25 Years to retirement, What would you do?
New to Real Estate · FL · Member since 2022 · 95 posts · 18 votes
Hello ladies and gents. I want to share my goals that I feel are realistic but unfortunately you don't hear to many people speaking about it. All you hear about is fix/flip, wholesaling, syndication, multi-family, people talk about about 1,600 units and billions in real estate deals. Guru's this and guru's that, mentors charging $25k just so you can truly network with like minded people. Okay so I have 25 to 30 years before I want to retire. Is it such a bad idea to keep things simple, and buy at least 2 properties per year that I can afford in my state? If I am able to buy 2 properties per year, like condo's or small apartments, that rent out for approx. $1,200 to $1,300 a month. Eventually a lot of them will get the mortgage paid off and when I am 65 years I should be able to live solely off the cash flow. If I need extra money I sell a few units and if not I just live off the net cash flow. Is this goal to simple? is it not realistic? and why do I not hear more investors teaching or talking about longer term investments?
With that many years you could easily create a MASSIVE portfolio just buying a new primary home every year and turning your previous home in to a rental.
I bought a new primary and a new rental every year for 5 years and I was done. I retired in 5 years off that income (my wife was still a nurse for medical insurance.). In 12 years we had paid them all off and turned them in to almost $200k/year in income. This was 90% complete before BP existed. So yes. You should EASILY be able to accomplish it in twice the time with all the extra help you have available today.
Hi @Christian Requejo, I think you're on the right track. A couple thoughts:
First, you'll want the properties to generate cash flow even during the life of the loan. Everyone has their own cash-on-cash return hurdle, but no investors really want to shoulder negative cash flowing properties, even if there are strong prospects for generating cash flow in 25-30 years when the mortgage is paid off.
Second, there is a concept in fixed income investing called a "laddered" strategy. It basically means that you try to match the terms of your assets to the terms of your liabilities. For example, in real estate investing, you might use a 30-year loan to buy properties that you think will support your retirement. I have also known investors who purchased properties around the time they had children. They used 15 or 20 year mortgages with the idea that the loan will pay off around the time the child starts or finishes college. Matching the term of the loan to big life events can be a useful financial planning strategy.
With that many years you could easily create a MASSIVE portfolio just buying a new primary home every year and turning your previous home in to a rental.
I bought a new primary and a new rental every year for 5 years and I was done. I retired in 5 years off that income (my wife was still a nurse for medical insurance.). In 12 years we had paid them all off and turned them in to almost $200k/year in income. This was 90% complete before BP existed. So yes. You should EASILY be able to accomplish it in twice the time with all the extra help you have available today.
With that many years you could easily create a MASSIVE portfolio just buying a new primary home every year and turning your previous home in to a rental.
I bought a new primary and a new rental every year for 5 years and I was done. I retired in 5 years off that income (my wife was still a nurse for medical insurance.). In 12 years we had paid them all off and turned them in to almost $200k/year in income. This was 90% complete before BP existed. So yes. You should EASILY be able to accomplish it in twice the time with all the extra help you have available today.
That is not a bad idea aside from the condo part (HOA and condo fees will cost you). You may not be able to buy 2 properties per year unless you have a lot of money as the banks will only lend you so much. For rentals, you need 20% down and do the longest term you can for the mortgage.
Estimate how much you think you need to live off of if you were retired today and then how many houses also in today's market, would you need to cover those expenses? You likely do not need a ton of rentals.
Then you need to find places that will cash flow from the time you buy them. You mentioned condos or smaller apartments, but look at single family homes (preferably with legal suites) or duplexes. Avoid the 'cheap' places where they look good on paper, but have higher turnover and more problematic tenants as they will cost you more in the end.
As you are growing your portfolio, if one of the homes doesn't work out, don't be afraid to sell it.
That is not a bad idea aside from the condo part (HOA and condo fees will cost you). You may not be able to buy 2 properties per year unless you have a lot of money as the banks will only lend you so much. For rentals, you need 20% down and do the longest term you can for the mortgage.
Estimate how much you think you need to live off of if you were retired today and then how many houses also in today's market, would you need to cover those expenses? You likely do not need a ton of rentals.
Then you need to find places that will cash flow from the time you buy them. You mentioned condos or smaller apartments, but look at single family homes (preferably with legal suites) or duplexes. Avoid the 'cheap' places where they look good on paper, but have higher turnover and more problematic tenants as they will cost you more in the end.
As you are growing your portfolio, if one of the homes doesn't work out, don't be afraid to sell it.
I forgot about HOA. Yes that's the goal to stay in A/B neighborhoods and hopefully with newer homes if possible. The 20% will unfortunately slow me down. I am hoping to find a lender that will allow a smaller down payment. It's my understanding I can always refi in the future if rates drop again and possibly pull some money from my properties with equity to continue to invest. I am still educating myself as I go. But, trying to keep things simple and build my own retirement.
That is not a bad idea aside from the condo part (HOA and condo fees will cost you). You may not be able to buy 2 properties per year unless you have a lot of money as the banks will only lend you so much. For rentals, you need 20% down and do the longest term you can for the mortgage.
Estimate how much you think you need to live off of if you were retired today and then how many houses also in today's market, would you need to cover those expenses? You likely do not need a ton of rentals.
Then you need to find places that will cash flow from the time you buy them. You mentioned condos or smaller apartments, but look at single family homes (preferably with legal suites) or duplexes. Avoid the 'cheap' places where they look good on paper, but have higher turnover and more problematic tenants as they will cost you more in the end.
As you are growing your portfolio, if one of the homes doesn't work out, don't be afraid to sell it.
I forgot about HOA. Yes that's the goal to stay in A/B neighborhoods and hopefully with newer homes if possible. The 20% will unfortunately slow me down. I am hoping to find a lender that will allow a smaller down payment. It's my understanding I can always refi in the future if rates drop again and possibly pull some money from my properties with equity to continue to invest. I am still educating myself as I go. But, trying to keep things simple and build my own retirement.
For rentals, they won't. You can buy it and move in for a year or so and then turn it into a rental and repeat the process with a new home.
I did all mine with 20% down to avoid the PMI, I hate paying fees/interest and taxes.
If you don't mind paying PMI you have a lot more time and you can buy each one as your primary with s little a 5-10% down.
With the rentals you’ll be 20-25% down.