Ep 276: Early Retirement by Age 35 ($10k/mo) Through Real Estate

59 Replies

Originally posted by @Shane Ward :

Thanks for the advice Mel. I am in that process now. What I'm struggling with as far as deals go is finding the ones I can BRRRR. I don't want to wait to take the saved income and equity to buy more property. I really want to scale as quickly as possible. I am putting the work in and I know there are deals that I haven't jumped on just because I'm looking to hard for the perfect deal.

Patience is the key Shane. Also pushing through. Most people give up at the last few feet. I want to give this podcast a listen but I am still figuring out how. What I do know though is that if you're patient and work hard the reward is there.

Your Welcome Shane,

Look for the 4 d's.  Death, Disease, Disaster and Divorce those are the very motivated sellers.  They is to follow up and stay on them because more money is lost in the lack of the follow up.  There is no perfect deal.  

Also remember the 5 needs of every transaction, 

1-How much are they asking

2-What do you think the property is worth

3-Terms other than cash

4-Your exit strategy

5-What are the needs of the seller

These 2 components will help you to go far! 

All the Best

Mel Feller

While I liked the episode ok,  it seems that BP podcast has lost its greatness over the last year or so. In fact, I can't make it through a whole episode anymore without fast forwarding or turning it off.

I think it is partially due to the frequent changing of hosts and the loss? of @Joshua Dorkin   I also think it is due to some lack of a plan (outline). Unless I am remembering incorrectly, it used to dig deep into the specifics of how the guest ran their business. It also had more of a structured timeline of the guests REI story. Nowadays, it just kinda flows wherever the guest takes it.

This guest was still awesome, so it is not a dig on him by any means. 

Shane,  Mel is right.  There IS no perfect deal.  You're losing money on the good deals while you wait for the excellent one.  Jump in!  We were 49 and 48 when we started 8 years ago.  Just bought our 10th property and kicking ourselves for not being more aggressive.  Husband likes his job--we're on assignment in Germany but still buying back home and teaching our kids the business.  Good to know he could retire anytime if he wanted.  We plan to have at least  five more doors before he turns 62 in 2022.  But I'm shooting for ten.

Mel, Nancy and Hunter, Thank you guys for the tips and encouragement. Nancy, I really wish I had found Biggerpockets  a sooner than I did, but I found it and now I have to "Vacuum the Truck". I will let you know how it goes. 

Awesome podcast. Really loved it- I think much of Bryce's success comes from his can-do and upbeat attitude, something we should all pay attention to. 

One point I disagree with- he mentioned a building with heating costs of $3,000/yr(I think it was oil baseboard, and the owner paid the heating bill.) He ripped out the heating system and put in electric baseboard, putting the burden of the heating payments on the residents. He spent $5,000 doing that, and suggests a return of $3000/$5000 = 60% annually.

This sounds like a great idea- but in practice, I think it would fail miserably. Generally, electric baseboard is much more expensive than oil heat(see link below which allows input of various prices for electricity and oil.) With the default inputs below, electric baseboard is 87% more expensive than oil. If it's lower than that- call it 80% - then the residents would shoulder a burden of $5400/year in heating costs instead of ownership paying $3000/year.  That's not a lossless proposition! 

In my experience, when residents have unexpectedly high heating bills, they gripe about it, their ability to pay rent is reduced(leading to a higher eviction rate,) and they tend to leave the apartment at the end of their lease, dramatically increasing turnover. Turnover is expensive- repainting, cleaning, possibly a month or two of vacancy, paying an agent to rent it(or spending your own time showing it,) and so on.

It's also important to note that an owner can charge more if heating is included. Installing electric baseboard and putting the heat bill on the residents will result in lower rent rates. So I believe the actual return on ripping out the oil and installing electric baseboard is actually negative. 

Loved everything else in the podcast. Michael

https://www.efficiencymaine.com/at-home/home-energy-savings-program/heating-cost-comparison/

Originally posted by @Michael Gansberg :

Awesome podcast. Really loved it- I think much of Bryce's success comes from his can-do and upbeat attitude, something we should all pay attention to. 

