END GAME STRATEGIES for real estate investing.

Investor/Accountant/Builder · Meno, OK · Member since 2014 · 1k+ posts · 918 votes

We have been buying and holding since 2002. All with 10 year terms or less. Paying off, buying more, etc. Right now struggling with the payments. But, within the next few years all the SFR's will pay off, along with several duplexes, and also a sizable commercial deal, and the second(5 yr term) on an apartment second mortgage.

Will be super nice when paid off, but it is clearly tight while working the plan. Sometimes it seems that we are just babysitting properties til they are paid off.

Of course we have bought 8 units this year........we may never get everything paid off.....my wife is going to strangle me.......

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Keong Kam

San Jose, CA · Member since 2017 · 75 posts · 42 votes

9y

I know I am not super experienced and don’t have mature portfolio like you so I won’t be able to comment on this but certainly I also think about this all the time. This would be a very helpful topic for everyone! Very interested in finding out what others think about this.

1 Reply

Steve Vaughan

Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes

9y

I've become more ok with paying off higher hassle and higher interest debt over the last few years. I just satisfied another 11 units, bringing me up to 19 'red' doors.

I've pondered this as well. What's the end game? I'm content and my market hasn't penciled in a few years, so I guess a paid off or paid way down portfolio is better than a sharp stick in the eye or running on the corporate wheel until 65. I'll peruse opportunities if they arise, but am ok not hunting anymore.

But I'm not a 10xer. I'd rather take a nap than fly around in my jet doing seminars or overseeing my billion dollar portfolio or whatever. I imagine the end game is a little different for everyone. Thanks for starting this discussion @Jeff Barber!

3 Reply

Jeff Barber

OP

Investor · Jonesboro, AR · Member since 2016 · 11 posts · 53 votes

9y

yes, steve vaughan, I'm an opportunistic investor at this point. i believe i will be able to retire comfortably on 35-40k per month. funny to say and see it typed! barring any unforeseen natural disasters, rentals are my nest egg. i guess it will ultimately work itself out with time. i hate being tight on money come tax time in october when personal property taxes are due and april for income tax but my interest income and expenses help that too. i wish some seasoned veterans would chime in here and we could hear several differing viewpoints. everyone has their own level of needs, risk tolerance, and every market has different expectations as well. its' hardly a one size fits all answer but i felt that this particular category was lacking on the forum. its rah, rah, rah to get into realestate but not so much on how to know when you've arrived and etc.

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Lane Kawaoka

Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes

9y

This is why I don't think SFH is a good way to scale. A few are good but one should scale to MFH.

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Anthony PolcynPro Member

Investor · Jackson, OH · Member since 2014 · 42 posts · 20 votes

9y

I would buy more with longer notes and improved cash flow. You can always survive a couple speed bumps with cash flow. Once you have cash flow, you can always pay extra to reduce your mortgages to become debt free. You could also purchase more than you need (while increasing your cash flow) and later use the appreciation from the leveraged extras to sell and pay off your loans. I built too quick --60+ units-- with tight cash flow and didn't survive the correction and lost it all around 2007. It took a long time to recover. I suggest strong cash flow is important in any strategy that you use. I wouldn't want to see anyone go down the road I travelled.

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Anthony PolcynPro Member

Investor · Jackson, OH · Member since 2014 · 42 posts · 20 votes

9y

End game for me is to keep exchanging up using 1031 exchanges. If I have more than I need I can always up my philanthropy. If I am offering nice clean safe homes, I am helping lots of people, and I can use the excess cash flow to assist many more people in need, like bring clean water to villages in third world countries. I plan to pass everything on to my children and hopefully they will follow my lead in helping others.

6 Reply

Frank Grigus Jr

Coal City, IL · Member since 2017 · 34 posts · 14 votes

9y

Any other veterans willing to comment? I am a new investor and I was really hoping this thread would take off! Great thoughts and strategies thus far, keep it going please!!

