Congrats to my boy Lee(aka poker phenom Bill Ivey) who got 5th place the other day out of 6,025 players in WCOOP event #5, taking home $96,701.25. I honestly think we have the sickest collection of poker players in Tucson than other place. myself, bill ivey, mynameishov, gman06, biliards, etc...
One crazy story I forgot to mention from a month or so back. So Brett(mynameishov) and I are chillin in our room our last night at Turning Stone. We decided to go for the 6 max tourney that was goin on. So anyways, we're just hangin out, and I get a text from someone I recently talked to online. He's a good tourney player, and was trying to learn short handed nl cash games. I told him to swing by our room to meet up. So, we chat for a bit, and he asks if I can sweat him. I say sure, and he goes and gets his laptop. He loads up a bunch of tables and I try and teach him some tricks of the trade for 6 max nl. He does pretty well, and seems to have a decent grasp for the most part. Brett(who passed out while we were doing the session) asked me the next morning if I thought he was going to be able to make the transition to 6 max nl, and I said that I thought he definitely could. Fast forward 24 hours. I'm at home at upstate NY, and looking through some online tournies. Turns out, the next night, there had been a huge 6 max nl tournament. He ended up winning the whole thing for $200,000. haha. how sick is that?
Monday, September 24, 2007
Sunday, September 23, 2007
Poker Updates
Haven't updated much poker in a long time. I'm still grinding away at 2/4nl, with a little 3/6nl and 5/10nl once in a while.
The 64 man HU tourney I ended up losing in the 3rd round to the worst player I had played yet, so that kinda sucked. He was gloating after winning hands, etc... He ran hot and played poorly, but winning confuses some people into thinking they are playing well. This is why poker will ALWAYS be profitable no matter what.
I played in the WCOOP(world championshop of online poker) event Friday. It was the HU event. I think I played pretty well for the most part. I was happy with my play. Some people ask me to include some strategy in my blog so they can see some of my thought process. Here is one hand people might find interesting:
PokerStars Game #12189581795: Tournament #70000010, $300+$20 Hold'em No Limit - Match Round II, Level II (100/200) - 2007/09/21 - 17:18:42 (ET)
Table '70000010 249' 2-max Seat #2 is the button
Seat 1: snowbank (16054 in chips)
Seat 2: BREAKURFACE (23946 in chips)
BREAKURFACE: posts small blind 100
snowbank: posts big blind 200
*** HOLE CARDS ***
Dealt to snowbank [As 7h]
BREAKURFACE: raises 288 to 488
snowbank: calls 288
*** FLOP *** [Jd 7s 3c]
snowbank: checks
BREAKURFACE: bets 538
snowbank: raises 906 to 1444
BREAKURFACE: calls 906
*** TURN *** [Jd 7s 3c] [Qd]
snowbank: checks
BREAKURFACE: bets 1946
snowbank: raises 3053 to 4999
BREAKURFACE: folds
snowbank collected 7756 from pot
snowbank: doesn't show hand
*** SUMMARY ***
Total pot 7756 | Rake 0
Board [Jd 7s 3c Qd]
Seat 1: snowbank (big blind) collected (7756)
Seat 2: BREAKURFACE (button) (small blind) folded on the Turn
The player seemed like he knew what he was doing. I have never heard of him before, but seemed solid enough. (he was stalling every hand though, kinda weird. not sure if he wanted blinds to increase so it could turn into a variance fest or what. that kind of made me seem like he might not be that good of a player, but that was my only read on him- had nothing else to go on) Anyways, for the hand: He raises pre-flop, and I call with A7o. I hit 2nd pair on the flop. I check and let him cbet, and then I raise. He calls on a board that isn't extremely draw heavy. The turn is a Q. There are no draws that could have hit. I check, and he bets again. I go for the double check raise, essentially changing my hand from what may have been the best hand, into a bluff. My analysis was that he would not be betting the turn there with many hands better than mine, since he will often want to get to a cheap showdown if he has 88, 99, TT, or a J. It looks to me like he is betting the Q as a scare card to the flop of J high where I show weakness by checking the turn, making him think I might be giving up and a bet will take the pot away from me. By raising him here, I think he will probably only be able to bet this turn, and call a raise with JQ. All other hands fold for the most part. A set is the only other hand that should continue.
A little bit later this hand went down:
PokerStars Game #12190006816: Tournament #70000010, $300+$20 Hold'em No Limit - Match Round II, Level IV (300/600) - 2007/09/21 - 17:42:21 (ET)
Table '70000010 249' 2-max Seat #2 is the button
Seat 1: snowbank (21794 in chips)
Seat 2: BREAKURFACE (18206 in chips)
BREAKURFACE: posts small blind 300
snowbank: posts big blind 600
*** HOLE CARDS ***
Dealt to snowbank [8s 5s]
BREAKURFACE: raises 872 to 1472
snowbank: calls 872
*** FLOP *** [5c Qd 8c]
snowbank: checks
BREAKURFACE: bets 2042
snowbank: raises 18280 to 20322 and is all-in
BREAKURFACE: calls 14692 and is all-in
*** TURN *** [5c Qd 8c] [Jc]
*** RIVER *** [5c Qd 8c Jc] [Jd]
*** SHOW DOWN ***
snowbank: shows [8s 5s] (two pair, Jacks and Eights)
BREAKURFACE: shows [Kc Ks] (two pair, Kings and Jacks)
BREAKURFACE collected 36412 from pot
*** SUMMARY ***
Total pot 36412 | Rake 0
Board [5c Qd 8c Jc Jd]
Seat 1: snowbank (big blind) showed [8s 5s] and lost with two pair, Jacks and Eights
Seat 2: BREAKURFACE (button) (small blind) showed [Kc Ks] and won (36412) with two pair, Kings and Jacks
This hand obviously pretty much crippled me, and a few minutes later I was out. Ahh well. Tournaments= life tilt
So, I was out in the 2nd round, in 610th place out of 1,886 people. On the bright side, I did finish higher than new PokerStars posterboy RaiNKhaN. He got 1,886th.
I rarely play tournies, just kind of do it for a change of pace once in a while to have fun. I did have a good result a few weeks ago in one that I played. I ended up getting 3rd in a 6 max tourney and it paid like $4.7k or something like that. Small payout for that high of a finish, but was a pretty small field of only like 350 people or something, so I was happy.
One update that I told one of my students I would do was from this post(last paragraph):
http://snowbank23.blogspot.com/2007/06/move-up-to-big-games.html
I forgot to update how he ended up doing for the month. He ended up making $13,000 for the month, which was impressive, more than doubling his previous best month. He put in a lot of effort and has become a very good player. Congrats again.
As far as how I'm doing in my games, I'm still doing well, just pretty much grinding when I can. I'll update more tomorrow.
The 64 man HU tourney I ended up losing in the 3rd round to the worst player I had played yet, so that kinda sucked. He was gloating after winning hands, etc... He ran hot and played poorly, but winning confuses some people into thinking they are playing well. This is why poker will ALWAYS be profitable no matter what.
