Why I’m Planning to Buy (Much) More Real Estate in 2017

by | BiggerPockets.com

Friends of mine host a Christmas Eve dinner every year, and it is an evening of people, food, fun, and usually some ridiculousness. I was there solo, as my wife and kiddos were tired from the day’s festivities, and rolled into the sprawling house, the smells of Christmas dinner in the air. There is always a mix of successful doctors, crazy musicians, business owners of small and seriously large companies, and, of course, the family and friends I’ve known now for decades (who all still fit pretty much in these categories above).

This particular night, I ran into one of the friends I had made through this family more than a decade ago.  I’d watched as his business had grown in the healthcare world. There is nothing more that I love in causal conversation than to know what someone does, chat them up, hear what they do, and just dial in and learn something about them and their business. This gentleman (in every sense) is an amazing human and business owner, and I love to hear his stories and his wisdom. I did happen to know what his business was, but I hadn’t heard how things were lately or what he was into these days.

He and I started chatting about how things were for him — a hunting trip he had just been on, backpacking in and out with a giant moose in Alaska, real estate he was looking at, and interesting investments he was holding, buying, and selling. And then he asked about my business, and we chatted about my flipping and rental business and what an awesome year we’d had.

Through normal conversation, all the sudden, this nugget was dropped stopped me in my tracks. I’ve heard it from other super successful real estate guys, but never from someone technically not in the real estate business.

“I hate stocks. I don’t own any. None.”

Wow. Mind you, this is one of the guys I’ve looked up to for more than a decade, who has and does everything I want to do both in life and business and someone I greatly look up to and admire.

real-estate-negotiation

Related: What Types of Goals Should Investors Be Setting for 2017?

So then I asked him (paraphrase), “Don’t you use the tax strategies through pre-tax vehicles to reduce your tax burden?”

He said (paraphrase), “At my income, it hasn’t made a difference (to me).” I told him I had saved a few thousand dollars on my taxes this year, having put money in an IRA I had and was looking to use it in a self-directed way for funding and loaning money to others.

Then he said something like, “A few grand, right? Think about it. You could have put those dollars back into real estate. It’s depreciable, it cash flows, someone else is paying off the mortgage. I have yet to ever find a stock or other non-real estate investment that made better sense to me.”

Download Your FREE guide to evicting a tenant!

We hope you never have to evict a tenant, but know it’s always wise to prepare for the worst. Navigating the legal and financial considerations of an eviction can be tricky, even for the most experienced landlords. Lucky for you, the experts at BiggerPockets have put together a FREE Guide to Evicting Tenants so you can protect your property and investments.

Click Here For Your Free Tenant Eviction Guide

His Plan: Buy More Real Estate

“Buy more real estate.” My financial guy would say this. I make it rain, and he makes sure I keep it. This is a great concept and something I’ve appreciated about him over the years. However, don’t ever forget this: The person who has your best interest is YOU.

Picking stocks is not my game. There are people out there far better than me at it. This year, I am going to seriously look at the dollars I put into my IRA versus the money I could use NOT reducing my tax burden, but instead put into real estate — and what the actual rate of return over, say, 10 or 20 years looks like.

As we’ve increased income, I’ve struggled with where to invest our income. The thought of the long-term building of tax-free or taxed-later income is awesome, but I am not an expert in this field, and I am not spending the time to learn exactly where I want to put the money.

There is one caveat here, and that is once you have at least $50k or $100k in your IRA, you could then put those funds into a self-directed IRA and lend to others through real estate and notes, achieving a far higher rate of return that way. Just make sure you get a coach or mentor to help you if you aren’t an expert in this area. As my friend Frank says, “This isn’t practice.” And this is real money to make (or lose).

buy-properties

My Plan: Buy More Real Estate

My partner and I have spent a lot of time talking about the long-term goals of our business and where we will have it as far as operations, staff, and make up in the years to come. Our 2017 goals include adding 50+ rentals to our portfolio and flipping and selling dozens of retail and turnkey properties.

