Sell the dream home to further our investing career?
This question is for you older investors out there. Would you have done things differently if you were to start over? Is trading 5-6 years of a JOB worth giving up the dream house? Have you gotten more value throughout your years traveling or living in one great location? My wife and I have been investing in single family’s and small multi family’s along with our small business a 89 lot RV park in the path of development for the last 5 years. We have really grown our businesses and now my wife is looking to retire from her teaching job here in the near future. We can either 1. Sell our dream house, a modern nice open layout house on 18 acres with 2 private fishing/recreation ponds on it and invest those funds into more real estate. After 4 years or so we would have more than enough cash flowing properties to consider her quitting. 2. Keep plugging away with what we are doing and she would be able to retire in around 10 years. She is a guidance counselor in a small school system and we are in our mid 30’s. With the depreciation we claim on our rentals we would be able to qualify for an affordable option through the aca for heath insurance. We are looking to sell our RV park in the coming years as well as entertain the option of selling or getting management in place for our rental properties.
I'm fortunate to be able to interview a lot of successful investors. I would say the majority have said they wish they bought more real estate a lot sooner...some even go as far as saying they should have been a lot more aggressive knowing what they know now.
I think it's important the those who achieve the highest level of success have made the biggest sacrifices. Many of the most successful investor's I've spoken to made tremendous sacrifices at the start, but are now reaping the rewards.
I think it's a call you and your wife have to make. There are no guarantees and there is risk...but you are also risking not living up to your true potential by not acting.
@Jerrad Shepherd, firstly, congrats on your success to date. It looks like you've already put a lot of thought into your various options. I'm just a little concerned that you seem to want to swap one dream (which you're already living), for another (uncertain one)?
You've "been investing in single family’s and small multi family’s along with our small business a 89 lot RV park in the path of development for the last 5 years", but, you're "looking to sell our RV park in the coming years as well as entertain the option of selling...rental properties"?
And instead, "invest those funds into more real estate"? (ie. Different real estate?)
At the same time, you'd be happy to have no dream home anymore?
Just how badly are you haemorrhaging cash at the moment?
(Or should I ask: how bad were your investments in the first place?)
My theory is: either your dream home has appreciated significantly since you bought it, in which case you're probably just tempted by the lure of "free" money, or, you paid too much for it, and paying it off is sucking the life out of the rest of your income?
If the first scenario best describes it, then good luck ever being able to buy it back again in the future (as it continues to outpace inflation)! But if the second scenario is closer to the mark, then good luck making better purchase choices in the future!
Here's a question: Does your wife hate her job that much?
ie. In your thirties, ten years might seem a long way away, but, here's a thought for everyone: beware of leaving a job too early, and not being able to get it back when you change your mind again!
[Also, beware of selling dream homes too soon]. All the best with what you end up deciding...
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I dont know about others but sounds like you have your retirement home already 18 acres and private stocked lake that is way cool.. think about your joy of living there as well. got to stop and smell the roses along the way.
as for the other stuff just a numbers game and what you feel is worth your time and risk profile along with
dealing with the public.. is it more fun to deal with RV folks.. or is it more fun to deal with M to M renters who may have some drama etc.. ??
@Brent Coombs
Our personal residence has seen normal appreciation nothing outrageous. We would be able to cash out enough to live in one of our rental properties free and clear. The value of the rental property is around 1/4 that of the current property. We have made great choices in real estate so far, but isn’t the point of sacrificing to reap the reward in the end? Sure our house is great but the lure of the wife retiring and us being able to travel at such a young age is real. Running a successful business “campground” and being a full-time landlord isn’t exactly retirement. We are still trying to decide whether to cash out completely eventually or not. Our net worth is around 25 times what our annual spending would be if we moved and my wife quit her JOB. The struggle is real, keep chugging away to hit some insane cash flow goal or to buy our freedom. I have no desire for the finer things in life. I enjoy fishing at my house but I can fish for free down the road always. What is the saying, don’t buy the cow if you can get the milk for free?
