Financial Independence Lifestyle: Before and After
Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes
Financial Independence Lifestyle: Before and After
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
9yI left my corporate job 2.5 years ago to manage our portfolio. I ended up getting really bored and started two new businesses within the first 6 months of being "retired"
So I still work, but being self employed allows me a ton of freedom. Some weeks I work 20 hours, sometimes it's 80 hours. I go to the gym, get groceries, run errands during the day. If I didn't sleep well, I take a nap in the middle of the day. I don't set my alarm anymore and wake up when my body feels like it.
Travel was also a big deal for me, so I take off about 6-8 weeks a year to travel (This year was a 35 day trip to southern Europe!). My rental income covers all of my monthly costs, and the ability to maintain the lifestyle I was used to. It doesn't cover an extravagant travel budget, but the business I started after covers that.
Second City Real Estate4.821 Reviews
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- Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes9y
Also. BE SUCCESSFUL. which means work your *** off every second.
People thrive off your accomplishments and you should steam roll off that. the moment someone says they couldn't do something or they failed because they weren't as on top of things as they should be, I'm instantly turned off and I expect that's the way other people should treat me as well.
Banks love lending to people who are establishing themselves and doing a good job at it
Contractors love working for people who will pay for good work and promise future work
Renters love a landlord who has established themselves as fair but professional
Agents love working with a buyer who is on top of paperwork and responsibilities
your reputation and resume are everything in this business - Rental Property Investor · Montreal, Québec · Member since 2017 · 18 posts · 2 votes9y
Originally posted by @David Zheng:
Also. BE SUCCESSFUL. which means work your *** off every second.
People thrive off your accomplishments and you should steam roll off that. the moment someone says they couldn't do something or they failed because they weren't as on top of things as they should be, I'm instantly turned off and I expect that's the way other people should treat me as well.
Banks love lending to people who are establishing themselves and doing a good job at it
Contractors love working for people who will pay for good work and promise future work
Renters love a landlord who has established themselves as fair but professional
Agents love working with a buyer who is on top of paperwork and responsibilities
your reputation and resume are everything in this businessWell said.
- Real Estate Broker · Chattanooga, TN · Member since 2016 · 25 posts · 4 votes9yDavid Zheng that's awesome you've been in a tear. Are you buying single family homes or multi units?
- Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes9y
@Jerry Poon - It was actually 4 years, sorry. I made a good salary, but lived on half of it and banked my husband's income. Our third property was a live in flip which gave us a six figure equity gain once we refi'd after the rehab. The last ones we took a loan from a family member to aquire them.
Second City Real Estate4.821 Reviews - Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@David Zheng Thanks for the awesome advice. Would you mind walking me through one of your best deals? As in where you went to find this deal, who sold it to you, etc. I'd also love to get the numbers as well. Purchase price, rehab prices, other costs, monthly rent, financing interest, etc.
- Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes9y
Originally posted by @David Zheng:
Also. BE SUCCESSFUL. which means work your *** off every second.
People thrive off your accomplishments and you should steam roll off that. the moment someone says they couldn't do something or they failed because they weren't as on top of things as they should be, I'm instantly turned off and I expect that's the way other people should treat me as well.
Banks love lending to people who are establishing themselves and doing a good job at it
Contractors love working for people who will pay for good work and promise future work
Renters love a landlord who has established themselves as fair but professional
Agents love working with a buyer who is on top of paperwork and responsibilities
your reputation and resume are everything in this businessQuoted for truth! Busting *** beats theory every day of the week. Hard work is not working 100 hours, it is making the hours you work count for something. I know lots of busy people who have nothing to show for their busyness.
When you first start off you don't have a lot to go on. Once you've been doing this for a while it gets a boatload easier. Once you are known as No BS, people start wanting to work for/with you, rather than the other way around. Like attracts like. Complain and be a slacker, and that's going to be your consortium.
