Exit Strategy/What&#x27;s your &quot;number&quot;?

OP

Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes

5y

Originally posted by @Maksu Ize:

Freedom is boring.

All these people that retire, are bored out of their mind after a month.

The only goal is to never worry about money again.

I guess we will just agree to disagree on this one!!

We are approaching 10years since we walked away from our W2 jobs (and mostly from our REI) and the one thing I can't say I've felt yet a moment of is BOREDOM!! =)

Quite the contrary, it means that we get to diversify our time!
We can still periodically make changes within the portfolio (just completed our biggest deal to date by far exchanging a SFR we bought for 269k for a 1.1M 4plex), have started 2 different passion projects turned successful businesses to help other friends (and now also us) financially, have driven from Portland to Panama to the Arctic and back again, taught ourselves to sail and explored every island in the Caribbean (visited 22countries and counting), helped coach/counsel several people toward improving their own lives/chasing their own dreams, and learned more about both ourselves and the world in every year of that decade than a cumulative of the decades before it.

Who has the time to be bored??
Seriously, if someone is bored in retirement they lack creativity or simply aren't doing it right! =)

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

5y

My number is six. Meaning I'll be six feet under. That's when I plan to stop being productive.

My initial goal was financial independence. Not because I want to retire, but because I want to ensure my family is cared for if something happens to me. I hit that number and thought, "Now what?"

My current number is $300,000 NET income annually. I will live off $150,000 or less and the rest goes to charities. Five years ago, I would have said this is an impossible goal. Two years ago I thought it may be possible but would take 20 years. I have five years of investing under my belt and I'm already half-way there. I am 51 years old, I love my work, and I have no plans to retire any time soon. I am aiming to reach my goal by 2026 when my last child graduates highschool.

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Sam Fickel

Lender · Pasco, WA · Member since 2020 · 84 posts · 50 votes

5y

By the time I'm old and frail, I'd like to have $20,000 in passive income each month, with absolutely no debt.

I'll do this by building a portfolio of around 50-80 units that cash flow $200/month. Then, with a combination of selling off many of the properties and walking out with equity, and the Debt Snowball, I'll pay off the loans of my favorite units, to a point where I have 20 units cash flowing $1000/month and no mortgage on any if them.

Im dedicated to my career in lending so this might take several decades, and that's okay with me. I'm looking forward to the journey.

I'm on 100% commission right now, so my goal is the passive income stuff.

2 Reply

Scott Kaczmarek

Investor · Dallas, GA · Member since 2016 · 59 posts · 57 votes

5y

@Bryan Danger - I started my career 27 years ago with the first 23 years focused on saving for retirement in traditional retirement accounts. Until 5 years ago I had no concept of building streams of income instead of a pile of money. 4 years in we have a portfolio of 5 SFRs with the intention of adding another 1-3 units. We never wanted a big portfolio, but the eventual 6-8 units will cover about 1/2 our monthly expenses. My plan is to step back from my career (lots of stress and not as much fun) and get a job that I would be more passionate about even if I’m making a lot less money. The rentals will fill the income gap and bridge the time gap until we can tap into the pile..ha ha!

OP

Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes

5y

Originally posted by @Sharon Beatty:

@Bryan Danger. We bought a house In Portland and created an ADU in the basement. I'm getting out at the VA loan and moving again. Been thinking about some other Investments but financial advisor said to keep our assets more liquid. We're 5-7 years from retirement. Would like to be able to travel at retirement so thinking about converting our second floor to an Airbnb when the time comes

Good for you Sharon!
Just a thought, but have you considered building the ADU now and moving into it while you airbnb/rent our the main house? Similar to what we did a few years back, and the "flip" in monthly expenses and income might just have that retirement happening sooner than expected (and the flexibility later on when traveling as a way to come back home and visit without having to stay with family/friends is priceless)! ;)

Also fair to say most financial advisors aren't keen on REI (or at least don't know how to advise on it).
Especially if your advisor is the keeper of your 401k/retirement accounts, REI simply represents money they don't get paid on - which makes it easy to advise you to put that money into the market instead (even though in reality that investment is still only "liquid" in a good/growing market).

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

5y

your situation reminds me a lot of my beginning days in real estate.. I sold land in Northern CA.. you know the tune out drop out go live on a commune .. who needs money etc etc. I sold many parcels to many people who were just going to chill.. grow their own food grow a few pounds of weed to make cash etc etc.