@Jay Hinrichs
We enjoy the RV park customers much more than the tenants, no comparison. It’s fairly rare to run into a customer in a bad mood when they are on vacation! Our small city “25,000 people” is expanding out towards our RV park. 1 acre Lots less than 1/2 a mile away from us are now selling for around what we payed for the 35 acre park 4 years ago. We enjoy running the place but to be honest I don’t know if the highest and best use of the property is a RV park. We are own it with partners that are getting older as well and the exit strategy at this point is very unclear. I imagine that we will get approached in the near future to sell it. There is a 29 acre parcel next to us that has been for sale for a few years, we are waiting to see what ends up with it. It would be a great place for a amusement park but my pockets aren’t deep enough for that sort of thing right now.
@Jay Hinrichs
Btw, I watched the podcast you were on today. You have been around the block a few times! You have seen things that us younger investors have not. I appreciate any advice given!
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Originally posted by @Jerrad Shepherd:
@Jay Hinrichs
We enjoy the RV park customers much more than the tenants, no comparison. It’s fairly rare to run into a customer in a bad mood when they are on vacation! Our small city “25,000 people” is expanding out towards our RV park. 1 acre Lots less than 1/2 a mile away from us are now selling for around what we payed for the 35 acre park 4 years ago. We enjoy running the place but to be honest I don’t know if the highest and best use of the property is a RV park. We are own it with partners that are getting older as well and the exit strategy at this point is very unclear. I imagine that we will get approached in the near future to sell it. There is a 29 acre parcel next to us that has been for sale for a few years, we are waiting to see what ends up with it. It would be a great place for a amusement park but my pockets aren’t deep enough for that sort of thing right now.
depending cash flow of the business sounds like you have about a 17X in value jump with your land in the path of progress ! minus development costs of course.. love land in the path of progress. and especially if it earns money while it matures
When I bought my primary residence in the 1980s, the societal mindset at the time was to buy as much house as you could afford (dream home) because it would only go up in price, your income would always go up, and you would be paying down your mortgage. In the 2000s, when I first read about the concept of replacing cash-draining assets with income-producing assets (sell the costly stuff and use the money to buy the net positive cashflow stuff), I balked at selling the family home because doing so was the unthinkable. Today I can see the advantage of doing so and would think twice before committing my money to buying a home. I'm doing that now (thinking twice) before buying a home where I'm living for my retirement. I like the idea of perhaps renting (and outsourcing the maintenance tasks to a landlord) while using my capital to invest in assets that product income.
Originally posted by @Jerrad Shepherd:
@Brent Coombs
Our personal residence has seen normal appreciation nothing outrageous. We would be able to cash out enough to live in one of our rental properties free and clear. The value of the rental property is around 1/4 that of the current property. We have made great choices in real estate so far, but isn’t the point of sacrificing to reap the reward in the end? Sure our house is great but the lure of the wife retiring and us being able to travel at such a young age is real. Running a successful business “campground” and being a full-time landlord isn’t exactly retirement. We are still trying to decide whether to cash out completely eventually or not. Our net worth is around 25 times what our annual spending would be if we moved and my wife quit her JOB. The struggle is real, keep chugging away to hit some insane cash flow goal or to buy our freedom. I have no desire for the finer things in life. I enjoy fishing at my house but I can fish for free down the road always. What is the saying, don’t buy the cow if you can get the milk for free?
I agree that "being a full-time landlord isn’t exactly retirement" - but isn't that what Property Managers are for? ie. From the outset, your cash flow should have been calculated as if you weren't the ones managing it! [I reckon you have a good head on your shoulders, having listed the pros and cons].
Most of what you're asking relates to lifestyle, which we shouldn't decide for you. So again, all the best...
Just read a great article by @Brandon Hall that offers great advice related to your current situation. Give it a read.
https://www.biggerpockets.com/renewsblog/crafting-lifestyle-real-estate-business/
I am all about balance in life, got to smell the roses along the way and reward yourself.
Aggressive investing... also can come along with its own set of stress, I know about this one.
Your dream home sounds amazing, enjoy it.... you have plenty of time and you can still keep investing.
Congratulations on what you have achieved to date.
What did I do?
I purchased my dream home about 12 years ago, never looked back, its the best thing we did, its my slice of heaven, and never stopped me from investing..... I am about balance in life.... Good friends, family, lifestyle.... Its not just about the money