People think we're nuts

79 Replies

Hey everyone. We are selling our primary residence and moving into a travel trailer behind my parents house.  We live in one of the nicest neighborhoods in town. I have a family of 6.  A kid in high school and all the way down to an 8 year old. After looking at our bills we are just spending to much money.  We are developing a long term plan to develop some passive income.

We have around 250K in Equity. We will be paying off a 3 unit a car and some Bill's.  By the time everything is paid off we should have around 200k liquid. 

With the net cash flow and our jobs we should be saving around 7k a month. 

My wife is the driving force behind this plan. This is pretty hard for my kids and I, but our plan is to have 3 rentals paid for in cash before we move back into a primary again.  This also may sound a little crazy but I think the realestate market / stock market is going to be going into a recession in the next 1 or 2 years.

 Just wanted to know what some people might think that have more experience / knowledge with our plan. Thanks.

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@Chris Gawlik when everyone around you thinks you’re crazy.. you are probably on the right track.. keep being crazy! 🤙🏻

I agree 100% it is absolutely crazy. Why in the name of smart investing would you ever want to pay off a rental property. Complete waste of useful and valuable cash. Crazy. Certainly not what I would consider "investing".

When everyone around you thinks your crazy they are right. Crazy is as crazy does. (Forest Gump)

As for living in a travel trailer that won't last long. I feel sorry for your parents and your kids. Doubt your kids will ever want to brings friends home to visit, pretty embarrassing for them. Your parents are going to very quickly get sick and tired of your kids spending their time in their home instead of the camper. Major imposition on them. Interesting to see what the neighbours and building inspectors think of your plans.

@Chris Gawlik , You'll never regret one minute of this wonderful adventure!!!  You've identified what enough is and are moving toward it.  You've perceived that family isn't a building, life isn't a structure, and the only thing that lasts are memories and those are active verbs.  

18 years ago we moved onto a sail boat with 6 of us.  It was everything @Thomas S. said - noisy, cramped, inconvenient, our parents were scared to death, our friends didn't understand it.  It was horrible - So horrible we had to force ourselves off after 12 years.  So horrible that even today our 4 boys identify as "boat boys" and look forward to their own boats (or RVs a very similar lifestyle).  The biggest grandest adventure of our lives and none of us would trade it for anything!.  

One of my mentors in the endeavor had this comeback to all the naysayers.  You can adapt it for yourself.  When asked by a skeptic  "Do you really still live on a boat".  He replied, "Yes, do you really still live in a house?"

This is the freedom that real estate investing can give you.  Don't be a slave to a model or what everyone tells you to do.  Create your own perfect scenario,. Use real estate to sustain it.  

Love your plan!

Interesting story.  

Why do we invest in real estate?  After boiling away the trappings (money, vacations, donations, etc, isn't it about living the type of life we want?  About peace of mind.  About providing for yourself and your family?  Who else, besides you and your family, should determine what is best for you and the way you want to live?

Follow your dreams the way YOU dream them.  If you want the security of having all F&C rentals, just do it.  After all, the life you live is not just about all the numbers.  The one that wins the game in the end, to me, is not the one with the most toys.  It's the one that is really HAPPY.  (Hint:  toys don't always bring happiness.)

I know I would never sell my primary home to live in a van down by the river . If thats What you feel you need to do then go for it but Personally I would not be willing to put my family through the shame and inconvenience of such a decision unless I had no other choice available . When I was a kid we were on food stamps and rented a ratty house for 200$ a month . I got free lunches at school and My mom drove us around our small town in a cat urine yellow 78’ 4 door ford Ltd which was really out of date by the 90’s . Every aspect of our existence screamed poverty to my classmates and it had a very humiliating and a lasting traumatic effect on me growing up that I carried into my adulthood .I know that sounds over dramatic but I would never permit my children to grow up in an environment like that having been shamed . I think I would reconsider living in a travel trailer skimping on everything . Life is in the living and you don’t want your children resenting your decision and going the opposite direction out of spite

"Live now like no one else so later, you can live like no one else." - Marko Zlatic

Just kidding. We all know that's Dave Ramsey :)

My issue is not the choice to live in a trailer in your parents' back yard.  That could be an adventure.  It all depends on what you make of it.  I choose to camp/backpack a lot.  2 years ago I was on pace for over 60 days camping but tore a bicep on one backpack trip so only ended with 52 days.  I enjoy these trips as much as a trip to Europe or Hawaii, etc. (which I also enjoy a lot).  This was while maintaining a full time W2 job and self managing most of our rental units.

