:41:

John:

You point out a very real possibility that is often overlooked; especially by the bureaucratic lawmakers. There is always the very real possibility that the investor can loose everything. There are no safeguards (nor should there be) to prevent the investor from loosing money. Their latest target (especially in Maryland) are the “flippers” of realestate. They believe that they are making too much profit and are proposing new laws at the national level to make it more difficult to make large profits from flipping properties. One that I read today that is being proposed by one of our senators, is to have the seller disclose on the contract or listing, the latest purchase price of the property. The bureaucrats don’t really understand what we are doing or risking but are willing to enact laws that will limit our earning ability. It will be interesting to see what they come up with.

Bob

import · January 16, 2000, 8:49pm

Re: Debate Topic: How Much is “Too Much” Profit? - Posted by al

Posted by al on January 16, 2000 at 21:49:57:

You added the same gray area in your responce,what is taking advatage of someone? what is greedy? (in the eyes of the beholder dose`nt count)

import · January 17, 2000, 10:39am

Re: Debate Topic: How Much is “Too Much” Profit? - Posted by Rob FL

Posted by Rob FL on January 17, 2000 at 11:39:19:

You know what, I read your post and totally agree with it. The last thing I believe in is more government regulation and intervention. I think the more free the market is the better.

The things that I think of are some of the people I have dealt with in the past. For instance, my mother-in-law. She is a single mom of 3 kids. She has a 5th grade education and came here from the Dominican Republic when she was 29 in order to give her kids a better life. She speaks both Spanish and English, but still struggles with her English even after 20+ years. She works as a custodian at a local elementary school. No matter how much my wife and I try to help her and teach her things, she is always broke and will probably always be broke.

Another one are some good friends of mine who used to be my neighbors. It is a mother, son, and daughter. All were adults. They are not retarded, but all are kind of “slow” if you know what I mean. The mom is retired and the 2 kids both work full-time jobs for low-paying employers. They have high school diplomas which really makes me wonder about what kind of education the public schools are dishing out. They are some of the nicest people you could meet, but they are certainly not math wizzes.

I remember buying my SUV a few years back. Another no money down deal. I spent 30 minutes going over all the wonderful paperwork and actually reading what it said. The finance manager said I was probably the only customer he could remember who actually spent that long to sit down and read all the paperwork. I guess everybody else just “signs and drives.”

Now imagine pairing one of these people up against a real estate “expert.” Maybe the real estate “expert” could tell them I will sell you this house that the comps show is worth 75K and sell it to you Mr. High Risk for 100K at 25% interest. Maybe they couldn’t buy another house from anyone any other way, but sometimes I feel it is better to walk away.

Of course, if someone is a competent normal person, and they are willing to accept the deal, then no problem. We are entitled to all the profit we can get. I can think of plenty of my tenants who are high risk yet I wouldn’t feel I was taking advantage of them no matter what deal I offered them because I feel they either could or should understand what is going on. Dirk’s people sound like they were smart enough to know what they were getting into.

import · January 17, 2000, 10:01am

Re: Not surprisingly… - Posted by David Alexander

Posted by David Alexander on January 17, 2000 at 11:01:12:

Jacob,

Your taking things to an emotional level, and I surmise you probably do the same thing in business. No one said anything about not liking you. I’m sure that there will be places when we learn from you. The point is this.

How Much Profit should/can you make? How much should you make when you provide housing for someone? Put it in perspective. Do you think if you supply housing that someone should be able to buy that for 2k, on top of that housing with financing? You cant even buy a decent car for that and especially not one with financing.

Fast forward to the fact that we pull cash out through other Investors. Mh’s at least that I’ve dealt with have about a 30% default rate, (this may be just true for mine, and I may need better controls for this). So what that means is say we pull out the cash to yield 20% and then 6 months later there is a default. The people didnt do what they say they could, in fact they dont call or anything and now their gone, maybe they didnt pay lot rent for 30-60 days, maybe they didnt make the payment to you for 30-60 days while you were looking for them. Now you have to make payments to that Investor while you resale, plus the lot rents, plus any reconditioning, advertising.

Now your profits are paramount to your risk.

The difference between what some of us do and what you do is simply one thing, we take bigger risks( and get paid well for doing so). You buy a Mh and then sale with Institutional financing and then Bam your out of the deal, we sale with our own and live with the deal and off the asset. Nothing wrong with your plan if you like it. It’s just that your controlled by the NADA values, and what your financing guys say they will finanace, were not. We are controlled “Only” by what the market says. That is the market for our Notes when we finace against them, and the market for our Mh’s when we buy them and sell them.

A friend of mine that I talk to often is always telling me it’s just a tale of two cities, which one is better, that is only up to each individual. I will say I hope you reinvest in more deals, with the cash you make, and learn to let Assets Pay you because in order to eventually sustain yourself you have to have passive income coming in whether that be from stocks, RE or business.

Best of all

David Alexander

import · January 17, 2000, 9:39am

Re: Not surprisingly… - Posted by JPiper

Posted by JPiper on January 17, 2000 at 10:39:14:

Thanks for your brief comment concerning my post.

