Rental Property Investor · Allentown PA, United States · Member since 2016 · 567 posts · 442 votes
So I've known for years that I have wanted to get into real estate and then more I've been reading, listening to podcasts and being active on the forums have really opened my eyes to the power of REI and how it can grow your net worth(especially Brandon Turners 7 years to 7 figure wealth).
Goal setting has been very important so far in my life and one I've set for myself is to have a millionaire net worth by 30. I'm sure plenty of people will debate on whether or not this goal is realistic or not shooting high enough. My circumstances are that after I am done with graduate school I will most likely gross over 100k salary with a rather flexible schedule(physician assistant). I think by living frugal and house hacking I can contribute 50k of personal funds every year for 5 years before 30. I've mapped out a few scenarios on how this might be possible by BRRRRing, wholesaling and flipping my way to more cash leading to more equity in buy and holds to greater net worth.
I'm curious if anyone could provide some insight on what they're best recommendations are in this approach or what they would do if they were in my shoes. Thanks in advance.
Best recommendation is on the personal as opposed to investment side...
Do not get married. When you choose a "girl friend" select one with a high income job and a drive to increase wealth. Preferably one that views their employment as a job, exchange of time for money, rather than a career. You do not want a partner that allows their job to interfere with their life. Think of them as a potential business partner. Associate with like minded individuals, especially those with money.
Distance yourself from all your old friends that think money is earned to be spent.
It is great that you have decided to take action and become wealthy. That is what made all the difference in my life.
As for your plan, I know that as a single guy without any kids, you can live relatively comfortably on a very small income while saving a great deal of money. I saved close to $35,000 in one year. At first I thought that I would be able to save $50,000+, but I didn't take into account taxes and the rest of the government's share of the money.
Being single and a relatively high income earner means you are going to pay a lot in taxes. It took me a while to figure out how to offset that amount. You are not taxed on money you contribute to your 401K. You can contribute up to $18,000 per year as of 2017. So if you made $100,000, your taxable income would only be $82,000.
You can greatly lower your taxable income through this method. Later on you can get a 401K loan to access that money for investing.
In the past I contributed the bare minimum to get the match, but now I contribute the maximum $18,000/year.
Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
9y
I have very similar goals as well myself. And my strategy is pretty much the same as yours. With my goals after I hit a million. I want to dive directly into commercial and try to play with the big dogs. Maybe even large scale mansions as well lol.
Best recommendation is on the personal as opposed to investment side...
Do not get married. When you choose a "girl friend" select one with a high income job and a drive to increase wealth. Preferably one that views their employment as a job, exchange of time for money, rather than a career. You do not want a partner that allows their job to interfere with their life. Think of them as a potential business partner. Associate with like minded individuals, especially those with money.
Distance yourself from all your old friends that think money is earned to be spent.
Best recommendation is on the personal as opposed to investment side...
Do not get married. When you choose a "girl friend" select one with a high income job and a drive to increase wealth. Preferably one that views their employment as a job, exchange of time for money, rather than a career. You do not want a partner that allows their job to interfere with their life. Think of them as a potential business partner. Associate with like minded individuals, especially those with money.
Distance yourself from all your old friends that think money is earned to be spent.
LOL.
I wish it was as easy as choosing the perfect financial partner as a girlfriend. I looked for it for years and I just ended up being much older and alone.
I gave up on trying to find the perfect financial partner and instead focused on finding someone I love and then teaching them about financial responsibility.
Remember emotions are something that grow with a relationship so be carful who you invest in. Most people seriously underestimate the importance of selecting a partner and often simply allow relationships to grow before they actually assess the individual fully for financial compatability. Love/emotions are highly overrated and usually fleeting and not a solid enough foundation to build a partnership on.
Unfortunately that is the mistake most people make and why 50% of relationships today fail.
If you are not married now is the time to protect your assets....pre nuptial agreement. With a 50% chance of failure you can not afford to take any chances.
