All Forum Posts by: Don Roberts

I was actually hoping he would want to become an engineer (like me) or Doctor or something, but just the other day all on his own he said he wanted to be a real estate investor. At school they had a career day, and one of the presenters was a RE investor who retired early and lives off of the rental income. I wonder if he is a BP member ... ;-)

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Originally posted by @Kiley N.:

@Don Mangiarelli

Welcome to BP! Different circumstances got us all here one way or another so congrats on making the psychological plunge into REI despite the challenges/situation.

I have interacted with @Don Roberts in the forums and based on what you've shared I believe he'd be a great resource for you. I'd love to attend that AZ memorial lunch as well!

I invest in multifamily in Huntsville, AL and would be happy to connect with you to share what I can.

I also organize another investor lunch meetup in downtown Honolulu if that is ever convenient for you.

https://www.biggerpockets.com/forums/521/topics/731912-rei-professionals-lunch-downtown-honolulu

Great to meet yet another REI making it happen from the islands. The local community continues to grow.

Aloha,

Kiley

Kiley,

Definitely come on by for the lunch meeting on the 15th. The more the merrier!

Mahalo,
Don

1 Vote

Originally posted by @Kiley N.:

@Don Roberts

First of all, congrats on your achievements in getting to this point. It is nice to see that you put a thoughtful plan into action and had the gumption to see it through. It sounds like you have now reached the summit and are looking at a new viewpoint that has another mountain to climb as well as a nice powdery slope to cruise down on. If I could simplify the question, you're looking to find a good route to send your son up the mountain while you coast along in parallel and guide him.

Based on what you've said, it sounds like you have two primary goals:

1. Your well-earned passive lifestyle: Meaning protection of your passive cash flow streams and a conservative approach to leverage.

2. REI education of your son, which you stated in the original post.

Given the above the issue at hand boils down to balancing how much leverage you are willing to accept in return for accelerating your son's education.

While I can't speak for your son's interests, I can say that having/taking ownership in something has always been a great motivator for me personally. If you could A) continue to provide him with a vision of what a successful endgame can look like (because each individual's successful situation is unique) and B) cultivate ownership of his REI future while C) providing tools to get there at a good pace for his development, that would be an enviable setup for many at the tender age of 14.

COA2 sounds like a reasonable balance of the risks you are considering with the added benefit that the HELOC can sit unused until an opportunity meets your specific plan requirements. Preparing access to your equity seems to be a sensible step regardless of which road you end up taking.

Keep us updated, this is exciting!

Kiley,

Thanks fro the comments. I like the mountain analogy! I definitely planned on opening HELOC's on all of the rental properties before I don't have W2 income anymore. It is definitely good to have access to that credit line in case something good comes along.

Mahalo,
Don

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Originally posted by @Kerry Baird:

We have done the same thing as the OP, and are taking the additional advice of @Tyler Hampton, with my husband working 5 more years in a GS position, for a second pension.

In the back of the book Millionaire Real Estate Investor are some investor strategies. I was really taken with the guy who got focused on buying 5 rentals and aggressively paying them off, and then doing 5 more and aggressively paying them off. My original thought was that having 5 houses-Paid-Off would replace my SSgt salary, when I got out of the service to take care of our children.

I have been buying houses as if I were still wearing combat boots ever since. I systemized my processes, created file folders just like we had at work, created a team to enable me to make offers and close on deals.

My other strategy, that I would not change, @Don Roberts, food for thought on locations...has been to buy near Air Force bases in areas with growing populations (obviously, we were AF). Later, we agreed that we preferred places in the warmth, as we didn’t want pipes bursting, so we stayed in AZ, TX and FL (places where we were stationed).

We asked the Housing Office for areas that were in demand by the current incoming families, took at aim for E-5/E-6 rank and above based upon the BAS housing allowance chart that is published online. Then we would know how much monthly we were aiming for, and we backed into houses that would give us cash flow. Often, these neighborhoods can be visually identified as we drive around, by a tenant/owner who is a policeman or fire fighter parked in a driveway.

Of course, our tenants are not all military, but it gave us a starting point. Just as there is usually only one Col or Gen on a base, but a broad tier of Es, we aimed for the broad tier as tenants. And then went up a couple ranks to account for increased responsibility.

I just bought house 32 and 33 two months ago. Just renovated one, and turned the other into my first short term rental.

Kerry,

Yes, I think buying near bases is good. I have done that in the past, but currently all are civilian and not military renters.

I am also thinking of buying near schools a 4 or 5 bd / 2 or 3 bath house and furnish each room and the entire house, and rent out each room to students. I think that could cashflow more than an entire house.