You?re exactly right, this was not a post about a NADA book, nor was mine. If you?ll look closely you?ll find that the word ?NADA? was used once, and in the context of a complete sentence, part of which also mentioned the cash value of a property. In your concentration on that particular word you missed the entire point of the post.

What my post was about (and yours as far as I can tell) is about profit?.a part of which is determined from the selling price. So again, there is a DIFFERENT value for property when it is sold on terms. The reason for this difference is accounted for by the risk taken?.a risk that you evidently don?t take (if I understand correctly), nor do your lenders take the risk.

Dirk?s property is not worth $11K?it?s worth $380 per month for as long as he can collect it from these women (until the amount of $11K plus interest is reached)?.who clearly have a problem-ridden past. AND, there evidently IS a market for terms such as these?.my understanding is that Dirk sells plenty of these MH. So yes, there is a market. In my area the market for deals of this type far exceeds the available property. Jacob, that?s what we call a market, and that?s how we determine a market value?.based on the market participants.

What doesn?t create the market value for a property sold with terms is a book, your common sense, or my opinion. It?s only determined by the participants.

JPiper

import · January 18, 2000, 1:54pm

I haven’t been on the sight in a few days so i missed this debate and - Posted by Carey_PA

Posted by Carey_PA on January 18, 2000 at 14:54:47:

the posting about Dirk’s Ugly Duckling deal…but i’m reading these posts and trying to catch up…and Don I have to say that i agree whole-heartedly with your response here!

you know i went to get a pizza the other day, it was a bbq chicken pizza and it came to i think about $18…and i paid the $18 and ate my pizza and was happy…then i got to thinking DARNNNN, boy did they make a killing on that pizza, because i heard from someone after i inquired about pizza shops, etc that a normal plain cheese pizza costs the pizza owner roughly 99cents a pop…now i know this pizza that i bought had bbq chicken on it, but you and everyone else can bet your houses that it didn’t cost this pizza place anywhere close to $18 to make this pizza! my point is, i knew they made a killing on this pizza, but i paid it anyway, because i wanted it and i could afford it…oh and also one other point…maybe i should go into the pizza making business lol

thanks for listening and thanks for the post don,

CAREY

import · January 16, 2000, 6:57pm

Just to clarify… - Posted by Jeanne

Posted by Jeanne on January 16, 2000 at 19:57:42:

Ed,
The ladies who bought the mobile home are in their 30’s or 40’s.
Jeanne

import · January 17, 2000, 7:07pm

Don’t try and help me too much - I just may like it here - Posted by JohnG

Posted by JohnG on January 17, 2000 at 20:07:21:

I just had to jump in here.
As soon as you start to make a determination of what is best for other people then you are stepping over the line. I have had that same feeling when I go and meet some of my tenants. I can hardly believe how they can exist in the smoke infested smelly dwellings that they live in. but, that is not for me to decide. Sure maybe you and I wouldn’t want to live there, but lots of people do. And who are you and I to say that they shouldn’t and they should have something better.

My friend, many years ago I gave up trying to educate and “save the world”. I spent so many hours of my time trying to give people a leg up that were struggling. Only later did I realize they were struggling all right - struggling to stay where they were and resisting my efforts to “help” them. They didn’t want my help - they were quite content where they were and who am I to argue with that ?

Its a little like the guy who was pressured by his father all his life to go to law school. But he wanted to be a fireman. And after seven years and he finally got his degree he looked at his Dad and said “Now can I be a fireman ?”.

Let people be who they want to be and those who want to really excel will always find a way, with or without your “benevolent” help.

import · January 17, 2000, 2:49pm

Thanks David and Jim - Posted by Jacob

Posted by Jacob on January 17, 2000 at 15:49:32:

Thanks for the responses. They show that in my book (not the NADA ) you two are real pros.
I can get emotional, no doubt about it. The thing I find amuzing is for every post here, I get at least five really disgusting emails. I would even reprint them, but nothing would remain after editing. That doesn’t include two viruses sent since last Mon. I guess I get tired of that, plus publicly being told here that I do not know what I’m doing, or that I am unprofessional and so forth. Especially from people I’ve never met or have ever met me. I can disagree with anyone here, without disagreeing with that person in general. I’ve tried to show that, but some just don’t get it.

No, Mr. Garcia I do not owe an apology to anyone. I’ve shown in the past I have no problem apologizing when I have done wrong. However, questioning a particular deal that is rubbed in my face does not require an apology. I’m sorry you feel I offended a friend, but an apology is not in order.

David, again thanks for the advice. As I have stated about 3,456 times in the past, the plan is to reinvest profits into assets, although probably not mh notes. I’d prefer something a little more secure. (Yes, I’ve changed my opinion on that in the past few weeks.)

Mr. Piper, you made several excellent points in your response and they are appreciated. It’s much easier to read and understand a post written in a respectful manner. Again, I learn more on a daily basis.

Thanks to all on this site. I look forward to communicating more and learning from you again in the future. (Yes David, you could learn some things from me:) )
Best Wishes,
Jacob

import · January 16, 2000, 11:51pm

Re: Just to clarify… - Posted by JPiper

Posted by JPiper on January 17, 2000 at 24:51:35:

Jeanne:

Those aren’t little old ladies to Garcia and I…those are babes.

JPiper