30 With a New Hobby in Real Estate

[srlimoges]

Ever since 14 yrs old I've disliked working for corporate america - being told what to do, when to do it, and how it should be done. Like 90% of kids I was taught to go to college, grad school, and work for someone else the rest of life. After graduating at 28 yrs old and working I've decided I want to retire ASAP and be disassociated with corperate america.

I've researched many retirement methods searching for the fastest way out. However, most popular investing strategies require at least a 10 year working minimum - way longer than I want.

Diligance in research led me to real estate, specifically the lease purchase strategy. With this method, on paper, (semi) retirement is realistically 5 years away (permanent retirement from all things corporate america).

I'm now 30, own 3 investment properties that net a combined $1000 per month, and am on pace to 'retire' by 34.

Back to the post beginning, how come the popular retire methods preach stock/mutual fund investing over real estate for retiring early?

***disclaimers - obviously it's wise to 401k invest if there's a company match but why invest beyond that? Also, purchasing real estate requires loans, which isn't true FI, but retiring early (and isn't RE the tangable goal?)

 

[REWahoo]

Back to the post beginning, how come the popular retire methods preach stock/mutual fund investing over real estate for retiring early?

***disclaimers - obviously it's wise to 401k invest if there's a company match. Also, purchasing real estate requires loans, which isn't true FI, but retiring early.

I think you just answered your own question.

 

[Texas Proud]

Sounds like the start of another spam poster wanting to preach the way to financial bliss...


Let me hurry up and pop the popcorn before it starts

 

[srlimoges]

I think you just answered your own question.

I just updated the post for clarification.

 

[brewer12345]

Thanks, I already have a full time job, a long commute, and a family that includes two small children: I do not need a second job (landlording). My investments do not require me to borrow money nor do they call me up and complain that the toilet is stopped up.

There are plenty of people who have done well with RE, but its not for me. Maybe after I ESR I will dabble, but it would have to be a "gimme" property.

 

[srlimoges]

Sounds like the start of another spam poster wanting to preach the way to financial bliss...


Let me hurry up and pop the popcorn before it starts

No offense but isn't that what your post was... and now this post is - spam.

Seriously, why do advisers evangelize the stock market as the best and fastest avenue to retirement? Is it a case of teach what you know and thats what advisers know?

There seems to be gapping holes in knowledge/communication of how to retire early. Working for 'the man', saving, and mutual fund investing is only one way to retire (in 10+ years). Thats certainly not for me - I don't want to spend 10+ years being told what, when, and how.

 

[srlimoges]

Thanks, I already have a full time job, a long commute, and a family that includes two small children: I do not need a second job (landlording). My investments do not require me to borrow money nor do they call me up and complain that the toilet is stopped up.

There are plenty of people who have done well with RE, but its not for me. Maybe after I ESR I will dabble, but it would have to be a "gimme" property.

I definately respect that. You've achevied many life goals I'm still aiming for.

I'm single and thoroughly enjoy spending free time retiring sooner(if I had a wife and/or children that be time priority #1).

Just to debunk the lease purchase myth, there's little landlording involved. My tenents agree to fix all required repairs including hot water heater and furnace as they're purchasing the property. That means little time and energy from me. However, I do spend diligence finding an appropriate candidate for lease purchase.

Is Brewer's reason for stock investing why everyone is steered in the same direction. The one-size-fits-all answers seems inappropriate.

 

[Letj]

No offense but isn't that what your post was... and now this post is - spam.

Seriously, why do advisers evangelize the stock market as the best and fastest avenue to retirement? Is it a case of teach what you know and thats what advisers know?

There seems to be gapping holes in knowledge/communication of how to retire early. Working for 'the man', saving, and mutual fund investing is only one way to retire (in 10+ years). Thats certainly not for me - I don't want to spend 10+ years being told what, when, and how.

I understand completely where you coming from. I've been working for the corporate world for 22 years and had to grin and bear it this long. I am not predisposed to playing politics and continually biting might tongue so needless to say, I will get out as soon as I can. You can do it in real estate (which is what I've been working on for some time now) but it's hard work and persistence. It's not as easy as the gurus make it; just remember to buy right because you can lose your shirt.

 

[srlimoges]

I understand completely where you coming from. I've been working for the corporate world for 22 years and had to grin and bear it this long. I am not predisposed to playing politics and continually biting might tongue so needless to say, I will get out as soon as I can. You can do it in real estate (which is what I've been working on for some time now) but it's hard work and persistence. It's not as easy as the gurus make it; just remember to buy right because you can lose your shirt.

Quoted for truth!

I'm no guru or even apprentice, but I do invest lots of planning/preparing time. The real estate team does the work and I make money when they do. Without them or my real estate agent I'd be shirtless, maybe even skinless!