Mahalo for the feedback,

Don

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Originally posted by @Tyler Hampton:

@Don Roberts is the $5k (probably more as you said) the only income you will have? Do you have any other retirement fund set up? Personally, I don’t think $60k per year is enough income to retire on with no other savings. I’m trying to do the same thing you’ve done and buy houses and pay them off. I love that idea! I totally understand you want to retire and do what you love, but is there any way to get more income buy working even part time or something?

If it was me, I would look hard at the house in Hawaii and make sure it’s worth it because I’m guessing that payment isn’t cheap. Needs to be cash flowing very well. Then I would continue working for another 5 years or so and divert all the $5k monthly cash flow towards another property. If you can live off another income for 5 more years and buy a house every year with your $60k down payment, you could get another 5 houses in those 5 years. Then you would be 56 and if those 5 houses cash flowed even $100-300 per house, you would get an extra $6,000-18,000 per year there. Then you would have an income of $6-8k per month and you’d have 5 more houses. Then you live off the $5k per year you were planning on and use the leftover $12-36k per year to pay off all your houses. Should be able to pay off one within a few years, then that increases your monthly cash flow, then it speeds up after that. Should be able to have 11 paid for houses by 60-63 and that would probably double your income and leave you a lot more comfortable for retirement.

So if you can work another 5 years, I think it would be very beneficial. You’ll also have to have insurance, unless military covers that. So that’s what I would do, but ultimately up to you! Sounds like you’ve done an awesome job and I’d love to be in that position one day! Good luck!

Tyler,

No other retirement funds or income. The net income after paying the mortgage for the last rental property and setting aside for taxes, repairs, insurance is $9k to $10k per month. The $6k was after buying another house (assuming $3k or so for mortgage, taxes, and insurance for a nice house in TX), so that would leave $9k-$3k = $6k or so for living monthly and travel.

The house in Hawaii is a keeper, as we will have 2 rental incomes from it. Its a multifamily home (3/2 and 2/1) and has positive cashflow each month.

At this point in my life I just want to retire and enjoy life, so do not really want another job. I think I can still invest in RE, but only will do 1-2 per year as long as they cashflow.

Mahalo for the feedback!

Don

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I was in the same situation in 2011 as you are in now (except it was for a SFH, not an apartment complex). I wasn't even in the market for a property, when my friend in Phoenix called me and said "Don ... you have to put in an offer on my rental property. The bank took it back and will offer it for sale as a short sale." This was after the bubble popped. My friend bought the house for $220k or so, then took out more equity as it went up in value and then couldn't make the payments so the bank foreclosed.

I asked him how much, and he said put in an offer to $60 k to the bank. I laughed ... this was a $280k house at the peak. No way they would take $60k. Plus I didn't have that kind of money for a cash offer. All I had was $10k in savings. He convinced me to put in an offer, so I did and forgot about it. A few months later, my real estate agent called me and said the bank accepted my offer. I was ecstatic!

After the ecstasy wore off ... I thought how I could come up with the other $50k. Luckily I have good credit and a multiple good credit lines on credit cards at the time (over $150k), so I took out $50k in cash advances, and had the $60k so bought the house for cash. I put all of the rent towards paying off CC's and it has now paid off the CC's and paid for itself several times over (and the house is now worth $320k).

If its a good deal you will find a way!!!

Regards,

Don

3 Votes

BP Community,

New poster but long time investor here. Looking for some advice from the collective Bigger Pockets Community. Please leave comments as this will be a factor into the future way ahead (your feedback will be considered for what to do next).

Background: I started buying real estate (RE) and in 2003 and generally bought, remodeled, and rented out houses. I am in the Navy and most purchases were bought as a primary residence when we moved somewhere, and rented out when we moved. Soon I will retire (July 2021 – retirement age: 51), and will have 6 investment properties with 5 paid off. The plan is to move to a no state tax state (TX) to a good school district for my son to start/finish high school.

Overall situation in 2021 after retirement:

Net RE value: ~ $2.2M

Rental property mortgate: ~ $800k (house in Hawaii)

Equity: ~ $1.4M

Monthly cashflow (includes military pension + rents – RE tax – RE Ins – estimated monthly repairs – last mortgage for investment property):

~ $9,000 (considering heavy repair budget for rentals. Probably not likely, so this is a conservative monthly income after expenses. More likely will be $9,500 to $10k)

I am estimating $3k to buy a nice house (estimating $300k to $400k house) in a good area with good high schools in TX (this includes taxes, ins., utilities). Lets say $4k on the ultimate high side.

This thus leaves ~ $9k - $4k so about $5k (conservative – but likely higher) monthly to live off of after bills, mortgages, etc. Plenty to live off of in a low cost state such as TX. Currently I am in HI, so moving almost anywhere is cheaper than here. 😉

My thoughts:

I had a vision almost 20 years ago (to buy and hold and slowly accumulate rental properties as I transferred to various duty stations) which I have accomplished as I stuck to my plan and long term goals. I never went in 'big' as I saw my best friend from high school and my brother go from 12 and 14 properties to both bankrupt in a few years after the 2008 bubble popped.

