investing advice - safe 7% return

[skipdup]

Wanted to ping the pelican brain-trust for this, as I realize I am not as fluent in things investing...

My 65 y/o mother has a sum of money she needs to invest. This is important money so she wants to be as risk adverse as possible. But she also needs to earn around 7% annually.

Anyone recommend a strategy? Is this a simple proposition? Or, do these current financial times severely limit options?

Many thanks,
Skip

[turbo6bar]

Originally Posted by skipdup

This is important money so she wants to be as risk adverse as possible. But she also needs to earn around 7% annually.

Looking for a home run, I see. Risk-free return would be considered US treasury bonds. That's 3% annual return. Assuming she wants little volatility in return, the only place you'll see that is high yield (ie. junk) bonds or a mafia-type activity.

Her age suggest a strong emphasis on maintaining principle, which defaults her into high-yield savings accounts, CDs, and government bonds. Sorry, anything over 4% is a pipe dream. jurgen

[fingpilot]

What he says. Anything over 4% needs a banana clip and a vest to secure.

[stomachmonkey]

Originally Posted by skipdup

...she wants to be as risk adverse as possible. But she also needs to earn around 7% annually.



Many thanks,
Skip

Wouldn't we all love that deal.

There's a guy in NY that might be able to help. Think his name is Ben or Bob or Bernie?

Try him at home.

[skipdup]

Yeah, I was afraid of this... Thanks guys.

[Jim Richards]

Madoff, his name is Madoff.

[Zeke]

She could buy real estate loans or even loan money directly. At least she'd have the property for security. There are many ways to do this in many markets, so be cautious. I have a friend that won't loan beyond 60% LTV and he still s finds places for his money loaning 2nds, 3rds or 4ths. Of course, he doesn't mind defaults in that position. Some of it is short term.

I guess he's a shark.

[Steve Viegas]

If you purchase real estate leins, please make sure you are in the "first position". People in second position or beyond are really at the mercy of the first position. If things go bad, it is far more likely that the first position will get paid out (possibly a partial payment) then any following positions.

[Rich76_911s]

Give Warren Buffett a call see if he will give her some of his 10% preferred shares in GE, and don't let him skimp you on the warrants. Not quite "riskless," but if GE goes under and can't make the 10% payments the world may be in such a hurt'n place that it won't matter.

[Schumi]

Here's an idea...

Take that money, move it to a foreign currency and stash in foreign bank. Like a bank in Sweden.

1 year from now, when the dollar has dropped, pull that money back into the US. It will seem as though she has made her 6%/year.



.....even though in reality we all just lost 6%. F*#&in economy.

[LakeCleElum]

Tell here to buy as many longhoods as she can afford and put them in storage. The market is a little soft now, but will come back strong......

[cgarr]

I am getting 6% on plain ole EE bonds, but they were purchased back in the 80's

[flatbutt]

Originally Posted by Jim Richards

Madoff, his name is Madoff.

spelling correction; Madeoff

[Zeke]

Originally Posted by Steve Viegas

If you purchase real estate leins, please make sure you are in the "first position". People in second position or beyond are really at the mercy of the first position. If things go bad, it is far more likely that the first position will get paid out (possibly a partial payment) then any following positions.

Not entirely true. Anyone with a loan in default has the option of paying overdue amounts to the other lenders. At least that's how the loan should be written up. But, you make an interesting point. Let's say I don't pay my first, but pay my 2nd. The only way I will know what's going on is when the first starts foreclosure. It could be expensive to get things right. That's why my friend only does up to 60 % LTV.

He finds them. I don't know how or that would be my business too. I'd borrow money at an equal rate just for the chance to take over those homes with only 60 % of the value owed. That's just shooting fish in a barrel.

Of course throwing people out into the street ain't too nice. In fact, my friend ain't too nice, but we did business between us well a few years ago.

Originally Posted by flatbutt

spelling correction; Madeoff

Pretty funny.

[Steve Viegas]

Milt,

You are correct regarding someone possibly paying down the second, but when you are in first position and you do not get paid, you foreclose. Through the foreclosure proceedings, you are the first creditor paid.

