New to REI at age 60

[Troy W. Hudson]

Hi folks, my name is Troy and I'm a Christian. I'm married to a beautiful girl named Tammy and we have 4 grown kids and 6 grandkids. I just turned 60. We live in the Augusta, GA area. Our kids are spread out all over the country. We want to have the freedom to live centrally to them, work from anywhere/whenever and travel and enjoy life to the fullest and share the blessings that come our way. To leave a legacy that our kids can utilize and then pass on to the grandkids.

My day job and career for the last 40 years has been in professional media production and for the last 12 years I've been running my own professional voice over business under my name - Troy W. Hudson Professional Voice Overs, LLC. I still love what I do but I know that it is time for a change and am planning on a 7-10 year transition to not needing to work for a living. I believe from what I have learned about REI thus far, buy and hold real estate is the way to do that. Call it retirement or the next challenge!

In March 2022, my dad passed away and I became administrator of his estate which included his home which was purchased in 2003 and had a 30 year mortgage balance of around $70K. We already have a primary residence in the area with a mortgage, since we had moved to his part of the country because he was ill in 2021 when mortgage rates were 3%. We suddenly had 2 homes and began exploring what our options were and that is when we discovered the intriguing world of REI and tapped into Bigger Pockets and Better Life Tribe, etc. to begin our education.

In the time since his death and the probate process we have been paying his mortgage off and selling items from the home which we have been maintaining. Current mortgage is $59k because I have been paying the principal down while we slowly try and figure out what to do. 

We are having renovation/repair work done over the next month and making the decision to sell or buy. My wife and I are leaning toward renting because of the long term cash flow opportunities as opposed to the immediate cash profit. Estimated home price based on comps is $250-260k and rentals go for $1,700-1,800.

We both believe that small multifamily properties are the smartest way to start given our ages and desire to probably retire by the time I hit 70 - 10 years from now (if we want to). This inherited home is the impetus for us to get going and we are excited to learn and share with others along the way!

[Wale Lawal]

@Troy W. Hudson

It's great to hear about your journey and plans for the future. It sounds like you have a solid foundation with your professional background in media production and your voice-over business. The inherited property seems like a valuable opportunity for you to venture into real estate investing.

Considering your interest in small multifamily properties for long-term cash flow, that's a strategic approach. Rental properties can indeed provide a steady income stream, and it's fantastic that you're exploring this avenue.

Here are a few considerations and steps you might want to take as you move forward:

Market research: Keep looking at possible multifamily buildings in the Augusta, Georgia region. Investigate areas with strong growth potential and rental demand, and take into account regional real estate market trends.

Networking: Attend local real estate events, sign up for internet discussion groups, and establish relationships with seasoned investors. Networking can yield insightful information and possible business collaborations.

Financing Options: Examine several ways to finance your real estate venture. Considering that you want to retire in seven to ten years, it's critical to evaluate how various funding options fit into your long-term strategy.

Property Management: Think about how you'll take care of the property if you want to rent it out. It is important to know what is expected of you, whether you choose to manage it yourself or work with a property management firm.

Exit Strategy: Develop a clear exit strategy for your investments. Knowing when and how you plan to sell or transition out of the properties is vital for long-term planning.

It's wonderful that you and your wife are excited about this new venture. With careful planning and strategic decisions, real estate can indeed be a powerful vehicle for creating a legacy and achieving financial independence. Best of luck on your journey! If you have specific questions or need further guidance, feel free to ask.

[Troy W. Hudson]

Hi @Account Closed

Thanks for welcoming me and for your insight. I do have both thankfully, probably more time to invest than money.

I probably spend 4 hours weekly studying and reading and listening at this point. 

[Troy W. Hudson]

[Troy W. Hudson]

Thanks @Account Closed, but I’ll continue on the learning path that my wife and I are already on. I appreciate what you do.

[Wale Lawal]

@Troy W. Hudson

It's great to hear about your journey and plans for the future. It sounds like you have a solid foundation with your professional background in media production and your voice-over business. The inherited property seems like a valuable opportunity for you to venture into real estate investing.

Considering your interest in small multifamily properties for long-term cash flow, that's a strategic approach. Rental properties can indeed provide a steady income stream, and it's fantastic that you're exploring this avenue.

Here are a few considerations and steps you might want to take as you move forward:

Market research: Keep looking at possible multifamily buildings in the Augusta, Georgia region. Investigate areas with strong growth potential and rental demand, and take into account regional real estate market trends.

Networking: Attend local real estate events, sign up for internet discussion groups, and establish relationships with seasoned investors. Networking can yield insightful information and possible business collaborations.

Financing Options: Examine several ways to finance your real estate venture. Considering that you want to retire in seven to ten years, it's critical to evaluate how various funding options fit into your long-term strategy.

Property Management: Think about how you'll take care of the property if you want to rent it out. It is important to know what is expected of you, whether you choose to manage it yourself or work with a property management firm.

Exit Strategy: Develop a clear exit strategy for your investments. Knowing when and how you plan to sell or transition out of the properties is vital for long-term planning.

It's wonderful that you and your wife are excited about this new venture. With careful planning and strategic decisions, real estate can indeed be a powerful vehicle for creating a legacy and achieving financial independence. Best of luck on your journey! If you have specific questions or need further guidance, feel free to ask.

[Michael Smythe]

@Troy W. Hudson really an investors challenge is determining if how much cashflow they want vs cash.

The inherited house demonstrates this:

1) You didn't mention the mortgage PITI, but assuming it's low, you should cashflow well and even more if you have tenants pay the mortgage off over time.

2) You could also do a cashout refinance, up to an amount that allows the rent to comfortably cover, and use the cash for further investments or personal use. Theoretically, you could do a cashout refi every x years as value & rent appreciation allow.

If you want to really focus on cashflow, then you may want to sell the inherited property and re-invest the proceeds in properties with higher ROIs and potential. Property Class will have an impact on this, see below:

When investing in areas they don’t really know, investors should research the different property Class submarkets. If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

Here’s our OPINION for the Metro Detroit market (always verify each area for yourself!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

Class A Properties:
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% the more recent norm.
Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

Class B Properties:
Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

Class C Properties:
Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

Class D Properties:
Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

What else can we assist you with?

[Julio Gonzalez]

Glad to have you as a part of this awesome community, Troy! 

[Tim Bratz]

Hey Troy! Welcome to the BP community. Love your thinking in terms of renting for the long term benefits. A lot of people only think about the short term, and how they can benefit now, rather than how they can set themselves up in the future. Long-term mindset is the way to go. I have a lot of properties in the Southeast and would be happy to connect further. Best of luck!

[Carini Rochester]

I started at 55 y. o. and I seem to have similar values and similar motivations and similar recent events in my life to you. I was behind on being ready for retirement and was hoping the real estate, and having tenants sending me checks each month would help in generating cash flow and increasing net worth. It starts slow but it accelerates! My parents have died over the past 4 years and my family had to fix up the family house and sell it. I would recommend selling as I believe that's the best way to capture the stepped up basis of the property. Then take the inherited money and buy a good investment property. Wish you well!