Investor · Hawaiian Gardens, CA · Member since 2015 · 308 posts · 386 votes
9y
Bill,
I'm in a similar spot to you, just turned 29. I'm a nurse, grossed 150k this last year, house hacked a duplex in California (doesn't cash flow, but mortgage 600$ after rental income). I find myself putting in 60+ hours a week (and I love my job), so my time was more limited. My first year (85k income) working I bought my duplex. 2nd year (150k income), I bought a SFR in Kansas City, and a duplex in Ohio. I pretty much peaked last year income-wise.
I still have student loans, so I save about 2500$/month.
I also think 50k+ savings might be a little ambitious, I saved 30k+ last year and live relatively frugal. I'm not saying you shouldn't shoot for the stars, but to curb your expectations a little bit based on us having similar situations.
Some expenses you might not have included:
When I got my duplex, I put in an AC, fixed plumbing, washer/dryer, fridge, window blinds, etc. Not sure what you already have, but the basic necessities of living costs more than I expected to get my home up and running.
Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
9y
Greg S. Thanks for that info. Honestly as a follow young guy myself. That's something I seriously thought about. And Anthony Gayden I see what your saying too and it makes it. But that's the difficult part to be honest. It's a ton of materialistic, self entitled, and selfish people who want instant gratification. I wouldn't sweat it, I know if your doing what you suppose to be doing. Things are just going happen organically. Hey by the way Greg S. What other ways can you protect your assets besides a prenup.
Best recommendation is on the personal as opposed to investment side...
Do not get married. When you choose a "girl friend" select one with a high income job and a drive to increase wealth. Preferably one that views their employment as a job, exchange of time for money, rather than a career. You do not want a partner that allows their job to interfere with their life. Think of them as a potential business partner. Associate with like minded individuals, especially those with money.
Distance yourself from all your old friends that think money is earned to be spent.
While I appreciate your honesty, I go through periods where I believe/act the way you describe above. Its always resulted in an alienating and less robust/fulfilling life. Being too money-focused is shallow and counterproductive, although I'm certain we're all guilty of it from time to time.
Best recommendation is on the personal as opposed to investment side...
Do not get married. When you choose a "girl friend" select one with a high income job and a drive to increase wealth. Preferably one that views their employment as a job, exchange of time for money, rather than a career. You do not want a partner that allows their job to interfere with their life. Think of them as a potential business partner. Associate with like minded individuals, especially those with money.
Distance yourself from all your old friends that think money is earned to be spent.
Is that a joke? I'm rather new here so I might not get the subtle humor of some and/or inside jokes.
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
9y
It's nice to have goals, but in RE timing is everything. And even then not everyone in the last 9 years has become a millionaire. We bought our last property short in 2012 from a guy who was trying to build an quick empire pre-2008, overextended, and lost it all. Slow and steady DOES WORK! We're well over $1m but have been in for 20 years and not been nearly as aggressive as we could in that time. Honestly, I stopped listening to the BP podcast for the most part because most of their "RE genius" interview subjects had never seen a downmarket!
Househack, do your best to save for downpayments, but keep your cool. The advice about partner is sound, my wife is low maintenance and buying a househack was her idea even though I was the one with reno skills. BTW, congrats on the degree, my 17 yo son currently plans to get a PA after a BS and 6-8 years of outdoor fun.
@Johann Jells Your post reminded me of a quote by Warren Buffet who said "You can't produce a baby in nine months by getting nine women pregnant"
You surely mean 1 month, but point taken. How can you learn from experience if you make a careers worth of mistakes all at once??
When we were looking for our 1st househack we saw a rent stabilized 8U in Manhattan, and the broker gave us a spiel about all the ways to get out the tenants and reduce the units to get off rent control. I told her "it sounds like a game investors play, and if they lose one they've got other deals going. For us the name of the game is Russian Roulette, if we lose once we're done and out." We might have made 2000% on our money there in 96, but we might have ended up broke and divorced.
Rental Property Investor · Allentown PA, United States · Member since 2016 · 567 posts · 442 votes
9y
Thanks, I appreciate everyones input. I am taking all of those things into consideration regarding waiting waiting to start a family and finding a balance between enjoying life, working hard and saving plenty of money(living in a low COL area). I guess to simplify the question, what strategy would you take in our current market to prioritize and accelerate increasing net worth? Cash flow in necessary for a deal and nice to have don't get me wrong, but I'm not looking to live solely off it anytime soon.
