All Forum Posts by: Tony Kim

Sure, we realize the situation and that's why some of us sell our houses and buy both a house and a neighboring local business at the same time. I totally understand that line of reasoning and wanting to get away from the traffic and all the other negatives that accompany big city living. And I applaud those people who have taken that initiative to fulfill their dreams. 

However, some of us have also lived here all their lives and do not want to move. I've lived in So Cal my whole life and moving to a small city in the Midwest would be too difficult a transition for me. I love living in the big city. Wilshire Blvd, which urban planners at UCLA consider to be the future corridor for metropolitan growth in the city of Los Angeles, is two blocks from where I live. But amazingly, my street is very quiet and has been designated a historical preservation zone. In short, I live in my dream house already because I get the residential feel but trendy shops are within walking distance and I'm also central to everything in LA. 

My friends and family live here..my wife's friends and family live here. I can't imagine not being able to see them whenever I want. This is why my plan is to achieve the level of financial independence whereby I can keep my 105 year old beautiful money-pit of a home.

So to answer the OP, my plan is to stay right where I am, but at the same time, I'm sure my wife and I will be traveling 6 months out of the year...vacationing, visiting relatives, who knows.... maybe even visit some of properties of the syndicated deals we've invested in over the years. 

@Matt Ward, excellent points. I don't want to perpetuate any false dichotomies, but I've been fascinated by the psychology behind certain areas of this forum which is to purchase certain properties just on the fact that they provide cash-flow...and label investing for capital appreciation as nothing more than gambling. Purchasing real estate for capital appreciation, on a long-term basis is ANYTHING BUT GAMBLING. In fact, I would consider a highly leveraged portfolio of properties that barely keep up with inflation that provide a few hundred dollars per door when occupied with tenants and a poor exit strategy as a much bigger gamble.

What keeps me focused and motivated is the fact that cultivating my knowledge and putting my money to work is probably the funnest, most enjoyable and rewarding thing I've done in my life (aside from marrying my wife, of course). I used to think it was a desire to be able to quit my job that drove me, but I've realized that's really not the case at all.  I love working for my company... and I also love investing.

I believe you mentioned these properties before in an earlier post. To be honest, that post made me re-evaluate my plans to sell some of my Los Angeles properties. I read so much about cash flow here that I had almost forgotten why I had these properties in the first place. Sure, we might see a correction within the next 5 years, but over the long-term, I'm hoping these properties will continue doing for me what they've done for the past several years. 

These are all points with which I am in agreement...and that is why I have also purchased out of state myself. If I could do it better than my turnkey provider, then I would. But as a busy person, I know that I cannot do it better...and thus I'm willing to pay for the turnkey premium. So I agree that it's all about the price you put on your time and energy.

I'm in the same boat as you regarding how much work this will ultimately end up being. The only point I was making was that we just don't know yet. 

BTW, perhaps you are getting 20-30% on your BA property...  just not in cash. 

Hmm, how long have you owned those turnkey properties?  Because unless you've owned them at least a few years and few turnovers in renters, I don't see how you can make that type of comparison. If they were TURNKEY properties purchased at turnkey prices, then of course you aren't going to have any immediate issues. Just wait and see what these properties look like after you've had your first tenant turnover or first eviction.

I have owned my Los Angeles SFR's for about 8 years now with no PM...and without exaggerating, I probably hear from them about once a year for very minor things.

Hmmm, how much can one put into an IRA and 401K? (it's not much!) Also, you get hit with UBTI when using leverage in a self-directed IRA. And in a 401K, you're very limited in what you can invest. I agree that the tax deferment and employee matching is great, but no one is going to get rich off it unless you contribute at or near the max for most of your life...and only once you reach retirement age will you be able to take distributions. That does not appeal to me at all. I want financial independence now...not when I'm old.

Also, to say that returns on real estate is 2-3% is, while technically true, would not apply to a saavy investor. A properly set up portfolio of real estate holdings will smoke the pants off equities. 

I'm pretty sure real estate has made a lot more mega-wealthy people than stocks.

Are you looking for a hard 80%? I was able to get 75% on an investment property through Mega Capital Funding.  http://www.mcfunding.com/

This is probably bad advice, but how badly do you want to get started in real estate? I personally think the 401k or IRA or any other deferred tax vehicle stamped as a path toward a comfortable retirement to be highly overrated. The deferment is great and so is the employee matching, but unless you contribute at or near the max for most of your life, you aren't going to get rich from it...and you'll only get that benefit when you are really old. No thanks.!!

I've EMPTIED my 401k twice in the past 8 years and used those funds to buy real estate. I paid a huge penalty both times, but I can trace a nice chunk of my current holdings back to these moves. Of course it helps that I'm in a part of the country where RE appreciates quickly. 

When I listen to my Co workers talk about their strategies for their 401k, all I can think of is "how the hell are you going to retire with that??" No thanks! I intend to be financially independent in 3 to 5 years..... which needless to say my 401k will have absolutely contribution in this regard. 

I'm not saying you should definitely empty your 401k and use it seed your RE career. This is a very costly and risky move....which brings me back to my original question of how badly do you want it? All I'm saying is that I did it twice and both times it has paid off handsomely and I'm very glad I did it both times. My 401k balance is pathetic, but I couldn't give a rat's ***. I still contribute 5% because my employer matches 100%, but once it reaches a certain amount, I'll probably empty it again. 

 Congratulations fellow South Californian!!!! You've accomplished so much and you're well on your way to financial freedom. Please keep us posted on how things go as your story is so inspiring.!