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28-year-old photographer wondering what to do next...
Old 09-20-2009, 10:05 AM   #1
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28-year-old photographer wondering what to do next...

Greetings!

I just finished reading "Work Less, Live More: The Way to Semi-Retirement," and found a link to this forum in the resources section. How nice it is to have a community of people with the similar interests and life goals! I'd like to introduce myself and give you a little back story, so feel free to read as much or as little as you'd like.

When I was 25 years old, I was a highly skilled photographer working as an analyst at a major bank. Shortly after being laid off from my third corporate gig in as many years, I decided that I would never be content slaving away in a gray cubicle, regardless of my salary. It became apparent to me that there were only two options: Keep grinding away in various button-down positions while trying to take photos on the side and begging for an annual cost-of-living increase, or striking out on my own. I had no idea what the hell I was going to do, as my Ivy-League undergrad education had prepared me for NOTHING practical. However, I did know that I had to figure out a different path as early as possible.

The two-week "severance" pay that I received as a "thank-you" for not throwing my PC out the window upon termination brought the balance of my savings account to just under $20,000.00. Hardly a fortune, and certainly not enough to live on for the next year let alone the rest of my life. Foolish as it may sound, I decided to buy a house. I'm fortunate enough to live in one of the rust-belt cities that, despite it's dreary past, has begun an impressive renaissance. I picked up a dilapidated hovel for $19,900.00 on the cusp of a really cool neighborhood, fixed it up myself, and promptly pulled $50k out of it for the purchase of two more similar homes. Long story short: it's three years later and I've managed to put together a real estate portfolio that generates just under sixty thousand dollars annually. I work about five hours a week managing the properties, and I spend the rest of my time pissing off every studio in town by charging less and offering superior images. Still, this only ends up occupying 15 hours of my week MAX. I've begun to feel restless.

As far as the real estate development goes, I intend to keep buying properties until I reach one of two goals: $100k in rental income OR ten properties, whichever comes first. I should be able to reach this goal within 3-5 years (age 31-33). I intend to keep shooting photographs as long as I can bear the weight of the camera.

I'm unmarried, have no children, and have a reasonably healthy relationship with my live-in girlfriend. In spite of all this seemingly good fortune, I'm wondering what the next step is. I'm hoping that the people on this forum can offer me some wisdom and advice. I'm open to all suggestions, however foolish or far-fetched. Indeed, buying a house a week after you've lost your job is about as foolish as it gets, so I won't judge.

Many thanks for your input!

--Chris
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Old 09-20-2009, 02:02 PM   #2
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Hi Chris,

Welcome

Sounds like you are quite the risk taker. Certainly buying property after getting laid off from your job is not the typical recommended path, but in your case the risk seems to be paying off if you're generating 60k income off your properties. Real estate investing isn't for everyone but if you've got the knack and understand the pitfalls than go for it.

I like how you are very clear in your goals, I think people who set very tangible goals have the best chance of acheiving them.

Is the $60k income from your properties enough to cover your expenses? Do you have any leftover to save/invest? If so, I would begin building a cash reserve & opening/investing in a Roth IRA for your future.

Does your photography business generate income as well, or do you operate at a loss? Seems like with your talent eventually that should be a profitable business for you as well.

Anyway, congratulations on your achievements so far and welcome!

By the way, I am a wannabe amatuer photographer...I have a Canon Rebel but am still in learning mode.
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Old 09-20-2009, 02:10 PM   #3
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Nice to see someone your age taking risks--nicer still that they seem to be working out for you! Welcome to the board.
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Old 09-20-2009, 04:53 PM   #4
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Only five hours a week managing properties? I'm impressed. Do you contract the yard mowing and other stuff out?

I feel like I spend over five hours a week fixing and maintaining the house I own and live in. Granted, I'm obsessive compulsive, and try to keep everything immaculate.
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Old 09-20-2009, 05:00 PM   #5
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You didn't say if your income was before paying expenses on your rental properties.

Usually, the next steps are marriage, kids, debt-up-to-your-eyeballs, divorce. Better get crackin'.

If you like, add "run for political office" to make things interesting.

Welcome.

Nikon or Canon? Or?

PC or Mac?

Mortgage or mortgage free?

Index funds or actively-managed?
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Old 09-20-2009, 05:12 PM   #6
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Hi all, thanks for your comments.

I don't want to give people the wrong idea. My behavior was a lot less risky than it seems. I paid just a tad over $117,000.00 for ALL FIVE of these properties. Adding improvements done mostly by myself (except for plumbing or electricity), most of which I read in Home Depot's 1-2-3 book, and the total grows to a meager $154,000.00. I owe $97,000.00, so the 60k more than covers my expenses.

It's important to note that I'm not a handyman, nor did I possess any sort of manual skill before I bought my first house. It turns out that most home improvement work is quite simple work, even if much of it is time consuming. Reading a 300-page book can literally teach you how to do 90% of what needs to be done in your home.