I played in the WCOOP(world championshop of online poker) event Friday. It was the HU event. I think I played pretty well for the most part. I was happy with my play. Some people ask me to include some strategy in my blog so they can see some of my thought process. Here is one hand people might find interesting:
PokerStars Game #12189581795: Tournament #70000010, $300+$20 Hold'em No Limit - Match Round II, Level II (100/200) - 2007/09/21 - 17:18:42 (ET)
Table '70000010 249' 2-max Seat #2 is the button
Seat 1: snowbank (16054 in chips)
Seat 2: BREAKURFACE (23946 in chips)
BREAKURFACE: posts small blind 100
snowbank: posts big blind 200
*** HOLE CARDS ***
Dealt to snowbank [As 7h]
BREAKURFACE: raises 288 to 488
snowbank: calls 288
*** FLOP *** [Jd 7s 3c]
snowbank: checks
BREAKURFACE: bets 538
snowbank: raises 906 to 1444
BREAKURFACE: calls 906
*** TURN *** [Jd 7s 3c] [Qd]
snowbank: checks
BREAKURFACE: bets 1946
snowbank: raises 3053 to 4999
BREAKURFACE: folds
snowbank collected 7756 from pot
snowbank: doesn't show hand
*** SUMMARY ***
Total pot 7756 | Rake 0
Board [Jd 7s 3c Qd]
Seat 1: snowbank (big blind) collected (7756)
Seat 2: BREAKURFACE (button) (small blind) folded on the Turn
The player seemed like he knew what he was doing. I have never heard of him before, but seemed solid enough. (he was stalling every hand though, kinda weird. not sure if he wanted blinds to increase so it could turn into a variance fest or what. that kind of made me seem like he might not be that good of a player, but that was my only read on him- had nothing else to go on) Anyways, for the hand: He raises pre-flop, and I call with A7o. I hit 2nd pair on the flop. I check and let him cbet, and then I raise. He calls on a board that isn't extremely draw heavy. The turn is a Q. There are no draws that could have hit. I check, and he bets again. I go for the double check raise, essentially changing my hand from what may have been the best hand, into a bluff. My analysis was that he would not be betting the turn there with many hands better than mine, since he will often want to get to a cheap showdown if he has 88, 99, TT, or a J. It looks to me like he is betting the Q as a scare card to the flop of J high where I show weakness by checking the turn, making him think I might be giving up and a bet will take the pot away from me. By raising him here, I think he will probably only be able to bet this turn, and call a raise with JQ. All other hands fold for the most part. A set is the only other hand that should continue.
A little bit later this hand went down:
PokerStars Game #12190006816: Tournament #70000010, $300+$20 Hold'em No Limit - Match Round II, Level IV (300/600) - 2007/09/21 - 17:42:21 (ET)
Table '70000010 249' 2-max Seat #2 is the button
Seat 1: snowbank (21794 in chips)
Seat 2: BREAKURFACE (18206 in chips)
BREAKURFACE: posts small blind 300
snowbank: posts big blind 600
*** HOLE CARDS ***
Dealt to snowbank [8s 5s]
BREAKURFACE: raises 872 to 1472
snowbank: calls 872
*** FLOP *** [5c Qd 8c]
snowbank: checks
BREAKURFACE: bets 2042
snowbank: raises 18280 to 20322 and is all-in
BREAKURFACE: calls 14692 and is all-in
*** TURN *** [5c Qd 8c] [Jc]
*** RIVER *** [5c Qd 8c Jc] [Jd]
*** SHOW DOWN ***
snowbank: shows [8s 5s] (two pair, Jacks and Eights)
BREAKURFACE: shows [Kc Ks] (two pair, Kings and Jacks)
BREAKURFACE collected 36412 from pot
*** SUMMARY ***
Total pot 36412 | Rake 0
Board [5c Qd 8c Jc Jd]
Seat 1: snowbank (big blind) showed [8s 5s] and lost with two pair, Jacks and Eights
Seat 2: BREAKURFACE (button) (small blind) showed [Kc Ks] and won (36412) with two pair, Kings and Jacks
This hand obviously pretty much crippled me, and a few minutes later I was out. Ahh well. Tournaments= life tilt
So, I was out in the 2nd round, in 610th place out of 1,886 people. On the bright side, I did finish higher than new PokerStars posterboy RaiNKhaN. He got 1,886th.
I rarely play tournies, just kind of do it for a change of pace once in a while to have fun. I did have a good result a few weeks ago in one that I played. I ended up getting 3rd in a 6 max tourney and it paid like $4.7k or something like that. Small payout for that high of a finish, but was a pretty small field of only like 350 people or something, so I was happy.
One update that I told one of my students I would do was from this post(last paragraph):
http://snowbank23.blogspot.com/2007/06/move-up-to-big-games.html
I forgot to update how he ended up doing for the month. He ended up making $13,000 for the month, which was impressive, more than doubling his previous best month. He put in a lot of effort and has become a very good player. Congrats again.
As far as how I'm doing in my games, I'm still doing well, just pretty much grinding when I can. I'll update more tomorrow.
Friday, September 21, 2007
Tay Zonday is the man
my favorite song:
http://youtube.com/watch?v=9mSKBgvHdoE
here's the one that made him famous:
http://youtube.com/watch?v=EwTZ2xpQwpA&mode=related&search=
Nothin like a lil' Tay Zonday to get me ready for a poker session
http://youtube.com/watch?v=9mSKBgvHdoE
here's the one that made him famous:
http://youtube.com/watch?v=EwTZ2xpQwpA&mode=related&search=
Nothin like a lil' Tay Zonday to get me ready for a poker session
Thursday, September 20, 2007
Trading > Poker? We'll see
Been a couple weeks since I updated cause I've been crazy busy. Been playing a lot of poker. Also been looking at ways to make more money. I've been doing a bunch of research into trading. I've talked to a lot of different people in the last couple weeks about it. A few weeks ago I was a total newb at trading, I literally knew almost nothing. Now, I still know pretty much nothing, but I know which area I'm going to focus on learning. I basically spent a couple weeks reading things in my spare time and talking to people who traded to find out what I should look into trading if I was going to try and learn it.
A lot of people when they hear "trading", they assume throwing money in the stock market and trying to make 10% or whatever. That's definitely not what I'm doing. I'm trying to make MONEY. What I'll be doing is daytrading, where the profits can be pretty insane. Probably the first thing that comes to people's minds is that I'm going to go broke, because most people do who attempt to daytrade. That's because they don't learn how to play the game. It has a lot of similarities to poker, in that only about 5% win, and a lot of people lose their shirts. The big difference in trading, in comparison to poker is that in poker your earning potential is essentially capped out at some point. I mean, you can always make a bit more in poker with a little more work, but very few people are making 7 figures/year at poker, where a lot of good traders are making that type of money. In poker, as you move up in stakes, you play against tougher competition, so although you are wagering more money, your EV(expected value) per buy in is lower since the game is harder. In trading, your competition doesn't change. The game doesn't get harder, so your EV stays the same, you just wager more money and return more profits at the same rate you were when wagering less.
Many people also think poker players make good traders, because psychologically they aren't effected by the money on the line, and they are used to making split second decisions under pressure. To us I think it would just be a game we're trying to win, and we wouldn't sweat the money involved, because we also have bankroll management skills from poker.
