All Forum Posts by: Jack B.

1) Their lease started 9th of September 2021, it was a month to month rental. They have to give 20 days notice before the end of the rental period. They gave notice April 9th 2022. 

2) They left their bed and some other garbage behind. There was no security deposit. Can I use part of their last months rent prepayment to pay for hauling their garbage off?

I bought four more houses last year. I was going to buy 2 more this year but 6% rates for an investment property make that cash flow negative and not worth it.

That said, what to do with cash on hand? 1.2 mil liquid. Paying off houses that are 3.65% rates makes no sense. 

I usually lose money in the stock market so far. Cash is losing money to inflation. So what to do with the money? Buy paid off houses out of state for 4K a month cash flow after all expenses?

 If I make below 40K a year (easy to do with a paid off house in a LCOLA) in many states such as my current one you get free health insurance. Dental not included, but there is Groupon for that. Also there are religious organizations that have a flat fee $150 a month health plan. I found this out from my friend who is below 40K a year and got free health insurance instead of paying $500 a month through his employer plan....

 Thank you, may I ask why you would do the same if you were in my situation?

Background:

I just turned 40. My net worth is 3.2 million. 1 million liquid cash, the other 2 million is equity in my houses including primary residence and rental properties for a total of 8 properties. Cash flow is about 30K a year because I cash out refinanced a couple years ago to buy more properties with the equity rather than using cash on hand. Real estate has been my bread and butter, it's how I made my 3 million. At this point, I make 1 million a year off of it (appreciation, cash flow and principal pay down). Again, I make 1 million a year off appreciation and such when the market is good, which is most of the time...factor that in.

I was planning on buying two more houses with a total of 300K down to ride the appreciation wave long term, two more houses that will be paid off when I'm older, etc. I had planned on retiring at 40 with 1 million, this was the plan I made when I was 30. Now I have three times that but life is more expensive and complicated than it was 10 years ago. 

My living expenses:

Because I rent out part of my house, I mostly live for free housing wise. Outside of that my living expenses as far as base are 1K, but realistically 2K. That includes money to date, buy a trinket here and there, etc. To be really comfortable I'd like to have 4K a month passive income in retirement. With a paid off house, in a low property tax state, utilities, taxes, maintenance, insurance should round up to 1K. That leaves 1K for gas, car insurance, food, incidentals, internet, phone, etc. So that brings me up to 2K per month. But I'd like another 2K buffer as I have occasional rental expenses such as repairs, appliances, etc. plus I date a lot and when in a relationship we have a tendency to travel. I've been to Tampa and Orlando 4 times in 3 years with 3 different women (one of them twice). 

The why:

I'm tired of working and life. I've had many recent heart breaks and I don't want to work anymore. I haven't wanted to work for a long time but now I'm really done. I had two health scares and almost died at 29 and 34, I'm not promised another day. They say stress causes cancer. I've worked so hard, MBA, 18 career certifications that were hard to get, own and manage rentals, two full time tech management jobs, two part time jobs. I've been working so hard. To top it off I've had a series of failed relationships last few years. After having a long period of stability with one girl for 9 years, I'm an emotional mess, dating is getting harder as I get older, the women are not as good looking and all seem to have baggage/issues. After a recent life assessment I did, I realized everything in my life that I worked toward came to pass. But my relationships are rocky. I'd like to take time and heal, grow and find a life long forever girl. One that stays. Even through the bad.

How I'm thinking of doing it:

-Relocating from WA to a cheaper part of Texas, Tennessee or Florida. With the equity of my primary residence, I should be able to buy a paid off house for cash. That will drastically reduce my living expenses.-Take 1 million cash and put it in index funds or split between Apple, Tesla, Amazon, Google and Microsoft and live off 3% withdrawal rate of about 30K a year. Supplement that with rental income from properties as is, which is about 24K a year cash flow.

OR....

