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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.
we did , but i don't want real estate in retirement and have been liquidating it . it is not passive and not liquid . not something we want to deal with in retirement .
two co-ops left and when we can sell those we are done .
we did , but i don't want real estate in retirement and have been liquidating it . it is not passive and not liquid . not something we want to deal with in retirement .
two co-ops left and when we can sell those we are done .
I can see that. I'd probably keep them till I got to the point where I just couldn't be bothered anymore with phone calls or headaches to any degree. At that point I'd hope the property would all be paid off or at least close to it, leaving me with a very high net worth which I could then transfer into other safe investments like CDs or Bonds letting me do the 4% withdraw with no headache.
yep , now that we retired i want only equities ,bonds and cash ,. no surprise big expenses and evictions to deal with .
you better have lots of dough or a low draw rate as safe investments are very risky trying to draw 4% inflation adjusted
Well if we can average 8% return on our ROTH over the next 32 years we'll have around $2mil tax free. If we had $1.5mil in realeastate that would give us $3.5mil total. If we average a 2.2% return on that, withdraw $10,000 per month, and up the withdraw 2% per year figuring inflation costs our money would last us 29 years. Which would make us 91 years old.
Chances are we wouldn't need $10,000 every month, my wife has a government pension which is even more reason we wouldn't need that much plus we have health coverage for life with the pension, I never count on social security.. and I would likely stay busy by going to estate auctions and selling items I won. Realistically we could probably trim back our ROTH ira contributions if we really wanted and enjoy the money more now.. But its fine as it is.
using no equities can safely support 2-2/2% inflation adjusted draws . 3% becomes iffy and 4% will likely drain under anything but optimum conditions .
in my opinion kind of a waste not to use 35-40% equity and to be able to pull a lot bigger income .
I'm probably gonna hit the lotto for like $189,000,000 anyway. So I'll just pull like $250,000 from it a month for the next 60 years.
Isn't it amazing I could actually do that and there are people that have hit the lotto like that and go broke in like 5 years. How big of an idiot can you be if you can't make $250,000 a MONTH work?!
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Hi, we've PM back and forth a few times. There's a few people who have vested heavily in Real estate, but overall most people on CD don't care for it (many poo poo it) and much prefer the stock market. I think you will get a better feel for this on that other forum.
Mathjack is right in that it's not very liquid, but as far as his comments about how passive it is, it just depends on how you set it up. You know my story, I pay a manager and spend a few hours a month dealing with my rentals. Had I done it the conventional way with the stock market I could not retire. Based on a 4% draw I would be getting about $25K a year.
I get 4x that with my rentals which allowed me to retire.
As far as liqudity I think I could put any of them up for sale for what I put into them and have it sold and closed within a few weeks. Certainly not like the market where you could do it in a day. Hopefully I have a cash cushion so I am never in that spot. Good luck
I flipped houses, a bunch of them. Still own 4 and am buying another but quit working 2 years ago @ 59. Funded most of my retirement from 2006-2014.
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