Exit Strategy/What's your "number"?

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

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???

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Joe SplitrockPro Member

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Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

@Bryan Danger I have seen many discussion threads here on the BP forums that talk about freedom number and goals. It could be that one was not trending when you have been checking in here. I also find some accomplished real estate investors are driven by more than freedom. People who get into business and real estate investing have a drive to accomplish goals and succeed. For many people it is the journey and sense of accomplishment that drives them. People who are passionate about real estate don't consider it a job. In fact when you scale it becomes even easier to outsource the parts of the business you don't like. Some of these people keep building the business, even though they don't "need" the extra income.

Your question is assuming everyone wants to exit the business. You are assuming your idea of freedom or the "good life" is the same as everyone else. Not everyone wants to travel the world. Some people want time with their family or raising children. Some have a passion for animals and would rather run a rescue mission. Some people love their work and would rather spend 60 hours a week in the office, achieving high levels of success in their profession. Some would rather go surfing every day. Some are trying to build generational wealth. At 87 years old Warren Buffet still works 8 hours a day. He has a passion for his business. He leads a frugal life style and could probably live on less money than you or I. He is a philanthropist that has pledged to give away all his wealth to help those less fortunate. You may be traveling the world, but he is changing the world. Everyone has their own passion and finds meaning in different places.

I have said before that financial freedom is simply the intersection of income and life style. A homeless man sleeping on a park bench is financially free. Freedom doesn't require retirement or frugality. These are two misconceptions I find in the FIRE community.

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Michael Temple
Rental Property Investor · Toledo, OH · Member since 2017 · 257 posts · 215 votes
5y
@Bryan Danger
"Sounds like you've already built a lot of freedom and flexibility into your business, which is great. Good for you! It's those guys that I guess drive my curiosity.
I don't disagree with REI being interesting and fun. I'm also still making deals and changing the portfolio from afar as the timing is right... I just realized at some point
that there were many (other) passions and interests and that enough was enough; at least in terms of full time work to expand/make more money. Maybe
several of those guy are already living their best life and simply took time away to go meet with you and discuss the portfolio/make a deal/offer... but I also wonder how many simply got trapped in the cycle. For most in the 9-5 its a buy/work/buy cycle that keeps them in it, but in REI the end goal or "success" often seems to be a bit more of a gray zone - thus my question."
I am not sure this is necessarily an either/or choice. You can use investments in real estate to support your lifestyle, which may or may not include doing more deals. Maybe, as you said, you have other interests and real estate passive income is simply a way to fund those other interests. On the other hand, you might enjoy still keeping your hand in it as it were and doing deals because it is fun and stimulating.
What I really love about it is once you have the skills, knowledge, experience, network, and portfolio you can choose to do "just a little" as it were. For example, if you have an SDIRA and you have already reached the traditional retirement age you could always do a flip or two per year, maybe a little wholesaling and use those now immediately accessible tax-free funds to do something special like a trip around the world. You don't need to go get J.O.B. (Just Over Broke) to earn extra cash like people that followed a more traditional approach to life might have to.
Maybe you convert all of your rentals into seller-financed notes and live off a portfolio of notes without having maintenance for properties. Maybe you like managing properties because you are good at it. I know at least 3 investors well into their 70s that still do all of their own management. They love it and are good at it. It doesn't crimp their retirement lifestyle at all. They still travel, spend time with family, etc.
The main point I am driving at is this investment classes in all its aspects (rentals, wholesaling, flips, notes, private lending) gives you A LOT of options at any age to control income, lifestyle, time commitment, and ultimately do what you want to do however you want to do it. There is no one right answer.

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Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
Originally posted by @Bryan Danger:
Originally posted by @Joe Splitrock:

Fair point on the adding the word passive into the intersection statement. I guess I took the liberty of assuming that was a given when talking freedom.

