Hi, I'm Hellbender

[hellbender]

. . . . . . but as long as I am living on <20% of my income and saving the rest, I figure it offsets my suboptimal investment strategies. If you can even call them that  

Yep.  Each individual's circumstances are different.  I have discovered that once you can say that you have a government defined benefit pension which is greater than your income needs and substantial assets set aside besides, the conventional investing advice doesn't scale very well, and can actually be quite damaging depending on an individual's risk tolerance.  I know many people who have retired early and quite securely without ever owning a share of stock.   I will continue to save substantially in retirement.  I don't need the types of returns which are claimed for equities and I do better with real estate anyhow.  Equities are way outside my comfort zone. I also know some folks who continue to bear the risks associated with stock ownership even though they are long past the point at which such risks are required to be taken. In each case they seem to have lost sight of the real reasons for investing. Optimizing (maximizing) returns and accumulating assets for the sake of accumulation has become the goal.

 

[Rich_by_the_Bay]

Yep. Each individual's circumstances are different. I have discovered that once you can say that you have a government defined benefit pension which is greater than your income needs and substantial assets set aside besides, the conventional investing advice doesn't scale very well, and can actually be quite damaging depending on an individual's risk tolerance.

If you can't afford a given risk, or if the gains from risk exposure bring little to the table in your own situation, you walk. That is what you are doing, and perhaps wisely so, by not investing in equities. (Of course, Delta pilots and Enron residua may have felt that way too, once upon a time; government pension is probably a different beast in that regard).

That doesn't change the fundamental wisdom of a diversified portfolio from a probabilistic perspective. For those of us without independent serious wealth or a completely adequate COLA'd pension or the like, the real risk is to NOT invest a substantial percent in equities, or to do so foolishly (e.g. timing the market, buying and selling all the time, concentrating on too few asset classes, etc.).

Totally situation-specific decision-making rather than a comparison of the wisdom of one approach versus another.

 

[hellbender]

Thanks for the warm welcome.  I look forward to taking part in several of the forums here.  For what it is worth. I have experience in the following areas and can help others who have/share like interests:

Real estate investment:
  Residential Rentals
  Vacation rentals
  Land development
  Notes/paper
  Real estate investment analysis

Construction:
  Facilities and infrastructure design
  Wells and drainfields
  Site planning and design

Organic Gardening


As I approach retirement I am interested in becoming more proficient at:

Home brewing
Walleye fishing
Cooking
Canoeing/kayaking

Thanks all.  I look forward to further discussions.

 

[yakers]

As I approach retirement I am interested in becoming more proficient at:


Canoeing/kayaking

Thanks all.  I look forward to further discussions.

Some kayakers around here. Mostly I do ocean paddling. All the white water I have done,( American River, CA, Kicking Horse, BC) has been rafting. I will be rafting the Ocoee next month. Any day on the water is a good day....

 

[califdreamer]

I have experience in the following areas and can help others who have/share like interests:

Real estate investment:
Residential Rentals
Vacation rentals
Land development
Notes/paper
Real estate investment analysis

Welcome, hellbender, have enjoyed your introductory thread. What types of RE investments do you prefer?

 

[hellbender]

Welcome, hellbender, have enjoyed your introductory thread. What types of RE investments do you prefer?

I'm glad you enjoyed the thread.  I don't generally subscribe to investment approaches that are put forward by gurus or that are currently fashionable.  I believe that to be a successful real estate investor, you must devolop a solid understanding of the basics such as real estate sales, marketing, finance, appraisal and law.   A real estate investor must then utilize what his local market allows, combined with his own personal likes and strengths to develop approaches that will be successful.  As a civil engineer with a knowledge of design and construction, approaches that stress new construction and land development are most attractive to me.  For a long time my local market has been favorable for investors who buy and hold single family homes for the production of income and capital gains.  I boosted my returns by using my personal Knowledge, skills and abilities to acquire land inexpensively and construct my own lease units which were optimized to maximize gains in my local market.  I no longer do this.  The real investor must work with what his local market offers.  Local price appreciation has been so great over the last few years that purchase or construction of units to lease no longer makes financial sense.  The acquisition costs are no longer supported by the rents to the extent required to provide a profit which justifies by the risks of ownership. 

