Another newbie

[Mike Johnson]

Hi all,

I am in a situation similar to others on the board but a bit different from most. I work overseas for a foreign company so my retirement is basically entirely in my hands. I doubt I will get much, if anything, from social security.

I do not want to get into rental properties to get rich or to do as a full-time job. I just want to learn how feasible it is to invest in real estate as retirement income. I would buy and hold, have the property managed, and would not really be concerned with appreciation. If there's some that's a plus but not something I want to rely on.

I have a house back home in WA. I bought it thinking I would live there forever so probably paid a bit more than it was worth and it's about as far from the ideal rental property as you can get. I've had it for five years, tried to sell it but would have lost too much money, so now it's sitting maybe breaking even if I'm lucky.

I could afford to put 20% down on a 50-60k property every year. How much could I reasonably expect in rental income from that kind of property? It's easy enough to estimate mortgage payments and I have an idea about expenses, but I've never lived in a place with $60k houses, heh. Also I am living in Beijing right now and it's throwing off my sense even more. Houses here rent for a tiny fraction of their worth, to the point where many owners just leave them vacant. Not worth it to furnish it and deal with tenants for such a small amount of money.

My goal would be something like:

Next 5 years, buy a house each year with 20% down and 25-year mortgage

Next 5 years: buy a house each year with 20% down and 20-year mortgage

Next 5 years: buy a house each year with 20% down and 15-year mortgage

With the goal of the rental income from the first houses helping to make the mortgage payments on the last houses.

That would put 15 houses paid off around the time I plan to retire, plus the house I already have.

I would be OK if I got no income between now and then, if the houses were able to pay for themselves. Is that feasible? And how hard is it?

Again, I'm just looking for some security with retirement, not to get rich quick or make a ton of money.

Thanks for any help you can give.

I would be looking at turnkey properties and if anyone with experience buying them can throw me a link or an e-mail that would be appreciated.

[Marco Santarelli]

Welcome @Mike Johnson! 

Your investment strategy and approach is not only conservative, but very sound.  I like how you thought it out.

A few comments:

• With 30-year fixed-rate financing still at historic lows, you should load up with as much as you can on income-producing properties (and as soon as you can).
• With 20% down on $60,000 (+/-) you can expect to get rental income in the range of $200 to $600 per month.  $300-$400/month is very doable as we have properties in four markets today that produce those numbers.
• Your limit may be more than 10 properties.  Some of our lending partners can finance up to 16 properties per borrower (credit score).
• It can be argued that paying off your properties may not be the best strategy to maximize your cash-flow, among other benefits.

Last but not least, do NOT accept "no income" as an option.  I see far too many positive cash-flow opportunities in good markets and neighborhoods for anyone to settle for a break-even scenario.  Just don't go there.

Real estate is a get rich slow investment and with the right plan almost anyone can achieve it.

Continued success!