I'm not even going to actually trade for money for at least a few months. I plan on studying for at least a month or so, and then simtrading for another month or so to see how I'm doing, and evaluate what I'm doing right and wrong. Then when I feel I have a definite edge I'll throw some money in an account and start trading.
Money wise I think it'd be great if I ended up doing well trading. It'll take a lot of work to get there, but if I do get there, it will have been well worth it. There's obviously a lot more money in trading than poker. Don't get me wrong, the money is great in poker, and I love to play, but I also like a challenge and I like $5 better than $1, so I'm going to give it a try.
I'm currently studying the trading method I'll be using with someone here in Arizona who is seriously a genius with this stuff. He's the one who introduced me to this method and thinks it's the most similar trading type to poker. He even put me in touch with a guy who is pretty well known using this method and making ridiculous amounts of money doing it, so I gave him a call last week and got a chance to pick his brain a bit. Let's just say there is MONEY to be made. I'll talk more about it when I learn more, and get some practice.
A lot of people when they hear "trading", they assume throwing money in the stock market and trying to make 10% or whatever. That's definitely not what I'm doing. I'm trying to make MONEY. What I'll be doing is daytrading, where the profits can be pretty insane. Probably the first thing that comes to people's minds is that I'm going to go broke, because most people do who attempt to daytrade. That's because they don't learn how to play the game. It has a lot of similarities to poker, in that only about 5% win, and a lot of people lose their shirts. The big difference in trading, in comparison to poker is that in poker your earning potential is essentially capped out at some point. I mean, you can always make a bit more in poker with a little more work, but very few people are making 7 figures/year at poker, where a lot of good traders are making that type of money. In poker, as you move up in stakes, you play against tougher competition, so although you are wagering more money, your EV(expected value) per buy in is lower since the game is harder. In trading, your competition doesn't change. The game doesn't get harder, so your EV stays the same, you just wager more money and return more profits at the same rate you were when wagering less.
Many people also think poker players make good traders, because psychologically they aren't effected by the money on the line, and they are used to making split second decisions under pressure. To us I think it would just be a game we're trying to win, and we wouldn't sweat the money involved, because we also have bankroll management skills from poker.
I'm not even going to actually trade for money for at least a few months. I plan on studying for at least a month or so, and then simtrading for another month or so to see how I'm doing, and evaluate what I'm doing right and wrong. Then when I feel I have a definite edge I'll throw some money in an account and start trading.
Money wise I think it'd be great if I ended up doing well trading. It'll take a lot of work to get there, but if I do get there, it will have been well worth it. There's obviously a lot more money in trading than poker. Don't get me wrong, the money is great in poker, and I love to play, but I also like a challenge and I like $5 better than $1, so I'm going to give it a try.
I'm currently studying the trading method I'll be using with someone here in Arizona who is seriously a genius with this stuff. He's the one who introduced me to this method and thinks it's the most similar trading type to poker. He even put me in touch with a guy who is pretty well known using this method and making ridiculous amounts of money doing it, so I gave him a call last week and got a chance to pick his brain a bit. Let's just say there is MONEY to be made. I'll talk more about it when I learn more, and get some practice.
Friday, September 7, 2007
LA Trip
The trip to Los Angeles was good. Got a direct flight from NJ; sooooooooo much better than saving a few bucks and having to stop/take longer for the trip. Time is money, so from now on I'll be doing that every time that I can. Real life money is so much different than poker money( mindsets with them), and always trying to save money, but when you break it down to save $100 or less to spend another few hours flying/waiting in airports, etc... is not worth it at all.
My flight got in Thursday evening and 2 guys from the casino picked me up in a Lincoln Town Car. So comfortable/relaxing taking a ride in that after a long flight, rather than a smelly small cab. When I'm rich, if I ever don't want to drive as much I may hire a driver and buy one of those for them to drive me around in.
I checked into the hotel, and went up to the room. The hotel was real nice. The hotel at the casino was all sold out when I went to book the week before so we got a place a couple blocks away. Brett's plane didn't get in for a few hours, and I was beat so I just chilled in the room and watched a movie until he got in. When he got there we walked around looking for something to eat since the places in the hotel were closed by then. We tried walking thru a Carl's Jr. but they wouldn't take our order, so I walked up to a guy's car about to drive through and asked if he'd order for us. He said he would. We stood next to his car and waited for him to finish his order before telling him ours. Dude was a beast so he ordered like 8 things. Me and Brett ordered, and we walked up to the window next to his car. The guy started talking to us and Brett didn't understand what he was saying.(he was Mexican so talked with a bit of an accent.) Brett says, "no comprende senor. no hablo espanol." haha. I told Brett he was speaking english. Luckily the guy was cool and didn't kill us on the spot.
We pretty much just ate and crashed that night since we were both tired. Friday and Saturday we grinded the 10/20nl games. One hand that I remember, I was on Brett's left. He had the button, and raised to $60. I made it $220 from the sb with KQ. He calls. Flop is Q-9-T, 2 clubs. I bet $350. Brett makes it $1,000. He has about $2,000 behind, and I cover. Such a crappy spot since I know his range is huge here, and he will be semi-bluffing a HUGE portion of the time. However, the rest of the time he will have me crushed here and to guess where I'm at for $3,000 didn't seem like a great idea. I fold, and he shows me 9-7. :( That was really the only hand with Brett that anything much happened. No sense messing with eachother a ton when we can wait for home games. Like they say in Rounders, "We're not playing together, but we're not playing against each other, either. It's like the Nature Channel. You don't see piranhas eating each other, do you?"
Brett left Saturday night to go see a friend who lived near there before his flight in the morning. I stuck around and grinded. A lot of actors/professional athletes were out. James Woods plays like every minute it seems. Every time I walked in it seemed like he was playing, and every time I left he was still playing. He plays a TON of poker. He's like 60 years old, and had a good looking model type girlfriend he made out with lots who was maybe 25.(note to self: get rich and famous) I was sitting next to former NBA player Jack Haley, and another former NBA player, Chris Mills was sitting behind me. Other NFL/NHL guys were there as well. Bunch of well known poker pros there- Chad Brown, Vanessa Russo, Men the Master, Cindy Violette, Tuan Le, Barry Greenstein, Mimi Tran and a few others. Eskimo Clark was walking/sitting around all weekend, looking for a stake or something.
Funny story I just found out about Tuan Le: He went to Foxwoods Casino and played the main event of a big tournament there in 2004. He won the tournament for $1.55 million. He didn't have a bank account at the time, so he took his winnings in cash, bought a duffle bag at the gift shop and caught the next flight out.
When Jack Haley was sitting next to me, the guy next to him was an NHL player, so they were exchanging some stories. One cool story Jack mentioned was that when he started playing poker about 2 and a half years ago he was there during a tournament and wanted to rent a room out. The rooms were all sold out, but they did have one room, a presidential suite available. Jack said he'd take it.(I dunno what that costs, but I'm sure it's ridiculously high.) Anyways, he liked it so much he never checked out, and is still checked in over 2 1/2 years later, using it as his poker pad.
Sunday I played for a few hours before my flight. I forgot to set up a ride to the airport. I called the floorman over to the table I was playing at. I asked if he could arrange a ride for me. He said he'd see what he could do and went and made a call. A few minutes later he came back over to the table and said I'd have a limo waiting outside for me at 5. Beautiful!