My issue is the plan for the equity.  I am assuming the 3 unit is conventionally financed.  There is no cheaper money than conventional financed RE.  Pay off bills makes sense (and maybe the car depending on the terms of the loan) as they are typically the most expensive money.  Then what with the $200k left?  Do you have a plan for it?

I would not pay off the 3 unit early if it has conventional financing and I would definitely have a plan on how to leverage the additional equity to produce a good return for the associated risk.  I do not see that in your plan and therefore it seems like half a plan.  Half a plan means you are missing half the plan.  What I fear is that if you do not have a plan for the equity, it will be wasted with little to show for it.

Good luck

Originally posted by @Dave Foster :

@Chris Gawlik , You'll never regret one minute of this wonderful adventure!!!  You've identified what enough is and are moving toward it.  You've perceived that family isn't a building, life isn't a structure, and the only thing that lasts are memories and those are active verbs.  

18 years ago we moved onto a sail boat with 6 of us.  It was everything @Thomas S. said - noisy, cramped, inconvenient, our parents were scared to death, our friends didn't understand it.  It was horrible - So horrible we had to force ourselves off after 12 years.  So horrible that even today our 4 boys identify as "boat boys" and look forward to their own boats (or RVs a very similar lifestyle).  The biggest grandest adventure of our lives and none of us would trade it for anything!.  

One of my mentors in the endeavor had this comeback to all the naysayers.  You can adapt it for yourself.  When asked by a skeptic  "Do you really still live on a boat".  He replied, "Yes, do you really still live in a house?"

This is the freedom that real estate investing can give you.  Don't be a slave to a model or what everyone tells you to do.  Create your own perfect scenario,. Use real estate to sustain it.  

Love your plan!

my Brother in law and sister in law lived on their boat in the  Berkley Marina for a few years while they were building their business up.  And since your wife is the one leading the charge your home free..   AS for paid for real estate you have a few schools of thought on that one.. the max debt crowd and the conservative lets pay it off crowd.. its what makes you sleep the best.. 

have you considered house hacking? it could work for you. have a 4 plex, and have the tenants from 3 of your units pay your mortgage/bills.  You will have 3 doors under your belt too, right? :)

@Chris Gawlik . I think this is all a great plan until the 4 kids part. With 4 kids I imagine this

Plan will be quite difficult

@Chris Gawlik a lot of good feedback and perspectives here.  I'm not a "leverage to the max" kind of investor, but I probably would agree with some of those that question if the free and clear route is the way to go.  Especially in your situation when you and your wife both work and you won't have a mortgage anymore with your primary.  You shouldn't have any issue qualifying for loans on multiple properties.  I know you think the market will tank in a year or two, but that's not something we know is definitely going to happen.  Just seems like you might reach your goal faster by using appropriate leverage.

As far as how to raise your family...I guess you asked for advice but I really don't think anyone should tell another how to do that.  Your kids might hate it now, but it might be the best thing ever.  It also might be the worst.  You really won't know until you do it and find out.  If it doesn't work the way you hoped at least you did it and tried and hopefully made some memories along the way.  Best of luck.

@Chris Gawlik Nuts? yes. Awesome plan that will change your family's financial future for generations. yes. Life is what you make it and the experiences you share. @Dave Foster gave the perfect example of this (also Dave let's meet up on that boat if you still have it :)). People will judge you no matter what you do in life. At least this way you can laugh at them with your FU money years from now. I love it and will be very curious to connect with you 12-36 moths from now on your progress. Good luck!

I am with @Thomas S. and @Dennis M. . “Trauma” from growing up poor sticks to you like glue. And not in the good way like our parents and grandparent who went through the depression - everyone was poor then. I grew up around people who had wealth- the inferiority I felt was crippling and could have been quite debilitating in adult hood, but for some chance decisions. My parent did not do that to me and my numerous siblings out of choice- and they provided us with a big house. You are doing this by choice and making your kids live in a friggin’ trailer.

We refused to start a family until I had a home so that our kids would know stability.

