Passive income = the best

[gstillson]

I see from your sig that you retired with $300,000 which is $100,000 more than we did.

I do active investing to produce ~$45,000 to $80,000 a year from our $200,000 nest egg. It has worked for the past three years which doesn't prove much but we have withdrawn and spent more than what we started with.

I spend maybe 2 to 3 hours a day on it, which isn't really passive I guess. But I don't have to unclog toilets.

[Amethyst]

In any discussion of landlording, tenants and clogged toilets inevitably appear in the same sentence. Funnily enough, the one problem we never actually had, in 25 years of landlording, was a clogged toilet.

Clogged toilets would have been a snap, compared with what we did deal with...

[hesperus]

And so we hear from the Jordan Belfort of real estate.
When's the book coming out?

[Chuckanut]

Quote:

Originally Posted by gstillson I do active investing to produce ~$45,000 to $80,000 a year from our $200,000 nest egg. It has worked for the past three years which doesn't prove much but we have withdrawn and spent more than what we started with. I spend maybe 2 to 3 hours a day on it, which isn't really passive I guess. But I don't have to unclog toilets.

So you work from home, part-time and earn 45-80 grand a year. Not a bad job.

[SumDay]

I inherited property from my parents. If you love your children, you won't leave them real estate. There is NOTHING passive about it - at least in the model my dad followed.

[Sojourner]

Quote:

Originally Posted by ncbill Residential rental real estate is not what I'd consider passive, either. As a former member here demonstrated, the best returns on the above come from doing all the work yourself (demo, roughing in plumbing/electrical, screening tenants & collecting payments, etc.) Paying a management company usually cuts into the returns enough that you might as well just put the money in a stock/bond portfolio instead.

+1

I sat down a few years ago with some friends who were renting out a townhouse they owned, and we went though all the financials trying to decide if they should sell the property and put the proceeds into the market or continue to rent. It turned out to be very close to a wash... with the rental option generating just slightly more income. Considering all the hassles they told me that they've had to deal with over the years, I can't imagine choosing that over simply investing the money in the markets.

Clearly, some prefer the rental income approach, and it seems to works for many folks and make them happy. But I prefer my truly passive income from diversified investments in the equity & debt markets, especially considering I'm not handy enough to do most of the maintenance and repair work myself on any rental properties I'd be trying to maximize profit from.

[Huston55]

Quote:

Originally Posted by hesperus And so we hear from the Jordan Belfort of real estate. When's the book coming out?

Right after he stays next door to Tommy Chong in an Asian hotel.

And then...The Movie!
Entitled: “The Bathroom” or “The Fox of Fix-Up Alley”

[audreyh1]

Quote:

Originally Posted by pb4uski Lucrative yes.... passive... not so much.

+1

Income from investments with no active trading - now that’s passive!

[daylatedollarshort]

Our own house takes a fair bit of work so personally I can't really see how a second house would be passive income. Every year we do at least one big project like the plumbing or roof. Even with hiring contractors we have to research contractors, get quotes, review the contract, etc. and it all takes time. Then there are all the odds and ends issues like clogged toilets or broken light switches. Electricians are in high demand in our area right now so it took many calls for a recent minor repair as most of them were booked up months in advance and only taking on bigger jobs.

We know a couple who had a murder suicide in their rental. They found out from watching the nightly news, seeing crime scene tape around a house and realizing it was theirs. Other people we know have had issues like being sued by a tenant or had issue with non-payment.

Good work to those of you who have rentals and don't spend a lot of time managing them. The returns seem to be pretty amazing with good tenants and the right properties.

[audreyh1]

Quote:

Originally Posted by pb4uski Passive is doing next to nothing... not spending time on the phone fielding call about problems from tenants and co-ordinating repair work with contractors.... not as passive a stocks and bonds using index funds... rebalancing once a year (or even less) so an hour a year... it doesn't get more passive than that... no tenants or failed sewer pipes or frozen pipes to deal with.

Gosh - so passive you don’t even have to talk to any property management company!

[travelover]

Another my investments are better than your investments thread.

