strategy for retirement (by hammer [TN]) Jun 13, 2018 7:15 AM|
strategy for retirement (by Richard [MI]) Jun 13, 2018 7:48 AM
strategy for retirement (by S i d [MO]) Jun 13, 2018 7:49 AM
strategy for retirement (by AllyM [NJ]) Jun 13, 2018 7:53 AM
strategy for retirement (by Deanna [TX]) Jun 13, 2018 8:43 AM
strategy for retirement (by JB [OR]) Jun 13, 2018 9:04 AM
strategy for retirement (by Hammer [TN]) Jun 13, 2018 9:53 AM
strategy for retirement (by RathdrumGal [ID]) Jun 13, 2018 12:16 PM
strategy for retirement (by myob [GA]) Jun 13, 2018 1:11 PM
strategy for retirement (by myob [GA]) Jun 13, 2018 1:13 PM
strategy for retirement (by plenty [MO]) Jun 13, 2018 4:15 PM
strategy for retirement (by Hammer [TN]) Jun 14, 2018 4:58 AM
strategy for retirement (by Robin [WI]) Jun 14, 2018 8:40 AM
strategy for retirement (by Hammer [TN]) Jun 14, 2018 1:44 PM
strategy for retirement (by JB [OR]) Jun 14, 2018 7:20 PM
strategy for retirement (by Kurt [MI]) Jun 15, 2018 7:32 AM
strategy for retirement (by Busy [WI]) Jun 15, 2018 1:33 PM
strategy for retirement (by hammer [TN]) Posted on: Jun 13, 2018 7:15 AM
Anybody have some books etc. they can recommend on rental strategy for retirement?
Goal: Retire in 10-12 years with $10k net income per month from rentals.
strategy for retirement (by Richard [MI]) Posted on: Jun 13, 2018 7:48 AM
1. Get enough places paid off to generate that amount of income with professional management. --66.188.xx.xxx
strategy for retirement (by S i d [MO]) Posted on: Jun 13, 2018 7:49 AM
Sure, there are dozens of books out there on how to accomplish it, so it really depends on what type of real estate you want and how hands on you want to be.
I'm mostly a SFH investor guy and I like to manage my own stuff, so I like Schaub's "Build Wealth One House at a Time" and Nielson's "Buy and Rent Foreclosures."
One ultra-simplified example: Figure a house with no debt on it that rents for $1000/month, take away 50% of rents for expenses, vacancy and reserves, leaving $500 per month cash flow profit. $10,000 / $500 = 20 houses. Adjust this formula as needed for your market and the types of units you want to own and whether or not you plan to still have debt on them 10-12 years from now. --173.19.x.xxx
strategy for retirement (by AllyM [NJ]) Posted on: Jun 13, 2018 7:53 AM
I gross six K per month here in NJ but I don't get to keep much of it. So I would guess you need about ten times the duplexes that I have and that would be thirty and sixty units total. I recommend putting money into TIAA CREF during the current president's years. I am raking it in there. --73.178.xxx.xx
strategy for retirement (by Deanna [TX]) Posted on: Jun 13, 2018 8:43 AM
DH came up with our magic number of 30 houses to give him the confidence he needs to retire. 10 houses bring in an average of $500/month each, x 12 months = $6000/year, x 10 houses = $60,000. Then you put away about 20%-25% for property taxes, insurance, turnover, vacancy, repairs, whatever. So 30 houses scale to about $144k/year for us and $36k/year to keep the biz running, and when we hit that number, that's when he wants to retire.
But I also realize that his retirement doesn't mean I get to retire! :) Someone has to manage this stuff. :) Fortunately, with us being less aggressive about renovations and expansion after I hit that magic number, that severely cuts back on the amount of work (and spending) that I have on my plate. But you have to decide whether you want to burden yourself with a job in your retirement--- or if you want something that is less profitable, but is more hands-free. You lose out on the larger check, and your investment dollars aren't quite so efficient, because you're no longer putting in that sweat equity on your side to make sure certain things happen in the way you want them to. The whole point for us for getting into real estate was to have control--- so that if we lost money, it was because of a tenant I chose, or a decision I made, rather than just numbers on paper that I could do nothing about.