As it relates to rental real estate and landlording which is 90% of your audience here.. The common theme is you have folks that have worked for others dont really like working for others and having to show up every day at the same time having to answer to the boss etc so thats their dream how do i get away from that without owning the company I work for.

Some will aspire to own their own company and that will be their financial freedom and a huge wealth generator for many.

Others the easiest thing in the US to start your own business is to simply buy rentals. No formal training the only thing that keeps you from doing it is cash and credit and desire.

So thats why in my mind you have so many folks talk about rentals as financial freedom.

now on a personal level since I started selling real estate as an agent at 18 became a broker at 20 I have never worked for anyone never had a w 2 job in well 47 years now.. So I stopped working at 18 .. thats when i left the grocery store bagging groceries.

And once you get into our business like @Marcus Auerbach and many others this just becomes a lifestyle.. As successful real estate agents and such we do have freedom to do many things.. but for that freedom we also have to perform. We cant just show up.

A lot of high producing agents have not a lot of interest in rentals per se.. Many get good at what they do and start a team ( small business) and the next thing you know they are making quite a nice annual income that 200.00 on a rental is just noise and not worth the time when they can spend 10 hours on a transaction and cash a 15k check or more.

But you have to love it you have to love sales and marketing if you dont then its just a JOB and you wont last anyway.

Not everyone wants to live a meager lifestyle.. in fact I dont think most do.. So I go back to all those I sold land to in the 70s and early 80s and sometimes I wonder if they are still living out there 30 miles back in on a dirt road growing their veggies and now the weed is basically legal.. AS we age out though most everyone needs more health care of some sorts. I get it when your young and dont even think about that..

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Ryan Morris

Rental Property Investor · Member since 2021 · 13 posts · 5 votes

5y

@Bryan Danger

Great post!

It is ironic, but a lot of the people I have encountered in my life that have the drive to succeed are incapable of shutting it off. Multi-millionaires / Billionaires are an extreme example of this. I don’t believe most are greedy, just innately driven. I know firsthand plenty of people who had the means to retire, tried it, and came back to work.

I’ve laid out my exit strategy to my wife and she basically laughed it off, telling me “you’ll never stop working” Now I’m out to prove her wrong!

I think (and I’m no expert) the key may be to channel the energy and passion into something other than accumulating wealth. Health, fitness, family, experiences, etc. But this is easier said than done!

My personal goal: $1mil per year in RE cashflow within 10 years, by working a max of 30 hours per week to achieve it. By or before the ten year mark I’d like to have a top notch management team in place so that it is as close as possible to “passive income”

OP

Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes

5y

Originally posted by @Jay Hinrichs:

your situation reminds me a lot of my beginning days in real estate.. I sold land in Northern CA.. you know the tune out drop out go live on a commune .. who needs money etc etc. I sold many parcels to many people who were just going to chill.. grow their own food grow a few pounds of weed to make cash etc etc.

Not everyone wants to live a meager lifestyle.. in fact I don't think most do.. So I go back to all those I sold land to in the 70s and early 80s and sometimes I wonder if they are still living out there 30 miles back in on a dirt road growing their veggies and now the weed is basically legal.. AS we age out though most everyone needs more health care of some sorts. I get it when your young and dont even think about that..

Hi Jay
Thanks for the response... but you may have misinterpreted a bit (or are simply making poor assumptions about who we are).

I think it would be pretty difficult for most people to label our lifestyle as "meager" (though we were willing to live that way for a few years if that's what it took to avoid the jobs - jobs that looking back I'm 100% certain would have killed me by now) ... much less living on a commune. =)

We walked away from our jobs in Portland when I was 35 to chase our dreams and find happiness, we have now travelled full time for a decade (while still young/healthy enough to enjoy it fully together), we live full time on a catamaran in the Caribbean that we own free and clear, just bought an oceanfront condo on our favorite island just in case we decide we want to grow old here later (one day when we're done sailing/exploring), still have a growing portfolio back home that pays for our perfect lifestyle and have also started a few passion projects turned businesses that are doing pretty darn well (considering our lack of interest in spending much time on them)... oh and yes, we do pay all our taxes and and fully insured/covered for health care.

