All Forum Posts by: Joel G.

Joel G, Let me share with you my retirement plan; maybe you'll find some interest in it. Right now I am working as a Realtor and General Contractor. All the money I'm making in this business is earmarked for rental properties. I believe the key to being wealthy and happy when you get older, at least for me, is owning many buildings. I think of a rental unit as a bank. Instead of putting money into an account at your local bank and having it sit there and depreciate, you put it into a building that pays itself off and hopefully a building that goes up in value over time. When I get to 5/6 or 7 buildings, or more :), whichever amount I know will provide me with a 6 figure income just from the rents, I plan on "retiring." I put "retiring" in quotes because my plan then would be to quit my jobs and be a full time property manager for my buildings. Cut the grass, shovel the snow, clean, chit-chat with the tenants, etc. Run my buildings as my full time job. The beauty of this plan, if all goes well of course, is if I'm making a good enough return, I could hire a property management company to run those buildings and my wife and I can spend time traveling, racing cars, doing whatever it is we'd love to do and still have 6 figures coming in. For me, that is the ideal dream.

If I were you, I'd start with one building, maybe a 2 or 3 flat just to get your feet wet. If you find a good one the rents should pay the mortgage, taxes, insurance, etc. and there should be a few hundred left over which you should save for repairs or for the downpayment for the next building. Once you're comfortable being a landlord, and you think it's what you'd like to do, purchase another one. Then another one. Before you know it, the left over profit each year will accumulate quick enough to where you'll have a downpayment for a 4th. Then you can use the profits to pay off the 1st one you bought and leverage it to buy a 5th! Etc, etc. Sounds easy and far fetched to many, but I've seen it done and really hope I can get it done too :). Not sure if this post will be helpful, but hey, maybe it will be.

Marcin,

Thank you sharing your plan with us! We too are very interested in acquiring hold properties for long term cash flow. You have definitely thought through your plan and I believe that is (at least n some respects) the biggest part of the battle...it's much easier to get to Disneyland if you know where you are going!

Good luck on your journey...I betting you have good things coming your way...and please let us know if there is anything we can do to help you while on your way!

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Originally posted by @Scott Gray:

As someone just starting out, this has been an excellent exchange of ideas and information. Just what I needed as a newbie.

I understand you can rollover your 401k to a self directed IRA and use these funds to invest in real estate. There are some restrictions though. Someone with knowledge of this will chime in hopefully.

Thanks for the insight.

Hi Scott,

We are interested in that very subject as well...it would be great to not be held to only certain investments as we are at this time. We plan on learning a great deal about this in the near future as it seems the structure of using these funds is almost as important as what we will ultimately invest in.

Good luck in all that you strive for!!

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Originally posted by @Jack Butala:

@Joel G.

Flipping land at the beginning of your real estate career is a low stakes way to learn about transactions and accumulate serious equity pretty quickly.

I started my company with $500 in 1999 and generated more than $20M to date without borrowing money or taking on equity.

I have a free ebook on my site. Feel free to take a look.

Good luck and let us know how it goes.

Hello Steven,

Thank you for your feedback. I have never really considered land transactions...mainly because I know next to nothing about them...glad to hear that you have had such great success!

Tammy and I will definitely check into your ebook and poke around your site...thank you so much for the invitation!

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Originally posted by @Robert Musallam:

@Joel G. Welcome To BP!

As others have already said, TONS of great people and info here to help you learn whatever you're interested in!

See you around the forums!

Thanks Robert! Enjoying them, and learning from everyone already!

See you round!

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Originally posted by @David Faulkner:

Hi Joel,

Normally I'd advise starting small, in your backyard, doing all the work yourself, and focusing on cash flow. This let's you learn the business while the stakes are low, then scale up once you know what you're doing (and prove it).

In your case, though, because of where you live this may be difficult. If you like Texas and have friendlies on the ground there, I'd start by looking there. If you can find jobs there, even if you have to take a pay cut, what about moving before you retire? You could likely buy a house for cash from proceeds from your CA home, and the gains (up to $500k) will be tax free if this has been you and your wife's primary residence for more than 2 yrs. Living mortgage free will allow you to save like mad and invest in rentals in your new, better cash flowing, Texas backyard. A big move, to be certain, but a low risk, potentially high reward option for getting started. As an added bonus, when you leave your CA jobs, you can roll your 401ks into a self directed IRA and invest in RE as well (notes and/or rentals, tax free income if you turn it ROTH).

