I have begun investing this year at 52. I am transitioning from my current career to RE investing. My strategy is to buy and hold rentals in a BRRRR strategy. After enough seasoning, will refi to look to acquire additional properties with the cash from the refi.
I also used my self-directed 401k to buy distressed properties with a partner. He rehabs and then we will decide to either hold and rent long-term or do owner financing after the house is rehabbed.
I look to provide passive income (or rather, minimally active income), conduct this business with property managers so I don't have to do that part of the business, and it gives me an activity/hobby to focus on over the next 30 years or so where I can decide how much time I want to invest growing it or just keeping it well run.
I figure to have w-2 income for the next 2-3 years and have the flexibility in my job to dictate how much and how long to work.
I have begun investing this year at 52. I am transitioning from my current career to RE investing. My strategy is to buy and hold rentals in a BRRRR strategy. After enough seasoning, will refi to look to acquire additional properties with the cash from the refi.
I also used my self-directed 401k to buy distressed properties with a partner. He rehabs and then we will decide to either hold and rent long-term or do owner financing after the house is rehabbed.
I look to provide passive income (or rather, minimally active income), conduct this business with property managers so I don't have to do that part of the business, and it gives me an activity/hobby to focus on over the next 30 years or so where I can decide how much time I want to invest growing it or just keeping it well run.
I figure to have w-2 income for the next 2-3 years and have the flexibility in my job to dictate how much and how long to work.
We're starting out at 50++, but wish we'd started sooner. Our goal is to create a revenue stream sufficient to allow my husband to retire, while maintaining (or improving!) the lifestyle to which we have become accustomed. We're focusing on starter homes that we would have liked to live in when we were starting out...condition, location, amenities, with the hope that we will attract stable tenants who won't destroy our houses. We're only a couple years in, but so far so good!
From this site, I've learned about solo 401ks, which would allow us to tap into our retirement funds to buy properties. This could open up a huge opportunity for us, and we're very excited about it.
I began this year at 51. Have one in college and bought our first property just off campus for him to live in for the next few years. Three more kids to go. Not sure where they will land school-wise, but we have decided (for now) that our niche is going to be the college/university student market. Like @Sonny Ruckstuhl I also am transitioning out of another business that I have had for 30+ years. Burned out and ready to do something different. And, like @Katherine S., I wish we had started this adventure earlier, but better late than never I guess.
@Sonny Ruckstuhl,
I was looking into the BRRRR strategy and it seems like everything has to be aligned just right like the stars and to find the perfect deal seems illusive, but I don't have all the contacts yet. I am also trying to do this out of state so, it creates another hurdle to overcome. Did you find your contacts/partner through Biggerpockets?
I can relate to this being your hobby/activity in your later years as you have more time and experience and have built more of your kingdom. I also feel like this will keep me occupied and fulfilled during the Golden Years and to have passive income to boot. Like others, I wish I had done this earlier and I am envious of all the 20-something year olds here. Thanks for your input and insight.
@Katherine S
Yes, I am looking for properties that will cash flow that can "hold its own" until it can be paid off by the time I completely retire. Nice to hear that you guys discovered this and are doing well. It's encouraging to know that I have peers that are doing this also.
I briefly looked into the 401K real estate investing, but will investigate more of the details. I know the possibilities seem endless with real estate investing and it is exciting! Thank you for your input.
Yes, I know about the burning out part and have been seeking something that will strike a passion in me that I want to pursue to transition out of my current line of work and it seems that real estate investing is it. I like the endless possibilities and the creativity that comes along with it. There are so many facets to it.
That's great that you're taking advantage of purchasing real estate where your kids are going to be attending college. I remember when I was going to college, a couple of my classmate's parents did the same thing with buying an apartment building and renting it out to their kids and college students. I was not even thinking about that at that time. Wish I did! Like you and others have said, better later than never! Maybe your kids will realize the value in what you're doing and take it on earlier in life. Thanks for your feedback.
@Angela A. I am not 50 but I have several clients that started near that age. Most of these clients did start by using their retirement funds in self directed accounts (happy to refer a company if need be).
My advice would be to invest in turnkey assets from a reputable company with a good BBB rating. If you have the option to use your retirement funds that would be a great use of your retirement vs. the stock market.