I recently sold all of my single family leaseholds.  I will be moving to a different are in a couple of years when I retire.  It will undoubtedly provide different opportunities.  In fact, I have already evaluated the area and have formulated a plan.  The area is rich in natural beauty and recreational opportunities.  The state is investing money in promoting tourism in this area which is not nearly as strong economically as the place I will be leaving.  Due to the slower local economy, the single family rental business is not particularly attractive.  Rents and tenant quality are not very good.  On the other hand, it is my conclusion that vacation rentals will do quite well.  That is where I will be.  I have already purchased land which will be close to my retirement home which is ideal for attracting vacation home tenants which will bring money into the area.  I am designing the rentals now and will be constructing them later.  I also have concluded that there is a market for land here and that local land prices do not yet reflect the reality of increasing demand from retiring baby boomers.   Investment approaches which are not as management intensive are starting to have more appeal to me as a retiree planning to dial back a bit.  To this end, one approach I am very high on right now is purchasing land at a modest discount to market value through strong negotiation and the effective use of cash.  I will then turn around and sell property so acquired at a premium with built-in financing (I will carry the notes).  By buying low and selling modestly higher with installment terms, I plan to passively achieve double-digit yields.  More on this approach later. . . . .   

 

[Rich_by_the_Bay]

A real estate investor must then utilize what his local market allows...As a civil engineer with a knowledge of design and construction, approaches that stress new construction and land development are most attractive to me... no longer do this. The real investor must work with what his local market offers.

I will be moving to a different are in a couple of years when I retire. It will undoubtedly provide different opportunities. In fact, I have already evaluated the area and have formulated a plan... it is my conclusion that vacation rentals will do quite well. That is where I will be. I have already purchased land which will be close to my retirement home which is ideal .. I also have concluded that there is a market for land Investment approaches which are not as management intensive are starting to have more appeal to me as a retiree planning to dial back a bit...I am very high on right now is purchasing land at a modest discount to market value through strong negotiation and the effective use of cash. I will then turn around and sell property so acquired at a premium More on this approach later. . . . .

Retiring or changing careers? Sounds more like the latter.

Either way, sounds like you enjoy what you do. Good luck in your new ventures.

 

[hellbender]

Retiring or changing careers? Sounds more like the latter.

Either way, sounds like you enjoy what you do. Good luck in your new ventures.

The real estate has always been a hobby (albeit a lucrative one).  My career is designing, constructing and maintaining major weapons research facilities for the U.S. Navy.   I am fortunate that activities which I enjoy, also put money in my pocket. Retirement to me means being able to do whatever I want, whenever I want if it makes me happy.  It means not having the necessity to be at a specific place, at a specific time and engaged in activities determined  primarily by others.  If it makes you happy . . . . it ain't work.

 

[Rich_by_the_Bay]

The real estate has always been a hobby (albeit a lucrative one). My career is designing, constructing and maintaining major weapons research facilities for the U.S. Navy. ...Retirement to me means being able to do whatever I want, whenever I want if it makes me happy.

Couldn't agree more.

Work actually does provide deep nonfinancial rewards and satisfaction for me, and I plan and hope to continue doing it after I become financially independent. Main difference will be just as you say: do it because I want to, and for as many or as few days as I choose. The income will be welcomed and helpful but not absolutely necessary to us.

Thankful to be approarching that place in my life.

I guess "designing major weapons research facilities for the U.S. Navy" would be tough to maintain as a post-FIRE hobby .

 

[brewer12345]

Home brewing

That one I can help with...

Welcome.

 

[hellbender]

I guess "designing major weapons research facilities for the U.S. Navy" would be tough to maintain as a post-FIRE hobby .

Yes. . . . but that is not a problem.

 

[califdreamer]

Very interesting real estate projects hellbender. You're at a much more sophisticated level than I am, that's for sure.

I've been fortunate the last ten years to buy and hold multi-unit rentals, usually for two-to-four year period, then 1031 them into more units. Several years ago, started moving the equity out of CA into areas that looked like more attractive opportunities for price appreciation. Namely AZ and TX. Has worked out well. Looking to move some more equity out-of-state right now, perhaps into TX or Southeast.

Do you ever leverage land deals or do you always use all cash? I tried to get in on a land deal in TX but it didn't go through.

Look forward to hearing about how things unfold for you in the new venture.

 

[hellbender]

Very interesting real estate projects hellbender. You're at a much more sophisticated level than I am, that's for sure.

Well, I don't klnow about that.  Multi-units scare the hell out of me.  I always assumed that apartment dwellers were much less sophisticated about managing real estate and would create more stupid problems for me.   This in addition to the inevitable squabbles with the close-proximity neighbors.  Also, I've never been adventurous enough to own properties that I couldn't go over and look at with short notice.

