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Commercial property income
Old 11-10-2014, 11:47 AM   #1
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Commercial property income

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Hello, first post here. Would like to know from folks - in the same boat as us.

Did the BigCompany-upper-management think and hated it. Big time. Few years ago, said 'I'm done' and working as a consultant now. Love being my own boss and working [U]my[/U] own hours.

Wife and I have around $600k together in savings (500k in IRA's and 100k in stocks).

We are both 48. We own 4 commercial properties (combined worth around $3m) with about $900k outstanding on all loans. Fixed rate at 5% for another 9 years. All four are completely rented. The rent from our tenants pays for everything: loans, tax, insurance, maintenance (they pay their own utilities). We managed 'em ourselves. These numbers and property worth, includes our home, where we live.

Our plan is to pay off the loans pretty aggressively within the next 7 years or so (between $3k-5k extra principal payments -depending on work). Then, relax, travel and live on the income from 'em.

Anyone else on this track?
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Old 11-10-2014, 01:30 PM   #2
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Welcome to the forum. For easier legibility, I have copied your text below. I don't know why it has the HTML format.

********

Hello, first post here. Would like to know from folks - in the same boat as us.

Did the BigCompany-upper-management think and hated it. Big time. Few years ago, said 'I'm done' and working as a consultant now. Love being my own boss and working my own hours.

Wife and I have around $600k together in savings (500k in IRA's and 100k in stocks).

We are both 48. We own 4 commercial properties (combined worth around $3m) with about $900k outstanding on all loans. Fixed rate at 5% for another 9 years. All four are completely rented. The rent from our tenants pays for everything: loans, tax, insurance, maintenance (they pay their own utilities). We managed 'em ourselves. These numbers and property worth, includes our home, where we live.

Our plan is to pay off the loans pretty aggressively within the next 7 years or so (between $3k-5k extra principal payments -depending on work). Then, relax, travel and live on the income from 'em.

Anyone else on this track?
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Old 11-10-2014, 01:47 PM   #3
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I have 24 rentals. 7 buildings. 4 are paid off.

Investable assets are ~930K, Equity is ~$1.5M+. Cash flow, after all expenses including mortgages is ~125K, if I continue to manage them, I add in another $20K.

I do not plan on paying off any additional mortgages, just keep my fixed rates in place. If you have commercial loans, that is a major risk.

i.e. I am planning the same thing.
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Old 11-10-2014, 01:49 PM   #4
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As for commercial property...I know 2 people who own them. 1 is an EX boss but the property is kind of part of the business, some of it is rented out to off-set the costs. I believe his plan is to sell the entire business at some point when he gets bored. He can still race horses and run the business so likely not any time soon.

Another land developer I knew owned some commercial property. His building was the only thing that saved his butt when the housing industry collapsed in 2004. He still owns the commercial property, but lost the business and his personal residence. He still "goes to the office" every day though and no plans of ER with that income...I believe his "carpenter" son leeches off the income.
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Old 11-10-2014, 01:56 PM   #5
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Our plan is to pay off the loans pretty aggressively within the next 7 years or so (between $3k-5k extra principal payments -depending on work). Then, relax, travel and live on the income from 'em.

When you guys are fully retired and traveling around, will you have a property mamanger to look after things (probably less inportant with commercial property than with residential)? If so, what do you figure your return on equity will be (after maintenance, taxes, vacancies, etc)?
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Old 11-10-2014, 02:04 PM   #6
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I've got 33 rentals with an on-site manager, actually a couple. He does some of the maintenance also. They collect the rent and show the empty apartments. My wife manages them. She's already retired. She also pays the bills and deposits the rent.

I am 56 and hope to retire in 15 months. The income from the apartments is part of my plan. I also have a 401k. I hope to sell and finance in 5 to 6 years with a 20 year note.

I am in a low cost area, the rent averages about $300/month. So, I'm not getting New York type rents.
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Old 11-10-2014, 02:24 PM   #7
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When you guys are fully retired and traveling around, will you have a property mamanger to look after things (probably less inportant with commercial property than with residential)? If so, what do you figure your return on equity will be (after maintenance, taxes, vacancies, etc)?
Hi Samclem, I plan on taking care of the properties myself. I kinna like it and it gives me something to do.

As for the return on equity, around 15%. Pretty good I think, no?
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Old 11-10-2014, 04:46 PM   #8
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As for the return on equity, around 15%. Pretty good I think, no?
It is good for an investment, but many would argue you don't have a pure investment here--you have an investment and a job.
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