We had to drop off two ladies in Beverly Hills on the way to the airport. The limo driver was telling me that the one lady basically owned Santa Monica. She was ridiculously wealthy. We dropped her and her friend off in a sick neighborhood that you could tell costs crazy money to live there. Makes me want to get filthy rich. She asked what I did and I told her I played poker for a living. She told me no one can win at gambling and I should quit before my luck runs out. :)
My flight got in Thursday evening and 2 guys from the casino picked me up in a Lincoln Town Car. So comfortable/relaxing taking a ride in that after a long flight, rather than a smelly small cab. When I'm rich, if I ever don't want to drive as much I may hire a driver and buy one of those for them to drive me around in.
I checked into the hotel, and went up to the room. The hotel was real nice. The hotel at the casino was all sold out when I went to book the week before so we got a place a couple blocks away. Brett's plane didn't get in for a few hours, and I was beat so I just chilled in the room and watched a movie until he got in. When he got there we walked around looking for something to eat since the places in the hotel were closed by then. We tried walking thru a Carl's Jr. but they wouldn't take our order, so I walked up to a guy's car about to drive through and asked if he'd order for us. He said he would. We stood next to his car and waited for him to finish his order before telling him ours. Dude was a beast so he ordered like 8 things. Me and Brett ordered, and we walked up to the window next to his car. The guy started talking to us and Brett didn't understand what he was saying.(he was Mexican so talked with a bit of an accent.) Brett says, "no comprende senor. no hablo espanol." haha. I told Brett he was speaking english. Luckily the guy was cool and didn't kill us on the spot.
We pretty much just ate and crashed that night since we were both tired. Friday and Saturday we grinded the 10/20nl games. One hand that I remember, I was on Brett's left. He had the button, and raised to $60. I made it $220 from the sb with KQ. He calls. Flop is Q-9-T, 2 clubs. I bet $350. Brett makes it $1,000. He has about $2,000 behind, and I cover. Such a crappy spot since I know his range is huge here, and he will be semi-bluffing a HUGE portion of the time. However, the rest of the time he will have me crushed here and to guess where I'm at for $3,000 didn't seem like a great idea. I fold, and he shows me 9-7. :( That was really the only hand with Brett that anything much happened. No sense messing with eachother a ton when we can wait for home games. Like they say in Rounders, "We're not playing together, but we're not playing against each other, either. It's like the Nature Channel. You don't see piranhas eating each other, do you?"
Brett left Saturday night to go see a friend who lived near there before his flight in the morning. I stuck around and grinded. A lot of actors/professional athletes were out. James Woods plays like every minute it seems. Every time I walked in it seemed like he was playing, and every time I left he was still playing. He plays a TON of poker. He's like 60 years old, and had a good looking model type girlfriend he made out with lots who was maybe 25.(note to self: get rich and famous) I was sitting next to former NBA player Jack Haley, and another former NBA player, Chris Mills was sitting behind me. Other NFL/NHL guys were there as well. Bunch of well known poker pros there- Chad Brown, Vanessa Russo, Men the Master, Cindy Violette, Tuan Le, Barry Greenstein, Mimi Tran and a few others. Eskimo Clark was walking/sitting around all weekend, looking for a stake or something.
Funny story I just found out about Tuan Le: He went to Foxwoods Casino and played the main event of a big tournament there in 2004. He won the tournament for $1.55 million. He didn't have a bank account at the time, so he took his winnings in cash, bought a duffle bag at the gift shop and caught the next flight out.
When Jack Haley was sitting next to me, the guy next to him was an NHL player, so they were exchanging some stories. One cool story Jack mentioned was that when he started playing poker about 2 and a half years ago he was there during a tournament and wanted to rent a room out. The rooms were all sold out, but they did have one room, a presidential suite available. Jack said he'd take it.(I dunno what that costs, but I'm sure it's ridiculously high.) Anyways, he liked it so much he never checked out, and is still checked in over 2 1/2 years later, using it as his poker pad.
Sunday I played for a few hours before my flight. I forgot to set up a ride to the airport. I called the floorman over to the table I was playing at. I asked if he could arrange a ride for me. He said he'd see what he could do and went and made a call. A few minutes later he came back over to the table and said I'd have a limo waiting outside for me at 5. Beautiful!
We had to drop off two ladies in Beverly Hills on the way to the airport. The limo driver was telling me that the one lady basically owned Santa Monica. She was ridiculously wealthy. We dropped her and her friend off in a sick neighborhood that you could tell costs crazy money to live there. Makes me want to get filthy rich. She asked what I did and I told her I played poker for a living. She told me no one can win at gambling and I should quit before my luck runs out. :)
Thursday, August 30, 2007
Going to Los Angeles
Packing for LA right now. Heading out there for a few days with Brett(mynameishov) to play some cash games and party. After LA I head back out to Arizona(I'm in NJ right now.) Supposedly the Commerce will send a limo to pick you up from the airport if you're playing high stakes, so I'm going to call them to see if I can have them do that so that I won't have to pay lots for a cab through LA.
Haven't updated in a while, but will update soon as I get back.
The investing post I made yesterday was written a while back(6 months or so?) but I re-read it and seems to have good info for beginning investors if you wanna check it out. Have heard it was helpful for a bunch of people.
Haven't updated in a while, but will update soon as I get back.
The investing post I made yesterday was written a while back(6 months or so?) but I re-read it and seems to have good info for beginning investors if you wanna check it out. Have heard it was helpful for a bunch of people.
Wednesday, August 29, 2007
Investing info for beginners
I wrote this a while back for some poker players who didn't really know much about investing, so this post is really basic/simple, and geared towards beginners. Thought it might be helpful to some people starting out or who haven't started investing yet:
I’m going to gear this post towards “small stakes” investing. I’ll talk about pretty basic things for the most part, but will hopefully open up new ways of thinking for investing for some of you. I know that some of you are probably making good money, and maybe don’t have any idea about investing. I’m not an expert by any means, but have read/experienced a decent amount with investing. I’ve also networked with quite a few investors, and tried to learn from/with them. I wouldn’t recommend one certain type of investment to any one person; basically invest in what’s best for you, and what your goals are. There are obviously some investments where you can make a lot of money(real estate, businesses, etc...), but may have to put some work in to make it a successful investment(active investing), and some that you won’t make a lot of money(savings accounts, bonds), but you also won’t have to do anything, and your money will grow by itself(passive investing), allowing you to do other things with your time.
First when investing, you need to decide what type of investing you want to do. Do you want to actively invest, putting in a little work to make your money grow, or do you want to passively invest, sitting back and watching your money grow without having to manage your investment at all. That’s something you definitely need to think about before you decide to jump in.
The ultimate goal for investors for the most part is to become a passive investor. The reason I say that is, because you can’t really retire if all you do is actively invest. When your passive income exceeds your expenses, you can retire if you wanted to. Many people’s incomes come from jobs, and they invest what’s left over passively, and they retire when they are old. Pretty standard for the most part. A number of people here will have the opportunity to retire pretty young if they invest wisely starting now.