My path isn't the most lucrative path, but it's probably the easiest way for an ordinary person to get into the biz, taking humble houses for wholesale price, and renovating them to standards of Clean, Safe, and Functional, and then renting them to the fast-food-and-factories type of people. (Low income tenants traditionally need more hands-on management than your white collar tenants, but I have a very stagnant population in my town, and everyone who's decent with money is already a homeowner.) My favorite book isn't specifically retirement-based, but is Perpetual Income by Bryan C. Wittenmyer, available on this site for $40.
I read books and lurked on forums for a good five or seven years before we bought our first property at Easter, 2010, renovated it, and got our first tenant after Halloween, 2010. (About two weeks later, she was arrested on outstanding warrants that didn't show up in screening, and off to jail she went! Time to rerent!)
Eight years later, and I have 16 houses working (17 after the 4th of July); five houses waiting in my renovation queue; and just bought an inhabited one on the courthouse steps earlier this month and am waiting on the sheriff's deed to arrive before I go chat with them. So it's not the most amazing growth, and every penny has been plugged back into the biz, but we have no debt or mortgages. We buy all our houses cash, and renovate them with money earned from the working renovations. But we're 2/3rds to our initial base goal, so that's cool. :) But you also see that I haven't yet reached that $10k/month net income that's your target-- I need to get maybe three or four more houses working, but unless disaster hits, I should get there within your 10-year deadline. :)
But I wouldn't recommend people to seek out markets like mine. I do it, because I have to grow where I'm planted. If you're in an economically stable area, it's going to be reflected in the prices of your real estate--- but that's the tradeoff for a good, deep tenant pool of people with solid, well-paying jobs, or having access to people who have the means to buy their own place, but know they're only going to be in the area for a short enough time that it doesn't make sense to buy.
So your first job is to figure out whether you want to saddle yourself with a job in retirement; and if so, your second job is to figure out who you want to rent to, and where they want to live--- and that's the place you buy.
Good luck! --96.46.xxx.xx
strategy for retirement (by JB [OR]) Posted on: Jun 13, 2018 9:04 AM
A super easy read is Automatic Millionaire Homeowner by David Bach. There is The Millionaire Real Estate Investor by Gary Keller and Rich Dad by Robert Kiyosaki. Any of these would be a good place to start.
I retired in my early 40's from my w-2 job. Wife retired from hers soon after. Now, with only a handful of rental properties, we are able to do what we want when we want to. --50.45.xxx.xx
strategy for retirement (by Hammer [TN]) Posted on: Jun 13, 2018 9:53 AM
Thanks everyone for the responses!
DeannaTX Thanks for the more detailed response.
Our area is voted top 10 WORST places to do business in TN every year. :-( We are experiencing a bit of growth due to skyrocketing home prices in surrounding counties pushing people out, but not because our local small town economy is healthy. Investing for appreciation is not currently valid around here.
I will have to do something in "retirement" or go crazy so my thoughts are to hit my number, then use side money to invest for "fun" while keeping the retirement cash generator.
House price to rent ratios in this town are a bit wacky since there aren't many high paying jobs. Anything over $1000/mo will take a long time to rent no matter how nice it is. A dumpy 2/1 will still cost you $50k+ but will only bring $500/mo after you fix it up to retail condition ($65-70K) So I am struggling to find Properties to hold with decent numbers that also work into my time line.
I am considering getting into mobile homes for the good cashflow and lower initial investment, then use that cashflow to buy/payoff low maintenance brick homes or multi's for my retirement years.
strategy for retirement (by RathdrumGal [ID]) Posted on: Jun 13, 2018 12:16 PM
I am going to be contrarian here. I recently retired from my W2 at 62. I had 30+ years working for one hospital system. Early on, I had signed up for the 6% employer match "employee savings program". Money was deducted from my paycheck, we got annual or semi -annual statements (don't remember which) and I basically forgot about this retirement fund. I did fund my 403B program to the hilt starting in my 30s. My husband and I are also debt free in a low cost of living state. We net $36K a year from our 6 plex apartment building.
When it came time to retire, that little forgotten about employee savings plan really paid off. I took the lifetime annuity option. I have plenty of money each month without even touching my 403 money. If my adult kids don't shape up, my cat is going to end up very rich! --98.146.xxx.xxx
strategy for retirement (by myob [GA]) Posted on: Jun 13, 2018 1:11 PM
You don't need some stinkin book? You have the knowledge right here -- on this web site for anything you need to GET RICH.
here's my sample-- 63 SFH's-- 5 mortgages left. Average rent 925.00 Per month. We didn't get them all at once but a few a year. !st year only 1 to see how we liked it. next YEAR was 3, next 5, next we brought 5 in one month-- and we were on a roll. Got up to 80+SFH's and dumped 17-- used profits to pay off all but 5-- so 58 free and clear (you do the math).