Keep in mind when comparing a FIRE forum to the BP forms that the ENTIRE and only purpose of FIRE is financial independence and retiring early. Everyone there is investing and saving to quit their jobs. For that reason, you would expect that to a be a common topic. BiggerPockets has a wider range of users that are here for many different things. Many of the regular posters here have already quit their day job. Some are realtors or syndicators looking to build their business. Others are lenders, insurance agents, etc. Yes, there is also a group of investors who are building a real estate side business with plans to quit their W2. I think that is the group you are talking about. There have been some large discussion threads on here where people discuss their goals. It is usually a "freedom number" for passive income that allows them to step out of their full time job. Some have a specific age or number of years. Don't take the lack of response to your post as indication that people don't care. Some questions just never trend, so they don't catch peoples attention.
In my case, I hit my freedom number several years ago. I am "free" but chose to hold on to my W2. I enjoy my job, have flexibility, good vacation, good benefits, travel the country and work from home. Stability and health insurance are important to me at this stage with a child in school. Once my daughter is out of school, my wife and I will travel much more. I don't expect to keep my W2 past the age of 50 and I may even quit sooner. In my experience once you reach financial freedom, your job becomes more enjoyable because your attitude changes. I say and do what I believe, having no fear of "sucking it up and dealing with it". I found since adopting that attitude, I have done even better in my career with less time demand. The other thing to keep in mind is many people chose careers that they didn't like, have demanding bosses or work physical / service jobs. That is why they want to quit. Those of us who have careers we enjoy, don't feel that same urgency.
The point is FREEDOM comes in many forms, as does happiness, goals and contentment. Some people grow a business for the sake of accomplishment. Look at most every giant company in the world and you see that the founder stayed on as CEO well past the point of "having enough to live on". Most of them could have sold out for millions in their 20's. The fact that they don't has nothing to do with greed or lack of goals. They are motivated by the thrill of business, like you get excited by sailing or your other passions.
It is hard to generalize BiggerPockets or really any group of people. You will find a total mixed bag here. I am sure some are stuck or have no idea what their goal is. If you listen to the BP podcast, you will notice considerable time is spent on talking about goal setting and having a why. This is an important topic to people and I think anyone accomplished has thoroughly considered these things.
On the flip side, I have always wondered why the FIRE crowd ended up in a job they hate so much and why they want so bad to retire. I have always thought, why not just get a job you love? I think sometimes people get so caught up on early retirement that they don't even know why they are retiring. Maybe that is the opposite problem of not having an exit strategy. Having an exit strategy, but not a life focus. We all need purpose, challenges and a sense of contribution.
I appreciate the interesting discussion. I think your story is really cool and I congratulate you on following your passion.
Thanks again Joe!
No desire to generalize anyone... to the contrary trying to learn from all different types as I don't think we fit well into any group or single particular mindset.

I understand the FIRE crowd's desire to get out because I happened to fall into one of those jobs i hated (and also felt very trapped there... though looking back now I'm honestly not sure why. Youth, lack of confidence, who knows). What I dont understand is why almost nobody in that crowd sees Re as a possible path to get there and at least based on the forums i tried to join and be a part of the average retirement age is still in the 60s... thats NOT my idea of ER!

I think its great that you love your job/W2! I have so much jealousy for that and no question in my mind that would have been a MUCH easier path than the unconventional trail we've been fighting to blaze along the way. I wish we were all so lucky to have found jobs we love, but Im afraid you are probably in a very small minority.

I think the FIRE crowd largely stays away from real estate investing because it is really not passive. I should say, not as passive as going to my online brokerage account and dumping a few thousand into an index fund. That literally takes no effort to acquire and no effort to manage. Rental properties take effort, if nothing else just buying them takes some effort and skill. My theory is some people in the FIRE crowd can't handle a day job, let alone handling a side rental business. It takes an entrepreneur to run a business or own rental properties. Many in the FIRE crowd can't get past the employee mentality in life.
What I also find ironic about FIRE is some of the early pioneers of FIRE actually make more money in retirement from their blogs, website or podcast. So they push the idea of "anyone can retire early" but neglect to mention that their life style is also supported by "teaching others" how to retire early passively. That is wonderful, but I just think people need to understand that stock investments alone are tough to retire on. Of course now I am generalizing. It depends on how much you are investing and what you require to live on.
This topic is very complex, but I appreciate your perspective.
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Justin R.
Developer · San Diego, CA · Member since 2015 · 1k+ posts · 1k+ votes
5y

This question very nicely highlights the difference between those with a job mindset and those with an entrepreneur mindset. People with a job mindset have "a number" and view their work as a means to an end. With an entrepreneur mindset, their daily work IS the end goal and so there is no logical time to stop. Entrepreneurs find something they are passionate about, then find a way to get paid for it so they can keep doing what they want to be doing. This fusion of what they *want* to do and what they *have* to do is the reason there's no target number... why stop doing what you want to be doing?
The discussion on BP around *growth* and *striving* is because that's what entrepreneurs do. Entrepreneurs get their jollies by creating and building things, so of course they want to create more.
FOR SURE there's lots of different mindsets here and OF COURSE some people are just attracted to the potential of getting shiny things. But, compared to other groups, I'd say BP has a high percentage of people who have built wealth not for the sake of wealth, but as a result of their interest in the REI game. So, why stop?
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Marcus Auerbach
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
5y
@Jay Hinrichs - you are right, it is not easy to maintain a focus on investing as an agent once you achieve a good production level or start a team. I took my eyes off the ball for a few years when I got licensed and I make it now a point again to buy real estate. Here is why:
When my dad got divorced in his late 50s, lost the house and the horse farm he helped my mom build on the side, nigts and weekends, he moved to an appartment he said: "I worked my whole life and I have nothing to show for."
That hit me so hard. It was a moment that defined my life. Thats why I keep buying single family homes!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Justin R.:

This question very nicely highlights the difference between those with a job mindset and those with an entrepreneur mindset. People with a job mindset have "a number" and view their work as a means to an end. With an entrepreneur mindset, their daily work IS the end goal and so there is no logical time to stop. Entrepreneurs find something they are passionate about, then find a way to get paid for it so they can keep doing what they want to be doing. This fusion of what they *want* to do and what they *have* to do is the reason there's no target number... why stop doing what you want to be doing?
The discussion on BP around *growth* and *striving* is because that's what entrepreneurs do. Entrepreneurs get their jollies by creating and building things, so of course they want to create more.
FOR SURE there's lots of different mindsets here and OF COURSE some people are just attracted to the potential of getting shiny things. But, compared to other groups, I'd say BP has a high percentage of people who have built wealth not for the sake of wealth, but as a result of their interest in the REI game. So, why stop?
EXACTLY its a lifestyle its what we do.. After 2 weeks of vacation I am bored silly LOL.. I was fishing in Montana a few weeks ago and was thinking you know I think will just check out for 5 days.. well that last about 30 minutes when I got back to the lodge .. I took my lap top just in case.. the lodge said no internet but lo and behold there it was wi fi.. there was no cell service though so that was good.. the guys I were fishing with were retired fully one owned car dealerships one a newspaper and one a Lumber mill.. their big interest after fishing was to check who was doing well in the golf tourne and other sports pursuits.. Along with running the golf at their CC there was a big tourne coming up. :) We all have our things.. I do think back though on other things other than real estate.. I mean I grew up in Cupertino same age as Jobs was around a lot of these people starting software computers etc.. could have easily gone in that direct not that I knew anything about computers but I could have sold them. got in on early stock options and who knows.. right.. but cant look back. My daughter has gone far up the food chain at Intel and she LOVES her J O B and is highly compensated for it.. Plus lives the Dave Ramsey life style NO debt all assets :)

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Robert C.
Investor · San Francisco, CA · Member since 2016 · 338 posts · 444 votes
5y
@Bryan Danger, If you want to get to the philosophical nuts and bolts of this, I think it's less about fear or avoiding a JOB and it's more about fulfillment and self-awareness in whatever you end up doing. Fear can be a motivating factor both for real estate investors, and for people who are living on a beach somewhere - and to that point, I don't view fear as a negative or positive emotion, because it can be a useful tool to get where you're going. Or - it can trap you in an unhappy life, too.
For arguments sake, maybe at the end of someone's life sailing and traveling, they might feel less fulfilled than the guy who worked an 80-hour a week job for their whole life but provided for a family with a bunch of kids and grandkids and, to Jay's point, helped some other people in their life journey.
Anyway, that's what I was thinking after the last few posts... I think everyone agrees you don't want to be psychologically trapped in a life with no internal value.
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JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
5y
Originally posted by @Joe Splitrock:
Originally posted by @Bryan Danger:
Originally posted by @Joe Splitrock:

Fair point on the adding the word passive into the intersection statement. I guess I took the liberty of assuming that was a given when talking freedom.

Keep in mind when comparing a FIRE forum to the BP forms that the ENTIRE and only purpose of FIRE is financial independence and retiring early. Everyone there is investing and saving to quit their jobs. For that reason, you would expect that to a be a common topic. BiggerPockets has a wider range of users that are here for many different things. Many of the regular posters here have already quit their day job. Some are realtors or syndicators looking to build their business. Others are lenders, insurance agents, etc. Yes, there is also a group of investors who are building a real estate side business with plans to quit their W2. I think that is the group you are talking about. There have been some large discussion threads on here where people discuss their goals. It is usually a "freedom number" for passive income that allows them to step out of their full time job. Some have a specific age or number of years. Don't take the lack of response to your post as indication that people don't care. Some questions just never trend, so they don't catch peoples attention.
In my case, I hit my freedom number several years ago. I am "free" but chose to hold on to my W2. I enjoy my job, have flexibility, good vacation, good benefits, travel the country and work from home. Stability and health insurance are important to me at this stage with a child in school. Once my daughter is out of school, my wife and I will travel much more. I don't expect to keep my W2 past the age of 50 and I may even quit sooner. In my experience once you reach financial freedom, your job becomes more enjoyable because your attitude changes. I say and do what I believe, having no fear of "sucking it up and dealing with it". I found since adopting that attitude, I have done even better in my career with less time demand. The other thing to keep in mind is many people chose careers that they didn't like, have demanding bosses or work physical / service jobs. That is why they want to quit. Those of us who have careers we enjoy, don't feel that same urgency.
The point is FREEDOM comes in many forms, as does happiness, goals and contentment. Some people grow a business for the sake of accomplishment. Look at most every giant company in the world and you see that the founder stayed on as CEO well past the point of "having enough to live on". Most of them could have sold out for millions in their 20's. The fact that they don't has nothing to do with greed or lack of goals. They are motivated by the thrill of business, like you get excited by sailing or your other passions.
It is hard to generalize BiggerPockets or really any group of people. You will find a total mixed bag here. I am sure some are stuck or have no idea what their goal is. If you listen to the BP podcast, you will notice considerable time is spent on talking about goal setting and having a why. This is an important topic to people and I think anyone accomplished has thoroughly considered these things.
On the flip side, I have always wondered why the FIRE crowd ended up in a job they hate so much and why they want so bad to retire. I have always thought, why not just get a job you love? I think sometimes people get so caught up on early retirement that they don't even know why they are retiring. Maybe that is the opposite problem of not having an exit strategy. Having an exit strategy, but not a life focus. We all need purpose, challenges and a sense of contribution.
I appreciate the interesting discussion. I think your story is really cool and I congratulate you on following your passion.
Thanks again Joe!
No desire to generalize anyone... to the contrary trying to learn from all different types as I don't think we fit well into any group or single particular mindset.