Let’s talk about some of the different types of investing. You can obviously put your poker earnings in the bank, and maybe get around a 4% return on them.(note: rough figure, don’t know the current rate, just using it as an example.) The return you will get from your bank will be very low in comparison to other investments you could make. This is an investment that will not lose money. It’s insured and safe, but you aren’t going to make very much of a return. Another investment along the same path is cds. The rates will be a little higher, the difference is you may have them for a certain length of time(6 months, 12 months, 2 years, etc...) Your return will be a little higher than your bank, maybe around 5.5%.(again, rough number, as I haven’t looked at the current rates) You can invest in stocks. You can probably expect your return in stocks to be higher than either of the previous options. You might expect returns to be 8-10%.(again, estimate, not exact number) With the stock market, the big difference between this and a savings account or bonds, is that the return is not fixed. So you could have an annual return of 20% or more one year, but you could also potentially lose money. Also, you may have fees if you use a broker. I wouldn’t advise picking your own stocks. It may not be worth it to use a broker though, as they will charge you fees for using them, and 95% of them won’t be making you any more money than you could make yourself just putting it in a Vanguard or something along those lines. There is a joke that they are called stock”brokers”, because they are broker than you are. If they could really make a lot of money trading, they would probably not be a stockbroker.(note: to any stock brokers reading, please don’t take offense, not talking about all stockbrokers) Mutual funds are another option. They are a longer term investment for the most part, and diversified to reduce risk.
On to some active investments. These investments will produce higher returns if done correctly, but will have more risk. Kind of like poker. If you play small stakes you know what type of money you will make, and for a lot of you it won’t be very risky. If you try some higher stakes to make a lot more money, you may lose, but the potential for greater returns are there.
One active investment is obviously starting your own business. If you start a business, and it becomes successful, you can definitely make a lot of money. You could do this on a small scale, maybe just buying and selling things for profits, or on a much larger scale. There’s a million different types of businesses you could start, so I won’t get into all of that. If you do start a successful company, and decide you would like to do something else, but still want to keep the business, you could always hire someone to run your business, turning it into a more passive investment. Many of you are going to school and playing poker, or working and playing poker, so could take a good amount of time to build a big business from scratch also. Internet businesses are often a good way to get started, often using a lot less money to get started, and instead using your own personal time as your main investment to build your business.
The next investment I’ll talk about is easily the topic I can talk most about: Real Estate. Like having your own businesses, you can make a LOT of money in real estate. Along with the ability to make a lot of money in real estate, you can also lose money if you make mistakes.(done that too) Many of the other topics(savings accounts, stocks, bonds, etc....) people at least know a bit about. Real estate is one aspect I don’t think a lot of people here know about. It’s something you can build your money with a lot faster than most of the other investments, but is a lot “scarier” to get involved with since a lot of people don’t know much about it. I’ll give a lot of examples to explain some of the different types of investing in real estate. In real estate you can invest actively or passively.(note: even passively, like business, doesn’t mean you will never have to do anything. You still want to know what’s going on with your properties even if you are investing passively) Active investing is often referred to as investing in properties to fix and flip, etc... You buy a property for $100k, hire contractors to fix it up for $20k, and sell for $150k, and make a little money.(note: you wouldn’t make $30k on this deal, because there are a lot of other expenses involved- taxes, realtors fees, closing costs, insurance, title, holding costs etc...) “Flipping” as it’s often referred to is getting a lot harder to do these days. You can still find deals to make money from like this, but it’s definitely not easy to do like it was 5-10 years ago. This is often what people do to build capital in real estate. That was my original plan, to flip a few houses, and then invest the profits into an apartment building for passive income, and then repeat. I have since changed my plan a bit, since I have different financial goals, and different ways I want to do things.
One thing that can happen during a flip, is it can take longer than you initially thought, and the market can change. I was lucky enough to run into both of these things on a house I bought late last year that I intended to flip.
I bought the property for $240k. The guest house was completely gutted. I planned on putting about $15k into doing the guesthouse. After talking to a handful of realtors, and reviewing comps, I thought I could sell after it was completed for about $300k. After all expenses, holding costs, and realtor fees($18k), I hoped I could make $15-20k. Well, the fix-up took a little longer than I had hoped, and the market softened a little bit more since I bought the property. With the increased holding costs, and the lower sales price I would sell at, I would barely make anything at all if I decided to flip it. If I was lucky I would have made $5k. Maybe I would have made nothing. I decided to hold the property and rent it out since it’d be around breakeven cashflow. I’ll probably hold the property for a couple years, and sell it once the market picks up again. So despite this example of what turned out to be a not so great flip, it will not turn out to be a bad deal at all for me since I bought right. The tenants will be paying my mortgage for me on the property, while slowly paying down some of it, and I’ll get tax benefits worth a few thousand dollars each year. Also, since I’m in no rush to sell it, when I do decide it might be a decent time to sell it a couple years down the road, I can talk with some other investors, or advertise to homeowners myself and save around $20k on realtors fees. So if the house appreciates some over the next couple years, some of the mortgage is paid down, etc... I could make a good profit(maybe $30-$50k if I sell without a realtor+ all tax benefits I receive while I own it that save poker profits come tax time) without a whole lot of work on my end.(note: not exactly passive, because it can be a pain to rent it out if doing it yourself)
Another property that I bought late last year, would have been a great flip, even though the market was slow. I got a great deal in a nice neighborhood. I used a “bird dog” to find this property.(Think poker tracker for real estate investors)- not really but kind of. A bird dog is someone who finds good deals, but isn’t going to invest in the deal themselves for whatever reason.(maybe not enough money, not enough time, etc...) The bird dog I used had too many deals going on at the time, and didn’t live in the area, so threw me the deal. If I closed, I paid him $1,000 for the lead. Well, did my homework on the deal, turned out to be a steal, so closed it right away.(actually drove 2 hours in the middle of the night to meet the owner to sign a contract with her before someone else got it, then 2 hours home- soooo worth it) After some expert negotiating, I bought the house for $170k. I thought the house was worth about $215k. It only needed about $5k worth of work, if that. Real simple stuff, that could have been finished in a week or so without much trouble. After the $1k I paid the bird dog, realtor fees,etc...I could have easily made $10-$20k, in a couple weeks time. Well, I liked the neighborhood so much I decided to move in. So decided against flipping it for the time being, but will realize the profits when move out and decide to sell.(note: might not be actual “profits” left when I move out, since I’ll be paying my mortage while living in the house, and not having renters pay my holding costs for me. Depends what the market does)- but I need to live somewhere, so it’s all good.
I’m currently talking with an investor I know about partnering on a deal that would be on a much larger scale than the two I mentioned, and we could potentially be looking at making 7 figures on that one deal.(obviously no guarantee, we’re just starting to look at everything involved with it) It would take a couple years to complete, but could be well worth it.(it would be a deal where we are adding value to some commercial property) The possibilities are really endless with real estate. I’ve obviously only invested in smaller deals up to this point, but once you learn, and are comfortable with the risks involved, there are much bigger deals out there, and much more money to be made if you find real estate is something that you like.