One point I disagree with- he mentioned a building with heating costs of $3,000/yr(I think it was oil baseboard, and the owner paid the heating bill.) He ripped out the heating system and put in electric baseboard, putting the burden of the heating payments on the residents. He spent $5,000 doing that, and suggests a return of $3000/$5000 = 60% annually.

This sounds like a great idea- but in practice, I think it would fail miserably. Generally, electric baseboard is much more expensive than oil heat(see link below which allows input of various prices for electricity and oil.) With the default inputs below, electric baseboard is 87% more expensive than oil. If it's lower than that- call it 80% - then the residents would shoulder a burden of $5400/year in heating costs instead of ownership paying $3000/year.  That's not a lossless proposition! 

In my experience, when residents have unexpectedly high heating bills, they gripe about it, their ability to pay rent is reduced(leading to a higher eviction rate,) and they tend to leave the apartment at the end of their lease, dramatically increasing turnover. Turnover is expensive- repainting, cleaning, possibly a month or two of vacancy, paying an agent to rent it(or spending your own time showing it,) and so on.

It's also important to note that an owner can charge more if heating is included. Installing electric baseboard and putting the heat bill on the residents will result in lower rent rates. So I believe the actual return on ripping out the oil and installing electric baseboard is actually negative. 

Loved everything else in the podcast. Michael

https://www.efficiencymaine.com/at-home/home-energy-savings-program/heating-cost-comparison/

was thinking the same thing. completely agree!

Definitely do not have to be book smart in order to be considered smart. This is a great podcast for those that see achieving success in real estate investing as no possible. 

Great episode!  Inspirational stuff, tons of great tidbits in here.  

I really appreciate these podcasts where the focus is on a mindset of getting enough to make your life comfortable and then spending time on what matters to you.  Not all of us want 300 units and syndication (sounds a lot like work!).

Definitely agree on the "vaccum the truck" thing. I have to remind myself to just take the NEXT step and not worry about the ones after that. Because in my case steps 2,3,4 continue to change! 

Originally posted by @Amanda Olvera :

I think I’ve listened to all of the BP podcasts and this one resonated with me most. As a teacher myself, I could identify with Bryce in so many ways. And I agree with other posters, he should consider motivational speaking! He is a brilliant communicator and has an inspiring and educational message!

I actually plan to use this with a mini-unit I’m planning for my HS juniors. Kids need more information about personal finance and FI at an early age. Wish someone had exposed me to some of these principles at 17 instead of 37!

Nicely done, BP. And from one teacher to another, well done, Mr. Stewart!

 If you don't mind me asking what exactly do you have planned for the HS Juniors? If only more information was put into a practical format in school. I congratulate you on taking a step most others aren't willing to take. 

@Justin Glass
I’m going to do a small unit on personal finance where they do a 10 year retirement plan/ journey to FI. I plan to use excerpts of different books including Scott’s Set for Life as well as podcasts and blog posts from BP—like this one and a couple from The Money Show. Mr. MM probably going to make an appearance, too:).

Their end product will be a presentation to the class on their journey to FI by 28. Maybe some of them will actually implement it! 😊.

As a side note—@Mindy Jensen if you could do a Money Podcast exclusively about college costs, that’d be awesome!

I’m curious about the “Jedi mind trick” strategy @brandonturner mentions in this podcast where he gives two offers for consideration. Anyone have experience with this or know of a thread where this is discussed?

The bad thing about listening to podcasts during the morning and evening commute is that you can't take notes. Definitely have to listen again!

Bryce's hunger for his goal was so apparent and hence a very inspiring success story!

Brandon and David's commentary was A+ as well.

I really enjoyed Bryce's perspective on real estate rental cash flow. I have often heard people say they are looking for $200-$300/month in cash flow on a property and thought that wasn't enough of a return, so I feel validated now! I always listen while driving and wind up taking calls and (a-hem) watching the road, so I will listen to this one several times to be sure I don't miss a single grain of wisdom. Thanks for another great show! 

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