All Forum Posts by: Alan Pederson

We bought our first rental when I was 52. We have 3 right now and are about to buy another one. Like so many others have said, I wish I would have started sooner.

I've read several book on investing and some on real-estate. I've learned lots of good information but none of them are very motivating. They give you the nuts and bolts of investing and that's great!

I want to read something that gives me that plus stories mixed in that inspire me. In my spare time I write down my thought and have logged my journey along the way. Maybe some day I will put out my own book.

I love all the comments.

I hear things all the time that make me want to put these people I work with in their place. I hold my tongue because I know if I say what I really want to that it will just get me into trouble. The best revenge is to live a happy and successful life. I spent a lot of years just coming to work, doing my job, then going home to just do it again the following week. Some people are happy with making enough to pay their bills and having enough to buy food, cigarettes, and beer. That is what makes them happy. I want a little more.

I think as my portfolio continues to grow, it just makes some feel like they aren't successful and they lash out to compensate. I've tried to encourage the ones that will listen but it's easy to come up with excuses why you can't be successful. Doing nothing is easy. The bad part is that some day you might look around and wonder why you spent so many years just going thru the motions instead of trying to have something better. I've heard it all. My wife just won't save money (she spends it as fast as I make it), I have kids, I don't make enough, I have a big car payment or house payment, etc, etc... Not trying to pick on any women. I work with almost all guys and that's their side of the story. Me and my wife spent 10 years saving up money to buy the first house. We had 2 teenage daughters still at home when we started. We helped put them thru college and paid for nice weddings. It would have been easy to buy a bigger house or new cars but that didn't fit into our plan. The plan is to live below our means and save money to buy more property so we can retire with a steady passive income. It wasn't always easy and we had more then a few fights along the way. We agreed on a plan and anytime we moved away from that plan I would have to remind my wife what our goal was. I'm very conservative and my wife isn't. She doesn't spend like crazy but if I get a bonus, her first thought is where are we going to go to spend it. My first thought is, this will all go in the bank. We usually end up in the middle some where. We save most of it but spend some on home repairs or take a little vacation. We take one nice vacation every year (I never did this before I met her) and we might take a few mini vacations. I long weekend in San Antonio, Arkansas, or Broken Bow are common for us. It doesn't cost a lot and we have fun and relax for a few days.

I'm not rich or a genius and if we can do it, anyone can. I really think FEAR is what stops most people. Fear of failing, fear of the unknown, and even the fear of succeeding. If they do well, then what? The guys that tell me they aren't happy with their life are the same ones that keep doing the same thing over and over. Isn't that the definition of insanity? If you're not happy with the people you date, you have to date someone that you normally wouldn't. If you're not happy about your financial situation, you have to make better choices, find a better job, cut spending, get a roommate, etc.

I only know that this has worked out pretty good so far and I don't see any reason why it won't continue to work for me. I have heard comments asking what I would do if the market drops like it did in 2008. I just say I will be able to buy the next house cheaper.

There are always opportunities even in a down market. You might have to ride it out for a few years but if you plan for it, it won't be a surprise. I live well below my means and keep plenty of cash reserves so i'm not concerned. I work with a few people that live paycheck to paycheck and they've done this for years. That would scare me to death. Most of the managers I work with (10 total) are in their mid 50's or older and only a couple of them have a plan for retirement. They all drive nice cars and live in houses much bigger then mine. I work with hourly guys that live larger then me. I don't think they're looking at things long term. I look at things 10, 20, or 30 years down the road. It does no good to live in a big house and drive an expensive car if you can't put any money away. I lived house poor in my early 20's and won't do that again. When I retire, I want to be able to travel and see the grandkids without worrying about paying my car payment or still having a house payment. These people will be working well into their 60's or more because of the lifestyle they're living now.

My day job is for a paper company. I'm a salaried manager and I've been working here for 33 years. A few years ago me and my wife started buying rental property so we could retire a few years earlier than we normally would have been able to. We aren't in this for a quick buck but look forward to a steady second income stream. We have bought one house a year for the past 3 years and we have the means and motivation to continue this practice for years to come. We live well beneath our means and save money so we can keep buying houses. Nothing remarkable here. If we can do it, anyone can.

This brings me to the point of writing this post. A few weeks ago, the company I used to work for offered a lump sum buyout of the pension I have with them. All of the managers I currently work with used to work for this company before our division was sold to another company. During a meeting we had to discuss the various options we could choose from one of the managers (that I have never got along with) made a comment in front of the group about how he wanted to hear from Alan about how to buy rent houses

(I'm not planning to use this lump sum buyout to buy property. I plan to invest it in a self directed IRA.).

I asked him what he wanted to know and he just laughed and the group disbanded. For a few minutes, I thought he was serious but I quickly realized he was just using this opportunity to make a joke about what I was doing.  My boss did the same thing about 4 years ago when I told him I was going to start buying rent houses. People say things all the time or have big plans that they never follow thru on. I hear stuff like this from some of the hourly employees. Real-estate has been a solid investment for generations and has created more millionaires than I can probably count. I never proclaimed to have a goal of millions in income in a few years so I'm not sure why they think this is a joke. My goal is to make $5,000 a month by the time I retire in 8 years. More would be better but I try to set reasonable goals for planning my retirement strategy.

Now that we have purchased a few houses, my boss has changed his attitude a little. I told him my wife now has the opportunity to retire in just a couple more years and that would have never been possible without the extra rental income we have right now. The more we buy, the sooner I can retire at the level of income I want to be at instead of retiring and trying to live off Social Security, 401K, and the pension i will get from my current job. I really don't see an end to this. We can keep investing as long as we want to and build this up as big as we choose. I encourage those around me (hourly, salary, and personal friends) to look for ways to make money outside of their regular jobs. I like doing home repair work and that works well with having rent houses. I work with an hourly employee who started selling chicken nest boxes a couple of years ago. I didn't see how he could make much doing this but at least it was something he was interested in. He has now expanded to being more of a distributor and makes well over $60k a year doing this just on the weekends. He keeps his regular job for the security and insurance.

I guess some day I will have the last laugh when my little adventure of buying rental property starts really paying off. It is already paying off in multiple ways but when my boss or other managers ask about it I just smile and say "yeah, we make a few dollars" or "it's going okay". I don't waste my time or energy on people like this. My advice to anyone who wants to invest in real-estate is to make a plan, follow thru, and ignore those negative people around you.

I would start with a SFH before you make the leap to commercial

The only thing that stopped me from buying my first rental sooner was my wife. I was ready to jump in about a year before she was. She finally gave me the green light and I wasted no time getting the first deal done.

welcome aboard

I thought the same thing. You could save money doing things yourself but you could also lose big if you mess anything up. I've purchased 6 houses and feel pretty good about what needs to be done. Getting an agent (even a discount agent) would give you peace of mind that things were done right. Kind of like  an insurance policy.

In the contract, it spells out who pays for what. Prepaid taxes, document fees, etc...

You also have sellers disclosure, inspection, appraisal, etc.

The last house we bought I represented myself and the seller had an agent. I was very nervous but took care of everything myself. Making phone calls and setting up appointments. We ran into a problem because the roof was bad and mortgage company wouldn't finance because insurance company wouldn't insure house with the current roof. I had to go back to seller and insist that they replace the roof before we moved forward. Then I had to get roof company to send paperwork to mortgage company once they finished and have insurance company come back out to inspect again prior to closing. It was a crazy couple of weeks and very stressful dealing with this and working full time.

If you haven't bought very many homes in the past, I would recommend that you get an agent.