I don’t think you are crazy I think you and your wife are extraordinarily selfish and completely out of touch with the psychological needs of a child.

As for your refusal to utilize leverage- I believe it is indicative of a complete lack of fiscal responsibility. The only way fiscally irresponsible people can “save” money is by paying down a mortgage/appreciation. 

I think there is a 92.3% chance you will blow through your cash with little to show for it.

Rental properties are not your answer friend.

Originally posted by @Chris Gawlik :

Hey everyone. We are selling our primary residence and moving into a travel trailer behind my parents house.  We live in one of the nicest neighborhoods in town. I have a family of 6.  A kid in high school and all the way down to an 8 year old. After looking at our bills we are just spending to much money.  We are developing a long term plan to develop some passive income.

We have around 250K in Equity. We will be paying off a 3 unit a car and some Bill's.  By the time everything is paid off we should have around 200k liquid. 

With the net cash flow and our jobs we should be saving around 7k a month. 

My wife is the driving force behind this plan. This is pretty hard for my kids and I, but our plan is to have 3 rentals paid for in cash before we move back into a primary again.  This also may sound a little crazy but I think the realestate market / stock market is going to be going into a recession in the next 1 or 2 years.

 Just wanted to know what some people might think that have more experience / knowledge with our plan. Thanks.

That sounds like an adventure for sure and I love your enthusiasm!!! But it's not for everyone. I think you should decide as a family. The investment plan sounds good and could improve your family life down the road. But you want them to be happy now too because money is awesome but it isn't everything.

Maybe you could use your equity as a HELOC and still pay off those expenses and still invest in more rentals and stay in your house that your family loves. Or downgrade to smaller house in another nice neighborhood. Talk it over with everyone in your family and consider a compromise that keeps everyone happy and still achieves your goals.

Some say go for it, go for it. But are they really considering the feelings of the whole family?

Sounds like a plan for disaster . First , when someone complains about you living in a rv in a back yard , the government will make you stop , now when they see children they will call social services , you may lose your kids .  Now if you read about rv's they are not recommended for full time living ( I own a 30 foot and have 2 boys ) . You wont last 1 month with 6 people living in a rv .  ( one good bowell movement and you will clear the unit ) . Storage is limited , hot water is limited , refrigerator is small , seating is minimal . 

I think its not a bright idea with a family 

Originally posted by @Patrick M. :

I am with @Thomas S. and @Dennis M. . “Trauma” from growing up poor sticks to you like glue. And not in the good way like our parents and grandparent who went through the depression - everyone was poor then. I grew up around people who had wealth- the inferiority I felt was crippling and could have been quite debilitating in adult hood, but for some chance decisions. My parent did not do that to me and my numerous siblings out of choice- and they provided us with a big house. You are doing this by choice and making your kids live in a friggin’ trailer.

We refused to start a family until I had a home so that our kids would know stability.

I don’t think you are crazy I think you and your wife are extraordinarily selfish and completely out of touch with the psychological needs of a child.

As for your refusal to utilize leverage- I believe it is indicative of a complete lack of fiscal responsibility. The only way fiscally irresponsible people can “save” money is by paying down a mortgage/appreciation. 

I think there is a 92.3% chance you will blow through your cash with little to show for it.

Rental properties are not your answer friend.

Well the issue here isn't about being poor. Sounds like they will have plenty of money. The issue is how the kids will feel having to go from a nice house in a nice neighborhood to a cramped trailer in a not so nice neighborhood. But I do agree that this kind of change could be emotionally difficult for the kids and that those kinds of stresses do stick with you into adulthood. Very brave of the parents, but hard on the kids.

@Lori Greene they will not have plenty of money when it is locked up in assets that are ripe for a correction.

I see absolutely 0 bravery. How is it brave to place you family in Jeopardy. 

It is fiscally irresponsible.

Refinance the house and pull money out if you are dead set on locking money up in an asset.

Do what you want before you have kids.

Brave people don’t take hostages.

Originally posted by @Patrick M. :

I am with @Thomas S. and @Dennis M. . “Trauma” from growing up poor sticks to you like glue. And not in the good way like our parents and grandparent who went through the depression - everyone was poor then. I grew up around people who had wealth- the inferiority I felt was crippling and could have been quite debilitating in adult hood, but for some chance decisions. My parent did not do that to me and my numerous siblings out of choice- and they provided us with a big house. You are doing this by choice and making your kids live in a friggin’ trailer.