Just because we chose (and continue to choose) to live a free and nomadic lifestyle doesn't mean we dropped out of society to "smoke it up at the end of a long dirt road" - and just because we have decided that it's important to us to live and experience each day fully while we're young doesn't mean we don't have a plan for the future. It might mean we chose differently than most, it might mean we're a bit more risk tolerant than most; but we're also still among the same group of people you're talking about above - who hated working for someone else and started looking for a different path.

I just happen to believe that with proper planning and an exit strategy, most investors could realize a true freedom (meaning NOT WORKING) that they haven't yet seen (or don't realize is waiting there for them) through this process just as many others get "stuck" in the cycle.

If you and others are 100% fulfilled by the art of the deal and want to continue doing if full time forever that's great for!
But just like I don't believe everyone is miserable working and looking to run away like we did, let's not fool ourselves into believing everyone loves the work and wants to do it forever.
There is also a large section of investors who are doing this specifically to find a way to NOT work rather than to keep working at what is just a different job with a different boss (even if its themselves).

OP

Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes

5y

Originally posted by @Ryan Morris:

@Bryan Danger

Great post!

It is ironic, but a lot of the people I have encountered in my life that have the drive to succeed are incapable of shutting it off. Multi-millionaires / Billionaires are an extreme example of this. I don’t believe most are greedy, just innately driven. I know firsthand plenty of people who had the means to retire, tried it, and came back to work.

I’ve laid out my exit strategy to my wife and she basically laughed it off, telling me “you’ll never stop working” Now I’m out to prove her wrong!

I think (and I’m no expert) the key may be to channel the energy and passion into something other than accumulating wealth. Health, fitness, family, experiences, etc. But this is easier said than done!

My personal goal: $1mil per year in RE cashflow within 10 years, by working a max of 30 hours per week to achieve it. By or before the ten year mark I’d like to have a top notch management team in place so that it is as close as possible to “passive income”

I think you're spot on!
The more time we spend away and talking with the newly retired (the sailing community has a LOT of them), the more Ive realized that most people are trapped for entire decades either by a fear of leaving or simply an inability not to keep doing it.

I was also hard-wired for the same, which I think is why it's such a deep interest for me now.
I couldn't imagine not working/racing/dealing full time even back at the W2 job and I thought my wife was 100% crazy when she proposed this "scheme" to quit our jobs, run away and find happiness... but I can tell you right now in full certainty that she saved my life. I would died at my desk (or on a rental car bus) years ago and never even known what happiness actually felt like.

Now, from the other side - I'm completely shocked/amazed when I see others on the same path even though I can still remember being there myself. I get it... if some people quit, find out they actually hate travel, don't enjoy free time or can't find other hobbies or interests, then fine - go back at it and an grow the portfolio or chase the dollar again... but I've also met enough others out here that were like me out here. Those of us who all thought we knew everything, thought we'd want to do it forever and now realize that in a decade (or two or three) we would have had massive regret for not going out and seeing for ourselves, not spending the time focused on our loved ones; not chasing the dreams and see where they lead us.

In not saying money doesn't have value... I'm not a complete fool (questionable).
But I do now also have an all-too-clear understanding that it also can't buy what's important (and certainly can't buy back time).

Good luck with the exit strategy/goals!
I strongly suggest writing them in sharpie in the form of an agreement/contract with the wife.
Otherwise... it's far too easy to change your mind and end up as yet another "just one more year/decade" guys.

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

5y

Originally posted by @Bryan Danger:

Originally posted by @Jay Hinrichs:

your situation reminds me a lot of my beginning days in real estate.. I sold land in Northern CA.. you know the tune out drop out go live on a commune .. who needs money etc etc. I sold many parcels to many people who were just going to chill.. grow their own food grow a few pounds of weed to make cash etc etc.

Not everyone wants to live a meager lifestyle.. in fact I don't think most do.. So I go back to all those I sold land to in the 70s and early 80s and sometimes I wonder if they are still living out there 30 miles back in on a dirt road growing their veggies and now the weed is basically legal.. AS we age out though most everyone needs more health care of some sorts. I get it when your young and dont even think about that..

Hi Jay
Thanks for the response... but you may have misinterpreted a bit (or are simply making poor assumptions about who we are).

