I've been lurking on BP for a few weeks and am addicted to the podcast. I've also been hitting the webinars every week since I signed up.
Here's the deal- My wife and I have good jobs working for her family's business. We own a nice suburban house and don't have kids yet. The thing is, we want more.
I want to have more control over our lives and our finances. I'm tired of using my back and my time instead of my brain and my money to provide an income. Before I really dig into that, however, we want to travel.
The plan is to sell our assets and drive a truck and camper around the world. After selling off our house, our stocks, and her car we'll have between $200k and $250k.
We'll need about $1500/mo to fund our trip, but I don't want to just draw from a savings/checking account. Stocks are too volatile and aren't as easy or safe to leverage. They also don't provide the income that real-estate can.
I'm interested in purchasing a small-medium sized multi-family property. From what I can gather COC returns of 12%-20% aren't unheard of. This would be plenty to fund our trip while allowing our net worth to slowly grow while we're gone.
After a few years of travel I'll return and use the equity to invest in more property and begin to build my portfolio.
I know I'm crazy, so I don't have to ask. However, what have I missed/overlooked? Is this even possible? It seems to me that it is, but I have no previous REI experience.
I love looking over the numbers and analyzing deals. I have a management and economics background so I'm comfortable, if unacquainted with, the financial concepts particular to REI.
I'm in Salem Oregon and am open to nearly anything that can get me some experience and help me learn. Deals/Partnerships/Advice/Warnings, anything. I would love to get together with someone local and pick their brains about what works for them and to take any advice that's offered.
@KP Pawley Welcome to the world of introductions! Sounds like a great plan if you ask me - I'm also a big fan of travel. I'm not familiar with your market up there, but you should get in touch with some local investors up there that know the multi-family space. You could also start running the numbers on listed properties in your area just to get a feel for it and see what the numbers are for your area.
@J Scott wrote a great blog post outlining the various metrics used to analyze a property. Check it out here.
Welcome to Bigger Pockets! I'd suggest checking out the monthly Northwest REIA meetings in downtown Salem. We usually meet on the 2nd Thursday of each month. We have a different topic every meeting, and a lot of opportunity for networking. There are also meetings in Portland, Tigard, Vancouver, etc. Details about meetings can be found on the website in the Calendar of Events section. You can also Register to receive emails for upcoming events.
Congradulations on your 1st post. I like your idea of cutting all your strings and travelling the world although I couldn't see myself doing exaclty that at this point in my life. Having real estate paying for that lifestyle is very possible. Being somewhat new to real estate investing puts us at a disadvantage (I'm fairly new myself). We need to compensate for that by learning, networking, and jumping in feet first once we have that knowledge base and a few key networked people involved. I've been listening to tons of BP podcasts, audiobooks, reading books, and also studying for my real estate broker's license. With that foundation I think can limit a lot of the common mistakes newbies make when starting in real estate with tons of motivation and no clear direction or goal in mind other than a dream. Get rich slow is a phrase repeated over and over on the podcasts.
When we are ready to start purchasing properties for rental income (cash flow) I think it requires full attention. Its hard to grow a garden from across the world and especially when starting in real estate it requires our time to be invested. Partnerships would be an alternative where you put up the cash so you won't have to put up the time. The trade off obviously is less $$$ to you. Just like you I feel like my entry into REI is through small to medium MFR, but I may start with a SFR to get the ball rolling. I like the house hack idea of a 4-plex, but am having trouble finding any decent ones here in Salem. Those 1st few properties are critical for us beginners and should be evaluated and managed correctly because a major mistake could take us out of the game permaneantly. A book I'd recommend about multi family and apartment real estate investing is The ABCs of Real Estate Investing by Ken McElroy. He explains the process very clearly and even though most of his examples are from larger apartment buildings they can be easily scaled down to smaller units. I was able to get the audiobook off of Amazon for free as Audible trial.
I'd be happy to talk to you more in detail about REI if you'd like. Great thing about real estate is there are a thousand different ways to reach your goal. Trick is finding those ways that work best with your strengths and resources.