We refused to start a family until I had a home so that our kids would know stability.

I don’t think you are crazy I think you and your wife are extraordinarily selfish and completely out of touch with the psychological needs of a child.

As for your refusal to utilize leverage- I believe it is indicative of a complete lack of fiscal responsibility. The only way fiscally irresponsible people can “save” money is by paying down a mortgage/appreciation. 

I think there is a 92.3% chance you will blow through your cash with little to show for it.

Rental properties are not your answer friend.

on the fiscal responsible and debt part of your post.  Just for context I had two business partners.. One President of a fortune 500 company another self made garbage man and recycle owner..  the president hung debt at every chance.. the garbage man his balance sheet was all assets not one bit of debt..  during the GFC  the president was quite stressed he had a 12 million dollar loan on one of his wineries that was rocky.. my garbage man he just collected the interest on his bonds..  really depends on how much you have.

these guys were each 50 mil net worth's.. one in cash and securities and paid for Napa Valley real estate the other lots of debt.. both Smart and Rich.. great friends but completely different styles..    I think as you age you start retiring debt when your younger you acquire debt..   

And it really depends on what you do for a living.. as you grow in the business net worth and contingent liabilities are what bankers look for and those that always peg max debt the bankers look at much harder.. Might not matter in the rental property world.. but in the development world net worth matters and liquidity in cash matters..  

Originally posted by @Matthew Paul :

Sounds like a plan for disaster . First , when someone complains about you living in a rv in a back yard , the government will make you stop , now when they see children they will call social services , you may lose your kids .  Now if you read about rv's they are not recommended for full time living ( I own a 30 foot and have 2 boys ) . You wont last 1 month with 6 people living in a rv .  ( one good bowell movement and you will clear the unit ) . Storage is limited , hot water is limited , refrigerator is small , seating is minimal . 

I think its not a bright idea with a family 

that's why god made double wides  :) 

Originally posted by @Jay Hinrichs :
Originally posted by @Matthew Paul:

Sounds like a plan for disaster . First , when someone complains about you living in a rv in a back yard , the government will make you stop , now when they see children they will call social services , you may lose your kids .  Now if you read about rv's they are not recommended for full time living ( I own a 30 foot and have 2 boys ) . You wont last 1 month with 6 people living in a rv .  ( one good bowell movement and you will clear the unit ) . Storage is limited , hot water is limited , refrigerator is small , seating is minimal . 

I think its not a bright idea with a family 

that's why god made double wides  :) 

And then he made tornadoes 

Originally posted by @Matthew Paul :
Originally posted by @Jay Hinrichs:
Originally posted by @Matthew Paul:

Sounds like a plan for disaster . First , when someone complains about you living in a rv in a back yard , the government will make you stop , now when they see children they will call social services , you may lose your kids .  Now if you read about rv's they are not recommended for full time living ( I own a 30 foot and have 2 boys ) . You wont last 1 month with 6 people living in a rv .  ( one good bowell movement and you will clear the unit ) . Storage is limited , hot water is limited , refrigerator is small , seating is minimal . 

I think its not a bright idea with a family 

that's why god made double wides  :) 

And then he made tornadoes 

and hail and hurricanes.  and lets throw in a nice Loma Preita style earthquake .. 

If you call your trailer a "tiny home" instead of a trailer then it will go over better with the naysayers.  

Personally, I think any plan that gets you set for life is worth a bit of sacrifice.  If you can imagine a sacrifice for a couple of years while you sock away money, pay off debt, and position yourself for a better LIFE, that's worth a couple of years.  You didn't actually say how long your plan requires the downscale.  I reread the post-- it it a one year plan?

  In any case, I think if you're on board as a family, go for it.   Worst case scenario, you're debt free, own a triplex and a car free and clear, have 200K in hand and are cash flowing $7000 a month.  I think you'll be able to buy another house if it comes down to that!  If the situation gets dire at the folks house, just rent a house and regroup.  There's plenty of exit strategies available to you if you need them.   Bravo for your wife for coming up with the idea and you for considering it even though it's not "normal."  Normal, average Joe Blow American people live above their means, keep up with the Jones and die broke.  Don't be normal.

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