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
9y
Just do the standard BRRR househack. Your advantage is you're young, full of energy, and willing to learn skills you don't have to be able to put in sweat equity. Looking for magic is how people get turned into toads.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
9y
With a six figure salary and the real estate education you are getting, you are well on your way and you goal is very achievable. In the end, your goals will move around but having a tangible target like you have will push you to action and towards that goal each day.
You have mentioned some very good strategies. Adding value will accelerate your pace, whether through flips or BRRRR. Maybe start with some flips (a live in one would be great) to build up capital and experience and BRRRR some along the way too. As you progress, your path will become more clear. It's just time to execute at this point...good luck and keep us posted.
Real Estate Broker · Wilmington, NC · Member since 2016 · 236 posts · 126 votes
9y
Just stay cheap and invest everything you can, OP. I had a nice cushy job but I got so engrossed in real-estate that I became a broker.
Overall, all the metrics in the world aren't going to prepare you for what real-estate is going to bring into your life (good and bad). Just sit back and enjoy the ride.
Don't get so focused on a specific number that you get discouraged if you are not able to achieve that goal. Wealth building is a lifelong goal.
I personally feel well having an emergency fund covering 6 months of all expenses (including all of my mortgages), several cash producing investments that pay me even if I am not working, no debt outside my mortgages, and a very stable job that pays a decent amount is doing pretty well.
Don't forget to go out and have fun. I lived like a hermit for years straight saving money to get out of debt, buy real estate, and build wealth. It was not fun.
Best recommendation is on the personal as opposed to investment side...
Do not get married. When you choose a "girl friend" select one with a high income job and a drive to increase wealth. Preferably one that views their employment as a job, exchange of time for money, rather than a career. You do not want a partner that allows their job to interfere with their life. Think of them as a potential business partner. Associate with like minded individuals, especially those with money.
Distance yourself from all your old friends that think money is earned to be spent.
My partner was initially very financially lazy. Over time I taught her all the important aspects of investing. The biggest driver was to say, how long do you want to wait until retirement?
This was a big one because, who doesn't want to retire as early as possible. This pushed her towards investments. Now I handle RE investments and she does forex. Works well. :)
West Long Branch, NJ · Member since 2016 · 21 posts · 5 votes
9y
Bill you are on the right path to success. like the previous time is everything! but before you get filled with expectations of being a millionaire just remember love what you do! enjoy the moment and have fun with it. dont pressure yourself into this idea of being a millionaire. I own a commercial hvac business in which most of my clients are landlords in manhattan (nyc) and some are happy with there wealth and others are miserable for the fact that money makes them happy. A mindset that money will make you happy will only make you more miserable and lonely.
With that out fo the way take your time and eventually you will be wealthy. My advice to you is to stick to one aspect of real estate investing and practice its art. i know i sound philisophical here but its like any industry. stick to a nitch and be the best at it and eventually you will be.
I wish you good luck! if you want advice on the path to wealth there is a book i read recently that might discourage you and if it doesnt do that it will light a fire! how to be rich by felix dennis.
Bill, I totally understand the mindset. The earlier your start investing the easier it will be to get to your goal plus more. I started at 26 (I'm 28 now) and I've crossed that point. Keep building capital and look for investments that help gain you additional equity not at your expense aka multi-family. Having tenants build your net worth is awesome. The US market overall is pretty strong but buy smart, thats where you make your money. I am doing whatever I can to capitalize on this stable RE market. Currently I am focused on Flipping & Multi-Families. Problem right now with Multi-Family is no one is selling and if they are they are asking unrealistic prices. I took a break from working with unreasonable sellers on some 50+ unit buildings. It actually motivated me to ramp up my Flipping business and since I took this approach, I have been doing well. I put all my cash into the projects and have (2) crews working for just me. I do have another business outside of RE, which is my main source of income but I use whatever I make and put it into RE. Save your money now (as much as you can within reason) and invest now so as you age gracefully you can sit comfortably and get to enjoy what life truly has to offer! Cheers!
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
What you need to help you is a good old fashioned real estate crisis, starting tomorrow. If you are fortunate enough to get one, that would really help you along your way to your goal.