My goal is to aquire 10 lease purchase properties and suvive off the net rents. As each property sells I'll gain 10% to 15% net that will be rolled 1031 exchange into the next property downpayment. So mortgages decrease and net rental income increases. ...it's just a breathing theory so far.

 

[REWahoo]

Is Brewer's reason for stock investing why everyone is steered in the same direction. The one size fits all answers seems inappropriate.

You seem to want to pick a fight regarding equity investing. There is no right or wrong way to achieve FI or ER, so long as what you choose to do is legal. Whatever floats your kayak.

 

[srlimoges]

You seem to want to pick a fight regarding equity investing. There is no right or wrong way to achieve FI or ER, so long as what you choose to do is legal. Whatever floats your kayak.

I don't want to instigate, just challenge popular belief. Nothing is gained if we blindly except advise without understanding why.

And I agree with your last statement! We must understand the retirement whys to pick an optimal path (mine being retire ASAP). Brewer's plan fits his needs, but does not fit mine. And vise versa.

I feel people are pushed on the stock path by default (by 'experts' and experts) before all options are considered.

 

[brewer12345]

I definately respect that. You've achevied many life goals I'm still aiming for.

I'm single and thoroughly enjoy spending free time retiring sooner(if I had a wife and/or children that be time priority #1).

Just to debunk the lease purchase myth, there's little landlording involved. My tenents agree to fix all required repairs including hot water heater and furnace as they're purchasing the property. That means little time and energy from me. However, I do spend diligence finding an appropriate candidate for lease purchase.

Is Brewer's reason for stock investing why everyone is steered in the same direction. The one-size-fits-all answers seems inappropriate.

Actually, I have probably made more money trading/investing in bonds and derivatives than on straight equities. I am a securities analyst by trade, which is why I invest in the stuff I know the most about.

 

[NW Landlady]

While I don't use the lease purchase process, I think OP has made good points that real estate investment is a great alternate to stocks/bonds. Not everyone has time for this of course, but IMO it has definitely beat out the stock market over the past 10years. At least in my area rental properties have done particularly well. But there are definitely risks like everything else...just not as volatile as the DJIA.

 

[CuppaJoe]

Ever since 14 yrs old I've disliked working for corporate america - being told what to do, when to do it, and how it should be done....

Um, I’m a little confused. You joined this forum yesterday and signed off on these rules:

http://www.early-retirement.org/forums/misc.php?do=sknetwork&page=tos

http://www.early-retirement.org/forums/misc.php?do=sknetwork&page=rules

If you don’t want to be told what to do, why are you agreeing to all these rules? and just so we readers don’t go nuts: Please please use spell check.

Now back to your regularly scheduled one-note play.

 

[Onward]

But there are definitely risks like everything else...just not as volatile as the DJIA.

That would be a hard sell in my town, where the average house lost 57.4% of its value between 2007 and 2009, according to Zillow.

I'm coming to believe that real-estate investors and securities investors are just wired differently. I'm in the latter group, for sure.

 

[Rustic23]

Ok, may be it's just me, but this sounds just like the guy a couple of weeks ago, that was retired at 30, with investment property, and didn't know what to do. For me the first sentence was a red flag!

"Ever since 14 yrs old I've disliked working for corporate america - being told what to do, when to do it, and how it should be done."

I know very few 14 year old's that work for corporate America. Second red flag "after graduating at 28".

 

[ERD50]

I don't want to instigate, just challenge popular belief. Nothing is gained if we blindly except advise without understanding why.

I for one, welcome alternate approaches. Gotta shake the cobwebs out of corners, and keep an open mind. So I'm glad you've brought it up. Real estate investing certainly can be a valid alternative to equity investing.

But that doesn't mean that those of us who invest in equities haven't considered the alternatives. My Dad held real estate in a few different forms, and I decided I disliked that more than I disliked 'working for the man' and taking my chances in the market. But that doesn't make it wrong for you.

If you understand the risk/reward, and are comfortable with the work it takes, sounds like you've found your path. But I think your posts are coming across to some as a bit condescending - like you are assuming that those that chose other paths are just sheep that don't know better.

Seriously, why do advisers evangelize the stock market as the best and fastest avenue to retirement?

The same reason a Ford dealer tries to sell you a Ford, not a Toyota. But it is your choice to make.

-ERD50

 

[NW Landlady]

That would be a hard sell in my town, where the average house lost 57.4% of its value between 2007 and 2009, according to Zillow.

I'm coming to believe that real-estate investors and securities investors are just wired differently. I'm in the latter group, for sure.

I am not sure what town you are in, and location location location is of major importance in RE deals. But here the stats on one of my bldgs:
Purchased 1997 - $335K - $50K down payment
Almost sold (in contract) 2010 (13 yrs later)
Sale price: $785K (could have gotten more if I sold before the bubble burst ) Invested in Major repairs: $25K - $30K over the 13 years. Monthly income net of expenses has varied from $800 - $3000/month over time.
That is a return of $420K over 13 years on initial $50K invested - not taking the monthly income into account at all, just the appreciation. These are rough ballpark figures, I apologize.

