and i am not mistaken on the rent figures. these were mansions at the time. the bungalows that were torn down were renting for $1k (today 1.5-1.6k) the similar mansions right now rent for 2.5-3k/mo. kind of like how a similarly valued west side $1.3M house rents for $2.5-3k/mo right now.

i think the interest rate is not far from the truth. back then you were lucky to get prime+2.5%. (well, at least thats what i was paying).

In the 3 years out of University he made about 500k a year (plus since he saved that amount after taxes). Then he takes all his money after making so much from investments and puts it into a house only to sell a short time later to invest the money back again in equities except this time he can only get 15% so he goes back and buys a house again and retires. Very interesting story.

BTW

Check historical interest rates and rents. If there was that much negative cash flow in the 90’s with 25% down todays prices must be a bargain.

Timely you should mention. Today:

“Stocks initially rose, lifting the Dow Jones industrials briefly above 13,600 for the first time, after the market got a fresh load of deal-related news that included a possible bidding battle over aluminum producer Alcan Inc. But the excitement waned after a media report that Greenspan expressed concern that China’s stock market — which has recently been hitting record highs — could eventually see a sharp decline.”

Perhaps another asian meltdown? That would not be good for the global markets.

so how are those numbers shaping up?

NewsFlash: no, in the early 90’s those houses were 800k, went up to 1200, down to 800, back to 1300k.
if he bought 4, he would be worth 4*500+800=2.8M. 600k mortgage at the prevailing 8% or so rates back then * 4 — no way he would have qualified. and at the time you could not rent a suburban mansion for that much either!

Another thing your freind could have done is bought four 800k houses with 25% down in the 1990’s. Held them until now, collected rent paying off the mortgage and he would have about 10 million in equity right now.

He may not have had all the fun trading online during the dot com bubble, living in the small condo and moving around, but he would have 4 times the wealth.