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A lot of people are doing what they call house hacking. Instead of buying a single family home you buy 2 to 4 units and live in one and rent out the others. The advantage is owner occupied financing with the caveat you must live there one year. Often the rent from the others will cover your whole housing cost.
You can also buy one that needs work and fix it up to increase its value.
After a year you could move out and buy another identical situation and live in it. Rinse and repeat as able.
Eventually you will have a nice rental portfolio while almost living for free.
I had a friend who did this with a 4 plex. He picked up another 4 plex a few years later.
6 years later he's in his mid 30s and retired living off of his real estate.
Ruth is onto something here. In one form or another if you can create rental income where you live it will greatly help your wealth building efforts.
To be clear, he isn't retired, he's the owner and manager of a property rental company.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
Reputation: 16698
Quote:
Originally Posted by Lekrii
To be clear, he isn't retired, he's the owner and manager of a property rental company.
Depends on your definition of retirement.The problem is too many people assume you have to be managing the property yourself.
He has managers and virtual assistants running everything. Being that he isn't even in the the United States more than a few months out of the year he would have a difficult time managing them himself. He has outsourced everything. He has 4 assistants in the Philippines he pays $4 an hour to manage his properties with orders not to call him. He developed an operations manual and empowers them to use that or figure out the solution themselves.
He is in Columbia right now. Last year he spent most of his time raising money for orphanages in Vietnam nam and traveling throughout Asia .
Another friend in his mid 30's has several rentals and no longer works has spent the last two years studying martial arts full time in Asia. He to has hired out all management.
I don't have a job and I consider myself retired with rentals. But some people have said that because I spend an 20 to 24 hours per year checking my bank accounts and doing book keeping for my taxes at the end of the year that I am not retired. Other people will say I am retired. My manager now uses software that generates reports where if I wasn't so curious in analytics for myself I could just take her year end report and take it to my cpa and cut that down to maybe a few hours each year.
So what's you definition of retired?
Just to be clear there are liabilities to renting, so ensure you have the proper insurance coverage to protect yourself. Additionally once you start moving on to multiple properties, an LLC setup to own each is a safer path.
Just to be clear there are liabilities to renting, so ensure you have the proper insurance coverage to protect yourself. Additionally once you start moving on to multiple properties, an LLC setup to own each is a safer path.
Setting up LLCs for each property is a real pain and can be expensive, it also really does not add much protection (see the alter-ego principle) . You're better off getting a big umbrella policy, cheap and easy to do.
it definitely appears that all of my landlords and past landlords (offices) have set up unique companies for each property. im not familiar with all the benefits (i can guess a couple) but i have to believe they are worthwhile given the fact that they all have done it.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
Reputation: 16698
Quote:
Originally Posted by 22003yo
Setting up LLCs for each property is a real pain and can be expensive, it also really does not add much protection (see the alter-ego principle) . You're better off getting a big umbrella policy, cheap and easy to do.
I have heard of this alter ego thing. Is there any statistics as to how often an LLC is pierced? My understanding is mostly because of extreme negligence on the creator or being improperly set up at creation.
Would you mind explaining what the "MMM forums" are and where to access them?
MMM stands for Mr Money Mustache. Just Google it.
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