18 rentals owned free and clear

Investor · Sarasota, FL · Member since 2016 · 45 posts · 19 votes

I have 18 rental properties Free and Clear bringing in 18K a month and worth around $1.6 million. I happily manage them myself but I want to retire in 7 years at the ripe old age of 55. How do I do this?

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Jason Chen

Tampa, FL · Member since 2017 · 240 posts · 153 votes

Step 1: Sell all properties

Step 2: Put 1 million dollars into cryptocurrencies

Step 3: Wait 7 years

Step 4: Collect 100 million dollars

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Brian McHenry
Specialist · Kansas City, MO · Member since 2017 · 11 posts · 1 vote
9y
FWIW, I see a lot of NNN deals daily and most are thin on cash flow with low caps. Value in them is either cash purchase (with low % return) or reversion play.
Good luck with your bummer of a problem <grin>
0 Reply
Rebekah Keller
Investor · Detroit, MI · Member since 2016 · 61 posts · 86 votes
9y
@Adam Klugh, I would love to learn how you got to this point!
I am all ears.
0 Reply
Mark H.
Hamilton, OH · Member since 2015 · 19 posts · 3 votes
9y
@Adam Klugh, I don't know what you have decided to do, but if you are thinking about moving into large apartments for cash flow I'd highly suggest the book Multi-Family Millions by David Lindahl - link. It seems like I've read every book under the sun regarding multi family, and this book has, IMO, the most actionable content that will definitely save you $$$. Just my 2 cents.
3 Reply
Adam Klugh
OP
Investor · Sarasota, FL · Member since 2016 · 45 posts · 19 votes
9y
Thanks @Mark H. I will definitely throw it on audible. Traditional reading puts me to sleep when I do too much of it all at once.
0 Reply
David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Originally posted by @Adam Klugh:

@Kyle J. Property managers don't take care of my properties the way that they should but I may have to submit to their crapiness.
@David Faulkner and @Derrick E. 18k a month is comfortable, yes. But I'm not looking for comfortable. I'm looking for change in lifestyle. Want a strategy to double my cash flow in 7 years
@Jason Chen I like your style most, except for when the U. S. Gov puts the brakes on it when it becomes too disruptive
OK ... that makes more sense ... if I'm interpreting your statement correctly, you do not NEED more income to retire, but you WANT more income to retire, which is perfectly fine, but I think it is important to clearly demark needs and wants. You NEED the properties you have now to retire, and you WANT more properties or other investments before retiring ... so, yes you can and should go after more investments before retiring, however it is my philosophy that you should never risk what you have and need in order to buy something that you don't have and don't need ... in other words, I wouldn't leverage up on what you already have in order to acquire more.
3 Reply
Travis Dawson
Investor · Moscow, ID · Member since 2017 · 107 posts · 76 votes
9y
@Steve Vaughan probably hit the nail on the head. But rather than buy more houses, why not diversify into other avenues for investment? Index funds, notes, invest in a small business, etc.
0 Reply
Harris L.
Investor · Bay Area, CA · Member since 2015 · 47 posts · 19 votes
9y
wow this thread is cool to read specially the 1031 exchange discussion.
anyways, I'm seriously doing something wrong-maybe... I have 5 individual properties probably worth 1.4M but I'm only grossing 100k/year rent nothing close to 18k/month... they are free and clear too except for my primary residence... I've grown them organically... work really hard to save extra through my digital marketing skills and kept buying the past 7 years...
Now, I've been working on a 1031 exchange for one of my small condo in the sf bay area into 5-10 unit apartment else where, so hopefully I'll get beyond the 100k/year gross rent.
1 Reply
David Faulkner
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
Originally posted by @Harris L.:

wow this thread is cool to read specially the 1031 exchange discussion.
anyways, I'm seriously doing something wrong-maybe... I have 5 individual properties probably worth 1.4M but I'm only grossing 100k/year rent nothing close to 18k/month... they are free and clear too except for my primary residence... I've grown them organically... work really hard to save extra through my digital marketing skills and kept buying the past 7 years...
Now, I've been working on a 1031 exchange for one of my small condo in the sf bay area into 5-10 unit apartment else where, so hopefully I'll get beyond the 100k/year gross rent.
Harris, my opinion for what it is worth is that you are doing just fine ... you are not doing something wrong. I would wager that the rate of rent increases on your properties are higher than the OP, have already gone up dramatically in the 7 years you've owned them, and if you just hold on to them and do nothing more then they will dramatically exceed 18k in no time. What you are doing is working, and I'm of the mind that if it ain't broke then don't try to fix it.
2 Reply
Nik Krohn
Investor · Woodland Hills, UT · Member since 2016 · 84 posts · 31 votes
9y
why don't you take it easy? No need to make it more complicated. just live off the 18K per month and save your cash flow and keep buying properties cash. and when you want a big payout when you're close to 70 sell off a portion of a properties as needed. You could also hold the properties in definitely and pass them on to your children inside a trust.
0 Reply
Jason Chen
Tampa, FL · Member since 2017 · 240 posts · 153 votes
9y
Step 1: Sell all properties
Step 2: Take 1 million dollars and buy 1,000 houses in Detroit.
Step 3: Rent each house out for $100 a month and tell tenants to "fix the properties themselves"
Step 4: Wait 7 years
Step 5: Collect 100 million dollars
3 Reply
Dave Toelkes
Investor · Pawleys Island, SC · Member since 2008 · 1k+ posts · 837 votes
9y
You don't have to selll all the properties as a package for a 1031. Sell each property in a properly structured 1031 and use the exchange proceeds to acquire a tenant-in-common property. As you 1031 each of your properties, reinvest the proceeds into the ITC property.
0 Reply
Irina Belkofer
Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
9y
Originally posted by @Harris L.:
wow this thread is cool to read
anyways, I'm seriously doing something wrong-maybe... I have 5 individual properties probably worth 1.4M but I'm only grossing 100k/year rent nothing close to 18k/month... they are free and clear too
_________________________________________________________________________________
Now, if you count your capital gain for these properties - in California you don't have these 25-30% ROI like in Ohio, but you do have 30% capital gains per year, especially now.
You're doing great!
2 Reply
Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
9y
@John Thedford, if you sell that portfolio after all the years we've known each other and absorb the tax I'm going to "unfriend" you - Just saying!
The 1031 Investor5137 Reviews
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3 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
@Dave Foster
This is my new executive briefcase. Note the trigger on the handle. Note the picture of the hole on the side of the briefcase. Note the 9mm MP5 machine gun inside. Can you afford to lose me??
0 Reply
Justin B.
Investor · Gaithersburg, MD · Member since 2013 · 659 posts · 441 votes
9y
I'm curious as to what your need is. I'm assuming that you net at least $10k Cash flow off these (probably more, but I'm trying to be safe) and also that you have a day job (because you said you weren't "retired"). If you only need a few $K more, just keep doing what you're doing and buy as cash flow alllows and you'll get there before 7 years. If you need $30k/month to live, that's a different story and I'd suggest what I'm sure others have (I haven't read all responses). Start buying on leverage. You don't necessarily need to refi, pull cash out, etc if your goal is 7 years, but if you did, you could easily accelerate your timeframe.
0 Reply
Luke F.
Littleton, CO · Member since 2015 · 59 posts · 14 votes
9y
Originally posted by @Dawn Anastasi:

