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Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
Reputation: 16698
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Quote:
Originally Posted by Burkmere
Actually, you only have to do the mouse click once.
If you think you can buy rental houses now and retire in five years with apparently millions and millions of dollars because that is what it would take to retire..(easy, you say and you can self manage them with zero help from ANYONE) then you been drinking' way too much eggnog...
Your comment about eggnog makes me laugh because I picture you and old cranky man sitting at home drinking it pissed off about what could have been.Great advice from old person still stuck in his old ways who can only see how he did it and has no knowledge of real estate investing. I've already done it and so have others. There's no need to poo poo the concept because you lacked the knowledge on how to do it yourself.
The eggnog has clearly affected your mind- or maybe its the old age because I did not say you can self manage without help from anyone. I said NOT to self manage and use property managers and other people so that way it did not become a big headache or involve a lot of work on one's behalf. People said it was a big headache because they tried to self manage it themselves. Delegating the headaches and work to others makes it easy for the investor. Maybe had you done this you would be so bitter about rentals.
You don't need millions and millions of dollars to retire (well maybe you do because of your lower returns in the stock market). I spent well under a million to retire. I used profits to reinvest and buy more cash flow properties. The more you post, the more you confirm you know little about real estate investing. If you did and actually brought up valid points of stocks versus rental portfolios, I would listen. But you are too busy putting down the idea that rental properties could not only work, but surpass stocks. Facts are facts and if you can't accept them, that's fine.
I have always said I like to look at all options when making decisions. even if I don't like them or agree with them, I want to hear the truth on all sides so I can make my own decision on what is best for me. I've presented my ideas on what I actually did in 5 years versus what took you 40 years. You've presented your way. People can decide which route they want to take, but you making comments about how it can't be done with real estate is an unfair thing to tell people as it makes it seem your way is the only way.
BTW please be safe and don't go driving after all the eggnog you drank.
Location: Formerly Pleasanton Ca, now in Marietta Ga
10,351 posts, read 8,572,211 times
Reputation: 16698
[quote=Burkmere;46613593]
Quote:
Originally Posted by aslowdodge
Congratulations on waiting for 35 to 40 years to be financially self suffucient while my friends waited for five years to be just as self sufficient. You clearly beat them to a pulp on that one. I can't believe the mice are that heavy, but maybe at your older age they are. Did they even have mice when you started investing 40 years ago?
It's funny that you make a lot of assumptions yourself about how much risk they took. It's a lot of risk to you because you know nothing about rental real estate. You keep saying how much work it is, but the fact that I mentioned I use a property manager to do everything is akin to having a broker take care of your stocks. But for those that study it, analyze it, put a system together, it's very little risk.
So my friends started and retired in 5 years, how long did it take you? eh 40 years! Sure it's easier your way working for 40 years of your life, but some of us don't want to wait 40 years like you did. Retiring young and traveling when your young as well as middle age and older is more fun than just traveling when you are older. When you are younger you are physically in better shape to do more things. Plus some of us actually think that doing some work and research now for greater rewards is preferable to waiting for 40 years like you did. Some people take on a second job to get ahead. In their case their second job was rental real estate.
How many people want to work for 40 years waiting to have enough to retire? Many people are worried they won't make it to the 40 years as technology and outsourcing are eliminating their jobs and their ability to "mouse click" funds into retirement. I have friends that won't hit their retirement goals as you did because they a getting laid off and have stopped contributing. I feel bad for younger people as things aren't like they were before where you worked and were loyal to the same company all your life then you had a house paid for and a retirement and health care. Used to be get a degree and get a good job. That American dream and goal is slipping away. many graduates can't get a job, are underemployed, some living at home with mom and dad. I can see where some people would want to secure a nest egg earlier than waiting 40 years just to feel better about their future.
If you think it's easy moving a mouse, then operating a real estate business isn't much harder. Making a phone call, sending an email, or paying vendors and contractors and managers with online banking isn't much harder.
You live in an apartment. If you have a maintenance issue do you call the owner or the manager? If you need a toilet fixed, does the owner come out or is it a handyman or plumber?