I want to teach my son RE investing. I was thinking of buying a RV to travel each summer while my son is on summer break from high school, and look for 1 to 2 good deals each summer to buy, rehab, and rent out. These would be geographically dispersed throughout the U.S. (to limit geographic risk), and analysis will be performed to buy in the ‘path or progress’ for various cities. We will also look to purchase in areas next to Universities and rent out individual rooms … AirBNB’s, etc.

Advice??? I have thought of a few different COAs listed blow. Please when you leave comments, let me know which one you think is best and why:

Goal: teach my son (14 yrs old in 2021) about RE investing. This will be continuous education for the next several years. When he attend college, I want to buy a house for him in his name so he can house hack to pay a large % (or all) of the mortgage.

Risk metric (low / med / high): Risk is defined as ‘possibility of a financial loss’ and for the COAs below is estimated to be that taking on more debt (even though RE debt can be thought as good) as more debt = more risk. I think we may be at the top of a RE cycle and price appreciation may be flat (at best) and falling drastically (at worse). If correct, then this is not the type of market to take on more risk (more debt).

Baseline situation in 2021: I do not plan on getting a job after retirement from the military, and just live off of the pension and RE investments. Being 51 years old and tons of education/experience, I can get a well paying job, but when you get older you realize time is more important than money. Current plan is not to work and enjoy life. ;-)

COA 1 (low risk): Don’t buy any more rental properties, live off of the monthly cash flow that I have. Son will be educated from traveling to rental properties to do repairs, learning how to do accounting and managed the rental properties, etc. No additional risk as no new debt is accumulated.

COA2 (medium risk): Take out HELOC (or cash our refi) from current rental properties. In summers, look for 1 to 2 properties to purchase across the U.S. While living in RV, have son help renovate and put in ‘elbow grease' to renovate properties, then rent out. Risk is more debt, but if purchased correctly cashflow will pay for mortgage ++ and houses will cashflow.

COA3 (high risk): Same as COA2, but purchase 3 to 4 properties per year by taking out more loans against equity. Higher risk than COA 2 as more debt = more risk … and RE market may be falling in the U.S.

BP forum ... what do you all think? Collectively we are a wealth of knowledge. Let me know what you think (the good, the bad, and the ugly).

Regards,

Don

3 Votes

Originally posted by @Don Mangiarelli:

@Don Roberts that would be fantastic! LMK where

Don,

How about Aug 15 @ 1100 at 604 Restaraunt (located by the AZ memorial just under the Ford Island Bridge):

https://www.google.com/maps/place/Restaurant+604/@21.3703313,-157.9519428,14z/data=!4m5!3m4!1s0x7c006f444fc07e7b:0xe88f4f05f6b8cae0!8m2!3d21.370331!4d-157.936622

It will be myself plus 1 to 3 more active duty Navy Officers. I can also reserve a bigger table and put it up on BP meetups if anyone else wants to go.

Regards,
Don

https://www.google.com/maps/place/Restaurant+604/@21.370331,-157.936622,17z/data=!3m1!4b1!4m5!3m4!1s0x7c006f444fc07e7b:0xe88f4f05f6b8cae0!8m2!3d21.370331!4d-157.936622

1 Vote

Did anyone see this???

https://www.foxbusiness.com/economy/trump-cap-cash-out-refinances

"Under the new policy, the cash-out refinance cap would be lowered to 80 percent of a property's value, down from 85 percent."

If anyone is considering a cash out refi, they may want to speed up their plans to do so before the refi cap is reduced.

Don

1 Vote

@Don Mangiarelli

Don,

I am a real estate investor and active duty Navy stationed on Oahu. I am meeting up for lunch Aug 15 at 1100 (location TBD) with a couple of other Navy real estate investors if you wanted to join us to chat and exchange ideas.

Regards,

Don Roberts

1 Vote

All Forum Posts by: Don Roberts

Don Roberts has started 2 posts and replied 10 times.

Post: ENDGAME – what do you all think???

Post: Newbie from Oahu Looking to Invest in Rentals or Flips

Post: ENDGAME – what do you all think???

Post: ENDGAME – what do you all think???

Post: ENDGAME – what do you all think???

Post: need to raise $50,000 to purchase a 26 unit apartment complex

Post: ENDGAME – what do you all think???

Post: Newbie from Oahu Looking to Invest in Rentals or Flips

Post: Trump administration to cap Americans' ability to tap home equity

Post: Newbie from Oahu Looking to Invest in Rentals or Flips