I can't think of many equity type investments that have had a return this attractive but I plead ignorance if I am in error.

The downside is that this is just another job, albeit ones own. It can be a lot of work and a pain (as well as reward) at times.

 

[ERD50]

Ok, may be it's just me, but this sounds just like the guy a couple of weeks ago, that was retired at 30, with investment property, and didn't know what to do. For me the first sentence was a red flag!

"Ever since 14 yrs old I've disliked working for corporate america - being told what to do, when to do it, and how it should be done."

Nah, it's not just you, it definitely has that narrative, set-up look & feel to it, doesn't it? You could substitute 'Doctors', 'Big Pharma' and 'special black salve' in there, and it would play about the same. But I just like to give people the benefit of the doubt - what have I got to lose?

-ERD50

 

[haha]

In a way I hate to participate in this thread, since I suspect it is just spam. But there are a lot of ways to make a good living and get ahead financially other than various real estate schemes and corporate life. Like one's own business. Some will be scalable, and have the chance of producing great wealth. Some will be just providing some goods or services efficiently on a one off scale. Today I was walking down an alley after having coffee with a friend. I saw the biggest baddest blackest Mercedes I have ever seen parked behind some storefront. I asked her whose it was-she said it belonged to the guy who ran the restuarant on the corner. One location, good but relatively inexpensive food, long tenancy in this spot, and a very fine looking Mercedes came out of it.

When I was a boy men on my street raised families of 6-8 children on a well run bar. The things that work are always changing, but always there.

I imagine that real estate would be similar. Other than getting lucky with a surging market, it comes from an eye for value, market knowledge, good negotiating skills, and lots of careful blocking and tackling. Plus a dose of luck can never hurt.

Ha

 

[ERD50]

That is a return of $420K over 13 years on initial $50K invested - ...

I can't think of many equity type investments that have had a return this attractive but I plead ignorance if I am in error.

And with survivorship bias, we could find plenty of people who can document great returns putting up $50K on a $420 investment (buying calls is one way to do it, since margin on equities is limited to 50%).

Hows this - $50K to $250K in only 5 years, and all you had to do was spend 15 seconds at the keyboard, a $10 trading fee, and watch your money grow while you sip an adult beverage over a 5 year period (maybe the adult beverage can be considered an investment expense?). Doesn't get any easier than that!

Don't get me wrong, if the RE thing is working for you that's great. But it isn't for everyone, and all that leverage has risks, and many people lost their shirt doing it and are now asking us to help 'em out.

-ERD50

 

[NW Landlady]

Well thanks ERD, I stand corrected. I think I am just too stupid to know that If I bought apple in 06 it would do so well.

DH & I have invested in stocks off & on over the past 10 years and neither of us has done well with it and have lost $$, lots of it, so it takes a talent we don't possess or can easily acquire obviously!

On the bailout, I am just as mad as everyone else about it. In fact my tax liability this year is gonna be big enough to save at least one of the banks that went under, NK!

But I would not totally blame investors. The banks gave out too much$$ without underwriting the risk like it was their own dough. I saw a lot of sleazy loans & peeps on welfare buying houses in my time and just shook my head before the crash...

 

[bbbamI]

Working for 'the man', saving, and mutual fund investing is only one way to retire (in 10+ years). Thats certainly not for me - I don't want to spend 10+ years being told what, when, and how.

Then don't.

 

[ERD50]

Well thanks ERD, I stand corrected.

My only point was to be aware of survivorship bias in anecdotal evidence. The winners tell of great results, but we usually don't hear from the losers. Well, we do hear from some of the real estate losers, because some of them are out asking for a bail out.

RE is just a very different game from stock investing, it's actually pretty tough to make any comparison between the two, IMO.

-ERD50

 

[Nords]

If you enjoy landlording then that's what you should do. It gives you a greater measure of perceived control and you can have much more influence over the process.

But that's no reason to trash the plans/goals of those who actually enjoy working in the corporate world, for whatever reason, and feel that equity investing is an appropriate mix of effort/reward.

In our case we do both equity investing and landlording. They're both simple on the face of the subject, and they're both horribly time-consuming at certain points in the process.

Just to debunk the lease purchase myth, there's little landlording involved. My tenents agree to fix all required repairs including hot water heater and furnace as they're purchasing the property. That means little time and energy from me. However, I do spend diligence finding an appropriate candidate for lease purchase.

Having been a landlord for nearly 20 years now, all I have to say is... good luck with that and enjoy it while it lasts.

On the day that you declare yourself ER'd, what are you going to do with all that real estate?