New member introduction - San Jose CA

[Brian Tremaine]

Hi ,

I have have been buying & holding single family homes for 30+years as an investment approach outside my occupation as an engineer/consultant. As I near retirement my wife and I wonder whether to stay in real estate or transition into another retirement plan. It seems like all plans being pitched can be described as diversify into the stock market & mutual funds, or buy annuities and pay someone 1% of my net-worth annually regardless of performance. I never had great luck in the stock market. My "retirement plan" today is to keep consulting part time. I'd like to hear from other investors on what their long term plans are and also those in retirement how have you changed your business model pre & post retirement?

As a second issue, since I have held most of my properties for many years half are mortgage free, fully depreciated and have insanely low taxes (thanks Prop 13). So I'm asset rich and cash poor. 

Regards,

Brian

[Account Closed]

Brian,

Sounds like it's time to take those SFHs back, renovate and re-rent them at fair market rates. After that, you can do cash-out refinance to raise capital. Invest the capital into apartment buildings or some NNN to give you a higher yield. A 5%-7% cash on cash return is achievable. After stabilized, you're looking at 8%-10% cash on cash return in year 3.

Please do yourself and your family a favor by investing in supply constraint markets such as the Bay Area. The market priced the cap rates the way they are for a reason. A premium asset will almost never sell at a discount/high cap rate. Don't invest or do an exchange into some asset in boonville. Not only you would not achieve your promised yield, you would likely end up losing all of your capital. 

@Johnson H. hosts a monthly meet-up at Whisper Cafe & Creperies at the corner of Brokaw & Old Oakland Road on 7/17 at 7pm. It's free to attend. Come out and rub elbow with other local investors and exchange ideas if you have time.