I've been fortunate the last ten years to buy and hold multi-unit rentals, usually for two-to-four year period, then 1031 them into more units. Several years ago, started moving the equity out of CA into areas that looked like more attractive opportunities for price appreciation. Namely AZ and TX. Has worked out well. Looking to move some more equity out-of-state right now, perhaps into TX or Southeast.

Do you ever leverage land deals or do you always use all cash? I tried to get in on a land deal in TX but it didn't go through.

Look forward to hearing about how things unfold for you in the new venture.

All of my past land deals have involved financing to one extent or another.  Now that I have liquidated my holdings, cash deals have become a realistic option.  I look forward to further discussions and comparison of notes.  Which of the boards here do you gravitate to when you want to talk about treal estate? 

 

[haha]

Investment approaches which are not as management intensive are starting to have more appeal to me as a retiree planning to dial back a bit.  To this end, one approach I am very high on right now is purchasing land at a modest discount to market value through strong negotiation and the effective use of cash.  I will then turn around and sell property so acquired at a premium with built-in financing (I will carry the notes).  By buying low and selling modestly higher with installment terms, I plan to passively achieve double-digit yields.  More on this approach later. . . . .   

I await your further discourse with bated breath...

It seems to me that all plans that involve paying cash going in, and giving financing going out must soon destroy balance sheet liquidity. Then you find that you are A) Out of cash, and B) Full of notes of poor liquidity and questionable credit quality.

You could then borrow more cash, and continue the process, by which time you are operating a highly leveraged cyclical business which is likely to make you yearn for a return to building whatever it is that you currently build for the blue jackets.

Ha

 

[brewer12345]

I await your further discourse with bated breath...

It seems to me that all plans that involve paying cash going in, and giving financing going out must soon destroy balance sheet liquidity. Then you find that you are A) Out of cash, and B) Full of notes of poor liquidity and questionable credit quality.

You could then borrow more cash, and continue the process, by which time you are operating a highly leveraged cyclical business which is likely to make you yearn for a return to building whatever it is that you currently build for the blue jackets.

Ha

Sounds like the business of a bank ort thrift without the ability to take deposits. But if your notes turn over quickly enough and you manage not to get stuck with too much deadbeat paper, you might do OK.

 

[hellbender]

I await your further discourse with bated breath...

It seems to me that all plans that involve paying cash going in, and giving financing going out must soon destroy balance sheet liquidity. Then you find that you are A) Out of cash, and B) Full of notes of poor liquidity and questionable credit quality.

Thanks for your comments.  This plan would constitute only a small part of my total retirement investments which would also include cash, relatively liquid fixed-income investments, income-generating vacation/rental properties, etc.  It is my goal to exhaust the portion of my cash dedicated to such investments because I will now have it effectively deployed and earning double-digit rates of return.  Liquidity of the notes is not a goal.  High return on investment is.  I will finance high credit risks or those with low down payments using only land contracts.  In this way I give up title to the properties only when all financing terms have been met.   In any event, the debt is fully secured by valuable land.  In the event of default, I will foreclose (if required) and immediately resell or hold until favorable market conditions and terms can be realized.

You could then borrow more cash, and continue the process, by which time you are operating a highly leveraged cyclical business which is likely to make you yearn for a return to building whatever it is that you currently build for the blue jackets.  

It is not my intent (nor is it required) to perpetuate this activity with borrowed funds.  My other real estate holdings will be leveraged, but only to conservative levels, consistent with safely maximizing returns.

 

[kcowan]

Yup this sounds like a way too much work for me, HB. True you are your own boss. But when I was my own boss, I found I was working for a tough task master.

It is important not to confuse active real estate investing with other forms of equity investments. There are part-time jobs that can generate nice income & flexibility (e.g. work from home/anywhere) that require much less risk than active real estate.

That being said, your returns should be higher.

 

[califdreamer]

  Which of the boards here do you gravitate to when you want to talk about treal estate? 

Usually FIRE and Money.  There are a number of RE investors who regularly contribute to the board, some with pretty sizable portfolios and some who have expertise in fixing and flipping... two things I wish I had 

 

[hellbender]

Go Hokies!!!!  I like you already.

Looked at your military background and Hokie reference.  Did you know or have you heard of a Hokie killed in Iraq named Nick Mason?