Best of luck.
Welcome to Bigger Pockets. Consider sending messages to other members for specific guidance.
I think the main thing is not the numbers or real estate.
I did a similar thing with my wife and 9 month old girl. It is possible, for sure. I would say to make sure it suits your personality type: you and your wife can take as much time reading those signs at all the little roadside attractions and parks, you have nowhere to be. Maybe you like to plan all the details and you'll be driving 900 miles a day to get here or there. The country is pretty small traveling 75 mph. Or maybe you like to wander, taking the back roads to who-knows-where. I was always wondering if there was a legal place to camp up ahead. It's a completely different life. Also, almost everyone else works and can't hang out.
I would check out freecampsites.net and wwoof.org for keeping costs down and getting some unique experiences. WWOOFing gives you a place to stay (for free), food (partially, varies with each farm), local characters to hang out with, and something to do. Accommodations tend to be primitive, though.
You also say that you would stop traveling in a few years. Would you live in one of the units you purchased? Would you be able to pay the bills if you were living in it and you couldn't get a job right away?
I really appreciate your positive and thoughtful responses.
I'll definitely look into the monthly meetings, right now I feel like networking and learning from others is the single most valuable investment I can make! I am currently running the numbers of listings in the area, mostly for the practice and as a tool to see what's possible. I realize that properties I find on the MLS probably aren't going to give me the best returns, but running the numbers helps me come up with questions I didn't know to ask.
It's great to have so many locals respond to my post, it's exciting to meet people with similar interests in the area. I don't have the connections to the Willamette Valley that I would like to have. I've definitely learned that relationships in an area or business discipline can really open doors and grease the rails to success.
@Tommy White- I hear what you're saying. There are so many routes in REI that I can see how so many options could lead to a lack of necessary focus. I also get that what I'd like to do is pushing limits because of my plan to be an absentee owner shortly after my first acquisition. The good thing is that I have a lot of flexibility and I will have the ability to stick around as long as necessary to make sure things are rolling smooth. I also plan to keep my first investment fairly simple. I'll probably avoid some more potentially lucrative investments in favor of a well-priced investment that will need very little reconditioning and has a strong history. I know there are no guarantees, but hopefully I'll keep the purchase and financing simple enough that focus and research will limit the potential pitfalls.
@Matt Slakey- I have about as much experience in global overland travel as I do in REI, but I know several people who've spent several years on the road and have done countless hours of research into budgets and logistical questions. We want to travel slowly, on backroads and through mostly out of the way locations. The VERY rough route plan is the PanAm highway from here to Tierra del Fuego, then a container over to South Africa to begin a drive from Capetown to Cairo. Freecampsites and WOOFing are both on my radar as options for places to stay. We'll have a lightweight self-contained camper on my 4x4 truck so rustic and remote are exactly what we're looking for, with an understanding that we'll occasionally be sleeping next to the road at truck stops and borders. The hope is that only one of us will need to work when we return, but getting a job in our industries shouldn't be a problem. My wife and I both have very strong work histories and relationships. I figure we'll have three years of driving to figure it out.. maybe I'll just buy an avocado farm in Chile.. :)
Great to hear you will be doing the PanAm route and coming down to Patagonia. I am a realtor in Chile. I live in Santiago, but my partner owns a farm in Osorno (northern Patagonia), so let us know when you are around!
And... well... if you fall in love with Chile and decide to buy an avocado farm, just let me know and I'll help you finding the right one! :)
Thanks for your response. I can't wait to spend time in Patagonia, it's definitely a highlight and major motivator for the trip.
You have some beautiful properties on your website, I grew up farming and am a farmer at heart. Eventually I'd like to get back to it, but the plan is to build my net worth a bit first. They always say, "to farm for a year and end up with $1m, all you have to do is start with $5m"..
One thing that always makes our experiences travelling great is meeting friends and acquaintances along the way. Locals always help you find the true heart of a place faster than you can on your own.
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