I understand the FIRE crowd's desire to get out because I happened to fall into one of those jobs i hated (and also felt very trapped there... though looking back now I'm honestly not sure why. Youth, lack of confidence, who knows). What I dont understand is why almost nobody in that crowd sees Re as a possible path to get there and at least based on the forums i tried to join and be a part of the average retirement age is still in the 60s... thats NOT my idea of ER!

I think its great that you love your job/W2! I have so much jealousy for that and no question in my mind that would have been a MUCH easier path than the unconventional trail we've been fighting to blaze along the way. I wish we were all so lucky to have found jobs we love, but Im afraid you are probably in a very small minority.

I think the FIRE crowd largely stays away from real estate investing because it is really not passive. I should say, not as passive as going to my online brokerage account and dumping a few thousand into an index fund. That literally takes no effort to acquire and no effort to manage. Rental properties take effort, if nothing else just buying them takes some effort and skill. My theory is some people in the FIRE crowd can't handle a day job, let alone handling a side rental business. It takes an entrepreneur to run a business or own rental properties. Many in the FIRE crowd can't get past the employee mentality in life.
What I also find ironic about FIRE is some of the early pioneers of FIRE actually make more money in retirement from their blogs, website or podcast. So they push the idea of "anyone can retire early" but neglect to mention that their life style is also supported by "teaching others" how to retire early passively. That is wonderful, but I just think people need to understand that stock investments alone are tough to retire on. Of course now I am generalizing. It depends on how much you are investing and what you require to live on.
This topic is very complex, but I appreciate your perspective.

I've already posted on this but your post made me think of a couple of other things I wanted to say (or agree with!):
1. Virtually all of the "retire early" people are making money from the concept of retiring early. It's pretty hard to say you're retired if you're doing a podcast or actively running a website peddling ads, products or other people's products; someone has to run the website - create content for the blog - find and interview the podcast guests - etc. My favorite podcaster in this vein is Paula Pant (Afford Anything), who is intellectually honest in that she's not really "retired" so much as not working a job she doesn't enjoy. Mr. Money Mustache is also fairly honest about the whole concept as well for him, which was really more of a "financial security" than "sit on the beach drinking appletinis" retirement.
2. Retiring solely on index funds like a lot of these guys advocate is (in my opinion) a very dangerous way of retiring, especially the younger that you are. The timing and withdrawal of your investments and returns are a major factor in how much you end up with, and since no one can time the market with any regularity, your retirement could be sunk simply as a by-product of bad luck. I would sooner own a business that I hired managers to run than I would rely on index funds for 30+ years of retirement.
3. I agree 100% with the FIRE mentality. I'm just going to throw it out there, a lot of those people are just damned lazy. They simply don't want to work at all and believe there's some free lunch sitting around if you just know what restaurant is serving it.
4. Somewhere along the way we've allowed the perverse idea that "work is something to avoid" - to paraphrase my own song (©JD Martin/Rhythm Brewers)- to become so pervasive that a whole generation of people are looking for how to have a good life without any effort. In my opinion this is the backbone of the idea of the "gig" economy - a hustle here, a hustle there (thanks Lou Reed) and you've got a slammin' lifestyle. I call BS on the very idea. Work is noble. Work is worthwhile. Work builds value, character, civilization. Who in the hell is going to pay the rent if everyone is sitting around drinking Appletinis on the beach? This would be a pretty sad civilization if everyone checked out at 35 to island hop or make Tik Tok videos.
To me the key is not escaping from work - it's finding work that's so fulfilling that you look forward to doing it. And you know, sometimes that's not necessarily in the work - sometimes the work is just a means to an end to achieve a greater goal. There's lots of things on a daily basis that I'd rather not do than do - take out the trash; cut my fingernails; do the laundry; etc. But the alternative sucks, so I suck it up and get it done. Instead of dreading your day at work, how about looking at what it's allowing you to do? Feed your family; put money aside for buying rental properties; donate to your church or favorite charity; buy the toys you want. In the greatest country in the history of the planet, if your job sucks so bad you can't bear to do it another day, and you can't go find another opportunity, you just don't want to and should at least be honest about it.
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Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
5y
@Bryan Danger
Hopefully people aren't reading your stream and getting sucked in. As I stated before show your numbers. The topic is fine, but your approach doesn't work. In the mean time I'll give you some items to reach "Financial Independence", your not there yet. As all of the BP crowd will say, have you done your numbers. Otherwise its gambling. Lets make this post, a how to do "Financial Independence" once you get to your number. A checklist. It will be beneficial for you.
1. Get with an accountant with a payroll service and have them pay in annually an amount for Medicare/Medicaid. If you don't have W2 income. Don't want to hear about spaghetti dinners and go fund me pages when you run into a problem, and you spent all your money. Chump change now.
If you have these covered then just state you have them covered and how. Then do 2. If not I will do 2.
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Sean Walcott
Member since 2020 · 20 posts · 7 votes
5y
@Bryan Danger
I wish I knew. My biggest struggle is that my W-2 pays for health insurance for my family. I can’t imagine going out on my own yet or ever having to pay an extra $30,000 a year for coverage.
My goal right now Is to never feel dependent on my job, never get too stressed about having one, and Actually shutting down when I go on vacation.
I’m really lucky I have a job that gives me meaning, that I think it’s worth my time, and great coworkers. I would probably feel different if I wasn’t working from home full-time.
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Joe S.Pro Member
Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
5y
Since a couple of other posters decided to post twice I guess I will as well. :-)
It appears some people work very hard at not working. In my opinion that could be harder work.
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Bryan Danger
OP
Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes
5y
Originally posted by @Justin R.:
This question very nicely highlights the difference between those with a job mindset and those with an entrepreneur mindset. People with a job mindset have "a number" and view their work as a means to an end. With an entrepreneur mindset, their daily work IS the end goal and so there is no logical time to stop. Entrepreneurs find something they are passionate about, then find a way to get paid for it so they can keep doing what they want to be doing. This fusion of what they *want* to do and what they *have* to do is the reason there's no target number... why stop doing what you want to be doing?
The discussion on BP around *growth* and *striving* is because that's what entrepreneurs do. Entrepreneurs get their jollies by creating and building things, so of course they want to create more.
FOR SURE there's lots of different mindsets here and OF COURSE some people are just attracted to the potential of getting shiny things. But, compared to other groups, I'd say BP has a high percentage of people who have built wealth not for the sake of wealth, but as a result of their interest in the REI game. So, why stop?

