All Forum Posts by: Jacob Masters

@Eric C. Whether or not money is my motivation for REI is a interesting issue. I’ve heard folks say that money shouldn’t be your why, but for everyone it is certainly a why. As a preliminary response, I’d say that I do not seek money as an end in itself. It is a means to an end, namely a self-directed life and the opportunity to assist my children and their children in obtaining a self directed life. I assume when people say it shouldn’t be my why they mean it shouldn’t be my only reason or possibly my primary reason. I see money (specifically, that REI will meet or exceed the monetary benefits of pre-tax index fund investing) as a necessary, but not itself sufficient condition to deciding to diminish my pre-tax index fund investing in favor of REI. I also find REI exciting. But my interest in REI doesn’t overcome my desire for a self directed life and the ability to assist my children and their children in achieving the same.

@Eric C. Since my wife has access to a 457b plan, which allows penalty free withdrawals at any age after a separation in service, we have the option of utilizing a pre-tax account for early retirement. So my only rational justification for getting into rei is if I expect that my returns + tax advantages of rei would beat market returns + tax advantages of pre-tax accounts. I guess it boils down to what deals I am capable of taking down. Obviously if I buy a 1.5% property for 50 cents on the dollar, rei is the way to go. With a 1% property at market prices, probably not. I think the answer is I need to learn more about the tax advantages of rei, and find what should be my minimum criteria for a property then determine if I can reasonably expect to find properties that meet my criteria.

@Lynnette E. Thanks for your perspective. I’m from TN and it’s definitely one state I would consider retiring to. I hope to retire early so I haven’t really factored in the pension or ss. I hope they are there at some point because it would allow me to really help my children and future grandchildren, but that will hopefully be gravy when I reach regular retirement age.

@Anthony Gayden - I found your story on the BiggerPockets Money podcast tremendously inspiring. I lost about 150 lbs in law school and have gained every ounce of it back in the years since. That is another thing that weighs on me (pun intended). I need to find time to exercise so I live long enough to enjoy what I will build, not to mention walk my daughters down the aisle. That’s certainly a factor favoring passive income. Conversely, maybe I could brrrr, be more active in rehab and burn calories while I build wealth.

@Jay Hinrichs - I am mindful that I am an optimist. I am very excited about rental property investing. However, I have a job that occasionally requires work beyond 9-5, a long commute, and two young daughters. Maybe one or two properties would be a good idea to start and see how the time strain plays out. Our marginal tax rate is something like 30% so I don’t know how realistic it is to expect to beat that advantage in real estate. I assume I’ll move to a no income tax state at retirement.

Confused about what is the best decision for me and my family. My wife and I have access to three pre-tax retirement accounts, each of which have good low cost index fund options. I expect that we could max out all three starting in 2020 (i.e., once our oldest child begins public school). Alternatively, we could avoid using one or more of those accounts to start saving for buying rentals. We live in the dc/Baltimore area and I think there are rowhomes in blue collar or perpetual up and coming areas of Baltimore that exceed the 1% rule (Baltimore city has high property taxes so I presume the 1% rule is more like the 1.3-1.5% rule there). We are both government employees and have reached a point where our incomes will grow linearly, rather than exponentially. We are both mid30s and hope to retire in 10-15 years. Another option would be paying down our mortgage. We would expect to move to a lcol area if we RE. However, as our incomes grow we may have the opportunity to invest in rentals in addition to maxing our pre-tax bucket. But as our two kids age it’s also possible that our ability/inclination to save diminishes.

Confused about what is the best decision for me and my family. My wife and I have access to three pre-tax retirement accounts, each of which have good low cost index fund options. I expect that we could max out all three starting in 2020 (i.e., once our oldest child begins public school). Alternatively, we could avoid using one or more of those accounts to start saving for buying rentals. We live in the dc/Baltimore area and I think there are rowhomes in blue collar or perpetual up and coming areas of Baltimore that exceed the 1% rule (Baltimore city has high property taxes so I presume the 1% rule is more like the 1.3-1.5% rule there). We are both government employees and have reached a point where our incomes will grow linearly, rather than exponentially. We are both mid30s and hope to retire in 10-15 years. Another option would be paying down our mortgage. We would expect to move to a lcol area if we RE. However, as our incomes grow we may have the opportunity to invest in rentals in addition to maxing our pre-tax bucket. But as our two kids age it’s also possible that our ability/inclination to save diminishes.

Originally posted by @Ned Carey:

@Jacob Masters welcome to BP.  Since you say you are 99% ignorant you might want to check out the Ultimate free beginners guide here on BP.  There are a ton of knowledgeable people form the Greater DC area to help guide you along.

 Thank you.  I will certainly read it ASAP.

Originally posted by @Ken Nyczaj:

@Jacob Masters I grew up in the millersville/ glen burnie area. Public schools aren't very good and I can't say they're getting any better.

That being said, there are definitely some duplexes in the area where you could try to buy the whole duplex and rent the other side out and have that pay for your mortgage. If you want something that is around the same price but economically on a higher end, and better schools you could look into Pasadena which is only a few miles away.

I've only seen two duplexes in Glen Burnie, none in the other areas. Do you know any wholesalers or other people who might know about duplexes that may be for sale but not on MLS that you could recommend?

Thank you. I was actually looking around 200k at least for the acquisition price. There are a lot of townhomes in that range, which my RE agent says rents easier than a detached SFH. My understanding is that w/ condos and townhomes it is imperative to vet the hoa/condo board and see if they have cash reserves.