-Still relocate, but cash out refinance 1 million out of the houses before retiring. Between living off index funds and 1 million pulled out of the houses, that money should EASILY last me 10 years, realistically 15-20 years. By then the rents will have risen enough that they will cash flow enough I don't have to cash out refinance anymore for money to live off of. There are some people who do the cash out refinance thing every few years to live off of. Bonus is that it's tax free, it's a loan so not taxable income.

OR....

-Still relocated, use the 1 million to pay off 3 of the rentals, which should give me about 6K a month cash flow plus another 1K from the others that are still mortgaged. Move into a paid off house and retire. I like this because I've always lost my money in the stock market no matter what I've done. Options, swing trading, day trading, index funds, you name it. But real estate I've always made money. It's how I made my 3 million. At this point, I make 1 million a year off of it...so in a year I'll be worth 4 mil, in 2 years 5 mil, etc. At that point I could really retire without worrying. Maybe I hold off for now and grind a little longer. But two full time jobs, two part time ones, 8 houses and all the studying has really worn on me. Add to that endless heart ache from relationships last few years and I'm emotionally done. I want to destress and go live. 

Some problems with this:

If I move to FL, TX or TN, I'll be too far to manage the properties. My best friend will move with me but he said his parents could help out. So far I've been doing ok with video tours and hiring contractors lately. Not cheap but way cheaper than a PM. Liquidating them and moving them is risky as I may move somewhere else if I don't like it, or move back. But the properties make it very difficult to relocate since they are easier to manage locally. If I hire a PM, all my cash flow is basically gone.

Tenant has lived there for a month and has had 4 service calls. Each one the father in law "finds" the issue. Except the house never had any of these issues with previous occupants and went through inspection without these issues.

Today was the final straw. The father in law sends a picture of water all over the floor in the basement (split entry type basement not a true basement) and his assessment of it. I go and inspect and there is literally no leaks upstairs, no water lines in this section of the house and no rain for days outside and no sign of moisture intrusion from outside. It literally looks like the father in-law poured water all over the floor from a bucket. While there is some water where the trim is at the wall, that could also be from pouring water there to make it look like the source of the water. There is no water damage in the ceiling, wall, ANYWHERE. There is no sign of moisture ANYWHERE other than the floor as if someone poured water on it, 5 gallons of it. 

I call my plumbing guy who will come take a look later today and he agrees if no signs of moisture intrusion outside or leaks from upstairs especially without drywall damage, it sounds to him like the father in-law who is always there and "discovers" these things is doing it.

I've since given the tenant notice to vacate. He is some hot shot dentist who yelled at me to leave his father in law out of it. I told him no, the facts are clear, his father in law is always at the house when this happens and there is never any explanation or cause for how it happened, whether it's today's issue or another days different issue. The father in law sounds like he has some mental health issues and is a busy body going around making up problems...his daughter told me he is a really handy guy and can help fix things around the house if I like and I told them no. Especially since he didn't know anything about plumbing when I asked him some basic questions...I wonder if they were going to try to use him to get a discount on rent for "repairs" he did....

Anyone ever seen anything like this???

I have a tenant that is a HUGE PITA. The house is in Bonney Lake. Is it still 30 days notice to vacate or is it now 60 days state wide? He is on a month to month lease....

 I miss the days of BP where it wasn't a place where it's just people who respond are trying to sell you stuff...

With rising interest rates and down payments due to rising prices, does it still make sense to keep buying more rentals?

I have 8 properties including my primary residence. I was going to buy two more this year to keep enjoying the appreciation, principal paydown, etc. 

But with 325-350K required for dp for two properties in total, rates at 4.25 or 4.5 % I'm leery. Cash flow would be about $50 a month each. I'm in the Seattle/Tacoma area so appreciation is how we make our money and not quite near the top of the cycle based on indicators.

That said, I'm debating whether I want to buy more rentals this year or not. I could take the money and invest in stocks once they bottom. 

Yes, you have terrible math skills and make a lot of assumptions. You also have poor reading comprehension. How on earth do you think because I own six million in real estate that I must own only 6 houses?

I also noted that I make a million a year in appreciation. Yes, that's how people who know what they are talking about make money. If you think buying 30K houses to make $400 a month cash flow is good, you're delusional.