I very much agree with you on the difference in mindset (and on just about everything above... especially on the fact most of the crowd here seems to be not only doing it right, but also for the right reasons).

I guess as it turns out, I just also happen to be an "entrepreneur mind" that while hating the "job mindset" also likes the idea of there also being an "end/exit". Granted, I'm pretty high on the ADHD scale... but I find change exciting, and moving onto something new means more opportunities to learn something different, to tackle new challenges.

To me that doesn't have to mean boredom, checking golf scores at the country club or sipping appletinis on a beach, it's just that I enjoy far too many passions to spend 8hours a day doing any of them for very long (even if that thing is REI).

At some point if the portfolio is a full time job then I'm bored with it and likely growing frustrated that it keeps me from other things, other pursuits and adventures. If I have be available (physically present)... that means I'm a bit trapped and not truly free to do what I want or be where I want. That's not my personal goal of freedom.

In fact, I would argue that doing REI full time for long enough can settle many people into roughly the same as the "job mentality" you describe above.
The very definition of Entrepreneurship is based on starting something new. At some point with enough properties or deals; REI just like anything else is no longer new. It's just a means to a different end (albeit, probably a better one) and I guess that's what surprises me and make it feel like somewhere along the way the entrepreneur mind actually gives way toward simply being about making more money (to be clear, Im also not saying its a bad thing... just that Im intrigued by it).

The true beauty of REI in my opinion is that exiting doesn't mean I cant keep the portfolio, or even still make some additions or exchanges as the timing or market is right, but it also means I escaped what (at least for me) starts to feel a lot like work or a job simply to do, start, learn things that seem more exciting for right now.

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Bryan Danger
OP
Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes
5y
Originally posted by @Joe Splitrock:

I think the FIRE crowd largely stays away from real estate investing because it is really not passive. I should say, not as passive as going to my online brokerage account and dumping a few thousand into an index fund. That literally takes no effort to acquire and no effort to manage. Rental properties take effort, if nothing else just buying them takes some effort and skill. My theory is some people in the FIRE crowd can't handle a day job, let alone handling a side rental business. It takes an entrepreneur to run a business or own rental properties. Many in the FIRE crowd can't get past the employee mentality in life.
What I also find ironic about FIRE is some of the early pioneers of FIRE actually make more money in retirement from their blogs, website or podcast. So they push the idea of "anyone can retire early" but neglect to mention that their life style is also supported by "teaching others" how to retire early passively. That is wonderful, but I just think people need to understand that stock investments alone are tough to retire on. Of course now I am generalizing. It depends on how much you are investing and what you require to live on.
This topic is very complex, but I appreciate your perspective.

You are most definitely generalizing!! But based on my experiences in those communities I also happen to agree with you (in general, but I have also met many highly successful VIP types out here who very clearly could "handle" starting something new but simple had/have no desire to).

I really relate well to the goal-setting and planning of most in the FIRE community, but then my mind is blown when I start asking most people what their age goal is/was for early retirement! For most it's late 50s to early 60s. Can that even be called early with a straight face, especially among a group who is actively looking to leave because they don't like their job (generally speaking)???
Seriously, that crowd needs real estate more than anyone... but for some reason they read the wrong book first and now can't admit that there might be a better/faster way to realize the exact same goal. It's like "leverage" and "passive income" are foreign or dirty words!

