All Forum Posts by: Brett S.

Appreciate everyones suggestions!  This is perfect.  I'll send a picture once it's done.  :)

I just put an offer on the property this week and it will be added to my long term rentals collection.  The interior of this house is unbelievable/top notch/luxury appointed while the exterior is nice and clean and very blah to my eyes.  I've never done curb appeal work in my 15 years as an investor (lucky me or stupid me, I can't decide), but I think there is opportunity here.  

Any suggestions for a quick / cheap facade update to make it pop?  Guessing paint but not sure what color or where to put it...

 No worries haha. Great summertime or business casual look.  I was just thinking based on your comment that you'd want to have as much wearable wealth as possible, which would be a suit vs polo, and sports watch with a suit doesn't always look right 

 Car people tend to like that story.  Real estate people too.  Good combo here ;)

I would love to have a Lambo.  The only thing that stopped me was that they are so expensive vs a Ferrari of same model year that I figured I could only afford 1 of them vs two of my other dream cars.  

In my imaginary 10 car garage though, one stall has a car with a bull on it though, no doubt!

 I heard recently that lately watches are what the ladies look at to evaluate guys too.  

That said, get some sharp suits and a Patek Phillipe vs a Polo and a Rolex.

 I've done pretty much exactly what you are asking about.  I always said I'd get a Ferrari by age 30 but I was making more money than I ever thought I would at 27 and realized it wasn't enough for a Ferrari, and while my salary was high it wasn't going to grow much more in that company/career, so I decided to meet my dream halfway with a Dodge Viper.  

I rented an apartment for $500/mo and bought the Viper at $1,100/mo.  Then of course I needed something for the winters in Michigan so I bought a Cadillac Escalade a year later at $800/mo.  I also read Rich Dad / Poor Dad round this time which motivated me to buy a rehabed turnkey rental property in a class "d" neighborhood about 2 hours away from my apartment for more than it was worth which was a financial stalemate but a cheap education.

You can imagine the looks of conflicted amusement on my neighbor's faces when I had $120k of cars out front of my 800 sq ft townhouse that was probably worth $100k (looking back, if I lived in a warm area, that would paid for a Ferrari afterall - curse Michigan snow!).

About 6 months later my Viper visited the repair shop enough times to be eligible for the lemon law and I pounced on it as a money making opportunity.  

It took two years to get the lemon law case settled (smallish settlement) then I sold the car at a discount to a private buyer - I liked driving the Escalade better about 80% of the time anyway.  When I sold the Viper I took the cash flow I was no longer losing to the car and bought a duplex (still had the turnkey) and rented the other side.  Probably a turning point for me.

I traded the Escalade for a 300c (with a Hemi!) which did ok in the snow by itself, then a couple years later I bought a Caddy STS-V.  Finally, I sold that upon moving to New York where I no longer needed a car and I haven't had a car since because the company provides one as an expat (and I miss not being able to choose a sportscar!).

Long story short, having the Viper early was mixed - I scratched the itch at $70k vs $150k or $250k and it allowed me to focus on investing shortly after.  Without the lemon law "out" and going somewhere I couldn't drive though I probably would have stayed poor for a while longer; same game plan but a lot less cash flow to fund it.

When I finally get home though I'm going nuts.  Ferrari and Bentley are minimum.  I'll probably throw in a Range Rover for the wife now too since I'm married now.  All cash this time around.

Gotta enjoy life a bit or what's the point, ya know?

I haven't retired, but as of last year I finally could have done so.  I'm one of the odd ducks on BP that happens to enjoy what I do for my "day job" intersected with being pretty good at it.

What were you doing before, and what do you do now (professionally)?

I was/am/will be a Corporate Finance guy with a side order of IT.  I've started at the bottom and rose through the ranks in both careers, IT first.  Long term goal is overall CEO or CFO of a Fortune 100 company.  Still a ways to go yet.

Is your passive or business income from real estate the same, greater, or lesser than when you were working a job?