I think it would be pretty difficult for most people to label our lifestyle as "meager" (though we were willing to live that way for a few years if that's what it took to avoid the jobs - jobs that looking back I'm 100% certain would have killed me by now) ... much less living on a commune. =)

We walked away from our jobs in Portland when I was 35 to chase our dreams and find happiness, we have now travelled full time for a decade (while still young/healthy enough to enjoy it fully together), we live full time on a catamaran in the Caribbean that we own free and clear, just bought an oceanfront condo on our favorite island just in case we decide we want to grow old here later (one day when we're done sailing/exploring), still have a growing portfolio back home that pays for our perfect lifestyle and have also started a few passion projects turned businesses that are doing pretty darn well (considering our lack of interest in spending much time on them)... oh and yes, we do pay all our taxes and and fully insured/covered for health care.

Just because we chose (and continue to choose) to live a free and nomadic lifestyle doesn't mean we dropped out of society to "smoke it up at the end of a long dirt road" - and just because we have decided that it's important to us to live and experience each day fully while we're young doesn't mean we don't have a plan for the future. It might mean we chose differently than most, it might mean we're a bit more risk tolerant than most; but we're also still among the same group of people you're talking about above - who hated working for someone else and started looking for a different path.

I just happen to believe that with proper planning and an exit strategy, most investors could realize a true freedom (meaning NOT WORKING) that they haven't yet seen (or don't realize is waiting there for them) through this process just as many others get "stuck" in the cycle.

If you and others are 100% fulfilled by the art of the deal and want to continue doing if full time forever that's great for!
But just like I don't believe everyone is miserable working and looking to run away like we did, let's not fool ourselves into believing everyone loves the work and wants to do it forever.
There is also a large section of investors who are doing this specifically to find a way to NOT work rather than to keep working at what is just a different job with a different boss (even if its themselves).

sorry it came off that way.. in fact I think your living the dream many have.. Just like my clients I sold remote land to were living their dream .. its all a matter of perspective.

and I am all for travel and experience while your young.. I did the same thing Travel that is and as I age out here I look back and I have been everywhere in the world that I care to go.. or pert near everywhere and your right we live in the Jet age.

I get the sailing crowd a little bit.. in fact in search for a boat right now LOL.. although for me I am afraid of the open ocean.. Although I have flown and owned airplanes for 35 years which has its own risk factors.

What reminded me of my clients and your story these were basically all cash buyers.. some from inheritance others from great investing some sold a business.. But they had the same goals out of the rat race.. that was my point that i did not get across very well. One of my attorneys and his wife spent two plus years on a sailing boat going around the world more than once :)

Lastly I get were your coming from especially the mind set of those that live in areas were your goal is to work for the big corp and retire on their retirement plan.. much of middle America has or had that attitude. I know my cousins in the mid west always thought I was crazy that I worked for myself .

PS your fortunate to leave PDX when U did it has turned into a cess pool .. the powers to be have let the homeless basically ruin one of the great cities in the US at least for the time being.. all of us who live in bergs unless we have to no one goes downtown anymore and many of the resturants are relocating to the burgs were as you probably remember the burgs were devoid of anything remotely unique or fine dinning.

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2 Reply

Mike TerryPro Member

Investor · Fort Myers, FL · Member since 2015 · 292 posts · 278 votes

5y

@Bryan Danger

100k a year in passive rental income and 2MM net worth. We are close on the net worth. A long way to go on the passive goals at about 24k year now. Tryhing to do this in the next 6 years.

Account Closed

Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes

5y

Originally posted by @Bryan Danger:

I spend a bit of time reading and contributing to different forums...
Real Estate, FIRE/Early Retirement, Sailing, Overlanding - and every time I come here to BP I'm left wondering why the discussions/goals I see on all those other forums don't seem to show up here.

In most cases on other forums people are 100% focused on buying their freedom and how quickly they can get there.
For some people it's RE, for some it's the market, for some its various side hustles (for most, it's a combination of all of the above), but in almost all cases the early questions and focus is always on the end goal - FREEDOM, and how soon they can reach it.

When the method is focused on the market, those investors can almost always tell you "the number" that is their goal or end point. That number where the math works out and they feel comfortable that they can live off their nest egg or dividends for the remainder of their days without working again.

