Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
I will be retiring from my w2 job in a few years and plan on using the SFH rentals as a way to stay busy without being too busy. My wife and I love real estate and I enjoy the maintenance since I like working with my hands,
We realize that we are going to have to do something to shed assets eventually simply because I am not interested in dying with a super high net worth but we won't be selling because we want to.
After 20 years of landlording I can honestly say that I love providing good homes to good people. I love how we help families, I love the game of buying houses, I love fixing them up and seeing the results....why sell?
@K S
My situation was a bit more complicated. I had access to both a 401 and a 457, amongst a couple other retirement accounts. No matching. 1 account I did for 22 years and the other for about 12. Those 2 ended up at around $1.4M when I retired 5 years ago. The smaller accounts brought me up to about $2M. My wife did her 401 for 19 years and ended up at almost $1M. She had matching. So between the 2 of us we had $3M in our retirement accounts. now around $4M. So yeah, if we need to it would easily cover our living expenses even though we’re 11 years shy of 59.5.
Nice, that's the way to go. Zero maintenance, truly passive. Wish I focused more on the market than real estate 20 years ago. I'd be retired already.
Very insightful comments! I'm nowhere near the portfolio of the previous commenters. I plan to keep the Bay Area SFH (solely owned) and multi-family (co-owned with family) and pass it onto my kids and they also get my primary residence. With the Indiana SFHs, I may 1031 exchange all 3 properties to a California or Nevada SFH. Indy SFH#1 has a good amount of equity, Indy SFH#2 is currently losing money with all the repairs. This was supposed to be turnkey. @V.G Jason made a comment about flips in 2020-2022. I bought that house from a flipper who renovated it in 2022 and overpriced it (I got a good deal and some seller concessions at the time). Indy SFH#3 just closed on it less than a month ago (not rented out yet). Looking at my options but may sell the 2 recent Indy homes and invest in more liquid investments.
Someone else made a comment about quality of life. I'm constantly stressed out with managing these OOS properties and my W2 job (the combination of doing both and taking out more mortgages). I was trying to achieve the "live off my rental income in 3 to 5 years" and there's no way mathematically I can do this unless I scale to commercial RE (apartment buildings, not retail or office space). Not sure where I would get the capital to buy apartment buildings. Scaling with Class C SFHs in the Midwest at these interest rates is going to be a slow painful process to achieve wealth. (Not hating on the Midwest. I don't think it's a good strategy for me but might be great for someone else).
Sfh ltr was a business in 2010 and now its back to an investment.
rei is just that now, still a good long term investment but the window for doing it as a business to live off has passed
Sfh ltr was a business in 2010 and now its back to an investment.
rei is just that now, still a good long term investment but the window for doing it as a business to live off has passed
Not many people understand the difference between the two, Nathan.
be extremely careful when you do something like this. Phytologically speaking we almost always say everything we don't do is having a greener pasture. While you actually may be just opening from one rabbit hole of headache from left pocket to another rabbit hole headache into the right pocket, all these investment has known and unknown risk which could eat our soul and financial if we don't understand of what we're doing.
this is why in biggerpocket i no longer curious or think if someone has 9999 doort. Lot of trap in the investing world, the key is to keep educating ourself even for something that we don't wanna do. In other thread we even have someone that sold everything and go back to renting world after long successful or real estate investment.
Very insightful comments! I'm nowhere near the portfolio of the previous commenters. I plan to keep the Bay Area SFH (solely owned) and multi-family (co-owned with family) and pass it onto my kids and they also get my primary residence. With the Indiana SFHs, I may 1031 exchange all 3 properties to a California or Nevada SFH. Indy SFH#1 has a good amount of equity, Indy SFH#2 is currently losing money with all the repairs. This was supposed to be turnkey. @V.G Jason made a comment about flips in 2020-2022. I bought that house from a flipper who renovated it in 2022 and overpriced it (I got a good deal and some seller concessions at the time). Indy SFH#3 just closed on it less than a month ago (not rented out yet). Looking at my options but may sell the 2 recent Indy homes and invest in more liquid investments.
