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I have an acquaintance that bought a few apartment buildings when he was a young man and he continued buying as his income grew. His properties throw enough income for him to live in a well to do neighborhood and I would count him as a very wealthy man. (His wife will buy a $3k purse every 3 months). His job is to run his management company with his wife and son and they are busy with maintaining the buildings.
I'm sure each building he owns would be worth $5-10 million but I still consider him a slum-lord.
I know another fellow who drifted from job to job until he met a woman with some money that helped him buy his first apartment building. in a very short time, he was buying another building.
One friend who bought a house in GA, he figured the rent would cover the mortgage and still have a few hundred extra.
Another friend who started with 1 house and ended up with 3 after about 15 years.
So rental income is a great way to get additional income not just for retirement, but for me I worry about the bad tenants and generally dealing with people.
The risk is to much is riding on the rental income. There could be a fire, vacancy, medical emergency, major repairs, turning neighborhood etc.
I would keep the consulting business going and use 100% of the money to build up investments. Probably 3 years of living expenses plus $250,000 for medical exp as a minimum.
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Interesting I came across this as this is what I am planning on. I was self employed but the field I am in is dying off on my area. It's possible I can do it in another part of the country and make money though. At my age it will be pretty much impossible to find a job and going back to school to get a degree puts me at 60 yrs old, not an age to compete with young people looking for jobs.
I do have equity in Real estate and will sell it all to start over. I thought of buying a business, but that could easily go belly up and to liquidate would wipe me out. Besides I would only be buying myself a job.
The only I can think of is to be self employed and I do have real estate experience, so I decided to become a full time property owner. Doing a lot of planning and calculations I estimate I will bring in about $160K in rents per year. Allowing 50% like the other poster used for expenses, taxes , repairs , etc I should clear about $80K a year.
I have no debt and I am single. I just have living expenses, the biggest being renting a place to live and medical insurance , so I think I will be ok. I plan on moving out of Ca to a cheaper place to live where I can rent for $1k a month, maybe less.
I also turned my meager sep Iras ( about $140K into self directed and all are roth. I bought 4 rentals which should bring in about 42K a year in gross rents and net me about $21K after expenses. In the next 5 years before I turn 62 I think I can use the proceeds to buy a few more rentals within the IRA and make it so by age 63 I can collect about $30K a year in rents and since it is a roth it will be tax free.
Most people look at me and say I am dreaming, but at my age and place in life I think it is my only choice. I think a lot of people don't really get into real estate as investments or cashflow and because of lack of research just kind of poo poo the idea. I've been planning this for over 3 years and have many spreadsheets and projections for living expenses, taxes, etc and am 2/3's of the way through. There's no guarantee it will work out as planned, but I think I will come out ok.
This last year I met 2 people that quit their jobs and live off of real estate, both are in their 40's. I met a 28 year old and based on his investing I think he will be able to retire by the time he is 31.
He's counting on this rental income to support him in retirement and his philosophy is that what counts is what's in your checking account every month.
Do you agree or know any retirees supporting themselves mostly with rental income? How did it work out?
I've paid off my rental properties, and the rent usually puts about $2,500 - $3000 into my checking account each month, but not always. I wouldn't want be in a position where I didn't have much cash in the bank, and needed a certain amount of rental income each month to survive. Vacancies and major expenses can reduce the monthly income significantly some times. My rental properties are one source of income, but not THE source.
I've paid off my rental properties, and the rent usually puts about $2,500 - $3000 into my checking account each month, but not always. I wouldn't want be in a position where I didn't have much cash in the bank, and needed a certain amount of rental income each month to survive. Vacancies and major expenses can reduce the monthly income significantly some times. My rental properties are one source of income, but not THE source.
With rental markets tightening around the country, I wouldn't be worried about long-term vacancies, unless you are in an unusually depressed area.
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