Skyline Properties - Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes9y
Here's a fun one I did recently
3 unit multifamily. purchased in Oct at 230k from believe or not an MLS listing. I saw it within 30 minutes of posting, went to see it within 15 minutes of that, and put in an offer at the viewing. had to go through an HML because I was already 7 properties deep in my first year of investing so lenders were a little weary I was moving too fast. Had probably 100 bids go across my desk for every kind of work and what started as a projected 130k rehab budget I got down to 85k. (Ending at around 110k cause of many hidden unknowns). Investor money (downpayment) came from a paypal software engineer and ceo of a china based pharmaceutical company.
while in rehab (super ugly at the time), I rented each unit out for 2800 starting in January and collected first months rent and deposits for a cool 8400/month for the entire building. Interest only payments at the moment suck but will have it refinanced out asap after I file taxes
*Cost on a per month basis- Investors: 1832
- Vacancy/Capex/Maintenance (I self manage): 1000
- PITI: 2450
- Utilities: 475
Now this wasn't a perfect deal. again I was 25k over the budget and 6 weeks behind schedule after all was done. Plus Thanksgiving, Christmas, New years, my birthday I spent it all working alone at the apartment because my contractors dropped the ball so many times. I made a crap ton of mistakes but learned so much in the process. This was my first ever rehab project and some bold little voice in my head told me to project manage it alone but it worked out in the end
- Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@David Zheng So it sounds like you're using a combination of investors and banks for your financing. Based on your salary and assuming the other properties are similar to this, you should be maxed out at your DTI ratio. How did you convince banks to ignore that to lend you more money beyond the DTI ratio? Where did you meet your investors like the software engineer?
- Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes9y
O I maxed out my DTI by property #2. Talk to a lot of banks and some are more willing to work with you than others. Like I said success breeds interest. I rent out all of my places within days of closing for high rents. Banks liked that and were willing to ignore the lack of tax returns and obscene DTI and use 75% of my current rents as income.
I post a lot on social media sites and I do brag a lot haha, but people see that and they know I mean business. Naturally someone with a lot of money but not a lot of time will want a piece of that return, so they contact me and we work out a private lender deal.
Rinse and repeat - Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@David Zheng Thanks for all the input man!
- Flipper/Rehabber · Springdale, AR · Member since 2016 · 79 posts · 41 votes9y
Well, I'm just getting started, but I want enough passive net income to support me and my family- somewhere around 50-60k a year. I don't plan on retiring at that point, but rather put about half back toward investing and half towards living life a bit nicer and more generous. I don't want the headache of a big corporation or business, just nice homes with good income. My lifestyle is simple- my wife and I aren't extravagant. Rather, we're very involved in our church and end up giving a fair bit away. Being financially stable enough to devote most of my time to ministries AND be extravagantly generous is my ultimate goal.
- Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes9y
When I started out (in 2007), I had the goal of owning 100 apartments generating $100 per month which would put me at $120K positive cash flow (double what I was earning at the time). 4 years and 31 apartments later, I realized my plan would take too long to achieve and i had to get out of my JOB. Replacing my JOB income was as lofty a goal as I could muster and it didnt matter if I had to work 60 hours for myself...that would have been better than 40 for somebody else. I also had dreams of fancy cars and a big ol house etc. I've since had a big change in heart and believe very deeply that time is the most important thing we have (rather than things). It is time that allows one to enjoy experiences and develop relationships (two things that I value greatly)....but I digress. Back in 2011, knowing i rather make less on my own that make more while working for someone else, I bought a storage facility that was losing money and quit my job the day before i closed. We've been very fortunate in that our storage investments now allow my wife and I to work a combined 15 hours per week and all our bills are paid and we live quite comfortably by our standards. This is a wonderful level of freedom but our businesses do have a good bit of debt and so I do not yet consider us to be financially free. That day will come in 5-10 years when our debt is gone and we "re-structure" our investments to be as close to hands off as possible. And if there's money left over the fancy cars and toys will follow:) but not before then!
- Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@Michael Wagner What do you think catalyzed the change in heart from valuing things to valuing time?
As for your storage facility, did you jump into it knowing that you can turn it around? It's pretty ballsy to purchase a losing business and then quit right after.
- Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@David Zheng Question about private lenders. What interest rates and amortization timelines do you usually work with? I would guess that they would be much higher than when dealing with banks.
- Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes9y
Originally posted by @Jerry Poon:
@Michael Wagner What do you think catalyzed the change in heart from valuing things to valuing time?
As for your storage facility, did you jump into it knowing that you can turn it around? It's pretty ballsy to purchase a losing business and then quit right after.
Hi Jerry, When we bought are facility, we did extensive due diligence to mitigate risk and were relatively certain we would turn it around. We didnt know exactly how but we did identify the primary causes of its poor performance and knew we could address those. It helped that my wife had a job and we didnt have any kids. We also bought a house that cost half as much as the "banks" said we could afford. These things put us in a position to take the plunge.
