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Old 12-17-2015, 10:28 AM   #21
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Welcome Blaineatk,

Good advice on investing above.

On building your own house, a few thoughts. At your age, I would start with remodeling the homes you are thinking about renting. You can live in them as you remodel if you want. You also mentioned a possible marriage in the near future. Building your own home can be very hard on a marriage. I don't think it would be a good thing to do while starting a life long relationship.

I am currently in the middle of building my own home and it is pretty much all consuming. For me it is OK because I am retired and single. If you plan your home, when you get to the end of the planning, from my experience, double both the time and costs and you will be much more accurate in the final result.
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Old 12-17-2015, 10:52 AM   #22
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Here's another great little "beginners" (and not so beginners) book from William Bernstein. It's free, actionable, is a quick, easy read, and covers all the basics.

https://dl.dropboxusercontent.com/u/...0You%20Can.pdf

Good luck!
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Old 12-17-2015, 11:12 AM   #23
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Welcome Blaineatk,

Good advice on investing above.

On building your own house, a few thoughts. At your age, I would start with remodeling the homes you are thinking about renting. You can live in them as you remodel if you want. You also mentioned a possible marriage in the near future. Building your own home can be very hard on a marriage. I don't think it would be a good thing to do while starting a life long relationship.

I am currently in the middle of building my own home and it is pretty much all consuming. For me it is OK because I am retired and single. If you plan your home, when you get to the end of the planning, from my experience, double both the time and costs and you will be much more accurate in the final result.
As of right now, I already have the property that I am intending on building. I have been working with an architect for a while now and the plans for the house are pretty much finalized and paid for as well. My long time girlfriend (of 12 years) has been pretty involved in it as she is pretty excited about it as well.

Also, with my job being as it is with a lot of downtime, I am able to undergo a lot of the process while I am away at work. Then while I am home ( I am only gone 6 months a year) I am able to do a lot of stuff while she is at work or touring.

The costs are what has me intimidated. The location that I live in is a fairly expensive place to live but I love the area due to the laid back, beach lifestyle and the people. There are a lot of successful people around me and they have taught me a lot about making a successful path with your life. Most of the knowledge that I have gained from many of the people I have met has been invaluable! The costs to build out here are significantly higher than other areas though. Many builders from outside of the local area will raise their prices when they find out where you are trying to build. The whole process seems evasive to me when you start discussing cost to build. When I am able to begin the construction process I want to have an "out the door price" so there aren't any surprises. I don't want any extravagant house and neither does my significant other, my house plans are simple and smaller (only 1300 Sq/ft). This is not to say that I want to live in a shack either haha. If I can get my house completed for around 170k to 180k I would be happy. With my property not having any debt owed on it when construction begins, I think I would be in a good spot to use the land as my down payment to minimize the out of pocket expenses. What do you think about that idea?

As far as the time goes, it is not a huge issue to us. I know it is not for me and she says it isnt for her either. She has been through a lot of time with me so I think she is here to stay. My work used to have me absent for about 9 months a year. She didn't like it but she worked with me on it until I was able to advance and get an even time schedule and now only work 6 months a year.

As far as the financing on the construction, the bank I was intending on going with told me that I would make "interest only payments" until the the construction is completed. I personally, did not think that was a very good deal but as I looked around I was finding that most places did this! The lady told me that it was to help the out of pocket expenses until occupancy was possible so that you were not spending a lot of money on rent for a place to stay and a mortgage payment on a house that you are not able to be in yet.
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Old 12-17-2015, 11:14 AM   #24
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Here's another great little "beginners" (and not so beginners) book from William Bernstein. It's free, actionable, is a quick, easy read, and covers all the basics.

https://dl.dropboxusercontent.com/u/...0You%20Can.pdf

Good luck!

That is short! I can finish that QUICK!

Thanks for the link!
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Old 12-17-2015, 11:58 AM   #25
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Have you considered a modular home? You bring your plans to the builder and they build the home in modules that are then assembled on your site. We have had two nice homes here on the lake that went that way. The cost is usually lower than stickbuilding because the building is done in a factory (no weather delays) and the quality is as good or better than stick built. I would think modular would work particularly well if your house is near the beach and going to be on stilts.
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Old 12-17-2015, 12:12 PM   #26
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I have actually considered the modular homes but the area I am in has restrictions that do not allow them. Though we do not have an HOA, the county has the restrictions for my area. I am building an elevated home on pilings since I am within view of the water and in a hurricane zone.