Anyways, enough about some of the deals I’ve invested in, just wanted to give some real life examples, good and bad. Here are some things you might not know about real estate. It’s not as hard to get into as you might think. You don’t have to buy a property cash. You can put a certain % down, and you take out a mortgage on the rest. This is a HUGE factor to consider when investing in real estate. This is why this is one of the main investments I choose to try and get ahead financially, because of the power of leverage. The reason is if you buy a $200k property, you don’t need $200k to invest in it, you can leverage your money and buy more properties. Let me give you an example:
Let’s say John buys a house for $200k. He’s a baller so he pays straight up cash for this place. He rents it out for $1500/month. Tenants pay all utilities. John’s taxes are around $100 per month, making his total cashflow $1,400 per month, since he doesn’t have a mortgage. John holds the property for 5 years. The property appreciates roughly 5% each year that John owns the property. John finds some very high stakes poker games that he wants to play, and decides he wants to have a good bankroll behind him, so he decides he wants to sell his house. He could just take a home equity line out on the property, but decides he just wants to sell it, since his long term tenants are moving out in a couple months after their lease ends.
John’s investment:
$200k invested
$1300/month= $16,800 per year cashflow
X 5 years= $84,000
appreciation: roughly $50,000
John sells his house for $250,000
Average profit per year: $26,800
He made around a 67% return after 5 years
Roughly 13.4% per year on his investment.
He profited $134,000 from the deal.
Tay also decides to invest some of his poker earnings. He has $200k to invest as well. He decides he wants to buy multiple properties though. Tay decides to invest in the same neighborhood as his friend John. He works out a deal with an investor who is getting out of residential real estate, and sells Tay 10 houses. Tay puts 10% down on each of his properties. They are worth $200k each. So roughly $20k on each property he has invested. Each of the houses are rented out for $1,500. Tay has a mortgage on all of his properties, and pays $1,300/month. He also has taxes of $100/month, so he only cashflows around $100 per month. He has 10 properties though, so total he cashflows $1,000 per month. After 5 years, Tay decides it’s time to sell his houses and buy an apartment complex. Tay can sell his houses for $250k each, just like John.
Tay’s investment:
$200k invested
$100/month cashflow per property
X 10 properties= $1000/month cashflow
$12,000 per year cashflow on his houses
X 5 years= $60,000
appreciation per property: $50,000
total appreciation: $500,000
Average profit per year: $112,000
Return: 280% over 5 years
Tay made 56% per year on his investment
Total profit: $560,000
These are obviously just examples, but you can see how big of an impact using leverage to your advantage in real estate can be. Obviously there is a lot more included in deals like these(vacancies, something in one of your houses breaks, etc...) If someone wants an in depth example of how to break down a deal, based on vacancy rates, etc... I can do that. Just kind of winging this post, and it’s already pretty long so trying not to ramble about every detail and make it really long.
One other huge benefit in real estate is that you can roll over your profits into other deals and not pay taxes on them(1031 exchange.) Meaning in this example, if Tay decided to buy an apartment complex with the profits he made from these houses, he would not pay taxes on those profits. That’s another HUGE benefit to real estate. You can keep rolling over your profits and not paying taxes on them(LEGALLY.) This is the one of the main reasons, along with the ability to leverage, why real estate is one of the easiest, if not the easiest way to become rich. (I think something like 80% of millionaires in the United States made their money in real estate.) You do have to pay taxes if you do not re-invest your profits.
One case where you can keep the profits of appreciation, AND not have to re-invest is where you live in a property for 2 years.(actual law I think is 2 of the last 5 years) This is one of the reasons why owning is often much better than renting.(definitely exceptions though) When you rent, and decide to move out, you walk away with nothing. Maybe your security deposit back if you are lucky. Someone who helped me learn a lot of what I know in real estate actually uses this to his advantage big time. He buys a house, lives in it for a couple years, and sells it. While he’s living in it, he does things to increase it’s value so that when he sells he’ll be able to sell it for more than he paid, regardless of what the market does. He’s also been fortunate enough to own houses in areas that have done very well appreciation wise, so he’s sitting on a lot of extra money these days thanks to the ability to keep his profits from the houses he lives in tax free.
Couple other things I wanted to mention before I wrap up this post: Roth IRA- you guys should definitely look into this. You do need earned income to be eligible to invest here though.(so poker money doesn’t count) You can invest up to $4,000 a year, and the profits you make on the money from stocks/ mutual funds or whatever is tax free for LIFE(pretty much). Probably a good idea to look into for many of the guys who maybe have a little earned income from jobs at school, or whatever. Good thing to invest in for retirement. I broke the numbers down for my younger brother one day and figured his Roth IRA would be worth around $2 million by the time he was eligible to start withdrawing for retirement.(based on putting the max in each year: $4k, or a little more as you get older)- compound interest is HUGE. Definitely something to look into. There are also other types of IRA’s for people who are self-employed(poker players). Different types, but HUGE tax advantages, so worth checking out.
Hard money lending: another way to make money passively. You can lend to someone who needs money. Your money is tied to an investment(real estate, a business, a car, etc...) You just need to make sure whatever it is that it’s tied to is worth at least as much as your money, because if they default you get the property, business, or whatever it is that you get. I got an offer from some investors who were in need of capital for 37.5% annual. They needed $40,000, because all their money was tied up in other investments. They would give me $7,500 to use my money for 6 months. I turned it down because they were highly leveraged, and my investment would be tied to a highly leveraged property.
To wrap this up, there are a lot of different ways to invest. I talked most about real estate, because I know more about it than I do the other things, and there’s a lot more to expand about in that too, in comparison with the other things mentioned, especially since many people know a bit about some of the other stuff(stocks, bonds, etc...), and most of you that I’ve talked to didn't know as much about real estate. Real estate is my main investment choice right now, but when investing, choose what is right for you. Real estate might not be the best option for you. Maybe you want to start your own business. Maybe you want to just get some mutual funds and not worry about managing your investments too much. Maybe you are interested in doing something I didn’t mention.(day trading) There’s so many ways to invest. I think it’s important for people playing poker and maybe making a lot more money than other people their age, to think now about investments. You can get WAY ahead financially if you start now. Just because most of people don’t retire until their 50's or 60's doesn’t mean you can’t retire in your 20's or 30's. Hopefully I didn’t ramble too much throughout this post. Hopefully it was helpful for some people, and to the guys who haven’t invested, things like Roth IRAs, etc.. are definitely things to look into. To the guys who are looking to make money with their poker profits, hopefully this post at least gives you some ideas of some things you can do. I was pretty basic/general with things, couldn’t really go into tons of details on everything since this post would be way longer than it already is. If you want me to go into detail about something I said, just reply with what you want me to talk more about and I’ll do the best that I can. Hopefully some people can pick up some things from this post.
I’m going to gear this post towards “small stakes” investing. I’ll talk about pretty basic things for the most part, but will hopefully open up new ways of thinking for investing for some of you. I know that some of you are probably making good money, and maybe don’t have any idea about investing. I’m not an expert by any means, but have read/experienced a decent amount with investing. I’ve also networked with quite a few investors, and tried to learn from/with them. I wouldn’t recommend one certain type of investment to any one person; basically invest in what’s best for you, and what your goals are. There are obviously some investments where you can make a lot of money(real estate, businesses, etc...), but may have to put some work in to make it a successful investment(active investing), and some that you won’t make a lot of money(savings accounts, bonds), but you also won’t have to do anything, and your money will grow by itself(passive investing), allowing you to do other things with your time.