I now live mostly among people who have retired on stocks alone (some early, some not)
I get stressed out just watching them check the market each day... The idea of having to constantly do the math or live in fear that they might "live too long" seems completely counterintuitive to me.

I certainly don't bring up FIRE because I promote all of the ideas... but I do think there are a few components of the mentality that could also do some good to those of us more inclined to REI (goalsetting and exit strategies among them).

Thanks again for the dialogue!

1 Reply
Henry ClarkPro Member
Developer · Member since 2020 · 4k+ posts · 4k+ votes
5y
@Bryan Danger
2. Still on health insurance/costs. Get an annual policy with Allianz Global, since your travelling. Costs $825. This will cover transportation costs back to the US for anything major plus other medical.
Non life threatening issues in Second and Third world; setting broken leg $50; MRI scan $200; Hip replacement $15,000; Chinese Acupuncturist $10/hour; US trained doctor $50/hour just because he wanted to talk with someone from the US; Prescription drugs being over the counter from Pharmacist cheap, etc. If you want better care, then contract with local doctors versus State run clinics. Most are US or Cuban trained.
Your major issues of Heart surgery, Cancer treatment, or ongoing treatments such as dialysis; you will need to find a low premium, high deductible coverage, plus move back to the US for treatment. This is your main concern if not in the US or a 1st world country. Since this will probably be a rare occasion, don't need to set aside funds. Need to be prepared to sell a property to meet deductible. If you don't have insurance, you need to be prepared to sale all of your properties ($250,000 to $1,000,000 bill), plus go back to work while taking Chemo or rehabilitating from Heart surgery.
Tell us your numbers and how you have covered.
What's number 3 item on your list for Financial Independence?
0 Reply
Lindsey Ceane
Rental Property Investor · Member since 2020 · 10 posts · 18 votes
5y
@Bryan Danger
My end goal is $15,000 a month in profit.
I do think real estate is an addiction and I will always be looking, but my husband and I do not have children so we are truly doing this to be financially free. We think that the number I mentioned above will give us the freedom to do as we please. I used to think a number of doors was the goal, but you quickly learn after a number of deals that every deal is going to profit differently (or it should profit).
Also, the exit strategy will look different for us with figuring out taxes when we are older and looking to sell.
0 Reply
Bryan Danger
OP
Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes
5y
Originally posted by @Henry Clark:
@Bryan Danger

Hopefully people aren't reading your stream and getting sucked in. As I stated before show your numbers. The topic is fine, but your approach doesn't work. In the mean time I'll give you some items to reach "Financial Independence", your not there yet. As all of the BP crowd will say, have you done your numbers. Otherwise its gambling. Lets make this post, a how to do "Financial Independence" once you get to your number. A checklist. It will be beneficial for you.

1. Get with an accountant with a payroll service and have them pay in annually an amount for Medicare/Medicaid. If you don't have W2 income. Don't want to hear about spaghetti dinners and go fund me pages when you run into a problem, and you spent all your money. Chump change now.If you have these covered then just state you have them covered and how. Then do 2. If not I will do 2.
2. Still on health insurance/costs. Get an annual policy with Allianz Global, since your travelling. Costs $825. This will cover transportation costs back to the US for anything major plus other medical.
Non life threatening issues in Second and Third world; setting broken leg $50; MRI scan $200; Hip replacement $15,000; Chinese Acupuncturist $10/hour; US trained doctor $50/hour just because he wanted to talk with someone from the US; Prescription drugs being over the counter from Pharmacist cheap, etc. If you want better care, then contract with local doctors versus State run clinics. Most are US or Cuban trained.
Your major issues of Heart surgery, Cancer treatment, or ongoing treatments such as dialysis; you will need to find a low premium, high deductible coverage, plus move back to the US for treatment. This is your main concern if not in the US or a 1st world country. Since this will probably be a rare occasion, don't need to set aside funds. Need to be prepared to sell a property to meet deductible. If you don't have insurance, you need to be prepared to sale all of your properties ($250,000 to $1,000,000 bill), plus go back to work while taking Chemo or rehabilitating from Heart surgery.
Tell us your numbers and how you have covered.
What's number 3 item on your list for Financial Independence?

Hi Henry
Thanks for taking an interest (I think) - but I'm not sure we need the unsolicited advice... and I'm certainly not sure what makes you think our "approach doesn't work" or that you know anything about where we are in the process. Seems presumptuous for someone who also just stated that they know nothing about our situation.

I do keep hoping to go back and reply to your first post about "our numbers" (even though I'm not sure what exactly they have to do with this topic) but we've just finished several moves/changes/refis/exchanges in our portfolio and I haven't even updated all those numbers in our own spreadsheet yet.