Someone else made a comment about quality of life. I'm constantly stressed out with managing these OOS properties and my W2 job (the combination of doing both and taking out more mortgages). I was trying to achieve the "live off my rental income in 3 to 5 years" and there's no way mathematically I can do this unless I scale to commercial RE (apartment buildings, not retail or office space). Not sure where I would get the capital to buy apartment buildings. Scaling with Class C SFHs in the Midwest at these interest rates is going to be a slow painful process to achieve wealth. (Not hating on the Midwest. I don't think it's a good strategy for me but might be great for someone else).
I would love to discuss your portfolio in more detail. I agree that my portfolio was not created in 3-5 years either, but having as many properties as it sounds in underperforming markets when focusing on cash flow is somewhat counter to your stated goals. I also wonder if you are not trying to build clusters i.e. in Indy and have those professionally managed? That's what I do and depending on how much cash flow you're looking for, you could do the same.
By the way, there is a way to get really impressive COC if you are willing to accept some delayed gratification and possibly tap into the equity you have in your CA properties.
If you are interested, feel free to DM me
By the way, there is a way to get really impressive COC if you are willing to accept some delayed gratification and possibly tap into the equity you have in your CA properties.
If you are interested, feel free to DM me
By the way, there is a way to get really impressive COC if you are willing to accept some delayed gratification and possibly tap into the equity you have in your CA properties.
If you are interested, feel free to DM me
Yes, I can KS.
The fundamental deal is the same as always, making sure that a traditional residential property meets our criteria, is well renovated, and has a great ratio of purchase price and rental income.
Just as an example: I was offered a duplex in Ohio last week for $135K, rental income of both units together is $1900/month and the down payment through a special financing vehicle is $15188.
Initial cash flow is minimal but still positive and with a planned refi in about 3-4 years when rates are back down, it will jump massively. At that point COC will be amazing, even if rents are not increased.
COC in Year 5 after purchase will be about 30% and slowly increase with modest expected rent increases.
Not all deals are as good as this, but if you think how many properties could be owned and managed professionally, this is the approach I am applying myself.
@Becca F. had mentioned the stress with the management of OOS properties, I can only suggest using professional management. I really mean professional as in: proving that a PM has a sizable portfolio, documentation and forms that demonstrate processes that make life for tenants and owners easier, and software that keeps communication easy.
I literally spend about 2 hours/month on calls with my PMs for the three clusters I have in my portfolio of 9 properties. There is really no stress. It’s a matter of developing these relationships and it becomes a business meeting with 3 PMs 1x/month.
All the cash-flow in real estate is becoming a joke when we could create safe and hedged 20-50% dividend income with latest product of derivative-options ETF.
$6000 investment is printing $380 per month LOL.
The only way moving forward with real estate is only appreciation these days. As long as I force myself to DSCRed all asset close to 1.0 I should be good .
No syndication, no hundred dollar cash flow, nothing. Print money just using ETF/dividend.
so your plan is buy a cheap duplex in OH, with "special financing" that allows for 11% down, then hope/wait that rates will come down in a few years to refi to generate cash flow? Sure if you take a bet on rates... sure if you are only using "11%," the CoC return should/will look phenomially high. But, what is the actual cash flow? You don't say? If you can cash out all of the 11%, your CoC will be infinite, even if cash flow is $1.
I don't get it..
so your plan is buy a cheap duplex in OH, with "special financing" that allows for 11% down, then hope/wait that rates will come down in a few years to refi to generate cash flow? Sure if you take a bet on rates... sure if you are only using "11%," the CoC return should/will look phenomially high. But, what is the actual cash flow? You don't say? If you can cash out all of the 11%, your CoC will be infinite, even if cash flow is $1.
I don't get it..
You are right. Sorry about that. The initial cash flow is $70/month + net of rental increases until refi.
