Hey, All You Fulltime Investors! - Posted by Bob Richards

Posted by SusanL.–FL on December 30, 1999 at 11:22:33:

whereby the manufacturer will make a product so that it will last ‘just so long’ before it either wears out or falls apart (usually before it is paid off)…

Hey, All You Fulltime Investors! - Posted by Bob Richards

Posted by Bob Richards on December 29, 1999 at 14:44:25:

I am FINALLY making the jump into RE investing full time! Yup, no more J-O-B! Never mind Happy New Year, lets try “Happy New Life!” Anyway, my question to the fulltimers isn’t a techno investing question but rather a business support one: I’m going to get a new car (SUV actually) and I am wondering HOW you do it: Buy or lease the vehicle? I am familar enough with buying vs. leasing but I guess my question centers on the # of miles a fulltime investor puts on his vehicle in a yr. As most of you know, most leases allow for 12-15k miles per year before they start lopping on the penalties. Do you fulltimers put more than that on in a typical year? Or less?

Thanks for all your input. Happy New Year!

Bob Richards

It’s the cost of doing business to me. - Posted by JDenney

Posted by JDenney on December 31, 1999 at 24:10:10:

Let me tell you both sides.I would love to drive my 1988 escort but I have found if you are trying to buy homes creatively (with little down) you better look like your not on your last dollar! I just bought a 1999 durango and had my company logo put on the door and WE BUY HOMES 738-0000 ALL OVER IT. When I meet realtors ,bankers, owners ,they know I am for real. I can tell you now I get calls from realtors all the time.
Don’t get me wrong , I know i’m throwing away about 6000 a year but I feel I will make $30,000 min this year that I wouldn’t have. Don’t buy unless you have made enough profit from a deal to pay all your first years payments. overhead can put you under and back to a JOB!
Good Luck (the sleepless nights will end in about 6 months)

Re: Hey, All You Fulltime Investors! - Posted by Rafael_FL

Posted by Rafael_FL on December 30, 1999 at 22:52:01:

Congratulations Bob…here is a little bit of info I hope will help you.

Leasing a vehicle is not for everyone, but there does not necessarily need to be penalties after 12 or 15k. I am a finance manager for a large dealer group, and I have had accountants who drive over 30k year lease. They structure the lease to fit their driving habits. No lease company will let you structure the lease over 100k total, so in this case it was set up for 30 mos, 90k mile lease. He turned in a 96 Accord with 87k miles on it, and drove out in a 99 Accord.

There are also used car leases. Certain dealers have an arrangement with banks like NationsBank/Bank of America. They market their off lease vehicles and get an enhanced residual and money factor. We had several 96/97 Accord LX 4 doors with $1800 out of pocket that were $169/mo for 39 months (12k yr miles). It has been pointed out in a previous post that dealers like leases. Yes, but for reasons other than you think. Most people want to trade every 3 years, but never want to put any $$ down. The negative equity cycle builds until eventually you cannot trade. With leasing every 3 years we see you again, and we make $ again. You are happy because you have another car, and we sell another car.

Anyway, check with your accountant to see if you get any tax benefits from leasing a vehicle. With many leases, if you set up the lease as higher mileage (over 15k) you can sometimes buy the mileage @ 8cents/mile, vs 15-20 if you go over. You may also benefit in other respects as to asset protection. In a lease you do not own the car, you are technically leasing it. An attorney going for the deep pockets will go after BankOne/Chevy Chase/GMAC, etc. This is one reason banks require higher limits on your personal liability insurance when leasing.

