Hi! 26 And Looking to Retire at 35 through Passive Income

[aschmeerbauch]

Hey Everyone,

I'm a 26 year old based out of St. Louis.

My goal is to retire at 35 with $10,000 a month in passive income through real estate investing.

I started with $10,000 last year and now have 8 total units! With a goal to hit 16 by the end of the year!

Can't wait to get involved around here!

Thanks,

Andrew

[joeea]

Welcome and good luck.

[Newventurer]

Have you considered diversification? Are you aware real estate goes through cycles? If you lost all of your real estate, what would you have left? There are real estate sites that might be more helpful for pointers specific to your interests. Good luck!

[aschmeerbauch]

Quote:

Originally Posted by Newventurer Have you considered diversification? Are you aware real estate goes through cycles? If you lost all of your real estate, what would you have left? There are real estate sites that might be more helpful for pointers specific to your interests. Good luck!

So you're not wrong, however, in my time trading I learned a couple things.

1. Returns were out of my control.
2. Decisions are out of my control.

I decided to switch to real estate investing specifically with multifamily rental properties in mind simply because of the predictable returns.

During the 2007 financial crisis, the average rent in St. Louis went down $12, and vacancy rates actually decreased by .91%.

Now I'm not saying there are no risks involved. Certainly during the beginning a big repair out of the gate would have been tough.

FHA loans make it really easy to get started and 1031 exchanges make it easy to upgrade and increase number of units.

To anyone looking to increase passive income through real estate investing I would check out Biggerpockets.com. It's a wonderful community with a stellar podcast series.

[Newventurer]

Does your property insurance include coverage for business interruption in the event there is significant damage to a building or units? If not, would you be ok if you didn’t have rent coming in from a number of units and had to meet deductibles to make them habitable again?

What I hear you saying is that you believe you control your real estate investments. Hmmmm

https://www.extension.harvard.edu/in...housing-bubble

You will likely know in 9 years whether you can retire or not

[corn18]

Welcome Aboard! I am rooting for you. I don't know much about RE investing, but I know a few folks that have done well and love it.

Make sure you have a purpose in life other than making $120,000 a year. Other than that, good luck and keep us up to date on your progress.

[trumpeting_angel]

Welcome! I wish you the best of luck; bring all your youthful energy and temper it with caution as you continue this venture.

I own some rental properties, as well (8 units now). I made money while self-managing the properties, but then moved away. The main advantage I have now, with a management company that (after a few years) seems to have stopped trying to impress me, is a tax write-off. Before someone suggests a 1031 exchange to obtain properties closer by, I'll add that I'm 65 and living in a rural area. I'm no longer in a position (or have the motivation) to manage them myself. So maybe I'm not your typical investor.

Over time, I've been disillusioned by a tenant who refused to pay rent for trivial problems (and then wouldn't let the manager in to see what's wrong and correct it), carried on like this for years, had to be taken to court and have the eviction "settled" for less rent more than once - then leaves the place suddenly, trashed. I've paid tenants to leave (more than a few times) and been to court with others. I've had more than one unit vacant at once, with turnover costs and repairs to pay, and had to add to my rental bank account to cover the mortgage. I had a single family house that had a small fire in January and burned to the ground in March, and I had to be briefly investigated by the insurance company for arson. (Luckily, (1) I didn't burn it down - it was making great money! and (2) it's in a distant state.)

If I hadn't been working full-time at another job I'm sure I could still be making money at this. The tax advantages have been worth tens of thousands over the years. But it's not the Garden of Eden!

[cooch96]

OP, good luck and fortune!

[calmloki]

Very good job starting with $10k and having 8 units in a year - in a real estate market that is pretty pumped up. Also a fan of having some control of the investment vs watching stocks bounce up and down inexplicably. Rental properties made our net worth and continue to dump cash in the bank for us. Our problem is stopping and divesting. and the little gotchas Trumpeting Angel mentions.

[Aslowdodge]

Quote:

Originally Posted by aschmeerbauch Hey Everyone, I'm a 26 year old based out of St. Louis. My goal is to retire at 35 with $10,000 a month in passive income through real estate investing. I started with $10,000 last year and now have 8 total units! With a goal to hit 16 by the end of the year! Can't wait to get involved around here! Thanks, Andrew

Welcome
Good luck. I don't know your numbers but your goal is reachable. I am at your goal right now from rentals.
Just be careful not to over leverage and make sure you have a positive cash flow. That way if the economy hiccups you can ride it out. Make sure you have a reserve too, don't spend every penny you get into real estate.
As far as cycles, the market also goes through cycles too so really it's pick your poison.

[exnavynuke]

Good luck. Here's to hoping St. Louis doesn't become the next Detroit etc etc.