As for my personal "philosophy" switch, some of it I'm sure comes with normal maturation that happens in your 20's. I also started to notice that buying things felt really good!.....but only for a little while. A fancy car (a used acura TL in my case) can make a young man feel pretty big in the britches for a few months. But inevitably, that guy soon notices the Lexus or Mercedes and his TL no longer shines the way it once did for him. So if things only make you happy for a short while, is there anything that can make you happy long term?...and how much might that cost? So i started down a path of reading and investigating success and happiness material and have been very pleased with my progress in that realm. The funny part is that financially speaking, I'm far richer than I ever was when I focused on making money....of course, not needing to buy cars/houses etc that I cant afford has helped in that arena. Im sure this is more than you bargained for when you inquired but I am very passionate about helping people not climb the "investment ladder" only to realize that it was leaning against the wrong wall! Hence I use any opportunity I can to inject a better is better mentality into my investment talks. More isnt better.....better is better. This isnt to say that theres anything inherently wrong with fancy cars or big houses. If they bring someone lasting happiness, Im not one to judge that....my concern is that few people understand the true "cost" or promising thier future away buying things they cant afford (ie-taking on payments)....and I'll step down from my soap box now. Thanks for listening!
- Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@Michael Wagner This the exact type of feedback I was looking for starting this thread. I'm in my 20s and I feel like I am going through the transition you mentioned. Thanks for all the advice and I agree with a lot of it. Got any recommendations on the reading material you went through during your phase?
- Investor · Spokane, WA · Member since 2012 · 71 posts · 24 votes9y
Originally posted by @Jerry Poon:
For those of you who have jumped into real estate investments to reach the goal of financial independence, what is the lifestyle you have visualized for yourself after you have done so?
I visualize working when I want to and having the free time to partake in activities I want to. I also visualize travelling quite often for a month or two at a time, and doing a house flip or picking up another property once in a while when a deal is good enough to keep in practice.
But mainly, I want to be able to spend time with friends and family and travel. I live on as little as possible right now and have the spare income (and methods- I churn credit cards for free airline miles) to travel, but my full time work doesn't give me the vacation time to use it! Incredibly frustrating.
My personal goal is a $4-5k overall cashflow. I would put aside $1.5-2k for maintenance/savings, since these are investment properties, and $500/mo for health insurance, and live on $2-2.5k per month. With no major expenses (I live in a duplex that covers its mortgage), I should get by fine on that.
I figure it'll be around $600-700k net worth. I'm using heavy leverage, so $4-5k cashflow on that net worth is possible, but that's why I also have to save a lot of it for maintenance. I am trying to use a BRRR strategy to achieve it fast.
- Specialist · Victor, NY · Member since 2013 · 823 posts · 844 votes9y
Originally posted by @Jerry Poon:
@Michael Wagner This the exact type of feedback I was looking for starting this thread. I'm in my 20s and I feel like I am going through the transition you mentioned. Thanks for all the advice and I agree with a lot of it. Got any recommendations on the reading material you went through during your phase?
Your Money or Your Life by Joe Dominquez and Vicki Robin is a great nuts and bolts Financial Independence/Financial Integrity book.
Lifonaire by Steve Cook and Shaun McCloskey is probably the best book I could recommend from a "philosophy" standpoint. You should know that it is a faith based book. If you share the authors beliefs, it makes the book that much better. However if you do not, you can choose to replace God with Universe or whatever makes you comfortable. There are a lot of GREAT lessons in the book and it would be a shame to miss out on them simply because they are founded in the Bible. Two must reads for soemone looking to learn how to live according to thier own definition of success rather than society's definition! Enjoy and feel free to reach out with questions in the future!
- Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@Chris H. Thanks for sharing. How long have you been working on your goal? How much longer do you see it taking? Do you think you'll have to bump up the health insurance numbers as you age?
I understand the frustration with work and free time. As a young worker, we are often flush with cash but with no time to spend it. Either that, or the other way around.
- Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes9yBrie Schmidt Brie, What is your unit mix if you don't mind me asking? Big multi or a lot of small deals ?
- 9yPatrick AllenBusiness MemberRealtor · Tucson, AZ · Member since 2014 · 241 posts · 139 votes
I like the idea of this thread but think it is getting hijacked. Let's hear more stories of financial freedom!
I hope to use RE investing to become a professional triathlete... sort of.