Originally posted by :
Property managers don't take care of my properties the way that they should but I may have to submit to their crapiness.
Congrats too, on having so many paid off rentals. I own 17 rentals, and have 12 owned free and clear. So I'm getting there!
Not to highjack the thread, but after listening to your podcast years back, any reason why you decided to focus on paying down the rentals vs. trying to grow that total number of doors?
0 Reply
Account Closed
Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes
9y
Originally posted by @Adam Klugh:

I have 18 rental properties Free and Clear bringing in 18K a month and worth around $1.6 million. I happily manage them myself but I want to retire in 7 years at the ripe old age of 55. How do I do this?
If you are happy managing them, why would you change anything?
0 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
9y
If they're bringing in that much money, you should be able to hire a property manager and still get by just fine. Just make sure to thoroughly vet that property manager.
Podcast Guest on Show #121
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Dawn AnastasiPro Member
Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
9y
Originally posted by @Luke F.:

Originally posted by @Dawn Anastasi:
Originally posted by :

Property managers don't take care of my properties the way that they should but I may have to submit to their crapiness.
Congrats too, on having so many paid off rentals. I own 17 rentals, and have 12 owned free and clear. So I'm getting there!
Not to highjack the thread, but after listening to your podcast years back, any reason why you decided to focus on paying down the rentals vs. trying to grow that total number of doors?
Just to keep life simple. :)
Podcast Guest on Show #29
0 Reply
Pete T.
Real estate investor · Las Vegas · Member since 2013 · 798 posts · 171 votes
9y
harris- I would say it is the selection of the houses/buildings. How many units do the 5 properties make up?
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
Originally posted by @Dawn Anastasi:
Originally posted by @Luke F.:

Originally posted by @Dawn Anastasi:
Originally posted by :

Property managers don't take care of my properties the way that they should but I may have to submit to their crapiness.
Congrats too, on having so many paid off rentals. I own 17 rentals, and have 12 owned free and clear. So I'm getting there!
Not to highjack the thread, but after listening to your podcast years back, any reason why you decided to focus on paying down the rentals vs. trying to grow that total number of doors?
Just to keep life simple. :)
Exactly how I am starting to feel. How can you 1031 out of 12 properties at once without giving them away?
@Dave Foster??
0 Reply
Gay Lloyd
Real Estate Investor · Ogden, UT · Member since 2014 · 160 posts · 81 votes
9y
Lots of good advise here ! I especially agree with @Thomas S. up above "equity must be put to work to earn it's keep" Nicely said.
0 Reply
Levi T.Pro Member
Rental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
9y
Originally posted by @Adam Klugh:

@Kyle J. Property managers don't take care of my properties the way that they should but I may have to submit to their crapiness.
@David Faulkner and @Derrick E. 18k a month is comfortable, yes. But I'm not looking for comfortable. I'm looking for change in lifestyle. Want a strategy to double my cash flow in 7 years
@Jason Chen I like your style most, except for when the U. S. Gov puts the brakes on it when it becomes too disruptive
Hire your own employee to be the PM, you'll spend a lot less, and control all terms of the operation the way you like.
0 Reply
William S.
Rental Property Investor · Overland Park, KS · Member since 2015 · 492 posts · 234 votes
9y
@Adam Klugh
How'd you get to 18 paid off rentals?
1 Reply
Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y
@Adam Klugh Equity is lazy. Have you ever read Equity Happens by Russell Gray and Robert Helms (The Real Estate Guys Radio Show). It's shows you how good is the enemy of great when it comes to equity and cash flow. As an example, I have less equity than you but have more net cash flow. I make a few hundred dollars per property over 48 properties. By doing it this way, almost all the income is tax free because it's offset by depreciation. Just my 2 cents.
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