Hi David,

You have hit on the one factor that we are having the most trouble figuring out. BA REI seems out of our reach...but good incomes approx. $200k between us...OR moving back home (Tx) cash in hand to be sure but probably a haircut down to $100k per year if we're lucky, but more affordable properties to be sure...hard to decide.

You do make a compelling argument for moving back home though, and brought up some points that we have yet to factor into our decision...thank you for that feedback.

The 401k rollover is something we know we will need to do...and some of the rules concerning its use in investing are pretty difficult to cut through...have you found a good resource for learning the ins and outs of using a 401k for REI?

Thanks again for your thoughtful insights!

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Originally posted by @Alex Morstadt:

Congrats on jumping into the fray @Joel G.!

One of your biggest assets is having a spouse with the same goals and positive outlook that investing in RE as you do. It took being very successful in our first investment to truly get my wife involved. Lucky for me, she is way better at all of this then I am!

You've got the goals, now write down a plan that will help you get those. Make sure it starts within the next hour. The first thing you have on your "list to do" can be something that you do immediately and can cross it off. That way you get the satisfaction of moving forward today and not putting it off tomorrow.

Good luck... I'm looking forward to your success!

Alex

Thank you for your advice, but first...and more importantly...thank you for your service and your family's service to our country. Tammy and I love all of our servicemen/women and families and give thanks for them daily as not only our heroes and protectors, but as the very fabric of what makes our country great...truly...thank you!

Now onward...KAILUA...are you kidding me THE...MOST...BEAUTIFUL...BEACH...IN...THE...WORLD!!! How can you even stand doing anything but looking out on the MOKs and Flat island and not just stare all day long??? I would never get anything done if I lived there! Tammy and I LOVE that beach...a miraculous place on earth.

I have always given that my wife is smarter than I am...and things are much quieter in our home given my position on that subject...and it sounds as if you may have found the same secret in your union as well :)

It is wonderful to have a partner that shares in your hopes and dreams...it will 25 years of marriage for Tammy and me this November...and as I always tell her...its been the shortest 40 years of my life...lol.

Your goal plan makes a lot of sense and we will put that on paper asap. I would do it now as you suggest...but at this time of the night...it would be me that gets scratched off the list...so tomorrow it is!

Thanks for your advice and welcome to you as well on BP.

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Originally posted by @Radhika M.:

@Joel G.

Welcome to BP. It is a great place to learn about RE investing. I am pretty new my self and learning.

We are investing locally because that is what we are comfortable with.

I typically am nervous about investing out of state but in your case since you plan to move to Texas eventually and seem to know the area I think that could be a goop option.

Since you seem to be open to selling your house to start your investing one thing to consider is house hacking in a duplex/triplex or 4 plex. That way you get still live in a property you own and have your most of your mortgage covered by the tenants.

Good luck.

Thank you for you thoughts.

Moving back home is certainly one goal we have as it will be nice to get back closer to family...but don't get me wrong the Bay Area is really nice...and we will miss it when we leave someday...but will write it up as a wonderful chapter in our lives!

Your advice on a MFR is a VERY interesting one...when we sell this home...we have been trying to figure out what our next step would be...as it puts us in a bit of a dilemma...we stay and keep our jobs and the security/opportunity it affords us for REI but we wind up renting (not happy with that...but a means to an end) OR we move and now we have no job history and have to start building again from ground zero...but possibly live in an area that we can really start digging into properties and working our plan.

BUT...working here and possibly getting into a MFR could wind up being the best of both worlds...if we can find one that is...never really looked in the BA for that kind of situation.

I will DEFINITELY bring this up to Tammy tomorrow...I think she will like the idea!

Thank you again for your thoughts!!

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Originally posted by @David Nolan:

@Joel G. Hi Joel and welcome to the world of REI for a living.