First when investing, you need to decide what type of investing you want to do. Do you want to actively invest, putting in a little work to make your money grow, or do you want to passively invest, sitting back and watching your money grow without having to manage your investment at all. That’s something you definitely need to think about before you decide to jump in.
The ultimate goal for investors for the most part is to become a passive investor. The reason I say that is, because you can’t really retire if all you do is actively invest. When your passive income exceeds your expenses, you can retire if you wanted to. Many people’s incomes come from jobs, and they invest what’s left over passively, and they retire when they are old. Pretty standard for the most part. A number of people here will have the opportunity to retire pretty young if they invest wisely starting now.
Let’s talk about some of the different types of investing. You can obviously put your poker earnings in the bank, and maybe get around a 4% return on them.(note: rough figure, don’t know the current rate, just using it as an example.) The return you will get from your bank will be very low in comparison to other investments you could make. This is an investment that will not lose money. It’s insured and safe, but you aren’t going to make very much of a return. Another investment along the same path is cds. The rates will be a little higher, the difference is you may have them for a certain length of time(6 months, 12 months, 2 years, etc...) Your return will be a little higher than your bank, maybe around 5.5%.(again, rough number, as I haven’t looked at the current rates) You can invest in stocks. You can probably expect your return in stocks to be higher than either of the previous options. You might expect returns to be 8-10%.(again, estimate, not exact number) With the stock market, the big difference between this and a savings account or bonds, is that the return is not fixed. So you could have an annual return of 20% or more one year, but you could also potentially lose money. Also, you may have fees if you use a broker. I wouldn’t advise picking your own stocks. It may not be worth it to use a broker though, as they will charge you fees for using them, and 95% of them won’t be making you any more money than you could make yourself just putting it in a Vanguard or something along those lines. There is a joke that they are called stock”brokers”, because they are broker than you are. If they could really make a lot of money trading, they would probably not be a stockbroker.(note: to any stock brokers reading, please don’t take offense, not talking about all stockbrokers) Mutual funds are another option. They are a longer term investment for the most part, and diversified to reduce risk.
On to some active investments. These investments will produce higher returns if done correctly, but will have more risk. Kind of like poker. If you play small stakes you know what type of money you will make, and for a lot of you it won’t be very risky. If you try some higher stakes to make a lot more money, you may lose, but the potential for greater returns are there.
One active investment is obviously starting your own business. If you start a business, and it becomes successful, you can definitely make a lot of money. You could do this on a small scale, maybe just buying and selling things for profits, or on a much larger scale. There’s a million different types of businesses you could start, so I won’t get into all of that. If you do start a successful company, and decide you would like to do something else, but still want to keep the business, you could always hire someone to run your business, turning it into a more passive investment. Many of you are going to school and playing poker, or working and playing poker, so could take a good amount of time to build a big business from scratch also. Internet businesses are often a good way to get started, often using a lot less money to get started, and instead using your own personal time as your main investment to build your business.
The next investment I’ll talk about is easily the topic I can talk most about: Real Estate. Like having your own businesses, you can make a LOT of money in real estate. Along with the ability to make a lot of money in real estate, you can also lose money if you make mistakes.(done that too) Many of the other topics(savings accounts, stocks, bonds, etc....) people at least know a bit about. Real estate is one aspect I don’t think a lot of people here know about. It’s something you can build your money with a lot faster than most of the other investments, but is a lot “scarier” to get involved with since a lot of people don’t know much about it. I’ll give a lot of examples to explain some of the different types of investing in real estate. In real estate you can invest actively or passively.(note: even passively, like business, doesn’t mean you will never have to do anything. You still want to know what’s going on with your properties even if you are investing passively) Active investing is often referred to as investing in properties to fix and flip, etc... You buy a property for $100k, hire contractors to fix it up for $20k, and sell for $150k, and make a little money.(note: you wouldn’t make $30k on this deal, because there are a lot of other expenses involved- taxes, realtors fees, closing costs, insurance, title, holding costs etc...) “Flipping” as it’s often referred to is getting a lot harder to do these days. You can still find deals to make money from like this, but it’s definitely not easy to do like it was 5-10 years ago. This is often what people do to build capital in real estate. That was my original plan, to flip a few houses, and then invest the profits into an apartment building for passive income, and then repeat. I have since changed my plan a bit, since I have different financial goals, and different ways I want to do things.
One thing that can happen during a flip, is it can take longer than you initially thought, and the market can change. I was lucky enough to run into both of these things on a house I bought late last year that I intended to flip.
I bought the property for $240k. The guest house was completely gutted. I planned on putting about $15k into doing the guesthouse. After talking to a handful of realtors, and reviewing comps, I thought I could sell after it was completed for about $300k. After all expenses, holding costs, and realtor fees($18k), I hoped I could make $15-20k. Well, the fix-up took a little longer than I had hoped, and the market softened a little bit more since I bought the property. With the increased holding costs, and the lower sales price I would sell at, I would barely make anything at all if I decided to flip it. If I was lucky I would have made $5k. Maybe I would have made nothing. I decided to hold the property and rent it out since it’d be around breakeven cashflow. I’ll probably hold the property for a couple years, and sell it once the market picks up again. So despite this example of what turned out to be a not so great flip, it will not turn out to be a bad deal at all for me since I bought right. The tenants will be paying my mortgage for me on the property, while slowly paying down some of it, and I’ll get tax benefits worth a few thousand dollars each year. Also, since I’m in no rush to sell it, when I do decide it might be a decent time to sell it a couple years down the road, I can talk with some other investors, or advertise to homeowners myself and save around $20k on realtors fees. So if the house appreciates some over the next couple years, some of the mortgage is paid down, etc... I could make a good profit(maybe $30-$50k if I sell without a realtor+ all tax benefits I receive while I own it that save poker profits come tax time) without a whole lot of work on my end.(note: not exactly passive, because it can be a pain to rent it out if doing it yourself)Another property that I bought late last year, would have been a great flip, even though the market was slow. I got a great deal in a nice neighborhood. I used a “bird dog” to find this property.(Think poker tracker for real estate investors)- not really but kind of. A bird dog is someone who finds good deals, but isn’t going to invest in the deal themselves for whatever reason.(maybe not enough money, not enough time, etc...) The bird dog I used had too many deals going on at the time, and didn’t live in the area, so threw me the deal. If I closed, I paid him $1,000 for the lead. Well, did my homework on the deal, turned out to be a steal, so closed it right away.(actually drove 2 hours in the middle of the night to meet the owner to sign a contract with her before someone else got it, then 2 hours home- soooo worth it) After some expert negotiating, I bought the house for $170k. I thought the house was worth about $215k. It only needed about $5k worth of work, if that. Real simple stuff, that could have been finished in a week or so without much trouble. After the $1k I paid the bird dog, realtor fees,etc...I could have easily made $10-$20k, in a couple weeks time. Well, I liked the neighborhood so much I decided to move in. So decided against flipping it for the time being, but will realize the profits when move out and decide to sell.(note: might not be actual “profits” left when I move out, since I’ll be paying my mortage while living in the house, and not having renters pay my holding costs for me. Depends what the market does)- but I need to live somewhere, so it’s all good.