Plus waiting 40 years is a risk in itself. If the market doesn't pan you're a lot older and have less time to catchup. You peak earning years are probably behind you.
You might want to reexamine your comments about letting facts get in the way. The saying "You don't know what you don't know." applies to you here. You think you know the answer, but it's obvious you know little about the real estate rental business, so how can you really make a fair comparison? If you did you would know you could have done way better than your little rental that you actively managed.
I understand your point of view-it's all you know an you aren't willing to expand your education. Most people don't want to make any effort.
They buy rentals and expect it is like buying mutual funds. Buy it and forget it. For them your way is the most practical. There is more work than that when you first get started and as you build it up it gets easier. For those that don't trust the system or have the time to wait to see if it pans out like maybe it did for their parents, taking responsibility for their lives and their futures is what they need to do.
It's just a plain good idea to educate yourself in finances and retirement, I don't think anyone can argue that. By the same token if you are going to do real estate, take the time to learn how to do it right. Don't learn about stocks, bonds, 401Ks etc for investing in the market, then not take the time to educate yourself in real estate rentals and poo poo it because you didn't learn how to do it correctly and now you say it can't be done.
BTW if you knew anything you would not tell people to go out and buy apartment complexes, that's what people who don't know about how to make money in rentals would say-even if jokingly. That is a lot bigger jump in at the start. I don't own apartments, I own single family homes. If someone makes $100k a year and puts 15% away each year like you suggest, they could use that 15% to buy a house and rent it out. That can get themselves a $50K house which if bought correctly (no you can't sit on your butt like you did and click and forget) will get them a positive cash flow after all expenses including a manager so they don't have to actively manage like you did. They could buy one house each year and after a while get two a year. In 10 to 15 years they could be totally self sufficient with 12 to 20 houses and retire early if they wanted or know that they are secure financially. They don't have to worry about getting laid off or worse hurt and unable to work. Achieving this in 10 to 15 years is preferable to waiting 40 years for an outcome on how their lives will be.
Tenants pay for the house with rents which when paid off they the person now owns plus they get some extra cash which can in turn be saved to buy another rental. The also pay less taxes as they get mortgage interest write off and depreciation. Thus they keep more of their income which they can use to accelerate their real estate purchases.
Like I said I owned and self managed 5 rentals back in Ca a few years ago. I devoted 35 hours a year or roughly 40 Minutes a week "actively managing" them. I had them dialed in and systemized. If you find that is way to much work, then I can't argue with you.
On the other hand if you spent way more time with your rental to a point where you thought it was too much work, maybe you just didn't know what the heck you were doing and I can see where you would prefer clicking a mouse for 40 years instead.[/QUOTE
Great for you! I recommend to go out and buy a bunch of rentals in the Bay Area now..make sure they are in Palo Alto where they never go down.
And it will only take 40 minutes a week to self-manage them. Of course that includes "everything." Repairs, dealing with tenants, collecting rent, everything....lol... Remember, you said self-manage...no property manager...noone else, just you. And in five years, according to you, you will have million of dollars (enough to retire is what you said your friends did)....what a country!
Then let's check back in five years when because of interest rates rising they are worth 30% less.
Remember, you said five years. A 25 year old starting today can buy properties and in 100% of cases retire in five years. Guaranteed. LOL.
Lol you are so ignorant about this subject and it's funny you keep making up things based on things you don't know. Telling people to buy in Palo Alto where they never go down is more ignorance on your part. During the big real estate crash they did indeed go down.
Now try to pay attention.
I don't buy in the Bay area. You are basing things on appreciation- your first mistake and a big one. I bought out of state for cash flow. The cash flow per dollar based on rents received is 3x to 4x what the bay area is. You also don't need millions as the price points are way lower so while million dollar properties are hard to get into in the bay area, 30 to 50K properties are much easier to get into, especially when they cash flow positive and not negative like the Bay area.
I used to own in the Bay area and yes I did spend very little time managing them. I had little time involved because I fixed the places up so they wouldn't have niggling problems where people call me up all the time.