The goal is not to sell but to refi into a better rate but at the future value, so no additional cash will be needed but monthly mortgage payment will be much lower. It's basically delayed gratification that allows me to buy three duplexes instead of one with about $50K
So what is your target refi? What sort of delayed satisfaction are your targeting?
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
So what is your target refi? What sort of delayed satisfaction are your targeting?
I am looking for interest rates starting with a 5.X% and the delayed satisfaction could be up to 5 years, but I think 3 years is probably most realistic. The good thing is that this approach allows for up to 5 years from day of closing, which is convenient and removes any pressure. Anybody can keep tracking interest rates and value development/appreciation, even though the latter is helpful icing on the cake.
From a tax perspective, its best to "buy, borrow, and die". If you can gift your heirs cash flowing real estate they can rely on, I would think that is practically better then a massive stock portfolio.
From a tax perspective, its best to "buy, borrow, and die". If you can gift your heirs cash flowing real estate they can rely on, I would think that is practically better then a massive stock portfolio.
I agree. That's why I suggest to my followers to use the organization I used to develop my estate plan and the structure of the portfolio both to preserve anonymity as well as limited liability
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
Correct, it's a myth that the longer you hold a house, the better the return in the end. I bet investing that money in the market would have returned the same without the hassle and worries they have now. Constant renovations needed to maintain rents and the house itself and 25% of recapture will be insane after 50-100 years plus the house may not be worth more than the land it sits on since homes are not designed to last that long. Also, demographics change and constant 1031 exchanging into newer homes will ensure that you never pay off that mortgage before retirement.
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
Correct, it's a myth that the longer you hold a house, the better the return in the end. I bet investing that money in the market would have returned the same without the hassle and worries they have now. Constant renovations needed to maintain rents and the house itself and 25% of recapture will be insane after 50-100 years plus the house may not be worth more than the land it sits on since homes are not designed to last that long. Also, demographics change and constant 1031 exchanging into newer homes will ensure that you never pay off that mortgage before retirement.
Or have you?
A woman I recently dated also has a rental portfolio and retired in her 30's. She met a lady in California who told her as you get older you won't want to deal with the hassle of tenants and rentals or PM's, and you'll want to sell like I did. I agreed with her and so did the girl I was dating for a few months at that time.
So that begs the question, do any of you have an exit plan? Opportunity zones? 1031 into DST? What?
Correct, it's a myth that the longer you hold a house, the better the return in the end. I bet investing that money in the market would have returned the same without the hassle and worries they have now. Constant renovations needed to maintain rents and the house itself and 25% of recapture will be insane after 50-100 years plus the house may not be worth more than the land it sits on since homes are not designed to last that long. Also, demographics change and constant 1031 exchanging into newer homes will ensure that you never pay off that mortgage before retirement.
That's exactly what I am thinking
All the cash-flow in real estate is becoming a joke when we could create safe and hedged 20-50% dividend income with latest product of derivative-options ETF.
$6000 investment is printing $380 per month LOL.
The only way moving forward with real estate is only appreciation these days. As long as I force myself to DSCRed all asset close to 1.0 I should be good .
No syndication, no hundred dollar cash flow, nothing. Print money just using ETF/dividend.
I agree, take a look at JEPI and JEPQ, 10% dividends and the JEPQ ETF went up 20+ % on top of that last year. All while real estate is down and has been down for a couple years. RE was good to buy 2012 to 2021 but now...meh....
I took just over 150K and turned it into a few million in RE in just over a decade. But now that I have money I could make more money faster in VTSAX or VGT. That said, it's still worth it to keep some RE for the tax benefits....and diversification.
We sold it all in 2019 and retired in our early 40s. Thought about 1031 but after a year couldn’t find anything that would cash flow as well as our units. Didn’t want to the hassle of maintenance or management. So we sold it all piece by piece, paid the taxes, and never looked back. Also it completely freed us to be able to travel anytime anywhere for weeks at a time and ultimately months at a time.