Good Luck,


Nothing wrong with a new car as long as your INVESTMENTSpay for it! - Posted by Russ Sims

Posted by Russ Sims on December 30, 1999 at 13:30:43:

Even Kiyosaki of “Rich Dad, Poor Dad” says that he buys a new Mercedes (maybe it was for his wife:can’t remember) from the proceeds of his investments. Of course he could do something with that money that would further his investments, but there’s nothing wrong with enjoying the fruits of your labors!Yes, I am a full time investor, and yes, I did just lease a modest new car…I leased vs. bought because the payments are lower and I’m guaranteed not to owe more than the car is worth in 3 years.I rewarded myself after completing a couple of deals that essentially make my lease paymnets for me. Of course my other car is an 11 year old paid for Subaru that I can’t bear to part with. I use it for every day running around, and the new car when I go to meet with sellers or drive prospective buyers to property sites. Like it or no, image counts.

Re: Hey, All You Fulltime Investors! - Posted by Rob FL

Posted by Rob FL on December 30, 1999 at 09:55:33:

I ain’t a full timer, but I am working on it. I have a Jeep Cherokee and let me tell you, that those things depreciate more than they guzzle gas. In 1998, a friend of mine bought a new Ford Explorer for 32K – ouch! (I can’t figure that one out. I sold a rental condo recently for 31K – paying more for a car than for a condo?) Shortly after that, I bought my 5 year old Jeep for $8500. Guess who is still making hefty monthly payments??? Ain’t me. Payments quickly eat up your monthly income. No thanks, especially on some luxury item like a new car! I would rather own a condo that puts $300 a month in my pocket than a car that takes $500 a month out of it.

Weigh your options… - Posted by SusanL.–FL

Posted by SusanL.–FL on December 30, 1999 at 09:17:24:

Congratulations on your recent ?independence?! Wish you MUCH success and do hope it?s a ?smooth? road ahead.

As far as the car—if you lease a car, you won?t have anything to show for it at the end of the lease. If you buy a car, at least it will be yours after it is paid off.

You are looking at some ?hefty? monthly payments on an SUV. Nine times out of ten, if you purchase a high-dollar vehicle, they?ll finance you over a 60-month term. If you DO have to finance, try not to go over three-years.

I?m with the others–buy a good ?used? vehicle and pay cash if you are able (because those monthly payments will kill you).

Mileage can add up very quickly. My SUV is three years old and I already have nearly 55,000 (!!!) miles on it (AND?I haven?t used it to do any real estating?just plain ?ole driving around to do errands ?n stuff?

My advice would be—get your feet on the ground FIRST and make sure that you can survive out there on your own. If you have a car that is reliable (and hopefully paid off), HANG ONTO IT! If you have money you can blow, then invest it in something that will MAKE you money.

Now go out there and find yourself a deal!! :slight_smile:

my 2 cts too - Posted by CarolFL

Posted by CarolFL on December 30, 1999 at 09:16:47:

going into ANY business always takes longer to ‘get going’ than you think it will, and costs more. What everyone is saying is don’t run yourself into a cash crunch by spending money where you don’t need to at this time. (In addition to Millionaire next Door, Rich Dad Poor Dad, and E-Myth are required reading!)

I, like Gator, hate leases because they lock you in to something that may not be what you want a year from now.

Talk to your CPA about your situation. You don’t tell us what kind of entity you are operating within or anything, so it’s hard to advise - And happy investing.

Re: Hey, All You Fulltime Investors! - Posted by Tim (Atlanta)

Posted by Tim (Atlanta) on December 30, 1999 at 07:26:32:

I would think that you may want to rethink your plans. From personal experience, the transition to self-employment can take some adjusting. Don’t spend all your available funds now on some depreciating asset like a SUV. As far as the leasing question, maybe you should look at how many miles you put on your cars now doing REI. I presume you have been doing REI for some time now and know your area. How far do you need to travel for your deals? Are you in a rural area where you might have to drive 50 miles one way to find the next deal? Or are you in a major metropolitan area (like Atlanta) where you can find plenty of deals within 10 miles of your home?

I have to agree with the others, buy some el-cheapo vehicle. I personally drive a 1996 Chevy S-10 that I bought for $8,000. It only has 7700 miles on it, and runs great. Hopefully it will run for a long time. Just think of the difference if I had bought or leased a new truck. Over the next four years, I will save a heap of money that I can invest in REI. Just a matter of your priorities.