In terms of your #1 and now #2 above, no worries... we always pay all our taxes and our medical coverage, so all's good there!
Yes, we also have plans in place for travel medical and "evacuation" coverage (though in our experience the medical coverage is both better and cheaper outside the US, so it's getting harder and harder for us to imagine using it, much less continuing to pay for it in the future).
The last few needs/emergencies we encountered, we actually decided to pay in cash out of pocket versus even approaching the insurance company because the care was so affordable and because our rates back home I'm sure would only increase.
I'm afraid the simply truth here is that the US is no longer leading the way in many areas where we all still seem to think that it is. =/

And just so you don't get too stressed out about us -
We have turned down countless handouts, sponsorships, donations, patrons, and every TV offer and book deal pitched to us for a decade now... so you certainly don't have to worry about any eventual GoFundMe campaign; and when we choose to eat spaghetti dinners I assure you they are delicious!!
0 Reply
Bryan Danger
OP
Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes
5y
Originally posted by @Lindsey Ceane:
@Bryan Danger
My end goal is $15,000 a month in profit.
I do think real estate is an addiction and I will always be looking, but my husband and I do not have children so we are truly doing this to be financially free. We think that the number I mentioned above will give us the freedom to do as we please. I used to think a number of doors was the goal, but you quickly learn after a number of deals that every deal is going to profit differently (or it should profit).
Also, the exit strategy will look different for us with figuring out taxes when we are older and looking to sell.

We also don't have kids, and no question it makes the freedom line a bit easier/more achievable (and certainly adds flexibility to weathering any storms easier as well)... but we also know/meet plenty of people who have found their way to financial freedom and early retirement with the family as well!

I can say, having recently (finally) sold something rather than always buying... that now that we've had to look the capital gains tax straight in the eye - we are highly unlikely to ever sell/liquidate. As others have stated, why would we??
The team is already in place, the system is working well without any interaction from us, so it's hard to imagine why we wouldn't simply keep doing what we're doing and allow the income to grow.

Our number is probably pretty similar to yours in terms of long term passive income goals, we just decided to run away now and enjoy the freedom while we wait on that number to come. Right now our portfolio nets about 3k/mo after expenses but as our tenants continue to pay off the loans for us it will obviously grow along the way!

Good luck (to all of us) balancing the addiction with the freedom!! ;)

0 Reply
Michael Temple
Rental Property Investor · Toledo, OH · Member since 2017 · 257 posts · 215 votes
5y
@Jay Hinrichs LOL, you sound like me on vacation :) I don't mind getting away, but I get bored easily and after about a week I am crawling up a wall.

@Joe Splitrock I wondered the same thing about the FIRE community. My issue with the idea is it feels like you are working really hard to not work at all and the sacrifices I read about so many of them making just to get over the finish line. Some never go out, never vacation, buy nothing, don't have a family, and save like maniacs to reach early retirement and I think to myself, then what? I would rather have a profession I enjoy and live life as I am getting to where I am going. Enjoy the journey AND the destination.
4 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Michael Temple:
@Jay Hinrichs LOL, you sound like me on vacation :) I don't mind getting away, but I get bored easily and after about a week I am crawling up a wall.

@Joe Splitrock I wondered the same thing about the FIRE community. My issue with the idea is it feels like you are working really hard to not work at all and the sacrifices I read about so many of them making just to get over the finish line. Some never go out, never vacation, buy nothing, don't have a family, and save like maniacs to reach early retirement and I think to myself, then what? I would rather have a profession I enjoy and live life as I am getting to where I am going. Enjoy the journey AND the destination.
Or worse even expire before they get a chance to enjoy the fruits of their labor in a manner they dream of..
My Dads attorney told me long ago mid 70s Son real estate is a profession for life .. but you have to stop and smell the Roses.

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Bryan Danger
OP
Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes
5y
Originally posted by @Michael Temple:
I would rather have a profession I enjoy and live life as I am getting to where I am going. Enjoy the journey AND the destination.

Well said, and I agree with you 100%!

I just also happen to believe (from experience) that life without that profession can be even more free, more rewarding, more fun and even more challenging... so the thing that all those in the FIRE crowd are striving for is actually a pretty good idea (even if we might not choose the same path to get there). But for the record, just as there are any number of different paths to success in REI, there are in FIRE as well (some including REI). Just because someone has decided to retire early doesn't necessarily mean they've chosen to give up having fun along the way!

My personal belief (one I'm working diligently to prove) is that much thanks to REI, the best of both words is actually very much possible and that with hard work and good planning one can actually "have their cake and eat it too". ;)

0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Bryan Danger:
Originally posted by @Michael Temple:
I would rather have a profession I enjoy and live life as I am getting to where I am going. Enjoy the journey AND the destination.

Well said, and I agree with you 100%!

I just also happen to believe (from experience) that life without that profession can be even more free, more rewarding, more fun and even more challenging... so the thing that all those in the FIRE crowd are striving for is actually a pretty good idea (even if we might not choose the same path to get there). But for the record, just as there are any number of different paths to success in REI, there are in FIRE as well (some including REI). Just because someone has decided to retire early doesn't necessarily mean they've chosen to give up having fun along the way!

