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My FIRE Plan, looking for insight
Old 06-22-2010, 04:13 PM   #1
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My FIRE Plan, looking for insight

I am currently in my lower 20's and a military officer. I plan on leaving in a few years and I have what I feel an extreme FIRE plan that I'd like some feedback on. I am currently married and my wife and I would like to have our first child post military.

My plan is to buy several 4-6 unit apartment complexes through the next few years. I do NOT plan on actively managing them, but instead hiring a management company to handle the grunt work. This is for two reasons, (1) I have no interest in actively managing them and (2) I plan on working a full time job and would rather spend as little time as possible in the day to day operations of these properties (although I am well aware I cannot be completely hands off and I will still treat this like a business).

From what I have researched, these type of multifamily units are the best for the long term. Your income from them is not solely based on one tenant and you can actually turn a high net operating income with several tenants. To go further into my plan, I would like to have a total of 5 or 6 of these buildings and have them paid off in no more than 15 years. I will do this by taking extra income from the properties and applying it directly to the mortgage. Once these are paid off, I would either sell them for their current value or hold on to them and just collect the rent and retire off either the lump sum or the monthly rental income depending on the current markets.

I know this is a somewhat simplified plan but it is still a working plan and is why I'd like to hear your feedback. Constructive criticism welcome. Anyone with experience in real estate please feel free to put me in my place if this plan doesn't seem realistic.

The reason I say this is sort of an extreme FIRE plan is because the goal would be to retire before age 40. Thanks in advance!

To summarize my plan:
-Accumulate 5 or 6 apartment complexes of 4-6 units in each
-Have a management company run the day to day operations so I can maintain another job
-Have them paid off in 15 years and retire off the lump sum sale of them or off the rental income depending on the current market.

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Old 06-22-2010, 04:41 PM   #2
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Personally, I think the weak link is the planned use of management companies. Do you have any experience with rental real estate?

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Old 06-22-2010, 04:48 PM   #3
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Originally Posted by brewer12345 View Post
Personally, I think the weak link is the planned use of management companies. Do you have any experience with rental real estate?
No I don't which is another reason why I'd like to use one. They usually charge between 8-10% of monthly rent as a fee, so as long as the mortgage is still being paid, no issue, plus it frees up my time. Having to deal with potentially 30 tenants is a full time job by itself.
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Old 06-22-2010, 04:52 PM   #4
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You will need the advice of calmloki, our resident expert landlord. He used to do all the maintenance himself, and just recently recruited the help of an apprentice.

Other people have done well with RE rental, I am sure. Still, there's gotcha in there somewhere.
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Old 06-22-2010, 05:07 PM   #5
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I dont know how much you plan to put down on each building, but it could be a little tight the first few years expecting to be able to cover all your expenses, mortgage, pay for a rental mgt company, and save up for the next down payment. I have no experience in this personally, but my parents did. It took them a few years to begin seeing the profits - but they did see profits. Of course, then came the headaches of keeping the units filled.

A lot will depend on how much you invest in the building up front (to keep your mortgage down), how much mtc it needs in the next few years, and how full you can keep it. I have seen this succeed and I have seen it fail miserably. Bottom line is I dont think it is as easy as it sounds (or a lot of people would be doing it) - but others have done very well by it.

My own experience, we rent out a house we inherited, but only because I am too cheap to sell it. Everything is pure income, as there is no mortgage and minimal expesnes. But frankly, it has been a real pita....and we have a rental mgt compant overseeing it. Keeping tenants and/or getting rent on time is not always easy, especially in this economy. But I also guess it depends on where you are buying and the rental rates for your area.
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Old 06-22-2010, 05:28 PM   #6
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Here are some older threads that might prove useful

Rental income to FI RE earlier
Rental property management companies?
Investment Real Estate question....
Buying rental property in 2008/2009

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