All Forum Posts by: Max Briggs

@Shiloh Lundahl

I am curious though. Maybe we should check back in in 5-10 years to see who’s further along. It would be an interesting experiment with an admittedly small sample size. We aren’t too far off. I’m investing with about $450k right now.  I’d be curious to see who wins the race to $1M. Not really an active competition, just a friendly mutual observation. 

@Shiloh Lundahl

I think his advice is worse than that. Many of the things he promotes are not just bad for the average investor. They’re bad for all investors. Be careful of “advanced strategies”. 

For example, hedge funds and VC struggle to keep up with the S&P. People think they are “advanced” because they are only available to qualified investors but in many cases they are simply inefficient in that they take on too much risk for their expected return. 

As far as I can tell Kiyosaki is telling you “don’t be conventional” and the alternatives he offers are worse than conventional. 

@Shiloh Lundahl

I don’t know if I’d call my advice a system. It’s more like pointing out that conventional personal finance advice is far better than anything that speed out of Robert Kiyosaki’s mouth. 

But to answer your question, I'm not sure exactly what you mean by active. If you mean day trading or actively managed funds then it will take you longer than what I quoted before, because commissions and fees will eat into returns. If you mean that you are willing to actively manage rental properties, then I'd say that you probably have the potential to receive 15%-18% annual return. I have three rentals that return about 18% CoC right now, if you count return on equity they're even higher than that. Assuming you have similar deals wherever you are looking to invest you may be able to do that too. With an 18% RoR you'd double your money every 4 years and reach 1.2M around 8-10 years from now.

@Shiloh Lundahl

it would depend on your risk tolerance and asset class preferences. 

With US equity valuations as high as they are now I’d expect low average returns over the next 10 years or so. 

If you invested in A combination of overseas developed and emerging markets and financed cash flow real estate I think you could realistically see returns above 10%. If you wanted to go all in on financed self managed real estate deals you could probably do even better. But using 10% assuming no external contributions you are probably looking at doubling your money every 7 years and getting to $1.2M in about 14 years. 

You could cut a lot of time off that if you are continuing to contribute to the investment over that time period. 

@Shiloh Lundahl

I have a personal finance blog that goes into detail on that. I’m not sure if bigger pockets allows me to post links in the forum, but if you dm me I can send you the link if you are truly interested. None of the advice I would give would be radically outside of mainstream personal finance:

1. Maximize your income

2. Live below your means

3. Invest the rest of your income in a combination of retirement accounts, post tax accounts, index funds, and real estate (reit’s, crowd funding, or rental properties according to your needs).

4. Maximize you risk/return position through diversification

5. Rebalance as your risk posture changes or market conditions change (for example real estate came much more attractive after the housing market crash, so expected returns went up, so jump on it).

Most people earning decent money can use that plan to reach financial independence within 20-30 years of work. People that make more and make quitting the rat race a priority can do it much faster.

There’s more detail in the blog, but that’s the executive summary.

Robert Kiyosaki gives lots of advice that can derail a financial future, such as his advice to avoid tax advantages retirement accounts or dumping lots of money into gold.

I have a personal finance blog that goes into detail on that. I’m not sure if bigger pockets allows me to post links in the forum, but if you dm me I can send you the link if you are truly interested. None of the advice I would give would be radically outside of mainstream personal finance:

1. Maximize your income

2. Live below your means

3. Invest the rest of your income in a combination of retirement accounts, post tax accounts, index funds, and real estate (reit’s, crowd funding, or rental properties according to your needs).

4. Maximize you risk/return position through diversification

5. Rebalance as your risk posture changes or market conditions change (for example real estate came much more attractive after the housing market crash, so expected returns went up, so jump on it). 

Most people earning decent money can use that plan to reach financial independence within 20-30 years of work. People that make more and make quitting the rat race a priority can do it much faster. 

There’s more detail in the blog, but that’s the executive summary.

Robert Kiyosaki gives lots of advice that can derail a financial future, such as his advice to avoid tax advantages retirement accounts or dumping lots of money into gold. 

I think that all of his advice fits into one of two categories: obvious or wrong. 

Obvious- “you shouldn’t spend all of your money, you should invest some”.

wrong- you should become an expert in forex trading and use your profits to buy gold.

Wrong- index funds and tax advantages accounts are the devil 

wrong- it doesn’t make sense to hold cash because it is fiat currency. 

it is astonishing to me how many people consider him an inspiration. 

I have three single family rentals for three years and I now have my first horror story. To this point I have been using trans union’s smartmove software to do credit, background, and eviction checks on my tenants. One of my applicants showed up with little credit but no defaults, no evictions, and only traffic violations and verified income high enough to cover well over 3 times the rent and I accepted the tenant despite there being some signs.

He paid the rent in time for the most part until a few weeks ago when he stopped and I could not get ahold of him. I come to find out he’s been arrested. In digging into the details through public record searches I find out that he has had 3 evictions, several drug convictions, and a violent crime. All of this passed the trans union smartmove screen without raising any flags at all. 

Now I know there are an army of people that are going to tell me that I should have done my own screening of the public records, and all I can say is I know. I wish I had. But I thought that’s what smartmove was doing and I trusted it too much. I’m offering my story as a warning. Trans union missed an obvious reject candidate and now I’m paying the price. Hopefully someone will read this and they won’t be in the same place as me. 

Also, if anyone knows of any other background check services that are more reliable please let me know. I am never using smartmove again. 

My short answer is yes.  Cash flow rentals with little appreciation can absolutely be a great move.  You can use the cash flow to fund future deals and build wealth as well as benefit from the cash flow.

My long answer is, it depends on your risk posture.  If your alternative investment is triple tax free bonds it sounds like you are extremely risk adverse.  If you are in the highest tax bracket and have some time to save, you may just be trying to preserve wealth and not really be looking for growth, which could be fine.  If that's the case then real estate investing might not be a great move.  While it will likely be much higher return it will likely be higher risk as well.

If you are fine with taking on risk then I would definitely consider cash flow real estate, as well as other investments (index funds, REIT's, etc.) that have risk that I would perceive as in between that of bonds and that of real estate.

@Thomas Richardson Well congrats on dodging the bullet.  Nice to have no regrets.