But here I feel like the conversations all seem to center around growth and striving for massive portfolios and making millions... so I'm just curious what everyone's end goal is in this "game" - and IF you already have a portfolio that covers your living expenses and would allow you to live a good lifestyle without ever buying another property... what is driving you to keep expanding the portfolio and working what is now another "job"??

I'll kick things off -
For us, we initially got involved in RE investing because we were fully in love with the idea of passive income and a monthly check rather than having to wait/work jobs we hated until some unknown date far into the future.

Fast forward a couple of years and we realized that lifestyle changes and downsizing/living more simply meant that even our small/modest portfolio could already cover our living expenses and allow us to live without jobs (if we played our cards correctly).
I'm certain we could have stuck around, kept our incomes/paychecks (to be more easily financeable) and continue growing the portfolio to a more impressive stature; but the goal was always freedom, and we quit our jobs and walked aware as soon as we thought we could survive on the passive income.

Now almost 10years later, our properties have continued gaining in value while our tenants continue paying off our loans for us and we continue traveling and living abroad full-time living our best lives (quite literally) and if I look back, honestly... I only wonder why we didn't trust the process and leave even sooner.

Whats your number/end goal???

I was just thinking today 22 properties (44 doors) is enough for me at this point. My desire to acquire more is no longer there.

Roarke Van Brunt

Contractor · Portland OR · Member since 2021 · 39 posts · 24 votes

5y

I like your question @Bryan Danger.

What makes your original question so great is that for me it all started with the FI drive that took me to different places. Career moves, lifestyle changes, education, and investments. When I finally ended up looking at RE, and having gained so much knowledge on my FI journey in other areas, it really helped me appreciate what RE can do. In fact, I don't think i would really be ready or have the mindset needed for RE without FI. I think the thing I like about RE is how it scales. I am just starting my journey in RE but can already see, as @Brandon Turner put it in a recent podcast episode, I can go from level 1 to 3 to 7, and make those huge jumps. Being in construction and knowing from experience how a $4 million property development and a $20 million development can take the same time/energy/effort really made that lesson/episode resonate for me.

I think the reason you don't hear the magic number you hear in other forums is Bigger Pockers just gets you pumped! Yes, I want FI and that is how I found Bigger Pockets as part of that search/learning journey. But RE isn't really a "new job" as you say when you are excited every day to do more of what you are doing. The idea of being master of your own destiny really resonates in RE and honestly the freedom that FI is supposed to bring is I think what most are after in those forums you mentioned. If you listen to the podcast and read the forums, the freedom is built in from almost the get go, and because of that the "magic number" or "exit" just doesn't seem to be the focus.

My FI journey started years ago, but my RE journey just started, and I know where my FI journey ends, there is a number. My RE journey however has just begun. I have no idea far it's going to go, but WOW I am excited to find out.

Great post topic!

Dell J.

Member since 2010 · 210 posts · 158 votes

5y

I dont really have a magic number or an exit strategy. I dont intend to quit my day job. I will continue to search for deals and buy and hold properties. I enjoy what I do and it is sustainable. I have 11 doors across 4 properties. I am constantly looking for deals. I enjoy it so why stop. I enjoy my life now; I travel, I ski, I hike, I hang out with friends and family. I probally wont make it to 1500 doors like some poeple. But that is OK. I know that at some point 20 years from now I will be too tired or too old to not want to acquire more. When that comes I will stop regardless how many doors I have at that time.

I believe in living the life you want to live right now. And not waiting for a magic number to start living

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

5y

Originally posted by @Account Closed:

Originally posted by @Bryan Danger:

I spend a bit of time reading and contributing to different forums...
Real Estate, FIRE/Early Retirement, Sailing, Overlanding - and every time I come here to BP I'm left wondering why the discussions/goals I see on all those other forums don't seem to show up here.

In most cases on other forums people are 100% focused on buying their freedom and how quickly they can get there.
For some people it's RE, for some it's the market, for some its various side hustles (for most, it's a combination of all of the above), but in almost all cases the early questions and focus is always on the end goal - FREEDOM, and how soon they can reach it.

When the method is focused on the market, those investors can almost always tell you "the number" that is their goal or end point. That number where the math works out and they feel comfortable that they can live off their nest egg or dividends for the remainder of their days without working again.