[lukeh]

NON traded REITs that invest in class A office space (no strip malls, vacation property...) . I have three of these and they pay 6, 6.5 and 7.5. There are also bond funds out there that are paying 7%. She can take the interest without having to sell any shares. Sure, the share price will move up and down (I'd say up over the long haul) but as long as it's the income she is after the fluctuation in the share price is meaningless. You can get 7% without having to look to the stock market or taking on an extreme amount of risk.

[911Freak]

Originally Posted by skipdup

Wanted to ping the pelican brain-trust for this, as I realize I am not as fluent in things investing...

My 65 y/o mother has a sum of money she needs to invest. This is important money so she wants to be as risk adverse as possible. But she also needs to earn around 7% annually.

Anyone recommend a strategy? Is this a simple proposition? Or, do these current financial times severely limit options?

Many thanks,
Skip

My firm offers 30-40% ROI (return on investment) in 120 days, backed by free and clear real estate presold REO pools nation wide...

No TD (Trust Deeds) with 2nd, 3rd TD's on them, free and clear, pre-sold through the auctions

Rock solid, been doing it off and on for years, only recently have we opened this up to a select few of the general public, due to the fact most don't understand the process (which is where I come in educating the investors)

Yes, there are others that do this but few if any can show proven results.

There are minimum investment amounts.

We use 3rd party for all provisioning, and accounting (nationally known leaders in their industry)

Each pool is done within a SPV (special purpose vehicle) & (LLC) for transparency and provisioning

Best short term ROI in the country, full transparency (unlike Madeoff)

PM me for details and non-circumvent etc.

All of our principals including myself put our own scratch into every deal (why wouldn't we )

[schamp]

Buy a post office and lease it back. 6% or better.

[competentone]

Originally Posted by 911Freak

My firm offers 30-40% ROI (return on investment) in 120 days, backed by free and clear real estate presold REO pools nation wide...

No TD (Trust Deeds) with 2nd, 3rd TD's on them, free and clear, pre-sold through the auctions

Rock solid, been doing it off and on for years, only recently have we opened this up to a select few of the general public, due to the fact most don't understand the process (which is where I come in educating the investors)

Yes, there are others that do this but few if any can show proven results.

There are minimum investment amounts.

We use 3rd party for all provisioning, and accounting (nationally known leaders in their industry)

Each pool is done within a SPV (special purpose vehicle) & (LLC) for transparency and provisioning

Best short term ROI in the country, full transparency (unlike Madeoff)

PM me for details and non-circumvent etc.

All of our principals including myself put our own scratch into every deal (why wouldn't we )

I hope you are just posting this as a joke.

If you are serious with your post and are looking for suckers to rip off with a scam, I think you need to take that someplace other than this forum.

[jyl]

Originally Posted by lukeh

NON traded REITs that invest in class A office space (no strip malls, vacation property...) . I have three of these and they pay 6, 6.5 and 7.5. There are also bond funds out there that are paying 7%. She can take the interest without having to sell any shares. Sure, the share price will move up and down (I'd say up over the long haul) but as long as it's the income she is after the fluctuation in the share price is meaningless. You can get 7% without having to look to the stock market or taking on an extreme amount of risk.

I wouldn't say fluctuation in the share price is meaningless.

Commercial buildings, even Class A office space, are declining in value. So, while the REIT is still paying out 6%, the underlying asset value is falling. The decline is masked because the REIT is not traded, but it is happening.

How much of a decline? Well, one can use publicly traded office REITs as a start. SLG has fallen from $150 to $20, BXP from $120 to $40, etc. These are certainly larger declines than the actual values of the properties - much of the decline represents the REIT's diminished future growth and the risk to future payouts. But the non-traded REITs are surely declining in value too.

But what about that steady 6% income? Well, you give $1MM and ask me to pay you 6%/yr, no problem - I can do that for a long time, as long as you don't mind me taking the money from your principal . . .

Eventually, if demand/supply for office space becomes weak enough, and the rents generated by those offices decline enough, the REIT will not be able to maintain the 6% income stream. Then the decline in asset value will be sadly evident.

I think before investing in a office REIT, traded or non-traded, you need to have a strong and analyzed view on the path of office building values. There is no free lunch.