I’m currently talking with an investor I know about partnering on a deal that would be on a much larger scale than the two I mentioned, and we could potentially be looking at making 7 figures on that one deal.(obviously no guarantee, we’re just starting to look at everything involved with it) It would take a couple years to complete, but could be well worth it.(it would be a deal where we are adding value to some commercial property) The possibilities are really endless with real estate. I’ve obviously only invested in smaller deals up to this point, but once you learn, and are comfortable with the risks involved, there are much bigger deals out there, and much more money to be made if you find real estate is something that you like.
Anyways, enough about some of the deals I’ve invested in, just wanted to give some real life examples, good and bad. Here are some things you might not know about real estate. It’s not as hard to get into as you might think. You don’t have to buy a property cash. You can put a certain % down, and you take out a mortgage on the rest. This is a HUGE factor to consider when investing in real estate. This is why this is one of the main investments I choose to try and get ahead financially, because of the power of leverage. The reason is if you buy a $200k property, you don’t need $200k to invest in it, you can leverage your money and buy more properties. Let me give you an example:
Let’s say John buys a house for $200k. He’s a baller so he pays straight up cash for this place. He rents it out for $1500/month. Tenants pay all utilities. John’s taxes are around $100 per month, making his total cashflow $1,400 per month, since he doesn’t have a mortgage. John holds the property for 5 years. The property appreciates roughly 5% each year that John owns the property. John finds some very high stakes poker games that he wants to play, and decides he wants to have a good bankroll behind him, so he decides he wants to sell his house. He could just take a home equity line out on the property, but decides he just wants to sell it, since his long term tenants are moving out in a couple months after their lease ends.
John’s investment:
$200k invested
$1300/month= $16,800 per year cashflow
X 5 years= $84,000
appreciation: roughly $50,000
John sells his house for $250,000
Average profit per year: $26,800
He made around a 67% return after 5 years
Roughly 13.4% per year on his investment.
He profited $134,000 from the deal.
Tay also decides to invest some of his poker earnings. He has $200k to invest as well. He decides he wants to buy multiple properties though. Tay decides to invest in the same neighborhood as his friend John. He works out a deal with an investor who is getting out of residential real estate, and sells Tay 10 houses. Tay puts 10% down on each of his properties. They are worth $200k each. So roughly $20k on each property he has invested. Each of the houses are rented out for $1,500. Tay has a mortgage on all of his properties, and pays $1,300/month. He also has taxes of $100/month, so he only cashflows around $100 per month. He has 10 properties though, so total he cashflows $1,000 per month. After 5 years, Tay decides it’s time to sell his houses and buy an apartment complex. Tay can sell his houses for $250k each, just like John.
Tay’s investment:
$200k invested
$100/month cashflow per property
X 10 properties= $1000/month cashflow
$12,000 per year cashflow on his houses
X 5 years= $60,000
appreciation per property: $50,000
total appreciation: $500,000
Average profit per year: $112,000
Return: 280% over 5 years
Tay made 56% per year on his investment
Total profit: $560,000
These are obviously just examples, but you can see how big of an impact using leverage to your advantage in real estate can be. Obviously there is a lot more included in deals like these(vacancies, something in one of your houses breaks, etc...) If someone wants an in depth example of how to break down a deal, based on vacancy rates, etc... I can do that. Just kind of winging this post, and it’s already pretty long so trying not to ramble about every detail and make it really long.
One other huge benefit in real estate is that you can roll over your profits into other deals and not pay taxes on them(1031 exchange.) Meaning in this example, if Tay decided to buy an apartment complex with the profits he made from these houses, he would not pay taxes on those profits. That’s another HUGE benefit to real estate. You can keep rolling over your profits and not paying taxes on them(LEGALLY.) This is the one of the main reasons, along with the ability to leverage, why real estate is one of the easiest, if not the easiest way to become rich. (I think something like 80% of millionaires in the United States made their money in real estate.) You do have to pay taxes if you do not re-invest your profits.
One case where you can keep the profits of appreciation, AND not have to re-invest is where you live in a property for 2 years.(actual law I think is 2 of the last 5 years) This is one of the reasons why owning is often much better than renting.(definitely exceptions though) When you rent, and decide to move out, you walk away with nothing. Maybe your security deposit back if you are lucky.
Someone who helped me learn a lot of what I know in real estate actually uses this to his advantage big time. He buys a house, lives in it for a couple years, and sells it. While he’s living in it, he does things to increase it’s value so that when he sells he’ll be able to sell it for more than he paid, regardless of what the market does. He’s also been fortunate enough to own houses in areas that have done very well appreciation wise, so he’s sitting on a lot of extra money these days thanks to the ability to keep his profits from the houses he lives in tax free.Couple other things I wanted to mention before I wrap up this post: Roth IRA- you guys should definitely look into this. You do need earned income to be eligible to invest here though.(so poker money doesn’t count) You can invest up to $4,000 a year, and the profits you make on the money from stocks/ mutual funds or whatever is tax free for LIFE(pretty much). Probably a good idea to look into for many of the guys who maybe have a little earned income from jobs at school, or whatever. Good thing to invest in for retirement. I broke the numbers down for my younger brother one day and figured his Roth IRA would be worth around $2 million by the time he was eligible to start withdrawing for retirement.(based on putting the max in each year: $4k, or a little more as you get older)- compound interest is HUGE. Definitely something to look into. There are also other types of IRA’s for people who are self-employed(poker players). Different types, but HUGE tax advantages, so worth checking out.
Hard money lending: another way to make money passively. You can lend to someone who needs money. Your money is tied to an investment(real estate, a business, a car, etc...) You just need to make sure whatever it is that it’s tied to is worth at least as much as your money, because if they default you get the property, business, or whatever it is that you get. I got an offer from some investors who were in need of capital for 37.5% annual. They needed $40,000, because all their money was tied up in other investments. They would give me $7,500 to use my money for 6 months. I turned it down because they were highly leveraged, and my investment would be tied to a highly leveraged property.
To wrap this up, there are a lot of different ways to invest. I talked most about real estate, because I know more about it than I do the other things, and there’s a lot more to expand about in that too, in comparison with the other things mentioned, especially since many people know a bit about some of the other stuff(stocks, bonds, etc...), and most of you that I’ve talked to didn't know as much about real estate. Real estate is my main investment choice right now, but when investing, choose what is right for you. Real estate might not be the best option for you. Maybe you want to start your own business. Maybe you want to just get some mutual funds and not worry about managing your investments too much. Maybe you are interested in doing something I didn’t mention.(day trading) There’s so many ways to invest. I think it’s important for people playing poker and maybe making a lot more money than other people their age, to think now about investments. You can get WAY ahead financially if you start now. Just because most of people don’t retire until their 50's or 60's doesn’t mean you can’t retire in your 20's or 30's. Hopefully I didn’t ramble too much throughout this post. Hopefully it was helpful for some people, and to the guys who haven’t invested, things like Roth IRAs, etc.. are definitely things to look into. To the guys who are looking to make money with their poker profits, hopefully this post at least gives you some ideas of some things you can do. I was pretty basic/general with things, couldn’t really go into tons of details on everything since this post would be way longer than it already is. If you want me to go into detail about something I said, just reply with what you want me to talk more about and I’ll do the best that I can. Hopefully some people can pick up some things from this post.
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