New Guy

[hotwired]

Hi
I'm 42 and retiring at 50. Have enough now to retire but want to retire comfortably and frankly, at 42, I only work 15-20 hours per week and I have fun doing it so I don't mind the wait.

I have a financial planner who is "fee only" and has us in a basic "asset allocation" mix, 70/30 stock bond and mainly index ETFs, and a scattering of individual stocks. I pick stocks in my own ROTH account which is only around 30k and have had mixed results and am still in the process of deciding whether or not I even want to pick stocks OR simply manage an asset allocation strategy with mutual funds and etfs.

I am toying with the idea of investing slowly in single family homes. We had neither the bubble nor the bust up here in Central Maine and I can still get decent 2 BR 1BA homes for under 100k. We don't need the income, so in talking to a trusted agent I know, he told me that single family homes to him offer a nice long term gain (and cash flow once mortgage is amortized) with MUCH LESS hassle than even 2 to 4 units. (lower turnover, higher class of clientelle, etc).

Thanks for anything wisdom you can impart to someone in my enviable position, who wants to make it even more enviable. And I am always here for the same.

 

[Martha]

Welcome to the forum Hotwired. So what do you do that you only need to work 15-20 hours a week? That is an enviable position. The last two years before I retired I worked part time and it sure gives you a taste of real life.

I don't really understand why you would want to invest in single family homes. Even if they are less work than multi-unit properties, they are still work. We used to have rental property. Tenants, even good tenants, can be hard on a house. After a while it just starts to look like rental property. Other posters here have had more experience with single family rentals, so they can give you the benefit of their experience.

One upside is that you deduct your expenses and get a depreciation deduction that you can use to offset income. But you will have to recapture the depreciation later on when you sell and pay taxes on that gain(at a 25% rate) so you don't get long term gains treatment for the entire gain.

 

[Milton]

I don't really understand why you would want to invest in single family homes. Even if they are less work than multi-unit properties, they are still work. We used to have rental property. Tenants, even good tenants, can be hard on a house. After a while it just starts to look like rental property.

FWIW, I agree. As Martha suggests, 'less hassle' is still 'some hassle'.

Since you don't need the income, I'd suggest avoiding the headaches ... there are other, easier, ways to invest your spare cash.

 

[Rambler]

Been there, done that, got the t-shirt, glad to be rid of the headaches and hassles. Not likely I will ever invest in rental RE again. I would prefer my FIRE income to be from bond interest and stock dividends than rental income. You probably make more with less hassle.

REITs on the other hand, which I am beginning to investigate, may make a part of my portfolio some day.

R

 

[hotwired]

Thank you, hitting home

So the impression I'm getting, both from your responses, and my own thoughts during the past year is "If you're young (30s or so) and only have $50k or so, and want to have the MOST money you possibly can when you're retired, rental realestate MIGHT be the best bet. But if you're ALREADY all set, and are just looking to invest in realestate to "diversify", it might be best to reconsider."

To answer the "how do I only work 15-20", I sort of accidentally and intentionally made it happen, if that makes sense. (no) - I own a landscape business and I'm experimenting with sub contracting. I have one key employee and the rest are subs, so I tend to help out labor wise in the spring, then by mid June, I'm working 10 hours or so "behind the shove" and a few behind the computer. Then I actually own a small web design company and only really work when I get support requests, new designs or am feeling ambitious and want to beef up my marketing. I'm really loving the "passive income" idea and am working realistically on ways to streamline and delegate more and more, BUT keeping the focus of excellence in front of me too. (it's easy if you're not careful to just "pawn stuff off" and call it delegating).

Thanks again for all your responses. I'm going to like this forum. People who are really there, either retired or planning to, and that have "gone before me", so to speak.