For those who haven't checked out my profile (you should, I'd love to connect!) I am primarily a cycling and triathlon coach; my 9-5 job is writing workout programs to get athletes in shape for cycling, triathlon and running races all over the world. As a coach I am intimately knowledgeable regarding the importance of one core difference between pro endurance athletes and weekend warriors: the pros recover like pros. They don't work a "job" so they have the time to source the best foods, get 9 hours of sleep every night, get regular massages, etc. It is their ability to recover which allows their ability to train.
When I am financially free I look forward to taking a sabbatical to live and train like a pro triathlete. I plan to spend 9-12 months doing everything right and really exploring the upper limits of my ability as an athlete.
That, and perpetual travel, anyway :-)
- Specialist · Honolulu, HI · Member since 2014 · 1k+ posts · 1k+ votes9y
Originally posted by @David Zheng:
I'm going to go the total unhumble way about this and give you some solid numbers because it will probably motivate you more as it motivates me
I'm at a full time right now at 70k salary but my monthly cashflow from rentals alone after piti, investors, expenses, etc. is 9.5k/month. Obviously much higher than my paycheck but I don't forsee myself quitting anytime soon. I would like to get to 20k before I consider stepping down to a part time employee.
Reason being, as a single young male, I want to live the high life. yup exotic cars, beach front properties, traveling when I want to etc.
Willing to sacrifice a lot of my younger life to live a much more comfortable 60+ yearsHate to get all stoic - you are hoping for something that is absolutely no guarantee. Health, mobility, mortality, at that age. Go out and see more of the world, for some perspective, is my honest suggestion.
- Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@Andrey Y. Hate to say it but you're kind of going against what this whole forum is about. People are here to save/borrow money and supplement/replace their incomes with real estate to build better lives. It's the bigger picture. I absolutely get what you're trying to say, and a few on this forum will unfortunately die before they see the fruits of their labor, but a great, GREAT, GREAT majority will live to enjoy the rewards of their current financial/social sacrifices. I appreciate your input though, and I honestly feel the same way you do sometimes. It's what I'm building towards. I am sacrificing probably 10 years of my life to do this the right way, and hopefully I get to live the rest of my life the way I want to, financially free. Different folks, different strokes.
- Investor · Atlanta, GA · Member since 2015 · 366 posts · 283 votes9y
I can relate to @Brie Schmidt. I parted ways with my corporate gig almost 2 years ago and quickly got bored. I started volunteering at a local nonprofit 2 days a week and consulting in my industry on the side. I HATED cubelife, so to me the best thing about financial freedom (in addition to all the things Brie mentioned) was being able to choose how I spent each moment of my day. I should note that my husband continued to work full-time, which was additional peace of mind but he didn't/doesn't have to work, he just loves his job.
I think the biggest myth is that you have to be a millionaire to be financially free - I wasn't, but because rental income covered/s my living expenses comfortably and we had ample reserves, I was still just as financially free as someone making millions. I traveled, focused on my relationship, spent time with family and friends, slept in, went on long walks, volunteered for causes I cared about, consulted...freedom is awesome. I always hesitate to share my story b/c I don't want to seem like I have it all figured out because I don't - I still have a ton to learn. That said, I do want others to know that you don't have to slave in a job you hate until you're 65. Live frugally early on, save aggressively, invest smartly in things that generate income, work hard, and voila!
Ironically, people kept offering me jobs while I was trying to be "free" so about 6 months ago I accepted a full-time role at a company I LOVE doing a job that I really enjoy - it is 100% remote and my salary almost equals when I was busting my behind in cube hell. This also allows me to now qualify for leverage to do larger deals and take our portfolio to the next level (hopefully). There are advantages to having a more traditional job that I didn't consider when I first stepped away from corporate America. We missed out on at least one amazing deal b/c I couldn't get anyone to lend us money without a "9 to 5" - I'm still disgusted by that.
So, I plan to continue to live simply and save a ton so that we can keep building...have 2 SF deals in escrow right now and hope to close on 2 MFs before the end of the year. Sorry for the essay - best of luck in your journey!
- Real Estate Investor · Los Angeles, CA · Member since 2014 · 237 posts · 67 votes9y
@Patrick Allen Thanks for steering this back on track. I was hoping someone would lay out their dreams on this thread like you just did. Would you mind sharing your financial goals? What monthly income would allow your sabbatical and training regimen? I'd imagine world class recovery food and regular massages would require quite the bankroll. When did you discover this passion of yours, and how did it lead to your discovery of real estate investing as a possible solution? How long until you reach your goals?
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