Why the hell NOT buy 50 houses next year? I’ve committed my mind, my will, my time to producing the results I want in my life. Whether it is getting up early or having better time management, all those roads lead to the end result. I want to grow my real estate portfolio (cash flow and net worth), help my friends, family, and staff in my office, become more financially educated and savvy, and help build wealth for my family long-term.

Related: 4 Steps to Hold Yourself Accountable to the Goals You Set for 2017

What You Put in Your Life Determines Where You’ll End Up

Who you surround yourself with and what kinds of inputs (television, media, books, people, ideas) you allow into your life are massive determiners in who you are going to be and what you are going to do. I highly encourage you to spend time everyday thinking about what it is in life that you want. Build out what the plan is. What does it actually look like? How much income do you need? How many properties do you want to own? Do you have a wealth or net worth goal? What does it take to get there? The 50 properties for next year is just a start for me.

My goal is much bigger than that — and one I will write about in future posts. But it is the start to achieving the end game — complete financial freedom to do what I want with my family and leave the legacy of time and wealth with my family for generations.

Make your plan, visualize it, and then go after your goals. It’s that easy. Just remember, easy doesn’t mean no work required. Put the right work in, and get the result you want. Go get it.

Are you planning on acquiring more rentals in the new year?

Tell me about your plans in the comments section!

About Author

Nathan Brooks

Nathan Brooks is a dad, husband, worship leader, and real estate investor in the Kansas City market. Foodie. Coffee addict. Crossfit junkie.

17 Comments

  1. Byron Bohlsen

    Couldn’t agree more. Yesterday I checked my Roth IRA figuring it would be up a good amount given the stock craziness since the election but it’s only gone up a few hundred bucks in over a year. I am planning on pulling it out to and putting it to work in real estate.

    • Nathan Brooks

      Two things. First, if you believe that, then it’s true. Second, whatever paradigm you live in, is what kind of success and challenges you will have. I’ve spent years learning how to buy SFR better, more efficiently, and have done hundreds of transactions. When you’ve done lots of transactions, and have a basis for that feeling/thought … then you can make that kind of decision. Figure out what you WANT, and then go get it.

  2. vijay maiya

    Recently rolled over my 401K from a previous company into a SDIRA. Now investing in notes thru PPR. Planning on doing same with my Roth. I’ll take the 12% passive income stream and sleep much better at night. Great post by the way !!

  3. Caleb Friberg

    Nathan, couldn’t agree more. I just used a 401k loan + a few of my personal dollars to purchase a SFR that’s not only going to cash flow $200/month, add $40k in equity and have an ROI OF 24%. My 401k it’s doing ok but can’t touch those numbers and I started contributing at 18. I like your goals and know you’ll succeed!

  4. Travis Limbocker

    Nathan,

    I took what I had in years of employer-sponsored 401K funds and setup a solo(k). It is my goal in January to begin investing these funds into real estate myself. As a more lofty 2017 goal, my partner and I are setting out to acquire 100 units (large MF’s) to scale our business. Your posts continue to inspire us to do more. Look forward to hearing about your success in 2017.

  5. James Rodgers

    Man, thanks for sharing your passion Nathan. It’s effecting me…

    The only way I’m bothering with stocks is by maxing out my employer’s 401k contribution match. They match 4.5% for 6% of my paycheck. I always thought that was a no-brainer, FREE MONEY, right?

    For the first time, I’m seriously considering stopping that to save for real estate. The time frame in which I could retire from RE trumps that which I could expect from a 401k at 6% of my paycheck… So why would I continue to mindlessly put my money there? I mean, I did switch it to an index fund so I am not wasting money on a mutual fund account manager, but now that I stop and think about it, is that really best? I’m thinking no!

    To @ Vijay Maiya, how do I go about switching my 401k to a SDIRA? What are the downsides to doing that?

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here