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Old 05-19-2017, 12:23 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,661 posts, read 57,789,143 times
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Land lease is another great way for retiree style RE.

A farmer friend has McDonalds, BurgerKing, Subway, and a large truck stop / cafes / store as land lease holders (~15 acres). Tenants provide 100% of the 'improvements'! (Buildings, roads, utilities, taxes, permits...)
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Old 05-19-2017, 12:51 PM
 
3,254 posts, read 3,749,276 times
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Quote:
Originally Posted by ericp501 View Post
I've been reading a lot about real estate investing and spending a good amount of time over at biggerpockets. It seems realistic that if you're a handy person and can recognize a good deal real estate can be a great way to get to retirement faster and always have rents coming in for as long as you own the property.

Figure you want to retire with $75k a year.

That would take 17-18 properties cash flowing an average of $350 a month after all expenses (property manager, vacancies, planned damage and repairs, etc). If you need $20,000 cash to purchase each property that's a total investment of $340,000. Or $34,000 a year for 10 years. And the cashflow from each property will have helped you buy the next. By the time you get to property 10 each year of purchases is funded by the cashflow of the property you already own.

If I put $34,000 a year in stocks for 10 year's even at a 10% return that's $680,000.. figuring a 4% withdraw that only gives me $27,000.

Anyone retire early with real estate? How many properties do you own? Was it easier/harder than you thought? Would love some insight.

The biggest problem I see with this plan is how on earth do you figure you are going to get $350/month of cash flow from a $20,000 property? To generate that kind of cash flow, you are going to realistically need $500-$600 of rent. If you can find places you can rent out at $500+ for $20,000... then yeah... you've got it made in the shade. In my area, it is more typical to see properties that generate $500/month of rent for more like $40k-$50k.
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Old 05-19-2017, 01:07 PM
 
Location: Victory Mansions, Airstrip One
6,695 posts, read 4,993,920 times
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Quote:
Originally Posted by steveklein View Post
The biggest problem I see with this plan is how on earth do you figure you are going to get $350/month of cash flow from a $20,000 property?

He's not talking about a $20K property, but rather putting $20K cash into a property and using a mortgage. The problem with loading up on a bunch of levered properties is one can get spanked really badly if a recession or even just some local problem hits, and there's not enough breathing room in the cash flow.
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Old 05-19-2017, 01:15 PM
 
Location: Los Angeles (Native)
25,303 posts, read 21,391,595 times
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I'm not retired, but I am confident that real estate is a surer path towards early retirement.

One major advantage of real estate is leverage. We all know many people put a down payment on a property versus buying it with cash.
There are creative ways that one can acquire property with little of their own cash down. This isn't really possible in the stock market.
Another big advantage is the inefficiency of the real estate market.
It happens all the time where someone buys a deal 'below market' , you can't do that in the stock market.
If a stock is $100 you have to pay $100 for that stock.

I've heard of many people being able to retire young with real estate , but it just seems rare for people to retire early from stocks....unless it's one of those type of things where they got stock options and worked at a tech company or something...but those type of situations are rare and not really the same as investing in the stock market.

It is hard to make a lot of money with just rentals quickly , which is why many people seem to do some flips and then put some of those profits into rentals.
Important to know that neighborhoods that are good for flips , might not be so good for rentals and vice versa.

Flipping is more a job/business though and of course more active than holding rental properties.
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Old 05-19-2017, 02:10 PM
 
Location: Victory Mansions, Airstrip One
6,695 posts, read 4,993,920 times
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Quote:
Originally Posted by jm1982 View Post
I'm not retired, but I am confident that real estate is a surer path towards early retirement.

One major advantage of real estate is leverage. We all know many people put a down payment on a property versus buying it with cash.
There are creative ways that one can acquire property with little of their own cash down. This isn't really possible in the stock market.
Another big advantage is the inefficiency of the real estate market.
It happens all the time where someone buys a deal 'below market' , you can't do that in the stock market.
If a stock is $100 you have to pay $100 for that stock.

I've heard of many people being able to retire young with real estate , but it just seems rare for people to retire early from stocks....unless it's one of those type of things where they got stock options and worked at a tech company or something...but those type of situations are rare and not really the same as investing in the stock market.

Both can work, and both entail risk. I know people who have enough money to "retire early" if they wanted, some via mostly real estate and others via stocks.


The one thing about stocks is that, as long as you don't use margin, they will never require you to write checks to keep your investment. The company itself takes on the leverage and the corporate shell insulates shareholder from liability. Levered real estate can work both ways. I know people who lost everything in the Great Recession because they owned levered property and took too much risk.
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Old 05-19-2017, 02:37 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,661 posts, read 57,789,143 times
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Here is a bit of perspective (Real Estate +/-)

YMMV

REITs vs. Rental Property (Comparing Apples to Oranges)
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Old 05-19-2017, 03:43 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,661 posts, read 57,789,143 times
Reputation: 46126
Quote:
Originally Posted by jm1982 View Post
I'm not retired, but I am confident that real estate is a surer path towards early retirement.

