Investor · Albany, GA · Member since 2014 · 70 posts · 8 votes
Hi Everyone,
In a casual conversation the other day a friend said: 'You can't look for a quick return. Any money made will be over the long term.'
That has been bugging me ever since he said it.
Here's my question...
Where do you plan to make your money from a rental? Short term (monthly cash flow) or long term (what does that even mean; appreciation upon selling out) ?
I will admit that when I got into rentals (I own 6 SFHs) I was trying to increase income in the short term. But my friend's comment has kinda rocked my understanding of what it's all about. If I'm investing now to make money LATER then why bother with all the aggravation. Is it worth it?
Another question:
Is it still practical to continue acquiring rental units later in life? If a person is over 50 years old, are long term rentals still a good vehicle for investment?
Look forward to your responses. Thanks in advance...
@CL Tumlin. With virtually no retirement funds, I started investing in real estate in my late 50s. Today, at 64, I currently have 28 doors, 3 AirBNBs, am a co-sponsor as a GP in a 536-unit apartment building and am no way looking to slow down. I also host a podcast where I talk with tons of other “Old Dawg” investors who are crushin’ it as well. Yes, our strategies are different than what investors in there 20s and 30s would be but, nonetheless, REI is fantastic for people approaching or already in retirement!
I purchased my first rental at 49 so I guess I can’t comment 😀
Warren Buffett became a billionaire in his late 50s. Now pushing 90 he’s worth 70 billion. Maybe it pays to stay in the game as long as you are willing and able.
On behalf of my 70 year old mother-in-law, I refinanced her home and bought her 2 duplexes. A couple years later we sold for a good profit and she invested in a 42 unit apartment that I was purchasing. So now we pay her a monthly dividend in addition to her social security check (We also had a nice duplex built for her where she lives and rents out the other side to cover her payment).
At 52 I bought out my long term partner, acquiring 32 units (his half of our partnership). A year later, I picked up a 10-unit building (that has almost tripled in value). At 57 I bought another 22 unit complex. +64 units after age 50!
Hubby and I bought our first rental 21 days before my 51st birthday. We now own (we, not the bank) 12 SFRs and a house that we changed our minds on and is selling this month. That was 7.5 years ago.
@Frank Chin. I love your mother in law!!! I think what so many people overlook is the biggest thing that she got out her investing life - and it's not money.
It's purpose and a sense of goal! Once you start living just to not die you're already dead. The only variable is the date of your burial. A cautionary tale to all who think of retiring as ceasing to work.
Find something you like. And let it kill you - Kinky Friedman
Happy New Year everyone:)
Happy new year to you too.
Thanks for your comments, and I had a chance to review our finances and talked with my daughters over the holidays. My older one graduated 2 years ago, at a gathering with her sorority sisters mentioned she had no college debt and had $20K in the bank on graduation. Her friends were all shocked. Grandma contributed $30K into her 529 accounts and $20K in gifts. Her tuition was $10K per semester, covered by her 529's, and our rental cash flows, all thanks to grandma. She didn't realize how lucky she was. She didn't work through college except for a few months like most students her age.
Our younger girl has $30K in her 529's, thanks to grandma, haven't touched it yet though she started college. But what struck me as so unusual and striking was everyone was so shocked that my older daugher had no college debt.
Grandma lived till her late 90's, and $600K would barely sustain her retiring at 60 as her social security came to a few hundred dollars per month and a small pension. Many people in her situation had financial problems living that long, especially in high cost NYC. Real estate investing was the big difference, for her, her children, and grandchildren. When newspapers report on rents becoming so unaffordable here, I think to myself, lucky me, I'm the one collecting the rents, and thanks Grandma.
@CL Tumlin We started buying real estate five years ago when I turned 50 years old. I think it’s about the best time to do it if you haven’t done it already by that age. In the five years we have acquired 25 Rentals and our income is significant. The reason it’s a good idea though is because it’s inflation adjusted so we should be making more in 10 years than we do now and if you want to move your 401(k) money to something that will kick off income you’re going to get some really low return like say five or 6% so if you had $1 million in a 401(k), You would be looking at 50 or $60,000 a year to live off when you retired. As opposed to 1 million invested in real estate where you would make twice that much. That’s my take on it. Our goal is to get to 50 in the next three years and then see what we want to do then. Good luck!
"If I don't want your life, I don't listen to you"
So, perhaps, that can help when thinking of your friend's comment.
To answer your question: Where do you plan to make money from a rental: BOTH Short and Long Term (never selling).
"If I'm investing now to make money LATER then why bother with all the aggravation. Is it worth it?" Why bother? Because social security might not a good fiscal option in retirement age when one is too tired to work.
"Is it still practical to continue acquiring rental units later in life? If a person is over 50 years old, are long term rentals still a good vehicle for investment?" Yes, I would say if you are buying right meaning that the property cashflows well. Alternatively, you can always liquidate your portfolio and cash out and then move that capital in a more passive income real estate play if you feel you don't the energy or temperament to deal with tenants and properties at an old age.
Hi Everybody, I want to thank you all for such excellent answers. You have given
me a lot to think about, and it has been a huge help already. I was gonna try to tag each of you by name but there doesn't seem to be a way to do it other than manually which would take a couple of hours, so I will just say it here:
Thanks!!!!!
I really appreciate all the great insight and encouraging comments. Wich you all a great 2020!