Because they were nicer units and didn't have irritating problems tenants stayed for long periods. Less turnover means less time dealing with showings, vacancies periods of no rent, etc. Rents were mailed to me before the first of each month with no issues. Over a 3 year span I went there once to tighten a water heater inlet hose (15 minutes)and once to shore up a sagging cabinet (2 hours) , and twice to seal a leaking sunroom (4 hours). That's very little time spent for five rentals.
So overall very little time involved.
If Interest rates cause them to go down in value, I'm not worried. I own them free and clear and no matter the value the rents keep coming in. Appreciation investing is speculation. If it doesn't cash flow and goes upside down in value and you carry a mortgage, then you have a problem. In the Bay area you don't get cash flow, you hope for appreciation or hope to hang on long enough to pay it off. That's why I moved to out of state properties. This was the point I moved from self managing to hiring everything out and being able to retire early.
I wanted money now-not 40 years later like you. Appreciation is trapped equity which still can be realized , but is more of a problem to get out.
Cash flow right off the belt means you're making money now. If they appreciate, it's a bonus, but not a neccessity like bay area real estate.
BTW The rentals I bought increased in value immediately because they went from short sale conditions that couldn't be financed thus had lower values to fully livable homes that are now worth retail value. If they dropped in value 30% they would be worth what I put into them, so no loss there.
If interest rates go up-less people can afford to buy which means a larger rental pool which means I can raise rents if I want. Yep, you didn't think that one through before you made that comment.
I realize most of these things are beyond your knowledge of real estate. The fact that you didn't do this yourself means you don't know about it enough to be in a position to advise people it will never work. You also don't know anyone personally who has done it which you just use to reinforce your beliefs. I did it myself. I personally know three others that did it.
I've made several lengthy posts about how to do it, what I did myself, and backing up what I say. Instead of making jokes about it, why don't you cite specific examples of why it can't be done to back up what you say? Or maybe you just don't know enough about the subject?
A 25 year old could be totally retired if they do it carefully and correctly and not take advice from people like you who are naysayers and assume because they didn't do it themselves, well then it just can't be done.
Last edited by aslowdodge; 12-25-2016 at 11:43 AM..
Actually, you only have to do the mouse click once.
If you think you can buy rental houses now and retire in five years with apparently millions and millions of dollars because that is what it would take to retire..(easy, you say and you can self manage them with zero help from ANYONE) then you been drinking' way too much eggnog...
Well for one I disagree with you. My wife and I had this discussion about 18 months ago when she wanted to sell our remaining rental. The agent and her came up with a price about 75k more than it is worth. My wife's reasoning was she wanted to take her profit from it. The mortgage was the same as if we never paid a dime. Simple truth is we used the equity to do other things. Oh we paid down on it but then refied and did a new roof or siding or something. The argument came from me when I told her that she should take what is owed on the mortgage and the agent's commission. Well she went "WHAT? There is no profit there." So I had to explain the facts of life. We have owned the building about 20 years now. We have collected about $2k a month rent combined from all three apartments without fail. We had very little out of pocket expenses during that time and our mortgage is still at the same point we had when we bought it. The houses didn't appreciate much and in the case of this 100+ year old house it is lucky it is still standing. I figured the amount we had collected over that time to over $400k. She looked at me astonished and from that she began to look at me in a different light. She now knows that I do know how money works LOL. Oh and I did that without a calculator at the time.
So those who think only in terms of appreciation of the home when it comes to rental property are sorely one sided in their thinking. It is the monthly income over time that makes it.
Lol you are so ignorant about this subject and it's funny you keep making up things based on things you don't know. Telling people to buy in Palo Alto where they never go down is more ignorance on your part. During the big real estate crash they did indeed go down.
Now try to pay attention.
I don't buy in the Bay area. You are basing things on appreciation- your first mistake and a big one. I bought out of state for cash flow. The cash flow per dollar based on rents received is 3x to 4x what the bay area is. You also don't need millions as the price points are way lower so while million dollar properties are hard to get into in the bay area, 30 to 50K properties are much easier to get into, especially when they cash flow positive and not negative like the Bay area.