Hope this helps.

Re: Hey, All You Fulltime Investors! - Posted by Jim Kracht

Posted by Jim Kracht on December 30, 1999 at 01:13:28:

Bob, congrats on your decision. I am a newbie in RE but know something about car finacing. My first recomendation is -when you drive 30K miles per year, whatever car you drive will be used up in 2 to 3 years, so why not drive a cash car and let the mileage deduction pay you, 30,000*$.325=$9,750 per year to drive your car. You didn’t say if you had already made the move. If you still want to finance a car. Something you may consider, It is a lot easier to get approved for a lease or car loan it you have a job or W-2 income, with 1099 income or schedule C income you normally have to wait until you have 2 years of tax returns to prove your income. Just a thought. Be blessed in your new adventure, keep us posted.

Re: Fulltime Investors create own income and practise self discipline - Posted by Millie I.

Posted by Millie I. on December 30, 1999 at 01:10:29:

Welcome to the Real Life of a Full-timer,

Congrats Bob! Welcome to full time real estate investments. Sounds glamorous and exciting. Looks like you are going into the big times and big money, but before you get carried away trying to look like one, buy the book ‘the Millionaire Next Door’ and learn how to be one the correct way. You will understand what Gator is trying to tell you.

Let’s see where you came from. You left your job where the employer took care of your health insurance, your retirement plan, guaranteed you a paycheck every 2 weeks, and maybe you had 3 weeks of paid vacation a year. If you blew all your money, there is always another pay check coming in 2 weeks.

Now lets see where you are. You are self-employed, with most probably a retirement fund stashed away in an IRA, and you have a lump sum that you can use as capital for real estate investments, buy new cars, pay your credit cards and other bills, living expenses, out of pocket health and life insurance, groceries, kids’ clothing, daily needs for the wife and school expenses for the kids… The lum sum looks like a lot when you have a paycheck coming every 2 weeks, but when you have no paycheck coming in, that lump sum is gonna get smaller and smaller very quickly, and you just might find yourself having much less to invest than you think.

You have a major adjustment to make, especially if you come from the upper middle class, used to spending big bucks on fancy cars, vacations, fine dining, and designer clothes. It is time to downsize your lifestyle, and convert yourself from a CONSUMER to and INVESTOR. A Consumer spends big money on non-income-producing goods to pamper his lifestyle. An Investor spend small money to realize big financial returns or create long term income-producing sources. A Consumer turns a $1000 into $0 by tomorrow. An Investor turns a $1000 into $10,000 by tomorrow, and $100,000 the day after. How are you going to spend your money Bob?

How much are you going to spend on the new car? How much is that car worth in 5 years? If the money went into a down-payment for a 4 unit, how much rent would you have received in 5 years? For that same amount, I would have bought an REO at 50%, and doubled my money on a flip in 2 months.

To each his own, some people like fancy cars, others like financial independence. Maybe I am stingy, but I have 3 second hand cars. I buy them from people who get a new car every 5 years. I get the best price for the best deals.

I am not trying to make a big deal over a new car, I am trying to prepare you for full time self employment, and get you into the right frame of mind. You don’t need fancy cars, designer clothes, or the millionaire look to be successful. Most landlords look like their tenants. Most rehabbers wear dirty jeans, and eat packed lunches on the jobsite. If anything, they try to hide what they got using asset protection methods, because they are what the book called ’ the Millionaire Next Door’.

Buy yourself the book for your Y2K present, you deserve it, it only cost $15, but it’ll make you $15 mil if you learn the lesson right.

Happy Y2K, and Best of Luck for your investments,
Millie I.

Re: Hey, All You Fulltime Investors! - Posted by DavidV

Posted by DavidV on December 30, 1999 at 24:37:58:

Not sure how your business entities are set up but you might want to buy or lease through your corp. and make it deductable. Your accountant can probably give you some good ideas. I’m no full timer but i use gators philosopy. And CONGRATS on “losing your job”.