My personal belief (one I'm working diligently to prove) is that much thanks to REI, the best of both words is actually very much possible and that with hard work and good planning one can actually "have their cake and eat it too". ;)

what does FIRE stand for ??

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Bryan Danger
OP
Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes
5y

Sad but very true.
But... that "expiration date" isn't only waiting for those in the FIRE crowd, it's there for us in REI as well.

We all fall into the trap of working hard now to make life better later, yet we also don't really know if we'll be here "later" to enjoy the fruits of that labor... which exactly why I bring up the point about goal-setting and an exit strategy to begin with. ;)
1 Reply
Bryan Danger
OP
Specialist · Portland, OR · Member since 2019 · 81 posts · 88 votes
5y
Won't claim to be the expert, but in my understanding Financial Independence Retire Early

1 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
Originally posted by @Bryan Danger:
Won't claim to be the expert, but in my understanding Financial Independence Retire Early

That is the acronym, but the underlying principal is like a mixture of Dave Ramsey and the hippy movement. Dave Ramsey pushing the idea of low cost of living and high savings rate. Hippies pushing the idea of quitting your job, following your passion, living life for freedom and rejecting materialistic needs. It is really different than the traditional entrepreneurial financial freedom mindset, which accepts wealth as a recognition of accomplishment and welcomes a higher standard of living as a reward. Someone in the FIRE movement may believe someone who keeps working after reaching financial freedom is greedy. That is where the hippy mindset influences their perception. Someone in the traditional mindset may believe someone who quits producing (quits working) is lazy or non productive in society. There is also a Fat FIRE movement which supports a higher standard of living and challenges the idea that sacrifice is necessary.
My aunt and uncle were doing "FIRE" back in the 1980's. They rejected material possessions, saved all their money, quit their jobs, traveled in other countries. They even "house hacked" a duplex. None of this is new, it is just new generations discovering alternate life styles. It is easier to be financially free today with advances in technology. Forty years ago if you wanted to buy stocks, you had to call your broker on a land line and place a trade order. No index funds, no online trading, etc. The internet and mobile phone technology have empowered amazing things. When my aunt and uncle left for South America in the 1980's, they disappeared for six months. Today people traveling the world are giving daily blog or YouTube updates and making money doing it.
The freedom seekers should be thankful that not everyone is following their path. The economy would collapse if everyone quit their jobs. You need producers and consumers for an economy to thrive. Even the government only survives on the backs of producers and consumers.
4 Reply
Jeff S.
Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
5y
@Jay Hinrichs google Mr Money Mustache this pretty much says it all. While they say all they do is buy index funds he is pretty handy fixing places up and very smart. He is a brand.
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Joe Splitrock:
Originally posted by @Bryan Danger:
Won't claim to be the expert, but in my understanding Financial Independence Retire Early

That is the acronym, but the underlying principal is like a mixture of Dave Ramsey and the hippy movement. Dave Ramsey pushing the idea of low cost of living and high savings rate. Hippies pushing the idea of quitting your job, following your passion, living life for freedom and rejecting materialistic needs. It is really different than the traditional entrepreneurial financial freedom mindset, which accepts wealth as a recognition of accomplishment and welcomes a higher standard of living as a reward. Someone in the FIRE movement may believe someone who keeps working after reaching financial freedom is greedy. That is where the hippy mindset influences their perception. Someone in the traditional mindset may believe someone who quits producing (quits working) is lazy or non productive in society. There is also a Fat FIRE movement which supports a higher standard of living and challenges the idea that sacrifice is necessary.
My aunt and uncle were doing "FIRE" back in the 1980's. They rejected material possessions, saved all their money, quit their jobs, traveled in other countries. They even "house hacked" a duplex. None of this is new, it is just new generations discovering alternate life styles. It is easier to be financially free today with advances in technology. Forty years ago if you wanted to buy stocks, you had to call your broker on a land line and place a trade order. No index funds, no online trading, etc. The internet and mobile phone technology have empowered amazing things. When my aunt and uncle left for South America in the 1980's, they disappeared for six months. Today people traveling the world are giving daily blog or YouTube updates and making money doing it.
The freedom seekers should be thankful that not everyone is following their path. The economy would collapse if everyone quit their jobs. You need producers and consumers for an economy to thrive. Even the government only survives on the backs of producers and consumers.
Joe this went back to my first response on the post it kind of reminded me of my early days selling real estate in Northern CA to folks that wanted to live an alternative lifestyle be it those with money .. or those without really much money and tended to live the communal lifestyle that was prevalent in N. CA in those days it was the hippies leaving the Haight Ashbury and flowing right up Hwy 101 to Mendocino Lake and Humbolt counties.. weather there is not as nasty as the Sierra NV and its quite remote even to this day.
its only been since about 2000 or so when cash flow rentals became a kind of mainstream investment for the mass's and this was really promulgated by the advent of the OOS turn key investing models.. I started in it in 2002 in Detroit and all the buyers were LA based.
Of course i was the financing not actually owning the assets.. prices in those days were 120 to 160k then the crash happened and those houses went to ZERO to 40k and now they are back up to 100k plus .. pretty wild curve though..

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