I really wish that I could get a modular, some of them are very nice! One issue I have seen with the modulars though is that they do not seem to appreciate in value as a regular stick built home will. This seems odd to me as from what I understand, the construction is regulated and built with more oversight. In my mind they should equally appreciate, correct?
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Old 12-17-2015, 12:26 PM   #27
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............What I was attempting to describe by passive income was something like a rental income or another avenue that didn't require my physical, active involvement..........
I don't think many here who do rentals would agree with your definition of passive. Unless you hire a manager (which is in itself work, and an added expense), rentals take active physical involvement to attract and select tenants, protect, maintain and refurbish the properties, and evict the occasional flake.
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Old 12-17-2015, 12:41 PM   #28
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That is true, I am fairly familiar with the process of supplying rentals and have friends who do maint work on rentals. With the right property I believe I could make money. I do not believe that it will be my exit from my real job but if I can slowly acquire enough properties I think I would be able to make a solid income stream to the point where when I had a vacancy, the other properties would make up the difference for the lost rental income. If that makes any sense.

I think the acquisition would be slow in the beginning but if I was able to get a couple they could potentially compound my ability to gain the next one. Or is my mind out running the reality of the situation?
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Old 12-17-2015, 03:01 PM   #29
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........ Or is my mind out running the reality of the situation?
There is no doubt that one can make money in rentals. The question was whether it was a passive, i.e. not physical, active involvement kind of endeavor. I think it is more work than, say, yearly balancing my Vanguard account.
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Old 12-17-2015, 03:02 PM   #30
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For your investing education: https://www.bogleheads.org/

For your interest in rental housing: Mrlandlord.com Landlord Discussion Board

If you take the time to educate yourself on the above two forums, you will be ahead of 99% of the population regarding investing and landlording.

Good luck

PS: Don't mess with building your own house until you master the above.
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Old 12-17-2015, 10:44 PM   #31
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There is no doubt that one can make money in rentals. The question was whether it was a passive, i.e. not physical, active involvement kind of endeavor. I think it is more work than, say, yearly balancing my Vanguard account.
I agree with that, I imagine it would be more work than the contribution and balancing. At least it sounds like it would be. I know I have very little involvement in the contributing to mine as it is just an auto deduction from my account each month.

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For your investing education: https://www.bogleheads.org/

For your interest in rental housing: Mrlandlord.com Landlord Discussion Board

If you take the time to educate yourself on the above two forums, you will be ahead of 99% of the population regarding investing and landlording.

Good luck

PS: Don't mess with building your own house until you master the above.
Thanks for the links! I have actually been checking the Bogleheads site. Another member sent me a message on here about it. They seem to have a lot of beginner information and where to start. They also seemed to cover more than just the basic investing ideals and including when you are financially ready to begin investing.

What is the reasoning in not building until having the above mastered? Not contesting your information, just curious as to the reason? Is it wise to continue renting from someone else?
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Old 12-18-2015, 04:44 PM   #32
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So, today I was able to get some information from my office about our 401(k) program and was able to login and see what fund I was contributing to. This is the one that I am currently using for my 401k Vanguard Target Retirement 2050( VFIFX Vanguard Target Retirement 2050 Inv Fund VFIFX Quote Price News ), the expenses are fairly higher than a couple of the others that I have available to me but do not seem to be a lot higher. It has about 9.6% bonds which are not a huge necessity at this point due to my age I am thinking. This also has an 18% turnover

One of the ones that I found myself interested in was the Fidelity Spartan 500 Index Advtg ( FUSVX Fidelity Spartan® 500 Index Advtg® Fund FUSVX Quote Price News ). The fees are a little less that a third lower 0.05% vs 0.18%, has no load, and has a lower turnover. From what I have been reading, an actively managed fund rarely beats the market and even the low percentage of the ones that do beat it can simply eat up the difference in fees and load. I am thinking that the lower turnover is due to the latter fund being an index. This has no bond content which is something that I should begin to add as I age.

Am I correct? I guess what I am looking for now is to ensure that my line of logic is making sense.