Buying a car - Posted by Lisa in Oz

Posted by Lisa in Oz on December 29, 1999 at 17:39:48:

Pay cash for a decent car. Car dealers love leases even more than regular financing, so who do you think benefits?

Put your money in the business–especially at the beginning.

Just my five cents (no pennies in Australia) :slight_smile:

Good Luck and congrats on “losing” the job.


Congrats, be careful - Posted by Gator

Posted by Gator on December 29, 1999 at 16:22:10:


Congratulations on taking the big step. I put a bout 30k on my wheels each year. Sorry but in my opinion buying a new SUV is a bad investment. I can buy a couple of cheapie homes or several mobile homes for what a new SUV cost. I try to minimize depreciating assets such as vehicles. My last purchase, 4 year old 60k miles Isuzu Rodeo for 8k CASH! My renters drive better cars than me. I know you didn’t ask for this advise but I couldn’t resist. If you really want a new SUV and are in the financial position that a few depreciating goodies don’t hurt too much, by all means get it. Best wishes,


By the way lease sounds a lot like fleece to me.

They start to depreciate just as soon as they roll off the showroom floor. - Posted by SusanL.–FL

Posted by SusanL.–FL on December 30, 1999 at 10:14:45:

I also made the same ‘dumb’ move…Ford Explorer Limited, fully loaded…with every little imagineable gadget they could put in a car (moon roof/sun roof, embroidered seats, embroidered floor mats, CD player, one-of-a-kind color—you name it.

… But MAN I am one SORRY soul the 20th of each month! :frowning: double OUCH!!

Live 'n learn, I always say. But NEVER again for THIS chick.

‘Used’ will be fine with me! :slight_smile:

If I had invested (in real estate), what I have sunk into these car payments, I could probably retire…or at the very least, quit my J-O-B…

Re: Get the book for $7.00 - Posted by Chris

Posted by Chris on December 30, 1999 at 10:13:45:

Hey, I just wanted everyone to know that you can get the paperback version of “The Millionare Next Door” off of amazon.com for $7.00. I just bought it!!

This is required reading for everyone !!! Excellent !!! - Posted by JohnG

Posted by JohnG on December 30, 1999 at 08:19:09:

What an excellent post !!!
Everyone should read this and print it off and post it where they can see it.
The new people need it as a guide and the older investors need it as a reminder of whats really important.
I love your thinking.
(PS) - I just sold a property (34 units) that I have spent lots of extra money on over the last 3 years - money that could have easily gone for new cars, expensive wines, and trips on the SS Loveboat. Instead I just deposited a great big cheque into my account. I tried to find something to buy with some of it - but it seems I have everything I need right now so I put it all into another BIG real estate project !!!
(I looked at new cars but I still like my 5 year old North American made Caddy that had the depreciation wiped out of it when I bought it in June for 1/3 of its original cost with nary a mark on it !!!)

REALLY enjoyed this post!! (nt) - Posted by SusanL.–FL

Posted by SusanL.–FL on December 30, 1999 at 08:10:44:


Re: Congrats, be careful - Posted by JD

Posted by JD on December 30, 1999 at 11:38:35:

I put 30k on my wheels also. Ditto on the other comments.

I got a certifcate from Chrysler that stated… - Posted by Stew

Posted by Stew on December 30, 1999 at 22:11:10:

We have pulled you credit and since you have excellent credit would you be interested in ruining it by buying a new car you don’t need. (They weren’t that bold) Anyway, I get a $25 dollar certificate at Barnes and Nobles or Red Lobster if I go in and test drive a new car before Jan 15th. So I went… for the certificate, I ask the Salesman about a Jeep. Pretty much like the Jeep I hated riding around in Germany in the service. He says, “It’s only 16K and best of all it makes money. Yes Sir, It’s like MONEY IN THE BANK”. I went on my test drive, got my certificate, and went home. I am such a fool, how could I passed up a deal on a money making car. Hee-Hee Wait. I think I see a money making TV over there. Gotta go.