I need advice on my portfolio.

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I need advice on my portfolio.

Brent Davis
Investor · Petersburg, IL · Member since 2015 · 28 posts · 3 votes

I'm fairly new to this forum.  I poked around on here a few years ago.  I currently have over 20 units.  I'm a school teacher also.  I have been doing this for about 15+ years.  Does anyone have advice on who to talk to to look over my numbers/portfolio?  I've basically self taught myself everything.  I've kept above water for 15 years so I'm not failing.  However, it is always a sort of uncomfortable thing to share what I am doing as far as finances with people.  Basically my properties are mostly all short term notes now.  5, 10, and some 15 year notes.  They are all balloons.  They do cash flow.  However, I feel broke at the end of each month.  Lol.  I have a huge amount of equity in my properties.  THey are all in top notch shape and I have amazing tenants.  However, I constantly stress about the amount of debt I have compared to my income.  I'd love for someone to be able to look over my stuff or advice on how to do that.  I'm thinking of taking things to the next level and using some of my equity to acquire more units.  However, my amount of debt keeps me second guessing.  Any advice is appreciated..

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Gabe N.
Investor · Anchorage, AK · Member since 2015 · 29 posts · 24 votes
8y

@Thomas S. I see you always beating on the drum of "refi and reinvest" when it may not be be best option for somebody that has enough properties already and just wants to simplify their current investments. In my view paying down or completely paying off a few of the better performing properties in this portfolio may be the least stressful option and would increase cashflow.

Another thing I'm curious about is this "ghost cashflow" or "artificial cashflow" as you put it. Cashflow is cashflow no matter how you get it. Whether that is 10 properties making 10% or 1 property making 100%. It's just money in the bank account at the end of the month.

I don't mean to single you out but I just see this approach being foisted on every person and I would like some clarification as to why it's the best for every situation.

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  • Brent Davis
    OP
    Investor · Petersburg, IL · Member since 2015 · 28 posts · 3 votes
    8y
    We could not live off our cash flow of our rentals at our current living standard. We both have w2 jobs. I’m hoping to retire early at at some point. I’m 38.
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  • Tanya F.
    Rental Property Investor · Madison, WI · Member since 2013 · 629 posts · 339 votes
    8y

    My point of my story above is that if you wish to retire early, you are going to have to arrange your cash flow and other retirement accounts so that you can live off of it. We are there. We are 57. I am able to retire now if I wish, but I'm still enjoying the W2- plus it gets me health insurance. At 59.5 we can start using our other retirement accounts if we wish. That's in 2019! Coming right up!  Any financial advisor will advise a more conservative strategy over time once retired. Our 3 buildings should be less than 30% loan to value when we actually retire, and the cash flow should keep us comfortable. We can always cash-out refinance in the future, but will probably only do that for our primary residence (which is on schedule to be paid off in ~10 years).

    Without looking at your numbers, it sounds like you still need even more cash flow, either (a) through refinancing - such as your current plan to refinance combined with buying more properties, or (b) you need to adjust your current living standard. There have been quite a few threads here on BP about people's 'freedom numbers' and I personally can't imagine spending what some people say they require. You need to figure that out, though, and make a plan to 'get there' in the next few years. Include conservative plans if you want to retire. Say that 'freedom' number is $3M net worth. You can calculate how long it'll take you to reach that. Maybe you'll find that your freedom number is fine at $2M net worth if it means you can retire at 45 and then do REI full time, buying a handful more properties until you're 50 and reach $3M NW or more.


    Anyway. At 38, if you pay off the new 30 year loans on schedule, you'll be almost 70, which is about the age we'll be when we'll have our rental's loans paid off.  Which is why I posted my story above. Our situation now might be just like yours in 20 years. You could pay off sooner, but I'm mentioning this because we're sort of in the same boat in terms of financing.  Do you want to own/manage rentals into your 70's? 80's? Will you be traveling the world and paying property managers at that point?

    General early retirement questions -what I sense you asked in your original post... you want to know how to arrange your 'numbers' to enable early retirement? Will you plan to earn money during retirement from sources other than these rentals? 

    Do you have a pension?  Will you be able to afford health care for you and your family from age 50-65?  College for the 3 kids in your photo? Will you have parents to support?  Might your kids need your financial support?

    Sorry for the long post, but I think about this topic a lot, being on the brink of retirement myself.  You should be asking yourself these things, in addition to considering the advice given by others, who seem to be mainly interested in maximizing investment returns- which is important but only part of the picture.

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  • Brent Davis
    OP
    Investor · Petersburg, IL · Member since 2015 · 28 posts · 3 votes
    8y

    thanks for the reply Tonya.  My wife and I are both teachers. Hopefully TRS will be there. I’m enjoying my job at this point. I really don’t see myself traveling. I love working on the properties. I would jump into more rehabs if I quit teaching. I have the ability to do 90% of anything in the construction field. 

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