But here I feel like the conversations all seem to center around growth and striving for massive portfolios and making millions... so I'm just curious what everyone's end goal is in this "game" - and IF you already have a portfolio that covers your living expenses and would allow you to live a good lifestyle without ever buying another property... what is driving you to keep expanding the portfolio and working what is now another "job"??

I'll kick things off -
For us, we initially got involved in RE investing because we were fully in love with the idea of passive income and a monthly check rather than having to wait/work jobs we hated until some unknown date far into the future.

Fast forward a couple of years and we realized that lifestyle changes and downsizing/living more simply meant that even our small/modest portfolio could already cover our living expenses and allow us to live without jobs (if we played our cards correctly).
I'm certain we could have stuck around, kept our incomes/paychecks (to be more easily financeable) and continue growing the portfolio to a more impressive stature; but the goal was always freedom, and we quit our jobs and walked aware as soon as we thought we could survive on the passive income.

Now almost 10years later, our properties have continued gaining in value while our tenants continue paying off our loans for us and we continue traveling and living abroad full-time living our best lives (quite literally) and if I look back, honestly... I only wonder why we didn't trust the process and leave even sooner.

Whats your number/end goal???

I was just thinking today 22 properties (44 doors) is enough for me at this point. My desire to acquire more is no longer there.

Can you live off that amount if you stop working right now? That’s an impressive amount by the way. :-)

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

5y

@Joe S. what i find interesting is when these post come up and the question is asked how much can you live on.

the common number is 10k a month we see that often.. some say 4k some say 100k really depends on where you live and if your primary home is paid for or your in a market were you can live in primary that cost say 170 to 300k and its a great house.

but you go out to the Bay Area or SF penninsula and well that same house is 3 million .

or here in Oregon PDX area 300k wont buy you anything but a lot or a very beat up fixer in the worse part of town. But in much of the US especially mid west upper mid west 300k is a lovely home in a great neighborhood. So we all have to keep that in perspective on what it takes to live.

So when i think about it as we age out and if your going to buy top notch health insurance .. even with your home paid for and no other debt 10k a month could be comfortable but its not extravagant by any means maybe a few vacations a year etc.

My health insurance for my wife and I is 2500 a month a loan.. and so many people on this site have no clue.. Now we both just got on Medicare but since they go back and look at your earnings we are still paying 1500 or more I think I have not got mine yet . and that does not cover everything.. its for these reason I will never retire and will keep doing deals until i cant. I need the income.

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3 Reply

Robert C.

Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes

5y

@Jay Hinrichs, so I was just reading some market reports the other day. San Mateo county average home price for Q2 2021 went above $2m for the first time ever and the only Bay Area county to do that - speaking of what a home costs here.

As to the OP question, I don’t know the answer yet. But I do know it’s hard to stop, especially in this environment when you see inflation and housing prices sky rocketing, and you’re wondering what your nest egg will actually be worth coming out of this cycle. Some folks might want to think about raising their numbers!

Amy A.

Portland, ME · Member since 2012 · 616 posts · 550 votes

5y

My number was about $45,000 per year in 2014 with 2 years of living expenses in the bank. This would be enough to meet our basic needs. That's the year my husband and I turned 40. He was burned out at his job - with daily headaches, missing the kids' events, tired of being taken advantage of, no time for a life. I had been flipping houses mostly by myself and managing 10 apartment units. I started the "Free Mikey" fund, and we calculated the number of units we would need to get to $45k in rental income, so we bought 10 more units that year. He quit his job and started a consulting business. In 2015 he made 60% more consulting than he had ever made working for someone else.

Now we have 53 units and have done 1 or 2 flips per year. We've far surpassed our goal and have added new ones. Because managing the manager was such a hassle, we self-manage, but I look specifically for low-drama tenants and do a lot of preventative maintenance. We've decided to stop flipping houses in this crazy labor market since we don't want to do the work ourselves and don't need the money. He still does consulting work when he wants to.

Your question is valid because meeting our goal was much easier once we had a number. It's counter-intuitive, but we had to spend money to buy more property in order to have more money. We're trying to slow down a bit and enjoy life. Spending money on depreciating assets - like campers, cars and boats, is counter to what we spent years building, but we really need to have more fun! Read the Parable of the Talents to see why it may be hard for some people to stop investing.

