Hello-retired with Real estate

[Aslowdodge]

Just wanted to say Hi.
I retired with rentals and have no money in the market at all-missed the great runs with that.
I have a portfolio of rentals I invested about $750K in over the last 3 years and the portfolio is worth a shade under 1.5 million. Most all of the value gain was buying foreclosures and short sales and fixing them up. The area I invest in does not appreciate much, I think maybe 2-3 percent per year overall. Not like the California market I left.


Net rents after expenses is about $107K per year with a depreciation write off of about $20K. I wasn't planning on retiring, but setting them up as a good cash flow inn case I couldn't restart my photography business when I relocated to Atlanta. I realized living in a cheaper area that cash flow is a pretty decent amount to live on being single.


I also own 5 rentals in 2 roth self directed IRA's that I will draw out about 22K a year tax free in about 2 years,but I am hoping to get 2 more rentals in those to bring that up to about 30K a year before I start to draw out.


I guess I should say in my mind I am retired, but some people say I am not because I own a business that owns rentals. I have a property manager so I only spend a few hours each month doing my book keeping so my taxes are ready at the end of the year. So in my mind for a few hours a month I am close enough.



Before someone posts, I have yet to deal with a clogged toilet and if that occurred the property manager would deal with it, not me.
I know most people are probably retired with money in the market, but I think there's a few people here that own real estate.



I'm looking forward to learning about things like ss which I am eligible for in a few years and medicare as well as traveling. See you all in the other forums.

[calmloki]

Welcome. So you've a property manager - that's about 10% of rents received or about 20% of the profit in our area. Sure makes you a bunch more retired than self managing though! Another rental owner managed to have an uncompensated manager and a brother to manage the manager - a great trick if you can pull it off. I am intimately familiar with the arcane workings of toilets and own some serious power snakes and other trade-grade tools. Makes me a bit less retired I guess.

I took ss at 62 and while that means I'm betting against myself living a long long life it was the choice I made. Common wisdom is to wait as long as possible. Still, the piddly little check that drops into the bank account is an appreciated treat, and the medicare is a true joy compared to the insurance bills we were paying. I do find that I can't manipulate our interest and rental income as others seem to do with their stock income, so we pay substantial taxes. Ah well - there are much worse problems.

[UnrealizedPotential]

I do not own real estate outright, but I do own Mortgage Reits and I do get some income that way. I have other income sources besides that, but everyone is different. I do what I am comfortable with and others do the same.

[97guns]

Quote:

Originally Posted by calmloki Another rental owner managed to have an uncompensated manager

Don’t believe what everyone writes, really don’t know where he got that statement

[Onward]

Welcome, Aslowdodge!

[Aslowdodge]

Thanks. I'm looking at taking ss at 62 myself.
My property manager takes 9 percent but after you have a certain amount of properties it drops to 6 percent. My numbers have included the 6 percent commission. The 3 percent makes a big differences.

[flintnational]

Welcome to the forum. Rentals have helped many here, including us, build wealth. As you may have surmised, a debate on this forum centers around whether rentals are passive or active(retired or w*rking). In the end, IMO, it does not matter much. What is important is that each individual has been able to structure a life that allows them to do what they enjoy. As we often find on this forum, that means different things to different people.

[Red Badger]

I agree with flintnational's comment that if you position yourself to where you can pretty much do as you please, that's retirement for you. However, the IRP will be along shortly to call you out as a working stiff, and rebuke me/others for allowing any deviation from their definition of retired (whatever that is).

[ExFlyBoy5]

Welcome to the forum. There are a few of us here in the N. ATL area, so perhaps a meet up might be in store in the future.

[Aslowdodge]

Hmmm. I came here after hearing about it in another forum . I thought it would be less argumentative and judgemental about the definition of retirement and passive income . People were supposed to be more open to sharing real life scenarios and numbers and not be criticized as bragging or making things up.

Anyways,the vehicle I chose was rentals and if people feel an hour a month makes it an active investment, no harm.i figured that might be the same time that people spend managing their stock portfolios and doing taxes at the end of the year, but since I don't own those maybe I'm wrong. In any case it is what it is and I'm happy with my definition.
A meet up would be pretty cool to do.

[REWahoo]

Quote:

Originally Posted by Aslowdodge I thought it would be less argumentative and judgemental about the definition of retirement and passive income.

Think about it: this is a forum filled with a bunch of retired people. Being argumentative and judgmental is what we do for entertainment.

[hesperus]

Quote:

Originally Posted by flintnational As you may have surmised, a debate on this forum centers around whether rentals are passive or active(retired or w*rking).

Perhaps the debate should be around the definition of 'work', rather than retirement.

[flintnational]

Quote:

Originally Posted by hesperus Perhaps the debate should be around the definition of 'work', rather than retirement.