Roth IRAs are a very smart choice, and I know that they're appropriate for many people, but I plan on being on my fifth or sixth career/business/lifestyle by the time I reach the cha-ching age of 59 1/2. My rental business, properly managed, will supply steady income that will be, eventually, unearned. 100k is certainly enough to live in most places, and very comfortably in the Great Lakes region. I don't see the sense in socking 5 grand of liquid cash per year into a 30-year volatile stock portfolio that could shrink to half its value overnight the summer before my 60th birthday.

Alternatively, I can continue carefully selecting undervalued properties in strategic locations, many of which can be had for a song. Paying 19k for an asset that's going to pay you 9k/year for the rest of your life (after improvements, of course) seems like a pretty good bet to me. And the best part is, you can feel, see, and touch every cent of your money. Nothing short of a hurricane on the day you close before you've signed the insurance papers can take it away, devalue it, or siphon fees off the top.

Yes, the photography business is profitable. I own all of the equipment outright (saved for and paid in cash), and I have almost zero overhead, so I'm pretty much paid exclusively for my time (and, to a certain degree, my eye).

I realize I may sound like an obnoxious over-achiever, but my secret shame is that it wasn't difficult at all, and I only started three and a half years ago.

--Nikon
--PC
--I have no money in the stock market
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Old 09-20-2009, 06:49 PM   #7
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You can always get an IRA certificate of deposit at a bank or credit union.

It would seem prudent to have a significant cash reserve, in case one or more properties need significant repairs or you have a dry spell of renters. Long-term, paying off the mortgage seems wise, as well.

The rental price compared to what you have invested in the property is very attractive. It's not nearly that attractive in my area.
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Old 09-20-2009, 07:02 PM   #8
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The right rental properties can indeed make you wealthy over time, as many Europeans know. There will always be a need for comfortable but reasonably priced accommodation. The trick is to avoid high end places and drug houses and go for buildings that have become dated or need sprucing up and can be made more desirable for the average renter. The economics of the area are key too; this would not work well in NYC, nor would it work in a ghost town. I think you have the right idea. Good luck!
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Old 09-20-2009, 08:05 PM   #9
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I am going to get this Home Depot 1-2-3 book mentioned by the OP. Before the week is out! I think you are doing marvelously well and welcome to the forum.
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Old 09-21-2009, 12:40 PM   #10
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You should. It's a great book. That $19.99 will save you thousands on handymen or handywomen.
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Old 09-21-2009, 01:03 PM   #11
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Congrats on using that old saw of investing in what you know. I think that over time, you may see the value of diversification into other asset classes, but only you will know when you are ready to learn about something new.

We have several other young entrepreneurs like you on the board, and I'm sure they will enlighten you as they share their own investment strategies.

Welcome! And as LOL! said, you better get cracking if you want to lead that "typical" life. j/k.
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Old 09-21-2009, 01:57 PM   #12
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Quote:
Originally Posted by landedgentry13 View Post
I'm unmarried, have no children, and have a reasonably healthy relationship with my live-in girlfriend.
I'd say you hit the daily double. A great business and a "reasonably health relationship with [your] girlfriend".

How big is the city where you operate? Are there steady industries or businesses, or is it a possibly failing economy?

Can you buy a $19,000 house in a neighborhood where a woman can walk down the street in safety?

Keep sharing please.

Ha
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Old 09-21-2009, 07:00 PM   #13
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I'm a pretty private person, but I don't mind telling you that I live in Buffalo, NY.

It has long been derided as a dying rust belt city, but I know better. I've lived in Toronto, Washington DC, Las Vegas, Los Angeles, and parts of Europe. I can say with confidence that, while not exactly a bustling metropolis, Buffalo offers a quality of life unattainable for somebody my age (or any age for that matter) in other cities. We're on the Canadian border, ninety minutes from Toronto, an hour to NYC by plane, and have some of the most attractive housing prices in the nation. World-class art galleries, exceptional architecture, a philharmonic orchestra, waterfront property, a huge zoo, affordable housing, non-existent commutes, and an impressive Olmsted park system are just a few of the amenities of the area.

Yes, the 19k houses are in decent neighborhoods, they're just a bit difficult to find before an investor swoops in and picks them up (hence the need to pay cash as often as possible). I wouldn't say that the economy is "growing," but it's not exactly shrinking fast. It's also a great place to pursue alternative lifestyles, such as the 25-year-old who doesn't want to work past 30. Seriously, can you think of any other town where you can generate this much investment/unearned income before the end of your third decade? Ok...maybe Cleveland.

It is not, however, without downsides. If you hate winter (which I don't), Buffalo is not for you. But then again neither is Toronto, New York, Chicago, Boston, Philadelphia, etc. If you want a tech job paying 200k per year, you most likely will not find it in Buffalo. But then again you can buy a 5000 sq ft turn-of-the-century steel mansion on one of the parkways for 300-400k (if that's what you aspire to own).

