All Forum Posts by: Billy Smith

You know, I used to worry about an ever increasing deterioration in income to equity ratios but as I get older, I am more and more comfortable with dead equity. Yes, I can take cash out and try to invest in higher return projects, a sort of carry trade, but the reality is that increasing return on equity generally involves more risk. 

So If I were you I would congratulate myself on success and question do you really want to take on additional risk or incur not insubstantial transaction costs to transition from what you have. Putting credit lines in place might make sense to have the capital available if a sure fire opportunity comes your way, but I would learn to get a certain level of comfort with paid off mortgages too.

my wife and I are on medicare and with medicare and our supplimental we are still over 2k a month in health insurance.. My daughter who has 22 years at Intel I think she told me at 30 years she can retire and gets lifetime health benefits.. Only way to live on rent is to pay cash and or be extremely frugal mid western rust belt type area were primary housing is very low and all other things including gas, insurance etc are much lower than us west coast folks.
Nevada though to me is a smart choice to try to live on RE prop tax's some of the lowest in the country NO income tax utls are low . etc etc. But to live on just rental income and no other sources you just need to do the math.. with levearge its takes a boat load of Real estate . And your going to find it hard to get the associated debt you would need to qualify for the loans unless your using DSCR rent then you need a lot of cash since U need the debt coverage ratios..

I think its only been this BP dream that goes on about living on rents.. thats not a common thought out of these circles. of course investing in real estate getting it paid for and APPRECIATION is were wealth is created.. So really depends on your monthly needs to live the life you would find enjoyable  without bringing in some sort of income other than rental income.. Most of us that are in this full time have some rentals but its not our major income source we maybe RE brokers  or Mortgage Brokers or GC's and house flippers or like Chris fund manager etc etc.. granted we are self employed but we work and work hard.

PS I have never thought of my self as having a JOB I have been selling real estate since I was 18 and have done all sorts of different things in Real Estate my wife and I look at it as a LIFESTYLE not a JOB.  But if i had it to do all over again growing up in Cupertino CA in the 60s I would have figured out software and computers far better than I did would be like some of my peers that truly retired many years ago.  But hey we are still hear and enjoy all that we do. 

To clarify- if I am buying a property finished- (turnkey) at market value I can cashflow and average of 9-12% year 1 on a B class property and I am not at 1%, If i wanted to buy a finished property in a C/D class then I can get to 1% rule. But I personally value buying property in an area that appreciates more and has the potential for better tenants and rental increases, so I will easily give up the idea of the 1% rule, as I think future growth is much more important to me.