We only brought VA foreclosures at 100% financing with some at 0% down and some were 5 to 10% DN but most at 5%. Realtor kept 1K of the commissions and returned the other 4% back to us so we could buy more. I worked 2nd shift for 25 years and would get up at 7AM go to the new rental with my real job cloths and shower there- change and go to job until 1130 at night. That was my way. I will guarantee you others here have the same TYPE story-- at least those successful at this.
Here's what my insurance man told my wife and I. He said you know Don there were dozens of investors out there who I carried insurance on for their rentals-- of them all "only you and your wife are left".
We're left for one reason-- we worked our butts off-- vacations spent working houses, off days, same. Kids off days same. 2nd shift for 25 years-- sacrifice after sacrifice-- but now-------- IT'S PAYBACK TIME-- IN A BIG WAY. --99.103.xxx.xxx
strategy for retirement (by myob [GA]) Posted on: Jun 13, 2018 1:13 PM
Would like to stress the word WE from my last paragraph. My wife sacrificed in every way. --99.103.xxx.xxx
strategy for retirement (by plenty [MO]) Posted on: Jun 13, 2018 4:15 PM
The Millionaire Real Estate Investor by Gary Kelle
the blue and white book. explains it all rather clearly! --173.108.xxx.xx
strategy for retirement (by Hammer [TN]) Posted on: Jun 14, 2018 4:58 AM
Capital is a limitation.
IF I had unlimited capital, I would buy about 60-80 houses, keep the best rentals, sell the "duds" and use the profits to pay off the keepers.
I am thinking of a ratchet strategy.
Buy a couple more rentals and keep flipping. Review each rental at the end of the year and see if it is a keeper, needs improvement, or should be dumped and the equity put into paying off a keeper. Continue snowballing the cashflow into paying off mortgages on my best properties.
As my portfolio develops, access to funding will increase allowing me to pick up steam.
So I can attack on two fronts.
1. snowball rental cashflow into paying off keeper rentals.
2. Equity mining (sell) the poor performing properties after 366days (long term capital gains) to pay off keepers faster and free up capital to buy more/better properties.
Thoughts on this strategy? --137.119.xxx.xxx
strategy for retirement (by Robin [WI]) Posted on: Jun 14, 2018 8:40 AM
Rather than plan on purchasing poor-performing properties, I'd spend more time educating myself so that you buy at the right price, in the right area, so they ALL perform well. You can still sell, but at a much better price.
If you want to grow fast but don't have a lot of capital, the best way I know is to buy a fixer-upper, fix it up, and do a cash-out refi at the higher value. This should allow you to get most if not all of your equity back out. Then go buy another one.
Another option is to borrow. I would advise against this, at least when you're starting out. If it's your hard-earned lawnmowing money, you'll be a lot more careful about where you choose to invest it. Once you've successfully acquired 4-6 properties, if you're out of money you might explore that option. Start slow, though, and allow yourself time to learn the business. --204.210.xxx.xxx
strategy for retirement (by Hammer [TN]) Posted on: Jun 14, 2018 1:44 PM
I have no intention of buying poor performers, but I have been told that my criteria is unrealistic for my area.
I want a minimum of a 20% equity position when I buy, and a minimum $250 positive cash flow/mo on my rentals. With the low rents around here, that number is very hard to hit with 10 and 15 year notes.
What I meant by poor performers was to sell my worst performers and pay off my best ones, or roll the profits into the next property. --137.119.xxx.xxx
strategy for retirement (by JB [OR]) Posted on: Jun 14, 2018 7:20 PM
If you aren't looking at 30 year notes, they're almost never going to pencil. --50.45.xxx.xx
strategy for retirement (by Kurt [MI]) Posted on: Jun 15, 2018 7:32 AM
I really enjoyed Keller's book "The Millionaire Real Estate Investor" as far as overall strategy goes. --68.61.xx.xxx
strategy for retirement (by Busy [WI]) Posted on: Jun 15, 2018 1:33 PM
Hammer, key for you might to be make lots of offers that are so low you are embarrassed to present them. Most will be rejected, but, the ones that don't....
Of course that means major rehabs.... --172.56.xx.xxx