I suppose it's all about priorities. I'd rather live in Buffalo and work 5 hours/week with the option to f-ck off to Europe (or Miami, or Fiji, or wherever) whenever I want than work 70 hours/week at a desk. Time is immeasurably more important than money, and if you can find a way to have a lot of BOTH, well, then you're all set.

This is, of course, just my opinion. I know people who would rather be shot by a firing squad than spend a minute (or a penny) in Buffalo.
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Old 09-21-2009, 07:39 PM   #14
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Hi neighbor
I'm to the east of you somewhere near Syracuse, but out in the boondocks of East Nowhere.
I was wondering if you were here in NY or in PA when I saw the rust belt reference.
Regarding living in Buffalo, more power to you, my friend.
The Buffalo snow reports continue to impress, even as we get dumped on by lake effect from Lk Ontario. Most of it goes just north of me.
You sound very savvy in real estate investing. Congrats!
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Old 09-21-2009, 08:36 PM   #15
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I'm a pretty private person, but I don't mind telling you that I live in Buffalo, NY.
No way am I criticizing you, I am very impressed by your performance. You are doing great. You could buy a block of houses up there for what I would pay for a very uninspired apartment.

Ha
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Old 10-04-2009, 09:05 AM   #16
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Hey Landed- welcome to the board. I am also going to buy this Home Depot 1-2-3 book If your problem is boredom, and it kinda sounds like it is, maybe you can travel some and expand your photography base, or start new photography endeavors, like taking pictures at events. Or maybe you could volunteer to give a photography class at a high school or community center or something like that. I would imagine that, in general, you have a lot of interesting skills that people would love to learn from you-
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Old 10-06-2009, 10:38 AM   #17
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Thanks for your advice, Virginia.

Your suggestions are sound, but they present a few problems for me:

1. I have a highly specialized photography practice, and I've crafted it to be that way. This is because I like to get as much work done in as little time possible. Twenty $2,000 photography jobs taking one day each is far more attractive than taking on many smaller and less lucrative projects. Efficiency is something sorely lacking in today's society.

2. Travel is certainly something that I do and plan to do more of, but because of my rental properties, I can't really leave town for more than a month at a time. I could hire a property manager, but I won't be doing that until I can justify the expense (e.g. having more money than I know what to do with, illness or incapacitation, etc).

3. I have no desire of any kind to teach at a high school. I personally know three techers who have been fired because of supposed "inappropriate behavior" with students. This term has been expanded so much that teachers aren't even comfortable closing their classroom doors anymore. It doesn't matter that said students are sneaky, manipulative, and probably have more sex than most 30-year-olds. The teachers (particularly young male teachers) are automatically branded as predators, even when all evidence points to the teenagers being equally culpable. I have too much to lose to put myself in that position. Sorry.

Having said that, I've considered writing a book, which would be a way to help many people without a lot of time-wasting or opening myself up to such precarious conditions. This would certainly be more beneficial to society at large than working in a group. Again, I thrive on efficiency, and I've noticed that the more people involved with a project or activity, the less efficient it becomes. The old adage of "if you want something done right, you must do it yourself" is very true in a lot of ways.
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Old 10-06-2009, 01:32 PM   #18
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3. I have no desire of any kind to teach at a high school. I personally know three techers who have been fired because of supposed "inappropriate behavior" with students. This term has been expanded so much that teachers aren't even comfortable closing their classroom doors anymore. It doesn't matter that said students are sneaky, manipulative, and probably have more sex than most 30-year-olds. The teachers (particularly young male teachers) are automatically branded as predators, even when all evidence points to the teenagers being equally culpable. I have too much to lose to put myself in that position. Sorry.
Welcome to the wonderful, wacky, post feminest world where good old American Puritanism marries modern interest-group politics.

I am 68 years old and I refuse to be with anyone under 21 without a chaparone. I am more than a little careful with adult women also.

Ha
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Old 10-06-2009, 01:50 PM   #19
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It's not just men, young or old. I'm the world's more boring, least threatening middle aged woman and I'm instructed to leave the classroom door wide open when I volunteer with a group of 10 year olds once a week for the same protection.
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Old 10-06-2009, 07:12 PM   #20
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It would seem prudent to have a significant cash reserve, in case one or more properties need significant repairs or you have a dry spell of renters. Long-term, paying off the mortgage seems wise, as well.
Sensible advice.

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I'm a pretty private person, but I don't mind telling you that I live in Buffalo, NY.
Good old Buffalo. I remember (when I had television) that the news reports were invariably the same: "three alarm fire in North Tonawanda, four alarm fire in Cheektowaga, five alarm fire in West Seneca, stabbing in South Lockport".
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