Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I see you are one of the people that likes to argue the definition of retired as being how it was defined in the old days. The post you responded to I said the people quit their full time job, not mentioning the word retired.
Working an hour or so a month is pretty much retired in my book and that's what I do with real estate, mostly bookkeeping for taxes at the end of the year. If you are retired but have to monitor your stocks or readjust your portfolio occasionally, are you still retired? You still spent time working your retirement account just as I did with my real estate. At the end of the year do you still not spend time preparing your taxes? In my case I just do it monthly.
Actually I could just wait until the end of the of the year and take the financial reports my property manager generates to my accountant and spend even less time. Call it what you like. If working the real estate second job for an hour a month and getting more income than when I worked is not a retirement by your definition and that makes you happy, go for it. But if you call it a job because of the time spent on it, then you might want to call being retired a job also if you spend any time monitoring or making adjustments to your market investment. In both cases time is spent on it .
Yeah I wish I would have bought Apple a long time ago, but I didn't. I don't know anyone personally who got in early and retired and I lived in Silicon Valley. I'm not saying they don't exist, I know they do. I do know several people who got there with real estate. But I wouldn't be surprise to find more people achieved financial independence in real estate than those that hit The golden pre iPO.
Which IPO did you make it big with?
I happen to know many people who made their money by being in on tech companies early. These people are not only investors, but employees. More people have the opportunity to participate in the action than you might think.
It would not be wise of me to divulge which companies I personally benefitted from.
I have seen many people make a fortune in real estate too. However, unless you are one of “the pros” (as MJ pointed out up thread) it will probably be a long slog. I know no one personally who was a mere millionaire that made enough to retire in a short period of time.
- Real estate is not for everyone especially if one is going to take a 30 yr mortgage to finance their property. One might as well buy stocks on margin.
Give me a 30 year low fixed rate margin loan and I may do the same with stocks. Also housing has been way less volatile vs the stock market so it's much easier to stomach leveraging it out. One of the biggest advantages with RE is the ability to borrow.
Buying properties with cash and renting them out sounds like a slooow way to obtain serious wealth.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,345 posts, read 8,557,056 times
Reputation: 16679
Quote:
Originally Posted by Cabound1
I happen to know many people who made their money by being in on tech companies early. These people are not only investors, but employees. More people have the opportunity to participate in the action than you might think.
It would not be wise of me to divulge which companies I personally benefitted from.
I have seen many people make a fortune in real estate too. However, unless you are one of “the pros” (as MJ pointed out up thread) it will probably be a long slog. I know no one personally who was a mere millionaire that made enough to retire in a short period of time.
Just my experience....
Guess it's all what you consider "retired".
I do not consider myself a pro nor did the other real estate people I mentioned yet we all got to millionaire status in 5 years or less in real estate. Of course a net worth of a million means little compared to a while back.
Do you have RE investments or are you making theoretical arguments?
RE has a high barrier to entry, requires a good chunk of capital and one to have good cash-flow. Interest rates will eat into your return and there is not so much capital appreciation. This leaves on at the mercy of finding good tenants.
Stocks are a good way of building capital and thereafter one can transition into real estates. Personally, I don't see this as a stocks vs real estate discussion. I view RE as the next/higher level.
One can borrow to finance RE investment but relying on a 30 yr mortgage to do so does not make financial sense. I've taken out home equity loans or borrowed from my 401K (max $50K) but paid off the loans fast.
Quote:
Originally Posted by 22003yo
Give me a 30 year low fixed rate margin loan and I may do the same with stocks. Also housing has been way less volatile vs the stock market so it's much easier to stomach leveraging it out. One of the biggest advantages with RE is the ability to borrow.
Buying properties with cash and renting them out sounds like a slooow way to obtain serious wealth.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,345 posts, read 8,557,056 times
Reputation: 16679
Quote:
Originally Posted by 22003yo
Give me a 30 year low fixed rate margin loan and I may do the same with stocks. Also housing has been way less volatile vs the stock market so it's much easier to stomach leveraging it out. One of the biggest advantages with RE is the ability to borrow.
Buying properties with cash and renting them out sounds like a slooow way to obtain serious wealth.