Stay in safe markets with good growth (TX is in my opinion the best for this).
Invest in turnkey (rental properties with tenants in place already so there is no work for you to do).
Avoid high returns that seem to good to be true and low end rentals. This will have to much risk for someone close to retirement.
Don't invest in assets that will be negatively geared (mortgage more than rent).
If you need help or any introductions to good turnkey providers I am happy to help.
59 here. SO wish we had done this earlier. $111,000 in a SDIRA. Waiting for July and 59 ½ so I can pull $$$ from that to invest in buy and hold SFH, out of state turn key to start. Until then, getting ready to put $100,000 of the IRA $$ into short term notes. will probably then use notes use $$ not yet enough to get the next house. Probably going to get into wholesaling to speed up the process.
Well I started out out of state REI at 50+ and that was about 5 years back. Now that I am older still and retirement age is not that far off, I am more focused on shorter or medium term REI. My buy and hold strategy the last 18 months has all been in syndicated and diversified portfolios of 10 SFR (and now one apt building) that have 3-5 year exit strategies by the managers. I have written about these investments quite extensively in my BP blog articles
Have I Found the Holy Grail of Passive Real Estate Investing?
57 years old here and just starting out myself. We are going "Hands Off" total turn key. I announced my retirement last Friday (effective in 3 weeks). We are planning to move to Central America this fall. The goal is to have 3500 in passive cash flow when we leave. We like SFH and plan to pay cash for the first few, 1031 exchange a house here in California to nab a few more and then leverage to build our portfolio. I intend to use my IRA at 59 1/2 to nab some more. Also, I'm tapping into my SS the second I can.
Best wishes in your investing.
@Angela A. I am not 50 but I have several clients that started near that age. Most of these clients did start by using their retirement funds in self directed accounts (happy to refer a company if need be).
My advice would be to invest in turnkey assets from a reputable company with a good BBB rating. If you have the option to use your retirement funds that would be a great use of your retirement vs. the stock market.
Stay in safe markets with good growth (TX is in my opinion the best for this).
Invest in turnkey (rental properties with tenants in place already so there is no work for you to do).
Avoid high returns that seem to good to be true and low end rentals. This will have to much risk for someone close to retirement.
Don't invest in assets that will be negatively geared (mortgage more than rent).
If you need help or any introductions to good turnkey providers I am happy to help.
I would have to agree. Investing in Turnkeys out of state are great to earn some passive income. If you do not have the ability or time to become 100% involved with your REI, going with a true Turnkey provider would really make it better on you.
Good luck to you!
@ Carl Dean
Yes, I have touched up upon using IRA's for investing in real estate and need to look into the details. From what I superficially gather, you can't write off certain expenses like depreciation, you have to buy property with cash from an IRA as you cannot take out a traditional loan if purchasing with IRA funds, etc. So, I guess some pros and cons like with anything else.
I have looked into some turnkey companies, but a couple of ones that I looked into seem overpriced and didn't quite make the 1% rule.
As far as Texas, are there properties that will cash flow well at this point? Seems like it would be good for potential appreciation, but as far as rent to value ratio, seems low and entry points are relatively high. If you know of any areas or properties in B neighborhoods in Texas with potential growth that fit the minimum 1% rule and cash flows well, then I would be open to it.
If you have any recommendations for turnkey providers in good cashflowing areas whether in Texas or other states, I'd appreciate it. Thank you for your input and feedback. I'll also look into your website.
@Mark Whitted
The IRA is a whole new world to explore with many options and long awaited pot of gold at the end of the rainbow. So, when you say notes, you're referring to Treasuries? I guess that would be one of the safer ways to accumulate interest while preserving capital. Yes, I guess the downfall it seems is that if you're buying a rental from an IRA, you have to pay all cash as you can't get a traditional loan, but maybe you could use some other creative financing? As far as wholesaling, is that the same as bird dogging?
@Larry Fried
That's great that you have 10 SFR and 1 apt building in 5 years. I am inspired! I like that you have an exit strategy just in case you want out. That's a good thing to consider. Seems like in the later years, you don't have the time to bank on appreciation. Appreciation would be icing on the cake, but if you can count on good cash flow in a stable market, it seems like a safe way to go as time becomes a factor. Thanks for your feedback. I will check out your blog article.