I set out to replace my income with real estate almost 15 years ago when my IT salary plateaued.  I went back for my MBA at the same time, so while I've been carefully building a bigger and bigger portfolio the whole time, my W2 income so far has actually outpaced my RE investment income.

Do you "live the dream" and travel/vacation year round, do you focus on building your empire to ever greater heights, or do you pursue some other passion?

I live half the dream; I'm an Expat with my company so they send me all over the world.  My time is still theirs though outside of my vacation days, but my position allows me to be really flexible and independent.

How long did it take you to build up a real estate portfolio sizable enough for you to "retire" on?

~14 years.  I took it slow (buy and paydown vs lever up) and ate a recession in the middle.   Also, my target is generating enough income to live really well, not just survive.  I know that's ok with many people on here and other Finance blogs but just not what I'm after.

How much time does your real estate business consume per month?

Almost nothing.  Probably 3-4 emails per month to my team and no phone calls, unless I'm acquiring something - which I find exciting so I don't even notice.

Probably too late into this discussion and no one will read this reply but here goes:

By day I'm a CFO of a multinational.  By night I'm a real estate investor (>10 years now).  Have a CPA and MBA...  which is to say I'm fairly informed on the topic and have robust analysis skills.

I've wondered this question myself, many times.  I've ran 50+ models at various times.

My conclusion is this:  R/E and after-tax stock/bond market investing *in general* generates nearly the same returns for a given amount of investment because the stock market is way more tax efficient than R/E.  If you're getting crazy low priced deals everytime, never have capex or vacancy, and are buying everything with 0% down and reasonable interest rates, R/E will be a slightly better return.  But I'm guessing you can't do all of those every time so it will also be worse sometimes.  And if you invest in nothing but emerging market stocks, it might beat the pants off your R/E.  But it might not.

The bottom line is that in my analyses, R/E and after-tax investing are about the same return.  HOWEVER, pre-tax investing blows away both, and company match pre-tax blows pre-tax investing away.

Therefore, as long as you have a job, I recommend the following priority, which I've done for 20+ years:

1) Pick a couple luxuries in life that you don't have to pinch pennies on. Be a complete tightwad on everything else

2) pay off debt

3) Invest in 401k until the company match

4) Max out 401k

5) From additional every dollar, 50/50 split R/E and after-tax investing

Yes, it will take longer than focusing on R/E only, and you'll have to stay in your day job a bit longer (so if your goal is to quit ASAP, it's not the best solution).

But it is the highest return strategy there is.

 This matches my experience.  I've never been remotely interested in the looks of "investor specials" and the few times I've run the numbers on them, they're always worse than non-"specials".

You should read that as "non-investor specials" or "personal residence only with heavy rehab work required"

As soon as a market is published as being "hot" I take it off my list.  You should too.  Once it's common knowledge enough that a publication picks it up all the good returns are gone, or soon will be.  Same logic as the stock market - once you read about it it's time to sell.

I've looked at both markets for buy and hold in the past and decided against both.

Compared to my primary market, Texas *would* be ok/comparable *if* I lived in Texas.  Texas rental returns are 10% lower than what I consider acceptable.  This is offset with no income taxes.  Being out of state though, I have to pay state income tax anyway, so no deal.

Add in the fact that the oil and gas industry employs most of the state in one way or another (like auto does in Michigan) and that industry will be in the toilet for the next few years (with people leaving state for other jobs) and the demographics look scary too - no appreciation play to be had.  or at least not a good one.

In my experience when I ran the numbers, California might as well be Manhattan.  Insulting, obscene, offensive, tax levels (among highest total tax bill in the country), overvalued properties, and average rents = poor returns vs pretty much anywhere else in the USA.  Your only valid play in either location is appreciation.  I believe in the Manhattan appreciation play due to foreign money.  Not so much California, except maybe in very specific areas (silicon valley).  It's no Manhattan.