All Forum Posts by: Joe Szymczyk

NEVER leave your kids a buisness to share.  It just is begging for issues.  Set up your estate to liquidate upon your death, and give the kids equal shares of the profits.  They can do with the money what they'd like.  If THEY decide to buy rental properties, great!  But don't saddle them together with the same decision.  Not all kids are alike.

Now, back to the OPs question.....

Rental income can definitely support a retirement.  My parents are doing it now.  My husband and I are situating our portfolio to do the same thing. 

As you age, you may want to consider adding a property manager to eliminate the active participation that you have in the earlier stages, so that you are more of a passive participant.  However, I don't think it is necessary to liquidate everything.  You will always be in a better position by living off of the fruits of the tree, and not the tree itself.

I like many have mentioned you tend to reap more benefits with a long term hold strategy and once you pay off your debt you get even more rewarded by reaping the full cash flow potential.

I tend to try and buy properties that I can maximize cash flow from the start even while servicing debt. I have also struggled about when to sell as I am a buy and hold and generally do not sell but as one gets to retirement 65+ one can either continue to manage the properties, hire management to ease your burden and let you enjoy life without the hassles of land lording, OR you can begin a sell off strategy  where you can stagger your sales by selling 1 every other year or spread this out based on your need for cash and cash flow.

In the end it is a personal decision based on your own personal needs. Frankly, working a full time and managing 15 properties can be very stressful at times BUT if I didn't work a day job I think it would be very leisure to put around in my pickup truck and manage my properties. The biggest issue for me now is finding time while forking a day job in NYC with a hour commute each way.

OTOH, if by the time your are 65+ you may be just totally fed up with this business and want to cash out and hopefully by this time you have built up a good amount of equity in your investments if you bought right and managed right you should be in a great position to cash out and find truly passive investments if that's what you desire

It's also hard to predict how one will feel 15 20 years into the future. Things change and events happen also. Long as one has options which is the beauty of Real estate  IE. Sell, refinance, owner finance, contract for deed, lots of options

I'm still in the accumulating stages so it's hard to think about selling  :)

regards,

Chris

The biggest misconception small time investors have is that, at retirement, they are receiving a good return on their properties/investment. In reality by that time most properties are paid off and the ROI is in fact dismally low.

So low in fact that the property itself actually is in negative cash flow and is not a asset but a liability. High risk, low return = poor investment.

No investor would ever hold onto a paid off income property at retirement if they truly understood money, finances and investing.

They have unfortunately lost site of the value of money and are tricking themselves into believing they are smart investors. They are in fact losing income by not realising it's value and investing it smarter.

Real estate is a terrible investment if all you do is use it to park cash when you could triple your returns in something as simple as a income fund.

At retirement if you hold on to paid off properties it is no more than a hobby. Which is fine since retitees do need hobbies. 

 I like it Eugene...I am of the same thought...keep the rentals for retirement..work on those. The rest enjoy hobbies and travel...

I was wondering if management of properties is to hard for someone in their 80s

Joe, I am nearly 66 and retired. I bought several SFRs before I "retired" and the market was just beginning to recover. These rentals have paid me good money every month for the past 4 or 5 years and I just sold one last month. Bought it all cash for 100k and sold it  for 180k. I don't see that neighborhood growing too much more, so it seemed a good time to sell.  Made a pretty good return on it and I intend to reinvest in further properties. I enjoy the little bit of work that they do require, and intend to keep at it. One can only play so much golf! 😊

Joe, I am nearly 66 and retired. I bought several SFRs before I "retired" and the market was just beginning to recover. These rentals have paid me good money every month for the past 4 or 5 years and I just sold one last month. Bought it all cash for 100k and sold it  for 180k. I don't see that neighborhood growing too much more, so it seemed a good time to sell.  Made a pretty good return on it and I intend to reinvest in further properties. I enjoy the little bit of work that they do require, and intend to keep at it. One can only play so much golf! 😊

Although I'm not retired from the W-2 job world yet, that is EXACTLY the reason I started in REI. Not to be a Debbie Downer, but I have a serious medical condition that will shorten my life a good bit. Even if I live to be the more typical retirement age of 65, I'll probably be severely disabled by then. I needed to find a way to retire much earlier than usual.

Buy/hold REI was one of the answers I found. A monthly income that is my own business.

I started 6 years ago, am 44, and already at a place where I could almost replace my W-2 income from net cash flow alone.  Give me another 3 years and I'll be there.  I also keep my expenses down by keeping my own lifestyle comfortable, but not extravagant in the least.

Never say never, but I don't really plan on selling my properties, as long as I forecast their value holding steady and they are still a good ROI. I manage things myself at this point, but might need a PM for the future.

That's my retirement plan...at least "retirement" from working for others...in a general nutshell.

I think there are some markets that are hot, hot, hot but no inventory. This guy seems to think these cities are hot. I buy using Subject To, Wraps and Lease Options and then sell to tenant buyers and I carry the note. So I don't worry as much about the vagaries of the market like I did when I was doing Fix & Flips. I think the guys doing Fix & Flips can make a ton of money in certain markets if they can finance the deal and then sell. My business picks up when people can't sell on the MLS and I just ride it along clipping coupons for cash flow.

Statistically 1/3 of the houses on the MLS don't sell. (In Maricopa County anyway. I'd have to look it up for other markets.) And that's in a good market. So when you combine lack of inventory, 1/3 of the houses not selling and the Fed talking about raising rates, it leaves me scratching my head how the Fed is going to raise rates without crashing housing. But, that's why they get paid the big bucks and I just watch and smile.

 Real estate is like everything else, it has it's up and downs. I buy and hold for the long term. There are tax reasons and cash flow reasons for doing so. From the charts I've seen perhaps only Vancouver Canada and Toronto Canada and San Francisco are ready for a bust. There is still growth in the other markets, how much growth is a matter of great discussion. People who Fix & Flip in some markets, are doing very well because housing prices continue to go up. But those markets are hard to cash flow in. Some are having a hard time finding good properties that are affordable to Fix & Flip. So, I don't think we are dangerously close to a bust at this point.