I know we had less on paper right after selling. But the stock market has been good and I think we made up most if not all of the $ lost to taxes in the last few years. And probably from here on our networth will grow even faster than had we left it in RE. The stock market does tend to grow much faster. And no hassles.
We bought some amount of dividend paying stocks and indexes that help to offset our previous cashflow.
I initially thought I would keep the properties as a part time job forever. But, once we had enough networth and dividends there was no more need to keep working.
To each their own. We decided that enough was enough and left the field completely. Never been happier or less stressed.
Thank you for this. This was largely the kind of response and perspective I was looking for by posting this thread. I'm in my early 40's as well, almost 42. I made nearly 6 million from my real estate investments and career, as far as net worth, only to watch it drop to 4 million due to the feds interest rates. Some of that has been from working a high paying nearly half a million dollar a year career.
But I've grown tired of WA politics, and idiot tenants as well as the Karens that neighbor some of my rentals. I worry about frivolous lawsuits. I envision a day where I live off dividend stocks I've been trying out such as JEPQ and JEPI. At 10% dividends from 200K invested, between that and nearly 50K in cashflow from my rental houses, as well as a paid off lake house (if I decide to pay it off and retire here) I could easily retire AND save money still. All the while I'd still have a cool mil in cash to put into VTSAX or VGT (but I've only ever lost money in the stock market so I'm a bit wary, right now I've been trying out the buy and hold strategy and riding out the 10% + drops the last year). Anyways, the idea is to keep growing my wealth that way. The carpet cleaner I hire for my rentals also used to have rentals, he sold them paid the taxes, bought a cleaning franchise and retired from his VP sales job. Said he's happier without the rentals and he made the money back in the stock market several fold.
In any case, thank you for your candid response and sharing your numbers. It's refreshing to know I could theoretically pull the trigger, I've seen so many people do it with less money than me, by far. Yet here I am still grinding in Big Tech. That said the huge salary is nice and I am trying to make it to 45 (3 more years).
@Jack B. if that is what you are looking for, look into Business Development Companies (BDC's) and Master Limited Partnerships (MLP's). the former are doing 10%-12% and the latter anywhere from up to ~10% tax free. Other Closed End Funds (CEF) exist as well that do the same, even in real estate if you like. There are also REITs that provide dividends as high as 10% if you need it. These are income securities with less/different risks than jepq and jepi.
I think as I posted before, I'm just about done liquidating my rentals. This is so much better. Good luck.
I did. had 20 or so properties, mostly duplexes, that I bought after the crash in a neighborhood that other investors were scared of. I could see the development coming and dealt with difficult, poor tenants. I always figured I'd sell in 5-10 years.
Then the developments happened and the past few years I sold most for 10x what I had in them. sold my last house , my home, in march '23 and left the U.S. for good in April, so, I can travel.
Didn't want to pay Swift 3-5 percent to move my money to Europe, so, I transfered most into BTC (bought between 17 and 22k. Now it's 43k). I'm keeping it in that general asset class, which I don't think I'm allowed to mention.
2 weeks ago I was on a hot air balloon in Cappadocia. Last week I was gorilla trekking in Bwindi Impenetrable Forest in Uganda and right now I'm cat sitting in a Wildlife reserve in Tanzania.
I loved to renovate and that's what got me into real estate. I'm so glad I found it, as it allowed to bring out things from inside that I didn't know I had in me. I never wanted to be a longterm landlord. People still ask me why I couldn't have just hired a manager and kept the rentals. Because I didn't want to.
I have no children. My money will go to various animal rescues and this is the first time in my life that I have no responsibilities. I set myself a budget of not spending more than $10k per month (I average half that as life is pretty cheap in some areas). I can do that for 20 years and then still have 7 figures left to settle down, if I want to. No mortgage, no pets, no tenants.....and I'm enjoying the hell out of it,
We sold it all in 2019 and retired in our early 40s. Thought about 1031 but after a year couldn’t find anything that would cash flow as well as our units. Didn’t want to the hassle of maintenance or management. So we sold it all piece by piece, paid the taxes, and never looked back. Also it completely freed us to be able to travel anytime anywhere for weeks at a time and ultimately months at a time.