Gabriel Tapang

Rental Property Investor · Wilsonville, OR · Member since 2019 · 40 posts · 34 votes

5y

Initially, I got into RE buy and hold investing to reach that 'intersection of passive income and lifestyle' so I can quit the W2 salary job. For me, that number is $5k a month. As I started learning more and after buying my first 3 properties, I find RE so intriguing that my new goal is to quit my W2 so I can pursue my passion, which has become anything and everything RE. Once I hit my number, I would love to find an accredited investor or someone more established to learn more about flipping/wholesaling/RE notes/'whole-tailing' etc. by working for them.

After going through all the replies to this post, it seems to be a recurring pattern that people start here to achieve financial independence only to learn that RE investing offers such a plethora of ways to make a living that can appeal to all types of personalities (introverted, extroverted, narcissistic, obsessive-compulsive *haha) and in the end they find they would prefer to continue down the RE path.

I wouldn't say so much that people here on BP get 'stuck in the cycle' as much as people here on BP end up discovering something about RE that they are truly passionate about - it's a beautiful thing! :)

Andy Nathan

Rental Property Investor · Chicago, IL · Member since 2019 · 203 posts · 119 votes

5y

@Bryan Danger my wife and I had a baby daughter a few months ago. That changed my freedom date slightly. That said, I built up a good career in marketing. Based on my investment strategy, I believe I can replicate my income in 18-24 months. I will still need to manage the properties but I am building technologies and systems to improve the operations of this as well.

OP

Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes

5y

Originally posted by @Robert C.:

@Jay Hinrichs, so I was just reading some market reports the other day. San Mateo county average home price for Q2 2021 went above $2m for the first time ever and the only Bay Area county to do that - speaking of what a home costs here.

As to the OP question, I don’t know the answer yet. But I do know it’s hard to stop, especially in this environment when you see inflation and housing prices sky rocketing, and you’re wondering what your nest egg will actually be worth coming out of this cycle. Some folks might want to think about raising their numbers!

My initial question wasn't meant to be "when will you stop doing deals?", but when will you take advantage of the freedom REI allows us, hand the keys over to a PM and walk away. Stop working full or mostly full time on the portfolio as if its another job.

If one has the means, you should always go after opportunities, and I happen to agree with you that there are several at the moment!

OP

Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes

5y

Originally posted by @Gabriel Tapang:

Initially, I got into RE buy and hold investing to reach that 'intersection of passive income and lifestyle' so I can quit the W2 salary job. For me, that number is $5k a month. As I started learning more and after buying my first 3 properties, I find RE so intriguing that my new goal is to quit my W2 so I can pursue my passion, which has become anything and everything RE. Once I hit my number, I would love to find an accredited investor or someone more established to learn more about flipping/wholesaling/RE notes/'whole-tailing' etc. by working for them.

After going through all the replies to this post, it seems to be a recurring pattern that people start here to achieve financial independence only to learn that RE investing offers such a plethora of ways to make a living that can appeal to all types of personalities (introverted, extroverted, narcissistic, obsessive-compulsive *haha) and in the end they find they would prefer to continue down the RE path.

I wouldn't say so much that people here on BP get 'stuck in the cycle' as much as people here on BP end up discovering something about RE that they are truly passionate about - it's a beautiful thing! :)

I hope you're right and I'd certainly like to look at it that way!

For us however... as much fun and rewarding as RE is - at some point enough is enough.
There are still other passions in life and it all comes down to time. If we are buried in the full time job of RE and growing our portfolio (even if that is FAR better than the W2s we had before) its still keeping us from fully exploring other passions/interests, time spent together, time spent with loved ones etc.

I love RE, but it's simply among a long list of passions... so why not let it be the one that pays for the freedom to enjoy the others?

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

5y

Originally posted by @Bryan Danger:

Originally posted by @Robert C.:

@Jay Hinrichs, so I was just reading some market reports the other day. San Mateo county average home price for Q2 2021 went above $2m for the first time ever and the only Bay Area county to do that - speaking of what a home costs here.

As to the OP question, I don’t know the answer yet. But I do know it’s hard to stop, especially in this environment when you see inflation and housing prices sky rocketing, and you’re wondering what your nest egg will actually be worth coming out of this cycle. Some folks might want to think about raising their numbers!