I think with the small amount of reading I have covered so far, I feel that I am already progressing and able to make decisions. Hopefully the right ones
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Old 12-18-2015, 05:00 PM   #33
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So, today I was able to get some information from my office about our 401(k) program
Both of those funds are quite good--you are lucky to have them offered in your 401K program (many programs offer only funds with high fees). Either would be fine for you. The Vanguard Target Retirement 2050 is a great "one-stop" answer for most people, and even though you have many years to go, having 10% in bonds is fine--it decreases your expected total portfolio returns only very little and will help reduce year-to-year volatility. The Fidelity Spartan 500 is a very good US equity fund, but its stock exposure isn't quite as broad as those in the Vanguard fund (it's just got large-cap US stocks, not the smaller companies). One reason the Vanguard fund may show slightly higher expenses than the Fidelity Spartan 500 fund is that it's a little costlier to hold/trade some of the smaller stocks, the foreign stocks it has (and which you'll want--if you believe in diversification) and bonds in the Vanguard fund. But those smaller stocks can be expected to have slightly higher returns (overall--averaged over many years) than the S&P 500. Also, note that the Vanguard target date fund will slowly over many years, increase the %age of bonds. This is a traditional approach that many investors use, reducing their stock exposure as their timeline to retirement decreases.
I would leave things just as they are until you can read more and build an asset allocation plan that covers your tax-deferred and taxable accounts, and do everything at once.
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Old 12-18-2015, 05:53 PM   #34
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Blaine,
FUSVX is a good choice. I agree with the idea that you are young and would do well to focus on large cap US in your 401k. Do you have a small cap fund there?
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Old 12-18-2015, 06:02 PM   #35
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On building your home:

Sounds like you have it pretty well in hand. If you are working with a general contractor, the price may go up in your area because he has to pay more for skilled and unskilled labor.

If I were in your shoes, I would have everything nailed down including the kitchen sink, appliances, fixtures, etc. Then don't change a thing during construction. I would also make sure the contract had start and complete dates during the time you are in the area. Six months should be plenty of time to complete a small home especially if there will be no changes.
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Old 12-18-2015, 11:24 PM   #36
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I have actually considered the modular homes but the area I am in has restrictions that do not allow them. Though we do not have an HOA, the county has the restrictions for my area. I am building an elevated home on pilings since I am within view of the water and in a hurricane zone.

I really wish that I could get a modular, some of them are very nice! One issue I have seen with the modulars though is that they do not seem to appreciate in value as a regular stick built home will. This seems odd to me as from what I understand, the construction is regulated and built with more oversight. In my mind they should equally appreciate, correct?

Check out this web site - you might find their offerings interesting

I believe they can be built on pilings and they have high wind load versions of their stuff


http://www.rocioromero.com/LVSeries.html

http://www.rocioromero.com/faq/LV_series_FAQ.pdf


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Old 12-19-2015, 09:00 AM   #37
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I have actually considered the modular homes but the area I am in has restrictions that do not allow them. Though we do not have an HOA, the county has the restrictions for my area. I am building an elevated home on pilings since I am within view of the water and in a hurricane zone.

I really wish that I could get a modular, some of them are very nice! One issue I have seen with the modulars though is that they do not seem to appreciate in value as a regular stick built home will. This seems odd to me as from what I understand, the construction is regulated and built with more oversight. In my mind they should equally appreciate, correct?
I would think so, but there is a lot of ignorance and misunderstanding out there. Having been through a couple modular factories, they are essentially stick built in a large building. The only trick is making sure that the modules mate correctly in the field. They are more prevalent in our area and I think the perception of them is changing. The two I am most familiar with are pretty high end lakeside houses.

I think a case could be made that they are more solid because they tend to use both glue and fasteners more frequently than stick built homes.
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Old 12-19-2015, 11:37 AM   #38
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.......... they are essentially stick built in a large building........
Such a ridiculous concept. I always have my cars assembled in my driveway.
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Old 12-19-2015, 11:49 AM   #39
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With modular, your house (or the materials used to build a house) doesn't get rained or snowed on... that's a plus in my mind.. not to mention the time wasted removing snow or water and letting things dry out before proceeding.
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Old 12-20-2015, 02:51 PM   #40
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Just a couple quick things, Blaine. First, congrats on your income, and kudos for your attention at your age on building wealth for the future. I am not going to make any specific suggestions, as you have gotten a lot of very good advice above. I mainly wanted to give an additional vote that this advice is good, and you will do well to absorb and apply the information to your situation. Also, part of learning is doing. You will get better at investing as you get out there and gain experience with it. I say that as someone who has made mistakes but still got to FI. Good Luck, and don't think you have to be 100% right with every decision to succeed.
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