I used to own in the Bay area and yes I did spend very little time managing them. I had little time involved because I fixed the places up so they wouldn't have niggling problems where people call me up all the time.
Because they were nicer units and didn't have irritating problems tenants stayed for long periods. Less turnover means less time dealing with showings, vacancies periods of no rent, etc. Rents were mailed to me before the first of each month with no issues. Over a 3 year span I went there once to tighten a water heater inlet hose (15 minutes)and once to shore up a sagging cabinet (2 hours) , and twice to seal a leaking sunroom (4 hours). That's very little time spent for five rentals.
So overall very little time involved.
If Interest rates cause them to go down in value, I'm not worried. I own them free and clear and no matter the value the rents keep coming in. Appreciation investing is speculation. If it doesn't cash flow and goes upside down in value and you carry a mortgage, then you have a problem. In the Bay area you don't get cash flow, you hope for appreciation or hope to hang on long enough to pay it off. That's why I moved to out of state properties. This was the point I moved from self managing to hiring everything out and being able to retire early.
I wanted money now-not 40 years later like you. Appreciation is trapped equity which still can be realized , but is more of a problem to get out.
Cash flow right off the belt means you're making money now. If they appreciate, it's a bonus, but not a neccessity like bay area real estate.
BTW The rentals I bought increased in value immediately because they went from short sale conditions that couldn't be financed thus had lower values to fully livable homes that are now worth retail value. If they dropped in value 30% they would be worth what I put into them, so no loss there.
If interest rates go up-less people can afford to buy which means a larger rental pool which means I can raise rents if I want. Yep, you didn't think that one through before you made that comment.
I realize most of these things are beyond your knowledge of real estate. The fact that you didn't do this yourself means you don't know about it enough to be in a position to advise people it will never work. You also don't know anyone personally who has done it which you just use to reinforce your beliefs. I did it myself. I personally know three others that did it.
I've made several lengthy posts about how to do it, what I did myself, and backing up what I say. Instead of making jokes about it, why don't you cite specific examples of why it can't be done to back up what you say? Or maybe you just don't know enough about the subject?
A 25 year old could be totally retired if they do it carefully and correctly and not take advice from people like you who are naysayers and assume because they didn't do it themselves, well then it just can't be done.
Um, the Palo Alto comment was sarcasm which apparently you weren't able to pick up. LOL. Well, let's see how all the folks who buy a bunch of property now do with the 40 year bond bull ending.
For me, I preferred the mouse click and I'm retired now with no properties to take care of. Just free time.
But that's just me.
Well for one I disagree with you. My wife and I had this discussion about 18 months ago when she wanted to sell our remaining rental. The agent and her came up with a price about 75k more than it is worth. My wife's reasoning was she wanted to take her profit from it. The mortgage was the same as if we never paid a dime. Simple truth is we used the equity to do other things. Oh we paid down on it but then refied and did a new roof or siding or something. The argument came from me when I told her that she should take what is owed on the mortgage and the agent's commission. Well she went "WHAT? There is no profit there." So I had to explain the facts of life. We have owned the building about 20 years now. We have collected about $2k a month rent combined from all three apartments without fail. We had very little out of pocket expenses during that time and our mortgage is still at the same point we had when we bought it. The houses didn't appreciate much and in the case of this 100+ year old house it is lucky it is still standing. I figured the amount we had collected over that time to over $400k. She looked at me astonished and from that she began to look at me in a different light. She now knows that I do know how money works LOL. Oh and I did that without a calculator at the time.
So those who think only in terms of appreciation of the home when it comes to rental property are sorely one sided in their thinking. It is the monthly income over time that makes it.
Glad it works out for you! I just prefer to use my mouse click to enjoy doing whatever I want without having had the hassles or risk of real estate. But some folks enjoy messing with the risks and hassles of real estate over the original mouse click and dollar cost averaging into the stock market over 35 or 40 years to come up with a 100-150k a year retirement income based on an average return of 10% over the 35-40.