[pjigar]

No pain, no gain. But IMHO the pain is worth the gain when it comes to rental. There is no free lunch but getting double digit (as in over 20%) return by spending handful of hours/days a year is not a bad deal. But then again, the bad press of rental is what keeps the lucrative asset class to the chosen ones!

[97guns]

Quote:

Originally Posted by gstillson I see from your sig that you retired with $300,000 which is $100,000 more than we did. I do active investing to produce ~$45,000 to $80,000 a year from our $200,000 nest egg. It has worked for the past three years which doesn't prove much but we have withdrawn and spent more than what we started with. I spend maybe 2 to 3 hours a day on it, which isn't really passive I guess. But I don't have to unclog toilets.

My rents generate $68k a year, the gains on equity alone has turned $300k into around $1.2 mil in 8 years, there’s few things that I love better than traveling and one is money.

[Sojourner]

This thread reminds me a bit of the one where the precise definition of "retired" was being debated. It seems to me that if you've outsourced all the work and effort of keeping your rental properties rented and maintained and serviced, and you're simply receiving income from it passively, then that would certainly qualify as retired. But if you're spending several hours per week doing things like screening tenants, working with A/C or plumbing contractors or electricians, and a myriad of other things involved with keeping the rental properties in good shape and keeping the money flowing in, then that's not what I'd call retired. You are a landlord, and that's how you're earning money on which to live. If you don't need that rental income, and it's just gravy on top that amounts to some nice extra spending money, then you have a hobby that happens to pay you fairly well. I know for myself that it would feel like a job.

[BreathFree]

Quote:

Originally Posted by travelover Another my investments are better than your investments thread.

+1
Ignore the labels and follow your plan, whatever that may be.

[Winemaker]

Again the never ending conversation about rental investments vs. stock/bond/cash investments. I am diversified into all, but I have control of my rental business and income.

It is not for everyone; and I don't say that it is. Real estate has been very profitable for me over the past 19 years, and I expect it to continue. I did my own maintenance in the past to save costs; I was able to teach my DS the ins and outs, and he has a rental property now, too. I can afford to pay someone now to do my repairs, if needed. I have been insulted on this forum for my freedom of choice.

We see threads all the time about moving income around to be able to qualify for ACA freebie subsidies. DW and I will never qualify for ACA subsidies, but rental income property allows me to control my income for tax purposes legally.

As far as a 2 o'clock call about a plugged commode, it has never happened to me. If the commode was working when you moved in, then your lease says, you put something in the commode that plugged it, your dime to correct. As far as cutting grass at my units, well, I enjoy gardening and yard w*rk.

Again, in order to use the benefits of the tax laws, property owners are required by law to be involved in the operation of the rental property.

[Another Reader]

Quote:

Originally Posted by 97guns My rents generate $68k a year, the gains on equity alone has turned $300k into around $1.2 mil in 8 years, there’s few things that I love better than traveling and one is money.

Where are your rentals located?

I don't love money. I love the security and peace of mind money brings.

Leverage is great when you time it properly or just get very lucky. You did well by buying low and leveraging when you did. However, $68k in rent does not net a lot after expenses and mortgage payments. How do you intend to grow your income?

[pjigar]

Quote:

Originally Posted by Another Reader Where are your rentals located? I don't love money. I love the security and peace of mind money brings. Leverage is great when you time it properly or just get very lucky. You did well by buying low and leveraging when you did. However, $68k in rent does not net a lot after expenses and mortgage payments. How do you intend to grow your income?

My guess is that 68K is net.

[neihn]

Quote:

Originally Posted by Freedom56 You mean Ca Phe right? It is good. I prefer the bia.

+1 for ca phe and bia in Vietnam. No worries about 16k, you could drown with $1k :-)

[kgtest]

Quote:

Originally Posted by Amethyst In any discussion of landlording, tenants and clogged toilets inevitably appear in the same sentence. Funnily enough, the one problem we never actually had, in 25 years of landlording, was a clogged toilet. Clogged toilets would have been a snap, compared with what we did deal with...

when I owned my six plex, I swear I replaced all six toilets. Buy new and hold, don't buy old and hold lol. in all fairness a few towhomes with HOA haven't been touched in years. Rents just keep showing up direct deposit into checking.