One major advantage of real estate is leverage. We all know many people put a down payment on a property versus buying it with cash.
There are creative ways that one can acquire property with little of their own cash down. This isn't really possible in the stock market. oh, but it is VERY EZ in the Stock Market!!! (options and Margin = BIG time leverage!)
Another big advantage is the inefficiency of the real estate market. You gotta know ANY market to take advantage of 'deals'. Of 35+ properties I have only used a RE agent 2x. If you wait for RE to 'hit-the-market' you are MUCH too late to get a good deal.

It happens all the time where someone buys a deal 'below market' , you can't do that in the stock market.
If a stock is $100 you have to pay $100 for that stock. Very EZ to buy undervalued stock, sometimes a very stable company gets hit with bad news or a competitor has bad news, driving down the sector. My kids will make their money in the market, they are sick of helping me with RE.

I've heard of many people being able to retire young with real estate , but it just seems rare for people to retire early from stocks....unless it's one of those type of things where they got stock options and worked at a tech company or something...but those type of situations are rare and not really the same as investing in the stock market.

It is hard to make a lot of money with just rentals quickly , which is why many people seem to do some flips and then put some of those profits into rentals.
Important to know that neighborhoods that are good for flips , might not be so good for rentals and vice versa. Be careful to consider Residential Single Family homes as "investment opportunities". Most of my RE gains have come from other RE, not SFH.

Flipping is more a job/business though and of course more active than holding rental properties.
+/-
1) rental properties (SFH) can be very hard to get to 'cash-flow' Be SURE your investment lead to that end.

RE is just another tool. It helped me and many others GAIN enough wealth to be of use for future wealth building. (some with RE some with other methods.

Fortunately my company (employer) grew very well for 30 yrs (stock doubling in price annually). That HELPED too, but was not a 'get rich option', as I still had to make the choice to buy the stock and the risk to hold it!

Systematic saving / investing / spending helped me to retire 17 yrs before retirement age (on a single income hourly wage, while supporting family, parents, and a farm). nothing magic
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Old 05-19-2017, 04:54 PM
 
Location: Los Angeles (Native)
25,303 posts, read 21,391,595 times
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Quote:
Originally Posted by hikernut View Post
Both can work, and both entail risk. I know people who have enough money to "retire early" if they wanted, some via mostly real estate and others via stocks.


The one thing about stocks is that, as long as you don't use margin, they will never require you to write checks to keep your investment. The company itself takes on the leverage and the corporate shell insulates shareholder from liability. Levered real estate can work both ways. I know people who lost everything in the Great Recession because they owned levered property and took too much risk.
It corporate shell protects from liability but you also have no control and it's easy for shareholders to get completely wiped out . I've had several stock like this where they went to zero .

That doesn't happen really with real estate.

True that leveraging too much can be risky especially if one is buying property that doesn't cash flow
That's what a lot of people did . Property that doesn't cash flow combined with bad loans .

Many that were able to hold on and rent out their properties have equity in their properties now and rents have likely gone up .
Many that bought bad stock investments will never recover
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Old 05-19-2017, 05:06 PM
 
Location: Victory Mansions, Airstrip One
6,695 posts, read 4,993,920 times
Reputation: 9087
Quote:
Originally Posted by jm1982 View Post
It corporate shell protects from liability but you also have no control and it's easy for shareholders to get completely wiped out . I've had several stock like this where they went to zero .

That doesn't happen really with real estate.

Correct. It's much worse with real estate, where both equity and cash flow can go negative if one is using leverage. And nearly everyone uses leverage, at least when starting out.

Quote:
Originally Posted by jm1982 View Post
Many that were able to hold on and rent out their properties have equity in their properties now and rents have likely gone up .
Many that bought bad stock investments will never recover

Sure, either one can go south. But with stocks one can diversify even with very little money to invest, and effectively eliminate the chance of losing their entire investment.


Conversely, the great majority of real estate investors own a small number of properties all in one, or maybe two, locations. It's an illiquid and undiversified investment. I know people who have lost everything by putting all their money into real estate. I don't know anyone who lost all of their money in stocks. It is possible if you have all your money in one stock, like people at Enron who had all of their 401k money and all of their ESPP money in company stock, with no other investments. They learned about diversification the hard way.
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Old 05-19-2017, 05:23 PM
 
Location: Los Angeles (Native)
25,303 posts, read 21,391,595 times
Reputation: 12318
Quote:
Originally Posted by hikernut View Post
Correct. It's much worse with real estate, where both equity and cash flow can go negative if one is using leverage. And nearly everyone uses leverage, at least when starting out.




Sure, either one can go south. But with stocks one can diversify even with very little money to invest, and effectively eliminate the chance of losing their entire investment.


Conversely, the great majority of real estate investors own a small number of properties all in one, or maybe two, locations. It's an illiquid and undiversified investment. I know people who have lost everything by putting all their money into real estate. I don't know anyone who lost all of their money in stocks. It is possible if you have all your money in one stock, like people at Enron who had all of their 401k money and all of their ESPP money in company stock, with no other investments. They learned about diversification the hard way.
Could you share some examples of the people that lost all their money in real estate ?
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