I would suggest the following as a start. Write a detailed business plan of what you want your business to be. This is a business so treat it like one. Pay particular attention to the SWOT analysis. Strengths, Weaknesses, Opportunities and Threats. Your Strengths and Weaknesses are unique to you and are basically under your control. The Opportunities and Threats are what the market controls. You would be wise to be sure an have a plan to take advantage of the Opportunities and mitigate the Threats.

Once you have done those things then set some goals. Be sure your goals are in line with your values, lifestyle choices and financial capabilities, one of which is to understand your personal risk profile. This means can you live with a lot of debt, some debt or no debt and be at ease with yourself. If you cannot handle being in a lot of debt then be sure not to overly leverage your deals. Then set a realistic budget, and stick to it.

After you have done these things your path should appear a little clearer as to what types of deals you might like to do and where you might like to do them. This would then lead you to one of the most important aspect of REI. Understand the drivers of property prices in your chosen market. Simply following the crowd as many do and relying on the market to drive prices up, with little or no knowledge of how it is happening, what is driving it, is very dangerous indeed for a anyone in this business. You NEED to know what drives your market. Is the market at the bottom of the cycle or the top? Can I add value to this deal? Is it the right property for my objectives as per my business plan? What are my risks both financially and emotionally? Do I have confidence in this deal? These are all questions I would ask before I do a deal.

Property markets are cyclical, they move up and down. Please do not fall for the false belief that property always rises in value, it doesn't. Develop a sound business plan and stick to it. Learn as much as you can about the market you choose to work in. Don't over extend yourself financially, emotionally or physically. Stick to what you are capable of and you could enjoy a great career as an REI.

Good luck on your journey!

Thank you so much for your thoughtful advice David!

We will definitely invest time for a proper business plan...and your template is very well thought out indeed. Our strengths and weaknesses will be obvious to us when writing our plan...BUT is there a system you use for determining a markets opportunities and threats, like a pros and cons type list, or is it just learning to sense the way a market will react as an overall analysis of the ,armed itself...more like an economist would?

I'm a real news and stat junkie when it comes to an area I'm interested in and have always had an innate sense of which way a market will go...ie. We got out of the stock market in January of 2000 before the crash in April of that year...we didn't buy into the San diego housing market in 2004 feeling that it didn't have long til it went sideways...the problem with that was timing...isn't everything...the stock market thing was obvious to me anyway...the housing thing made sense to me but I missed the timing by years...when it finally fell apart...it happened EXACTLY as I had been expecting for years...the other problem is I don't always know WHY I know something...and that is a a real problem...that being said is there a way to start quantifying these things I know so that I can be a little more in tune with the markets or do you use certain indicators that just help show where a markets is in the cycle? Would love your thoughts on that.

Our goals have evolved since our kids have started getting to young adulthood...so that's another aspect that we will have to reconsider as to what we really want.

Would certainly love to hear your thoughts on the things I mentioned above, but wanted to say again how much I appreciate the time you have taken to give us your very well thought out advice.

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Minh, not sure how it happened but part of my last post looks like your quoted post...I have no idea how that even happened...except computers hate me...so maybe that's it...but there is a little more at the top of that post back to you!

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We will also make sure that we don't over leverage ourselves...and speaking of that...what percentage of our net worth would be considered safe to invest. Tammy and we're talking about this after reading your post and didn't have an idea...and granted there are probably many different thoughts on the matter...but what do you feel is a safe percentage to invest...might be a good question to open another post with.

In other words...If we have $400k available to invest...what amount could we invest that would give us the greatest chance to succeed, yet still be considered not over leveraged?

In my head I want a cushion, and would only be putting 35-40% of that amount to work at any one time....and as our account grows the percentage working may grow as well...but it seems to us that throwing it all out there at once with nothing to fall back on would just be reckless...like betting on red every time in Vegas....you may win for a while, BUT in the end you will lose it all...think 2008. What are your thoughts on this subject?

As far a the Lamborghini goes...I will leave that choice up to you...but I will take a ride in it with you someday though...for me I'm more of a truck guy...just a reliable ol' pickup truck and my girl pulled over next to me and I'm all set...I did see a '65 mustang convertible that would look AWESOME wrapped around me though ;)

Thanks again for all your thoughtful comments!

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All Forum Posts by: Joel G.

Joel G. has started 4 posts and replied 65 times.

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