Sometimes our debates over work/retired remind me of the Monty Python "Argument Clinic"

After being accused of working, the counselor responds, "Maybe I am arguing in my spare time"

Argument Clinic

[ERD50]

Quote:

Originally Posted by Aslowdodge Hmmm. I came here after hearing about it in another forum . I thought it would be less argumentative and judgemental about the definition of retirement and passive income . People were supposed to be more open to sharing real life scenarios and numbers and not be criticized as bragging or making things up. Anyways,the vehicle I chose was rentals and if people feel an hour a month makes it an active investment, no harm.i figured that might be the same time that people spend managing their stock portfolios and doing taxes at the end of the year, but since I don't own those maybe I'm wrong. In any case it is what it is and I'm happy with my definition. A meet up would be pretty cool to do.

I'll throw in my 2 cents.

Words have meanings. We communicate here with words, no body language, no facial cues, nuance is often lost or misinterpreted. So if people use the same word to mean different things, it's hard to have effective communication.

For the most part, if someone states they are doing this or that with their life, and it works for them and they are happy, they probably won't get an extended 'argument'. But if they add judgmental comments ( and I did not read that in your opening post ), then expect a challenge. Some people just feel they have to defend their approach, and use downright silly cases to do it.

If you are going to say (and I'm exaggerating only slightly here for effect) "I know a guy who put all his money in a dot com stock at the peak, and lost it all, so nobody should ever buy stocks, real estate is the only good investment." , well, some of us would like to straighten that out with facts.


I think if you view the responses in that light, you won't see it as a problem. I'm one of the people who personally would not want to own rentals, but that doesn't make it 'wrong' for others. Some people here seem to be happy and doing well with it, so I think you will be able to get some good tips from them about how to make the most of it. But with everything, take it all with a grain of salt. Some here seem to really white-wash the effort they put into it, or have special circumstances and support that most people going into real estate would not have.

Hope you find what you are looking for - welcome! - ERD50

[youbet]

Quote:

Originally Posted by Aslowdodge People were supposed to be more open to sharing real life scenarios and numbers and not be criticized as bragging or making things up. Anyways,the vehicle I chose was rentals and if people feel an hour a month makes it an active investment, no harm

Quote:

I have a property manager so I only spend a few hours each month doing my book keeping so my taxes are ready at the end of the year. So in my mind for a few hours a month I am close enough.

?

[Aslowdodge]

Quote:

Originally Posted by youbet ?

It varies between no time and 2 hours, so the average is 1-2 hours in the end

[Aslowdodge]

Quote:

Originally Posted by REWahoo Think about it: this is a forum filled with a bunch of retired people. Being argumentative and judgmental is what we do for entertainment.

Lol

[Lienlord]

We also have our investment portfolio in various types of Real Estate. Initially started with limited partnerships in large commercial properties (malls, shopping centers, office buildings, even a marina in FL). These provide a nice monthly dividend stream that we always put into savings and used for future investments. From there we branched out to buying SFR's, eventually owning about 20. After playing landlord for a few years (in addition to my FULL time job as Treasurer of a large school district) we started selling those SFR's off with owner financing. Now all 20 are sold (under 15 & 30 year mortgages @ 8%). Now, I only buy fixer-uppers with the sole intention of updating and selling using owner financing (I use a minimum 20% return over the term of the mortgage before doing project). I also provide HML (hard money loans) to other investors in the area to help them with their projects.
As I prepare to join the Class of 2018, these passive cashflows will be the sole basis of our retirement income before we qualify for SS & pensions (We're 54 & 55).
Because I enjoy the thrill of the game, I will probably keep doing deals that come my way (and meet my 20% return criteria) but I don't consider it a J*B like my current one that I'm preparing to leave. Just a hobby that makes $ rather than takes $ and keeps me on my toes!

[Oz investor]

Aslowdodge ,

did you miss the market gains ? ( you might have also missed the pain of the next downturn )

if you can stockpile some cash , a market correction might easily occur in the next 18 months , if that fails to happen you have some extra firepower for your next property move .

not a terribly bad situation at all ( and some extra time to research stocks and market behavior )

BTW , welcome

[Aslowdodge]

Quote:

Originally Posted by Oz investor Aslowdodge , did you miss the market gains ? ( you might have also missed the pain of the next downturn ) if you can stockpile some cash , a market correction might easily occur in the next 18 months , if that fails to happen you have some extra firepower for your next property move . not a terribly bad situation at all ( and some extra time to research stocks and market behavior ) BTW , welcome

Yep I did. I pulled out when the market was about 15,000. I did run my numbers and based on how I did with real estate I did beat the market by a pretty big chunk. But still watching the market climb I was pretty envious that I missed out.