I know we had less on paper right after selling. But the stock market has been good and I think we made up most if not all of the $ lost to taxes in the last few years. And probably from here on our networth will grow even faster than had we left it in RE. The stock market does tend to grow much faster. And no hassles.
We bought some amount of dividend paying stocks and indexes that help to offset our previous cashflow.
I initially thought I would keep the properties as a part time job forever. But, once we had enough networth and dividends there was no more need to keep working.
To each their own. We decided that enough was enough and left the field completely. Never been happier or less stressed.
Thank you for this. This was largely the kind of response and perspective I was looking for by posting this thread. I'm in my early 40's as well, almost 42. I made nearly 6 million from my real estate investments and career, as far as net worth, only to watch it drop to 4 million due to the feds interest rates. Some of that has been from working a high paying nearly half a million dollar a year career.
But I've grown tired of WA politics, and idiot tenants as well as the Karens that neighbor some of my rentals. I worry about frivolous lawsuits. I envision a day where I live off dividend stocks I've been trying out such as JEPQ and JEPI. At 10% dividends from 200K invested, between that and nearly 50K in cashflow from my rental houses, as well as a paid off lake house (if I decide to pay it off and retire here) I could easily retire AND save money still. All the while I'd still have a cool mil in cash to put into VTSAX or VGT (but I've only ever lost money in the stock market so I'm a bit wary, right now I've been trying out the buy and hold strategy and riding out the 10% + drops the last year). Anyways, the idea is to keep growing my wealth that way. The carpet cleaner I hire for my rentals also used to have rentals, he sold them paid the taxes, bought a cleaning franchise and retired from his VP sales job. Said he's happier without the rentals and he made the money back in the stock market several fold.
In any case, thank you for your candid response and sharing your numbers. It's refreshing to know I could theoretically pull the trigger, I've seen so many people do it with less money than me, by far. Yet here I am still grinding in Big Tech. That said the huge salary is nice and I am trying to make it to 45 (3 more years).
Hi Jack.
I don’t blame you for wanting to stick around another few years bc of your huge salary lol. But it’s nice to know you have a plan and a definite time line for calling it quits, isn’t it?
Yeah a lot of us also just don’t know when to quit, when enough is enough. The golden handcuffs. At least you have a cut off point in 3 years lol. Good for you.
congrats and good luck!!
I did. had 20 or so properties, mostly duplexes, that I bought after the crash in a neighborhood that other investors were scared of. I could see the development coming and dealt with difficult, poor tenants. I always figured I'd sell in 5-10 years.
Then the developments happened and the past few years I sold most for 10x what I had in them. sold my last house , my home, in march '23 and left the U.S. for good in April, so, I can travel.
Didn't want to pay Swift 3-5 percent to move my money to Europe, so, I transfered most into BTC (bought between 17 and 22k. Now it's 43k). I'm keeping it in that general asset class, which I don't think I'm allowed to mention.
2 weeks ago I was on a hot air balloon in Cappadocia. Last week I was gorilla trekking in Bwindi Impenetrable Forest in Uganda and right now I'm cat sitting in a Wildlife reserve in Tanzania.
I loved to renovate and that's what got me into real estate. I'm so glad I found it, as it allowed to bring out things from inside that I didn't know I had in me. I never wanted to be a longterm landlord. People still ask me why I couldn't have just hired a manager and kept the rentals. Because I didn't want to.
I have no children. My money will go to various animal rescues and this is the first time in my life that I have no responsibilities. I set myself a budget of not spending more than $10k per month (I average half that as life is pretty cheap in some areas). I can do that for 20 years and then still have 7 figures left to settle down, if I want to. No mortgage, no pets, no tenants.....and I'm enjoying the hell out of it,