If you enjoy the risks and work involved in real estate, great! I'm on your side!
Well for one I disagree with you. My wife and I had this discussion about 18 months ago when she wanted to sell our remaining rental. The agent and her came up with a price about 75k more than it is worth. My wife's reasoning was she wanted to take her profit from it. The mortgage was the same as if we never paid a dime. Simple truth is we used the equity to do other things. Oh we paid down on it but then refied and did a new roof or siding or something. The argument came from me when I told her that she should take what is owed on the mortgage and the agent's commission. Well she went "WHAT? There is no profit there." So I had to explain the facts of life. We have owned the building about 20 years now. We have collected about $2k a month rent combined from all three apartments without fail. We had very little out of pocket expenses during that time and our mortgage is still at the same point we had when we bought it. The houses didn't appreciate much and in the case of this 100+ year old house it is lucky it is still standing. I figured the amount we had collected over that time to over $400k. She looked at me astonished and from that she began to look at me in a different light. She now knows that I do know how money works LOL. Oh and I did that without a calculator at the time.
So those who think only in terms of appreciation of the home when it comes to rental property are sorely one sided in their thinking. It is the monthly income over time that makes it.
Some people need to think about it a while.
I suspect it was the realtor who put the idea of a 'fast' $75k [minus his cut] on the plate.
$400k over 20 years is not bad, $20k/year. Every year you have had the option of paying down the principal or bumping up 'cost-basis' or using depreciation to lessen your other taxes or taking some of that income for a vacation to Tahiti.
So long as you keep the property, you get to make these choices every year.
Looking back, sometimes I wish that we had held onto all of our rentals. But they were scattered thousands of miles apart, so it was not practical to keep them.
Lol you are so ignorant about this subject and it's funny you keep making up things based on things you don't know. Telling people to buy in Palo Alto where they never go down is more ignorance on your part. During the big real estate crash they did indeed go down.
Now try to pay attention.
I don't buy in the Bay area. You are basing things on appreciation- your first mistake and a big one. I bought out of state for cash flow. The cash flow per dollar based on rents received is 3x to 4x what the bay area is. You also don't need millions as the price points are way lower so while million dollar properties are hard to get into in the bay area, 30 to 50K properties are much easier to get into, especially when they cash flow positive and not negative like the Bay area.
I used to own in the Bay area and yes I did spend very little time managing them. I had little time involved because I fixed the places up so they wouldn't have niggling problems where people call me up all the time.
Because they were nicer units and didn't have irritating problems tenants stayed for long periods. Less turnover means less time dealing with showings, vacancies periods of no rent, etc. Rents were mailed to me before the first of each month with no issues. Over a 3 year span I went there once to tighten a water heater inlet hose (15 minutes)and once to shore up a sagging cabinet (2 hours) , and twice to seal a leaking sunroom (4 hours). That's very little time spent for five rentals.
So overall very little time involved.
If Interest rates cause them to go down in value, I'm not worried. I own them free and clear and no matter the value the rents keep coming in. Appreciation investing is speculation. If it doesn't cash flow and goes upside down in value and you carry a mortgage, then you have a problem. In the Bay area you don't get cash flow, you hope for appreciation or hope to hang on long enough to pay it off. That's why I moved to out of state properties. This was the point I moved from self managing to hiring everything out and being able to retire early.
I wanted money now-not 40 years later like you. Appreciation is trapped equity which still can be realized , but is more of a problem to get out.
Cash flow right off the belt means you're making money now. If they appreciate, it's a bonus, but not a neccessity like bay area real estate.
BTW The rentals I bought increased in value immediately because they went from short sale conditions that couldn't be financed thus had lower values to fully livable homes that are now worth retail value. If they dropped in value 30% they would be worth what I put into them, so no loss there.
If interest rates go up-less people can afford to buy which means a larger rental pool which means I can raise rents if I want. Yep, you didn't think that one through before you made that comment.