@Michael Vivilacqua
Congratulations on your retirement! I can't wait until I can announce that. Moving to another country is exciting also. I would like to travel more and hence the desire for financial freedom hopefully through real estate. I'd like to hear about your turn key experience as I am considering that also. I am sure with your California property, you can nab a few out of state. I guess there's the silver lining of getting older is you can get your hands finally into the cookie jar (IRA, SS). Best wishes on your new adventure!
@Tom Ott
Turnkey is one of my options I am looking into. Maybe less work, but still have to due preliminary research into the market, run the numbers, analyze neighborhoods, check the quality of company, etc. Just have to do my due diligence.
Thanks for the well wishes!
One thing I wanted to add that is not directly related to real estate investing, but can have an ultimate impact on it, is your health. I hope that, especially, as we are gaining more in years, we are taking care of our health and are making that a priority also because we may accumulate a ton of $$$ and properties, but if our health deteriorates before we can bask in the fruits of our labor, then all is for naught. So, everyone, please take the time to eat well, get adequate sleep, exercise and minimize stress!
Closed on my first investment property on my 55th birthday after 30+ years as a life science entrepreneur. Having lots of fun, but kicking myself for not starting sooner...when my income statement was stronger than my balance sheet instead of vice versa. On a pace to acquire two buy/hold properties per year in a tight market.
Secondary objective is to teach my college-age kids to start REI while they're still young enough to house hack. So far, they just think I've joined a cult. =)
Agree with @Account Closed, it's never too late to start. I've seen teachers, firemen, software engineers and all sorts of people utilize different strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.
@Angela A. Have you looked into converting to a solo401k? This is what many of my clients do in order to save some money on taxes etc. Also, there is a way to leverage those funds with non recourse financing offering 60% LTV.
As for the 1% rule... Most of the content written about this is outdated. Yes there are several markets in the US where you can hit the 1% rule with B class stock. In Texas however, those days are long gone. I will say that I still have assets that perform very well in TX, offering a 6.5-7.7% Net ROI, which I think is great in an appreciating market like this. B class assets have never really worked for me in TX, the taxes just don't make sense for B class assets. The sweet spot in TX is currently 135k - 220k for good cashflow and appreciation.
I would be happy to discuss in further detail and send you some information if you would like. Please send me a private message if you wish.
@Angela Abe Using retirement funds to invest in real estate may be simpler than you think. It can be done through either an IRA or 401k plan. 401k approach has the benefit of not incurring UDFI (Unrelated Debt Financed Income) on nonrecourse financing used for real-estate investment.
Either route, IRA or Solo 401k, can be easily administered with checkbook-control, meaning the retirement funds are accessible within a checking account. There are some tax rules you have to be conscious of given the freedom of checkbook-control. If you'd like to know more, just send me a message.
I found one partner through Bigger Pockets. Originally we weren't partners. I just found a project that I couldn't do and, after looking over his profile, it seemed a good fit for him and he ran with it. Then, as he needed my kind of help, we joined up on 4 projects. 2 through my SD401k and 2 through personal monies. He manages the rehabs and found the opportunities and I managed the money.
I prefer to use Property managers on the ones I have done on my own or with my sister. Tried being a hands on landlord and don't like it. . I like managing the manager and not the tenants. Reviewed, interviewed, and got references on 5 different ones before settling on my person. He had the contacts for the rehabs needed for those projects.
Everyone has their own way of doing things. I want more peace and will trade a piece of the money for that. You get to learn what your preferences are.
Happy to chat with you more if you want to PM me.
sonny
@Larry Fried
That's great that you have 10 SFR and 1 apt building in 5 years. I am inspired! I like that you have an exit strategy just in case you want out. That's a good thing to consider. Seems like in the later years, you don't have the time to bank on appreciation. Appreciation would be icing on the cake, but if you can count on good cash flow in a stable market, it seems like a safe way to go as time becomes a factor. Thanks for your feedback. I will check out your blog article.
Angela, I think you misunderstood. My reference was to buying interests in portfolios of 10 SFR at a time. These are fractionalized interests (shares) co-owned with other investors and the managers (ie: a syndication). I currently own interests in dozens of SFR that way, plus the apt complex. Separately, I solely own some turnkey SFR. I refer you to the article I linked above for more on those portfolio investments.