All Forum Posts by: Eddie Werner

@Account Closed 

I have a different financial belief of how to get to retirement and what age retirement should happen.  People view 401k type plans as the bedrock of retirement investing that stipulates they need to work 30-40 years and then they can retire.  I think it is foolish that the majority of citizens just buy into this plan and accept they will have to work until 62.  It is a mindset change I am writing about that understanding other ways to accomplish monthly income goals that will give anyone more freedom to do what they want with their time.

For me personally I don't think I will see anything from Social Security so when I see that taken out of my paycheck I just view it as funding my parents and grandparents SS check.  There has also been a lot of talk about the government having access to individual's retirement savings in the past few weeks.  This is something I will be looking into more but the more I look at the local and national economy it makes more sense for me to break free of this traditional mindset and focus on achieving the goal of monthly cash flow.

Real estate is intimidating to a lot of people and I think BP is really starting to turn that around.  If someone isn't comfortable with this type of investing or doesn't understand it then they should stick with more traditional methods.  The more I run the numbers and analyze my time frame RE is making more and more sense as the end goal.

@Elizabeth Colegrove

My market averages a 30% return on rentals as well so I definitely see the upside to continuing my acquisitions and deploying more capital to ramp up.  My plan is more long term but not as long term as 401k inventors will be waiting to retire. 

Like you mentioned, the key is strict money management.  When I get my paycheck a certain percentage goes IMMEDIATELY into an account for buying my next rental.  If someone doesn't have the self control and financial understanding to do this then they probably should keep using their 401k (or other autopilot-type retirement plan) as a retirement method.  I think for those who understand the end goal is monthly cash flow you can get there a lot quicker and "retire" well before 62.  Thanks for your comment.

I wanted to look at this topic a little differently then previous posters.  It seems that everyone pushes the 401k save for your "old" self when you hit 62 mindset. This is assuming you want to "work" until you are 62. In my discussions with my financial adviser we worked out the number of needing 2.5 million when I retire to have a monthly income of $5,000. They are ballpark figures but I feel they are critical in this discussion.

If I am working until 62 to retire with 5k a month..........when each property I currently own generates a couple hundred a month in cash flow........isn't the goal then to hit 5k a month in income?  Forget the 401k, employer match, etc. The goal is consistent income each month to "retire". Why not get there early by breaking free of the over marketed and over pushed 401k? I think the key is STRICT money management.

I recently cut my 401k contribution in half so I could save the other 50% of my contribution to buy rentals. The price to rent ratio really favors investors in my market so $250/door cash flow is fairly easy to achieve if you know where/how to invest. I have enough in my 401k if I cashed it out that I could buy 2 properties in cash. Each one would yield $500/month cash flow with no debt service....I would be 20% of the way to my "retirement" monthly income goal. I work and save for 10-15 more years continually saving and investing in properties that by the time I am 40ish (27 now) I have exceed the 5k a month income and can "retire." I feel that active cash flow investing would get individuals to their monthly income goals much quicker then 401k type investing. Has anyone committed fully and done this?  Thoughts?

I like what Joseph said.  Sit down together and work out what is fair if either partner wanted out.  Then you both are in agreement or......have a non related 3rd party investor give their 2 cents after analyzing all the details.

Just use 10% for each.  This is a conservative way to initially analyze cash flow.  Once the property is stabilized you can adjust as needed for projections but when doing initial analysis stay very conservative.

I would not add one.  Focus on the kitchen and bathroom.  I don't think a buyer will want to purchase because of a wet bar.  

Just to briefly revive this discussion I wanted to add my thoughts.  It seems that everyone pushes the 401k save for your "old" self when you hit 62 mindset.  This is assuming you want to "work" until you are 62.  In my discussions with my financial adviser we worked out the number of needing 2.5 million when I retire to have a monthly income of $5,000.  They are ballpark figures but I feel they are critical in this discussion.  

If I am working until 62 to retire with 5k a month..........when each property I own generates a couple hundred a month in cash flow........isn't the goal then to hit 5k a month in income.  Forget the 401k, employer match, etc.  The goal is consistent income each month to "retire".  Why not get there early by breaking free of the over marketed and over pushed 401k?  I think the key is STRICT money management.

I recently cut my 401k contribution in half so I could save the other 50% of my contribution to buy rentals.  The price to rent ratio really favors investors in my market so $250/door cash flow is fairly easy to achieve if you know where/how to invest.  I have enough in my 401k if I cashed it out that I could buy 2 properties in cash.  Each one would yield $500/month cash flow with no debt service....I would be 20% of the way to my "retirement" monthly income goal.  I work and save for 10-15 more years continually saving and investing in properties that by the time I am 40ish (27 now) I have exceed the 5k a month income and can "retire."  I feel that active cash flow investing would get individuals to their monthly income goals much quicker then 401k type investing.  Has anyone committed fully and done this?  

It depends on who is managing the property and if they are even aware of the issues you stated.  Have you informed them and they haven't done anything?  When I was renting a couple years ago I paid $2 per wash and $2 per dry.  It was kept nice but a hassle each time I needed to use it.  From an owner stand point a central laundry area is always best because possible water/maintenance issues are centralized.  If each unit had their own washer and dryer it could be a maintenance nightmare with one leaking hose soaking through to the unit below, etc.

Are any of these paid off, all leveraged??

In terms of deploying capital, if you have a fair amount of equity I would look at a portfolio loan so all your properties are under one monthly payment and you receive any cash out your equity positions will allow.  Depending on what that is you can deploy your capital and the 20k cash you have.  Just open a line for emergency funds.

If you want to stay more conservative then don't touch a few properties that cash flow well and blanket mortgage the rest.

Talk to local banks/credit unions or attend your local REI meeting to find out.