My initial question wasn't meant to be "when will you stop doing deals?", but when will you take advantage of the freedom REI allows us, hand the keys over to a PM and walk away. Stop working full or mostly full time on the portfolio as if its another job.

If one has the means, you should always go after opportunities, and I happen to agree with you that there are several at the moment!

I think one thing you have to differentiate is the Real Estate investor with no real back ground in real estate other than buying rentals and the real estate professional who makes fee's via real estate and owning real estate is just part of your job ..

for those of us to are quote un quote real estate professionals who just happen to own our stock en trade for the top tier agents, Loan Brokers, large PM's, developers, Commercial Broker, apartment syndicators Turnkey company owners etc etc.. we dont look at work the same way as a w 2 . we are not stuck at a job.. Once you apprentice in these occupations and become that top tier your business activities income will give you the means to do what your talking about travel the world buy a sail boat buy an airplane take tons of time with family ( for me start a charity ) or just hang out on BP LOL. And it becomes a lifestyle. Owning rentals is just another business you could do the same thing buying any number of small business's were you hire a good GM to run it..

For me and the feel good of giving back to society we often forget about the trickle down effect that we have in this industry. Landlords do create some jobs for folks maintaining their buildings so thats nice.. I look at what we do which is fund acquisitions for buy and hold investors in 12 states and build new construction in 3 states and run it all from my house in Lake Oswego.. The trickle down effect every house we build touch's at least 20 families not to mention all the suppliers of all the things we need to buy to accomplish these tasks. There is a lot of gratification once you realize what good your doing for others and not just yourself.

So again back to perspectives and your personal desires for your life. Keep in mind the main sales pitch for MLM and real estate gurus starts with a picture of the family and your doing this so you can spend more time with your family. Well those are all great thoughts but the reality is as your kids age the last person they want to spend time with is their parents.. there is a certain amount of it sure.. But its not the overwhelming factor as reality sets in.. Then U have grandkids and we are the trusted grandparents which of course we enjoy especially my wife.

Bottom line those who do choose RE as a profession stick with it for 10 years get to the top 20% do live the life your talking about everyday I know i have since I was about 25 .. and had 7 years behind me in the industry.

JLH Capital Partners51 Review

2 Reply

OP

Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes

5y

Originally posted by @Jay Hinrichs:

@Joe S.

its for these reason I will never retire and will keep doing deals until i cant. I need the income.

There it is Jay! That's the underlying fear I think/fear that most people have.

As much as I want to believe that everyone is on BP and working on their REI because it's just so fun/rewarding they can't imagine doing anything else... I think in reality much of it is actually based in fear. Fear that we all "can't afford to stop".

If that's the reality of the mindset (especially from someone like you who is a successful "RE Professional"), then it's no different than the trap created by the W2 job with a different boss. Maybe this is just the new version of the american dream... For older generations it was get a job and keep it your whole life because the pension would pay you back when you needed it. Now, we realize that it's possible to be our own boss and make more money/generate more freedom - but what's that worth if we don't actually use that freedom while we have the time?
Again, it sounds like you are happy with your life and wouldn't change a thing and that's great for you... but I don't presume that's the norm and that most people would choose to work forever, even if it's in real estate. I think goals ad escape plans are important to keep us all from becoming stuck in the "one more year", "one more investment" or "one more million" crowd, but obviously everyone is different and looking for something different out of life.

The one thing that gets lost in your "I have to keep doing this because I need the income" equation is that it is actually possible to reduce the cost of your lifestyle (and I would argue, sometimes while actually improving your lifestyle rather than the assumption of having to live in strife)! I think this is a common american problem... we've been so immersed in the consume/grow/success cycle that we never stop long enough to truly ask ourselves what we want, what the end goal is or what success truly looks like. I know I hadn't!

The truth is that when I finally broke out of the cycle for a little while to figure it out; when I looked at what is truly important in life and evaluated things on a larger level - the full time job of REI that I was working so hard to "escape to" was really not so different than the W2 job I worked so hard to "escape from".

When most people lie on their death bed, (or worse, sit next to their parter while they lie on there's)... many have regrets about time wasted, about dreams not followed, about not having enough time spent together - but I've heard very few tales of people who faced with the end say "I'm so proud of the wealth I generated along the way".