All Forum Posts by: Andrew M.

I live up in the Bay Area, have a nice job and a wonderful house, but still with a wife and two young kids, feels like you can't get ahead here because its so expensive.  Also hard to do any real estate investing when everything is so pricey and low cash flows up here.

I'm thinking life would be much less stressful if I moved to the Midwest (ex. had an opportunity in Omaha that I passed up), got a similar job, a much cheaper house and cost of living and was able to take the cashed out equity on my house here and start doing some serious real estate investing that could allow me to retire 10-15 years earlier than I might here in CA.

Has anyone done this move out of CA, and how did it go.  Am I crazy to even consider leaving the beautiful weather and so forth in CA? 

In my opinion, I would buy 9 properties with $50k down and keep a $50k cushion on hand.  With that much leverage, you'll be chewing up a lot of the free cash flow from the properties that you otherwise would have pocketed and been able to offset vacancy loss/repairs/etc.  I think that's a good idea to leverage because you can turn that $500k into $2.5m (assuming 20/80 cash/debt) which if it has a 10% cap rate is $250,000 annually vs. $500,000 x 10% = $50,000.  Once all the debt is retired you are in a much better position long term.

Just a theoretical question...if you were able to sell your primary residence and buy a cheaper replacement and pocket $250,000 and you wanted to invest that in real estate, what would you do...?  Purchase for cash cheap buy and hold rentals (cash because below $50k mortgage minimums), buy one big multi-family, something else?  Wanting to gauge the investor psychology...