What is serious wealth?
One advantage of buying with cash is having an edge on beating out competitors and getting a property that is a good deal. You also can negotiate a lower price with cash sometimes. You can always refinance afterwards
Even at all cash at 13% return I figure I can double my money in 7-8 years plus any appreciation, so its not that slow.
You don’t need real estate to borrow. You just need other assets
My recent sales as I'm liquidating my rental SFR holdings and looking at the buyer's end indicates you don't need much more than a good credit rating and about 3% down to buy a SFR.
Not sure if you were discussing borrowing to buy stock, probably not, but IIRC it's not a good idea to buy stocks on borrowed money unless you're an expert.
By the way, my very best renters exited when their lease expired, having timed close of escrow on their first home to allow them to move into their new home late in the last month of their leases. They were all great tenants and left my rental SFR impeccably clean. I have to remind myself of these tenants as I deal with tenants from hell.
My current and final tenant (moving end of next month) is nice but her ability to manage money is -1 on a scale of 0-10. I have a lot of pucker factor in the next several weeks. At least this is the last time for me.
Yeah, the argument gets confusing here. There's quite a range. If you buy turnkey places to live in in and then flip into rentals, that requires very little cash flow....and assuming you buy at a good price and can get financed well...is relatively low risk. If you know people that want to sell...that's a huge plus.
Add capital if you need to fix the place up.
Add capital if you need to do a full rehab to turn it into a multi-unit.
Commercial property is where it gets tougher to get funding and you'll need more operating capital beyond your purchase and fix up price. However, it's much more lucrative if you're able to take a plaza, fix it up efficiently, fill it with good tenants, flip into better financing and run from there. It takes money, but it takes a lot more then that.
There's also the construction route, which would be interesting to learn about...but I know nothing there. Maybe someone here knows.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,345 posts, read 8,557,056 times
Reputation: 16679
Quote:
Originally Posted by 1ondoner
Do you have RE investments or are you making theoretical arguments?
RE has a high barrier to entry, requires a good chunk of capital and one to have good cash-flow. Interest rates will eat into your return and there is not so much capital appreciation. This leaves on at the mercy of finding good tenants.
Stocks are a good way of building capital and thereafter one can transition into real estates. Personally, I don't see this as a stocks vs real estate discussion. I view RE as the next/higher level.
One can borrow to finance RE investment but relying on a 30 yr mortgage to do so does not make financial sense. I've taken out home equity loans or borrowed from my 401K (max $50K) but paid off the loans fast.
Wasn't sure if you were talking to me or the person you quoted since your post came in right after mine.
Yes I do have several rentals.
Do you have RE investments or are you making theoretical arguments?
RE has a high barrier to entry, requires a good chunk of capital and one to have good cash-flow. Interest rates will eat into your return and there is not so much capital appreciation. This leaves on at the mercy of finding good tenants.
Stocks are a good way of building capital and thereafter one can transition into real estates. Personally, I don't see this as a stocks vs real estate discussion. I view RE as the next/higher level.
One can borrow to finance RE investment but relying on a 30 yr mortgage to do so does not make financial sense. I've taken out home equity loans or borrowed from my 401K (max $50K) but paid off the loans fast.
Yes I have multiple rental properties. I don't see RE as a higher level of investment, just a different one.
Why does relying on a 30 year mortgage not make financial sense? Interest rates have been near 0 for the past 10 years, I don't see any scenario where paying off a 3%- 4%, fixed 30 year mortgages where I can deduct all the interest makes sense. I have some paid off properties for the safety net, but I'm taking a hit on the returns for the sake of lowering my total debt levels.
The mortgage does the opposite of eating into your returns, it amplifies them, for better or worse. If I put down $100k on a $500k home and it's worth $550k 2 years later that's a 25% annual return, now If I paid cash that would only be a 5% return. Now factor in you have some net rental yield on the paid off property and your return maybe a little higher, but still nowhere close to the mortgaged property.
@mathjak - true and you don't even need assets if you can find a loan shark or pay day loan center. The terms however will be much different.
Last edited by 22003yo; 10-12-2018 at 11:15 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