0 Reply

Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

9y

Been doing this 10 years. Separate game plan. Leverage leverage leverage to grow fast and take advantage of cheap money. I don't know what my overall equity position would be if I focused on paydown v growth but I'm happy with my current spot. 1000 or so units. $700k of rent roll

2 Reply

Account Closed

Oakland, CA · Member since 2017 · 133 posts · 58 votes

9y

I have been investing for 5 years, currently have 42 doors. Cash flow is twice my last W-2 job. My exit strategy is, "after" the peak arrive,... Note: we won't be able to tell "before" the peak arrive, but everybody "will" know "after" the next peak arrive. "After" the next peak arrive, I will sell "N minus 1" door, I will sell all except my primary residence. Then buy again "after" the next bottom is pasted. ======= Have anybody gambled "Baccarat" in casino before? When you hit the long "bank" or long "player" like us right now, never time when will the long bank or long player stop, just keep betting on it until the long streaks stop, then hit and run! Since we have a cash flow portfolio already, we don't need to time when the next peak come, just keep investing, keep leveraging, until the next peak just pass... Then it is time to hit and run, cash in all my chips please.

2 Reply

Jimmy MoncriefPro Member

Chattanooga, TN · Member since 2010 · 319 posts · 100 votes

9y

@Jeff Barber - congrats on all the success! For me, the biggest issue is taxes and simplification.

I would rather own less and gross the same so I would sell a bundle of residential houses - 1031 into a commercial property with less maintenance and be debt free.

I hope that helped.

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Michael Plante

Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes

9y

Originally posted by @Jeff Barber:

i started investing 16 years ago and currently have 52 doors and am about to start 4-3/2 rentals here in northeast arkansas. my gross rents are currently over 35k/month. the 4 additional houses will rent for about 1000/month bringing that gross total to about 40k/month. i have a good salary and have always financed my properties over a shorter term, sacrificing cash flow to ultimately pay them off. i would like a special forum category for people like myself to discuss what to do in the END GAME. is it better to own free and clear, or keep leveraged out and live from the cash flow? What other strategies are you using to help with taxes and income? I know there are enough of you out there with as many or more years of experience as me. I want experienced investors chiming in on this, not the typical newbie with 5 years experience or less. thanks!

I agree a separate forum for end game would be nice

I too am looking for a set amount per month net so I feel 'safe'

May I ask on the 35k/month how much you net?

0 Reply

Michael Plante

Deland, FL · Member since 2017 · 2k+ posts · 1k+ votes

9y

Delete

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Levi T.Pro Member

Rental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes

9y

You already know the end game. Most of us started the ball rolling in this threads years ago, and we only have 3 optione. Keep buying, stop buying, sell it all.

Most guys keep with option one till their later years, then somewhere around age 65-75 they start unloading fast.

I've personally bought up many portfolios from guys in their 70, it's becomes clear, once a landlord always a landlord, but pulling down a few hundred thousand per month is not bad!

If your lucky, your children will want to take over, and you can get true retirment, otherwise your riding this beast till the end.

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Dave FosterBusiness Member

Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes

9y

@Winston Churchhill (just thought I'd tag him in case...) said "The longer you can look back, the farther you can look forward". I think it's critical that you take a long long look backward so you can plan your forward. Real estate isn't a tame animal but it is very predictable within ranges. It is cyclical in nature and even within that macro cycle there are growth trends that are consistent. So planning your end game isn't just about where you want to be. It's about how to create that position given where the general market is and protecting that position.

So your exit game (assumption here is that exit means a gradual move from active to passive and higher risk/reward to lower risk higher security) will depend on where you are and where the market is when you want to say enough is enough. In my industry clients have charted a course of tax deferred growth and compound return by investing in part with deferred tax through the 1031.

The 1031 can be a huge part of your strategic positioning within the macro cycle because it allows you to move to different types of real estate, different amounts and price points of real estate, different geography and even from active to passive investments all while retaining the advantage of tax deferral.

The one thing that's very individual though is going to be risk tolerance from debt. The 1031 investor in particular has to plan early what their debt tolerance is going to be at the end. An investor not taking advantage of 1031 can simply follow @Account Closeds plan and exit into cash when the market has tipped. However the success of using 1031 exchanges early in your career is maximized by using leverage. So it is common for a 1031 investor to have to deal with not just what kind of real estate and where but also how do I strategically reduce their debt load to be downturn resistant for the exit they want. Yet at the same time they have to also begin to hold success up against the standard of net NOI rather than any sort of cash on cash, cap rate, or IRR standard.

I've heard it described that the key exit point is the moment when you can stop looking at how well your money is working and you start looking at how well you are living on "rested" money.

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END GAME STRATEGIES for real estate investing.

END GAME STRATEGIES for real estate investing.

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