All Forum Posts by: Kevin S.

 Kevin,

There are some really cool statements in your response. You definitely put many of my thoughts into actual words that I wish I could done on my own. You are spot on when it came to your philosophy on rearing the kids to allow them to pursue they interests and nudge the ones that may want to come back into REI later. All of my children are different and have opposite strengths and weaknesses. They are motivated and interested in things that are modern and out of my realm of understanding.

Thanks for redirecting me back to that understanding. I have always felt that way, but I had been a bit frustrated lately at their total lack of personal interest. I had given each a laundry room and allowed them to keep all the proceeds. It was great for about a year, then they all lost interest. Might just be their teen phase.

@Kevin S. https://www.schwab.com/ira/ira-calculators/rmd

This? So if you do born 1964 and $1mil, its says ~$80 rmd STARTING at age 73. So, for somebody TODAY at age 60, would have a ~$80k rmd WHEN they BECOME age 73 with I'm not sure how much IRA/401k balance at that time.....

As mentioned above.. there are a huge number of assumptions going on here.  You even said this post is a hypothecal example.  As mentioned, it all comes down to your strategies and goals.  That needs to be followed up with sufficient research/education.

Hi Kevin  just a quick note to connect and to say thanks for your thought provoking questions insights and analysis you bring to the forum. 

Will be 59 soon and looking to give up active work and the 1M questions was indeed where my emotions has/have been wondering. Am comfortable with income from 1M 4d nxt 30yrs at fairly moderate return of 7% ...Once again thanks and am following ur post keenly.

There are so many assumptions that keep getting added on. Members of varying degrees of experience will make different assumptions on this hypothetical question.

For the fun of the thread, thus far assuming approaching 65 (ready to retire) after having worked... so I will also assume there is a sizeable Social Security payment on the way. With that, having worked to 65 and saving $1M, one way or another, there are a few other assumptions to be cleared up. Is this person in poor health, good health, or excellent health with excellent family history. Furthermore, is there a spouse, kids, grandkids, etc... AND is there a primary residence already established or paid off?

This is why it is funny not to predict varied degrees of opinions from the forum.

For the sake of simplicity, based on all the assumption posts thus far, I would carefully consider NOT to invest in RE. For a person coming up on 65, having worked all their life, with good health and normal family health history, that $1M in a secured investment paying out a steady 5-7% is better than the stress of owning any RE. Focus on living within the SSI allotment, supplemented by the interest on the $1M, and enjoy the freedom from Landlording stresses. Find a partner to spend your days and nights with, if you do not already have one. There is nothing more valuable than a person you care for by your side when you are blue and when you want to go out and about. At the same token, if you already have a partner, spend as much free time with them as possible to make up for that lost time of working to 65.

This is just my opinion. I have experienced, first hand, so many healthy people drop out of the blue, as young as 40s, but often in their 50s and 60s. I have also met with many that look back on their chase for wealth, regretting their absence with those that count. $1M is sizeable. With all other normal assumptions, unless this person is ALREADY in the game, I would suggest to put that into a high yield investment account and enjoy life.

Now, if it was me, base on my current situation, I would leverage to the hilt and go for a distressed apartment where there is obvious value add opportunity. Pick up a $4-$5M with 30-50 Units in a C area at the border of a B area, or in an expanding area. Spend 12 - 24 month stabilizing and 1031x when the valuation hits $6-$8M. Then rinse and repeat. If you are aggressive, that original $1M will easily control at least $20M at 50-70% LTV at the end of 10 years. Using average assumptions, that could generate $300- $500K/yr cash flow... easily.

 That would depend on the market you're in and your AGE. If you're under 65 or so then you can lever up on the RE and let the tenants pay off the mortgage
1. Cap rates in most markets are pathetic and not much more than the 10 yr T-bond, future "appreciation" is baked in to the RE markets. Thus, to make a good return, and decrease the risk of a long-term flat market, you'll need to use leverage in RE (tenant pays off the mortgage), so you'll make money irregardless. If you can't leverage the RE and cash flow from day 1, then it's a hard pass
2. Important: you'll need to find a good property manager, this will make or break your RE investment. So you'll need to cash flow after PM fees, taxes, insurance, repairs, vacancy and the mortgage pymt
3. The best way, if you're dead set on owning RE rentals, is to find a property in a good neighborhood that will attract GOOD tenants... from a wholesaler. You can find them in Facebook real estate wholesaling groups. Have them add you to their list of cash buyers. When you find one well below market value that needs work, you can put some money into rehab, then rent it, and you'll have instant equity and a higher cash on cash return
4. For stocks, in this environment, I would only own large cap companies with a solid history of increasing dividends year after year, and reinvest the dividends which decreases your cost basis over time. Decreasing the cost basis protects principal
5. You could do a 50/50 mix of stocks and real estate (depending on the real estate market you're in). In CA, not likely, in OH, then yes very likely, for example