I am the rich guy you want to be - and I have nobody to talk to
Excuse what is going to be a long rant - for the sake of my sanity I need to get this off my chest. I have another username on Biggerpockets (no, Adam Smith is not my real) which is my real name - but for this post I wanted to go anonymous for obvious reasons. I run a portfolio with about $14M in equity between my mom and myself. It was spread across several hundred units - half of which we recently sold because we felt markets were getting nuts again. Now I am sitting on a pile of cash waiting to be reinvested and pondering life.
I don't know who to talk to about the downside of getting wealthy. I hide my worth from my gf (she thinks I'm worth about $300K) and buddies.
While I love the game of real estate and always have (since childhood), I don't hang out with other wealthy people - I don't like them. I don't join country clubs. I don't got to real estate industry conferences. My friends in university were not the econ majors dying to make big bucks on Wall Street - I prefer the company of academics, artists, social activists, musicians, even clergy. They are generally far more interesting than people who think about money all day. So from these people I hide my success and I certainly can't talk about it. I can't relate any more to people struggling to pay the mortgage, worrying about whether they will lose their jobs, etc. I'm enormously grateful for my good fortune in life but I have become isolated.
I am one of those wealthy people who complain about being wealthy. I also hide my wealth from my friends. I have a therapist but I don't dare talk about the problems of being affluent - because nobody sympathizes.
I'm writing this post as a form of release of tension - but also to warn you that someday you may get the success you crave - but there are real downsides.
In a nutshell the problems are:
1 - Guilt - that you don't deserve what you have.
2 - Fear - that you will lose what you have. That you are stupid, and you got lucky on your past decisions and that if you keep investing you will lose what you've made.
3 - Listlessness / lack of motivation - I don't need to work for a living any more and I'm only in my mid 30's. Now, if I don't work or spend my time actively investing I must live a very modest life to not risk the principal, but still - 99% of people are not in my position. I'm a 1%'er, very lucky to be one, and I know it.
4 - Aimlessness - once you get the freedom everyone craves you just might wake up and ask yourself - what the hell do I do now?
5 - More fear - that somehow we (my mom and I) have grown from "mom and pop" to a small level of money that is big enough to have real headaches (try to diversify a $14M portfolio - you wind up the the headaches of sourcing deals, evaluating them, etc. but you are still dealing with a small enough amount of money that the decision to hire an analyst and an assistant is a big step).
6 - Anxiety - that the next deal will go all wrong. That this small fortune is a dream and I will wake up and it isn't real - or worse, that it is real and I will lose it with bad decisions and
7 - Doubt - as to whether or not we need more. Is investing still the best use of my time? Or should we say "screw it" - buy an index fund and go live on $30,000 a year or less for the rest of our lives volunteering in some developing country. Or should I say "screw it" and go to medical school or get a phd just for fun?
The bottom line is that although I have more money to invest than most individuals on these forums I think my anxiety and self doubt is as bad or worse than any newbie.
I am a third generation real estate investor in my mid-30's. I'm in charge of a real estate portfolio with about $14 million in equity and cash, some of which is mine and some is my mom's and sister's. We keep it all lumped together in shared ownership. My mom is a retired physician and attorney. I have a bachelors in philosophy and economics. My sister is a physician and has zero interest in money and business.
I make all our family investment decisions and run the portfolio - my mom has sharp instincts but she doesn't love the game the way I do.
I am here to tell you - those of you who are starting out, or dreaming of that first million - that I do not know where the light at the end of the tunnel is. I don't know any more what it takes to find happiness.
What is weird is that on one level I know that $14M in equity is awesome. But on another level - having lived through 2008, 2000, 1990 - I know a crash is coming again eventually and I think I have just as much fear of losing it all as someone with $140K instead of $14M.
I am no happier than I was when I was a 17 year old undergrad reading about Plato, living in a dirty dorm room and eating stale pizza. In fact I'm quite sure I was happier back then.
I will not lie - financial security is a huge stress reliever. During the dark days of 2008-2010 I was worried we might get wiped out and it took nerves of steel to refuse to sell any assets when they were down in value millions of dollars, income numbers were in the toilet and vacancy rates in California were really high. I think on some level I was traumatized from those years and still haven't recovered (although that trauma was useful) - the way my grandmother was permanently affected by her experience living through the Great Depression.
A $14M portfolio ain't the Rockefellers, but it's enough capital that generating over a million dollars a year in cash flow is not too difficult. And the possibility of growing the portfolio to serious money - $50 or $100M level in my lifetime is realistic, although certainly not assured.
If we keep doing solid, boring purchases, keep living beneath our means and the world doesn't go to hell then I should wake up one day when I'm about 60-65 and be sitting on $50-$100M.
Is it worth it though? When is it enough? There isn't much else in life I need. I would like to have a nicer home. I'm a private pilot and owning a nice plane would be great. And it is nice to be able to afford the kind of luxuries that make you healthier and safer - a trainer to help motivate you to work out. Enough money to buy healthy meals if you don't like to cook, etc.
But the one thing I can't generate any more of is time.
In the next post I'll outline how we made the money and how long it took (about 30 years), and the event of fortunate timing and good luck that started it (my grandmother pushing my parents to buy some apartments after the S&L crisis around 1990 - when banks could barely give complexes away and you could do 90% leverage deals).
I'm the fortunate son of a grandmother who had a classic value investor's eye (even though she was trained as a nurse) and who started buying single family homes back in the 1950's and renting them out. Once she got to about 20 homes and 20 apartment units her husband made her stop - he was sick of it and thought they had enough to live off of (and they did). He was a country doctor from Oklahoma and just wanted enough income to pay his bills and buy a Cadillac once every 10 years. My grandmother, on the other hand, had investing in her blood - and she used to say "I don't want to own everything, only what's next to me."
Thanks for listening. If it was all boring I apologize. If you're interested in more or have any questions I'll be happy to answer them. I'll write more later.