I realize most of these things are beyond your knowledge of real estate. The fact that you didn't do this yourself means you don't know about it enough to be in a position to advise people it will never work. You also don't know anyone personally who has done it which you just use to reinforce your beliefs. I did it myself. I personally know three others that did it.
I've made several lengthy posts about how to do it, what I did myself, and backing up what I say. Instead of making jokes about it, why don't you cite specific examples of why it can't be done to back up what you say? Or maybe you just don't know enough about the subject?
A 25 year old could be totally retired if they do it carefully and correctly and not take advice from people like you who are naysayers and assume because they didn't do it themselves, well then it just can't be done.
Oh, and a 25 year old can have millions and live off of a 100-150k a year retirement income also by doing the mouse click and dollar cost averaging. Some people actually enjoy their jobs until 55-60 or whatever. They don't want to constantly be dealing with real estate even though I k now it's "no work at all and entirely risk free....especially after the 40 year bond bull now."
Real estate works for me because the transaction cost, I don't trade in and out with a mouse click. Plus there is a sentimental value. Everything I own, I've good memories with me and my family.
We have a rental property and i only expect it will appreciate through the years. Mortgage and all expenses are being paid by the tenants... We are still a good 15 years from retirement... Our idea is to keep the rental in the long term and sell it when we get tired of having long distance tenants.
I see there are many folks in here that have built their wealth via investment property. On the other hand many also have investd in the stock market, etc... as primary means of wealth accumulation for retirement.
Can you let me know what your experience was in this regard? What worked for you? What do you think is a best way to accumulate and protect a nest egg, and be financially independent? I have the impression that those that invested in rental properties were able to retire early (or earlier)... And that those who put their nest eggs primarily in investment vehicles (funds, etfs, etc...) had to wait longer to ensure the nest egg was big enough sustain the 4% or 3% withdrawal rate.
Thanks for your thoughts.
I have both, but more in rentals than the stock market. Rentals are great because you honestly don't care if the values go up or down...unless it's going to affect the amount of rent you're getting.
The key difference is liquidity. Give each of a your rentals a stock symbol. (Rental 1, Rental 2 etc.) and show them as owning 1 share each. In retirement, if I want $50K, it's going to be quicker and easier to sell $50K of shares than it will be to sell $50K of rentals. When you liquidate your real estate, it will be in big chunks of money, which also becomes a big chunk of money no longer making money for you.
And while I know it's illegal, once your regular income goes to 0, a big aspect of real estate is that it can be used for collateral. If you have no income, you can't get a loan. So I'd say having both is key to a happy retirement....or having enough real estate that liquidity won't be an issue is.
Final thought is they say you shouldn't spend more than a third of your income on rent. Conversely, having 3 rentals should be enough to provide you with the income level of your tenants. Rents go up with inflation, so that's the easiest retirement plan in the book.
I have both, but more in rentals than the stock market. Rentals are great because you honestly don't care if the values go up or down...unless it's going to affect the amount of rent you're getting.
The key difference is liquidity. Give each of a your rentals a stock symbol. (Rental 1, Rental 2 etc.) and show them as owning 1 share each. In retirement, if I want $50K, it's going to be quicker and easier to sell $50K of shares than it will be to sell $50K of rentals. When you liquidate your real estate, it will be in big chunks of money, which also becomes a big chunk of money no longer making money for you.
And while I know it's illegal, once your regular income goes to 0, a big aspect of real estate is that it can be used for collateral. If you have no income, you can't get a loan. So I'd say having both is key to a happy retirement....or having enough real estate that liquidity won't be an issue is.
Final thought is they say you shouldn't spend more than a third of your income on rent. Conversely, having 3 rentals should be enough to provide you with the income level of your tenants. Rents go up with inflation, so that's the easiest retirement plan in the book.
Re-financing makes taking capital out from a rental pretty easy.
Say I own a 4 unit building. They typically assess at around $200k. If I have $100k of equity in it, I can easily pull $50k anytime I feel I need to. It is tax-free, and changing the mortgage from $100k to $150k is not a big change in monthly payments due, and it retains the over all cash flow.
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