4 ms·

I'd recommend buying rental properties in areas with low housing costs relative to rent. There are parts of Florida where 3 bedroom existing homes (i.e. not ne

by ijidak 6y ago

I'd recommend buying rental properties in areas with low housing costs relative to rent. There are parts of Florida where 3 bedroom existing homes (i.e. not new) are $100,000, but monthly rent for that same house is $1,000+ per month. Based on discounted cash flow, you can determine the value of any revenue stream. In some parts of the country, you'll find homes are undervalued compared to rents. Stocks are good, but they're not good for steady withdrawals. For example, during a bear market your withdrawals are very costly. To retire, you need predictable income streams, and rental property is one of the best. Plus, it's easy for a regular person to leverage money for real estate. For example, with $1 million, you can buy $3 million worth of property with 33% down -- not counting transaction fees, though). 33% down should give you immediate profits from most of your properties. $3 million could get you as many as 30 condos/homes in the right areas. If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there. You might still want to continue working for a few years to give you capital to deal with hiccups and allow some time for those mortgages to pay down further. In a nutshell, rental property is one of the faster ways to generate income without working. The other, simpler way is to move to a country like the Philippines.

twblalock 6y ago
One of the biggest lessons of 2020 is that rental income is not as reliable as people thought it was. During the pandemic, many renters were allowed to stop paying rent and landlords had no legal recourse. Several states have created new rent control laws in the past few years, too.
aparsons 6y ago
Managing 30 properties - hell, keeping 30 properties occupied - is a nightmare. Unless they’re extremely homogenous, even a property management firm will hesitate to touch that.
garmaine 6y ago
> $3 million could get you as many as 30 condos/homes in the right areas. > If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there. With $3m invested in a FIRE-recommended portfolio you can withdraw $10k/mo indefinitely without any work at all. I don't think this is as good an opportunity as you are presenting.
phil21 6y ago
> If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there. I assume your calculations include a full-on property manager? I have a single unit (wife's pre-marriage condo we held onto) and even that is a minor job sometimes at the most inconvenient times possible. A kitchen sink doesn't care that it's 10pm on a Sunday night before a huge early Monday presentation. It's gotta be fixed now. 30 units would be full-on full time 40hr/week job while also hiring a part time assistant for larger jobs. If you have 30 units, I guarantee that 3 major things will break simultaneously during a holiday weekend - it's just the way the business goes. 33% down here won't get you into profitable territory with a property manager taking their cut. Certainly there are areas of the country where this is very possible, and if you put a little effort up-front you can make it a quite sustainable business - especially if you can get to the point you can hire a full time (cheap) property manager/handyman and you simply run the books. Just want to reiterate to those reading this that what is described is essentially a second career. Certainly not passive income in any sense of the term. You would be trading your tech career in for that of a landlord which indeed is actual non-trivial amounts of labor. That doesn't even get into risk. I'm renting in a city with evictions paused but no mortgage relief to be seen for my profile. I'm fine, but if had been just starting out in my landlording adventure I might be close to bankruptcy. Can you survive a year or two with 50% or less income? This can and will happen in the form of either vacancies/non-pay, or major unexpected structural repairs. I'm actually considering picking up a few more units in the neighborhood simply to have a diverse income stream for when I do decide to step back some and "retire" to an easier/part time job in my chosen field. But, I do this knowing I'm also lining up "things to keep me busy" at the same time.

by ijidak 6y ago

twblalock 6y ago

One of the biggest lessons of 2020 is that rental income is not as reliable as people thought it was. During the pandemic, many renters were allowed to stop paying rent and landlords had no legal recourse. Several states have created new rent control laws in the past few years, too.

aparsons 6y ago

Managing 30 properties - hell, keeping 30 properties occupied - is a nightmare. Unless they’re extremely homogenous, even a property management firm will hesitate to touch that.

garmaine 6y ago

> $3 million could get you as many as 30 condos/homes in the right areas. > If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there. With $3m invested in a FIRE-recommended portfolio you can withdraw $10k/mo indefinitely without any work at all. I don't think this is as good an opportunity as you are presenting.

phil21 6y ago

> If monthly profit on each of those 30 condos/homes can average $200 per month, that's $6,000 per month right there. I assume your calculations include a full-on property manager? I have a single unit (wife's pre-marriage condo we held onto) and even that is a minor job sometimes at the most inconvenient times possible. A kitchen sink doesn't care that it's 10pm on a Sunday night before a huge early Monday presentation. It's gotta be fixed now. 30 units would be full-on full time 40hr/week job while also hiring a part time assistant for larger jobs. If you have 30 units, I guarantee that 3 major things will break simultaneously during a holiday weekend - it's just the way the business goes. 33% down here won't get you into profitable territory with a property manager taking their cut. Certainly there are areas of the country where this is very possible, and if you put a little effort up-front you can make it a quite sustainable business - especially if you can get to the point you can hire a full time (cheap) property manager/handyman and you simply run the books. Just want to reiterate to those reading this that what is described is essentially a second career. Certainly not passive income in any sense of the term. You would be trading your tech career in for that of a landlord which indeed is actual non-trivial amounts of labor. That doesn't even get into risk. I'm renting in a city with evictions paused but no mortgage relief to be seen for my profile. I'm fine, but if had been just starting out in my landlording adventure I might be close to bankruptcy. Can you survive a year or two with 50% or less income? This can and will happen in the form of either vacancies/non-pay, or major unexpected structural repairs. I'm actually considering picking up a few more units in the neighborhood simply to have a diverse income stream for when I do decide to step back some and "retire" to an easier/part time job in my chosen field. But, I do this knowing I'm also lining up "things to keep me busy" at the same time.