ER delayed?

[67walkon]

I was planning on going part time January 1. One of the remaining issues was getting a longer term lease on some rental commercial property. Well, yesterday, the tenant notified us it was leaving. We had a month to month lease so there is nothing we can do. $72,000 a year is gone, plus we have to maintain it until we sell it.

The good news is that I had based our planning on getting that rent through 2015 and then selling the property for around $500,000. Someone is already interested and I'm going to try to get around $600,000 for it, which is below assessed value. Unfortunately, it will take a while, even if we sell it quickly, to get that money invested in decent income producing muni bonds or dividend paying stocks. If we get 5%, we've lost a good bit of income, but not in the long, long run, just in the next 3 years.

Easy come, easy go. Maybe I will have to work another year or so full time, but it isn't the end of the world. We have no debt on the property, we have plenty of cash and the only debt we have is a small mortgage on our house that will be paid off in about 6 years.

But today wasn't quite as rosy as last week!

 

[walkinwood]

Good attitude. Hope it all works out well for you.

 

[haha]

Unfortunately, it will take a while, even if we sell it quickly, to get that money invested in decent income producing muni bonds or dividend paying stocks. If we get 5%, we've lost a good bit of income, but not in the long, long run, just in the next 3 years.

Best of luck. But 5%? Unless there is a market crash, that would not seem to be in the cards.

Ha

 

[67walkon]

haha, we're consistently getting a combined rate of return of a little above 5% for the last few years. And that includes about 50% of the investments being in tax free muni's.

Do you think 5% is unattainable long term? By the way, we do all our financial planning using a 4% return, but we've been beating it.

 

[haha]

haha, we're consistently getting a combined rate of return of a little above 5% for the last few years. And that includes about 50% of the investments being in tax free muni's.

Do you think 5% is unattainable long term? By the way, we do all our financial planning using a 4% return, but we've been beating it.

Everything depends on yields available at entry. Sometimes, 15% /year total return is possible, sometimes very much less. In my view, which I think is a minority view on this board, returns are not more of less fixed over time. Some entries while feeling high risk, are actually very low risk. These low risk entry zones also correspond to high returns over time.

My comment was to what I thought you were saying about a 5% yield, not total return. I think to get this one would likely have to take market risk, or duration risk or maybe even solvency risk, and it might be difficult to get adequate diversification.

If long term munis are a major part of your allocation, you are accepting meaningful duration risk.

Ha