thank you all (and fdjake especially) for this thread!
for us newbies that ARE going to make a future in REI happen, it keeps us motivated.
i have been taking the ‘boring’ route for 6 months now, and by mid-december i will have paid off $21K in debt (credit card, auto and school loans). and that will be everything! that’s 29% of my gross income. 10% is going to my 401K. after it’s all said and done, i’m living pretty small. it’s amazing the cuts you can make (dinners & drinks are huge alone!)
next goal for '08: a second job related to real estate to further fuel my education (and my savings)
2009: $25K in emergency fund savings that i know i should have.
2010: buying a primary residence. i’m in so cal, so hopefully we’ll be looking at a better time to buy in.
2011 and beyond: buying investment properties!!
whew, it’s going to take a while, but i’m keeping my eyes on the big/end goal. eventually becoming a full-time REI!
it’s not easy, certainly not overnight and it takes a LOT of discipline.
and sometimes it’s hard to explain to the coworkers and friends why you can’t go to that friday lunch/movie/happy hour, etc. but, it’s getting me that much closer to my goal. and that’s all that matters.
thanks again to this site and all of the contributers!
I’m new to real estate investing. Actually, I’m not an investor as the only real estate I’ve purchased has been my own home. I found this board about 3 months ago and started reading the posts. I’ve also bought a few books on real estate investing, landlording, finance, etc.
I firmly believe in fdjake’s advice. It doesn’t matter what you want to do in life, but you better have some type of plan to get there. What have I done to attain financial freedom? First, I got a good job with a good employer that had benefits. I save money from every paycheck above and beyond my 401k. I’ve been working for longer than some of the others on this board so I’ve got some cash reserves. Now, I’m looking for something else. I’ve eliminated franchising. I spent about a year researching franchises and never found one that seemed worth the huge franchise fee. I want to be self-employed not franchised. I’m interested in RE. I’ve owned two homes and both were fixer upper’s. The first one I bought and fixed up with the intent of re-selling. I lived there for about 5 years and got a big down payment for my second home. My current home is also a fixer upper, but I’m fixing it up with intent of living here permanently. I love it, and I’ve also started a small business from my property that provides a decent second income. I’m leaning towards landlording as a RE choice and would like to eventually get into commercial. I can see me owning a small office building or a strip, shopping center. For now I’m looking at residential properties. I have a 10 year time frame to become self-employed as I’m well employed, and I don’t have the “attitude” that working 9 to 5 is the worst thing that can happen to a person. In fact, I’m counting on my steady income to help me get the bank loans that I’ll need. I’ve given myself one year (end of July 2009) to find my first property.
My wife and I decided to move to a townhouse and sell our suburban house. The plan is to use the equity we have to buy a townhouse free and clear. Use 25k we have in savings to buy an investment property to rent using Propertymanager’s 50% rule. Over the weekend I did some financial analysis and projected my financial plan/cash flow over the next 12 years (time I am estimating it will take me to replace my current income with passive income from the rentals).
It was a very interesting exercise to do this 12-year analysis. I recommend to anyone that is working on becoming more disciplined with money to invest some time planning for the future. It is a great way to keep motivated.
j1dias,
Very true about having a plan and putting on paper what you want for your future. I’m trying to replace my current income over the next 9 years, so I can retire from the military and do REI full time. As a note for discipline, I track my bills/IRAs/529s/etc in an excel spreadsheet. Nothing fancy…on one sheet, I list all my bill balances, min payments, due day of the month in a table at the top. I also list the interest and principal paid to the appropriate bills. I total the min. monthly payments to show my obligations. Below the table, I keep a running tally in the columns of my total debt, amount paid on debt, and debt goal. By doing this, I can see how far I’ve set myself back when I make a large purchase. It’s almost like the difference between paying cash and seeing the cash leaving your hands or paying by card. I do the same tracking with the IRAa and 529s to track performance over time. I just think by looking at it and keeping it updated keeps you true to your goals. It’s empowering to see things coming down as planned. If I get off track, it’s disheartening and motivates me to fix it. Our sacrifice right now is having my wife and kids stay with family while I’m deployed so we have no house payment. We did that, got rid of the home phone, cable, dropped insurance to comprehensive only on the cars, etc. to lower our expenses. I’m also blessed that my wife isn’t one of those that deals with me being gone by shopping. This is all helping to set us up to buy a couple places upon my return. It’s so important to put your future goals in writing. You have to know where you want to be and set reasonable goals for getting there. If you deviate from your plan, know why and how you’ll get back on track. Just be realistic based on your income. If you set unattainable goals, you’ll always be disappointed. Doing analysis for the future helps you to see how acquiring properties brings you closer to your future income goals.
Justin - I agree with your comment about setting realistic goals and tracking your performance against those goals. But I also believe that when you start you may not have all the information to be able to identify realistic goals. In this case, I believe you should set a goal and over time adjust it. This is what I did over the weekend. It seemed a little bit crazy to setup a 14 years plan. I am sure the reality will be different than the plan. I hope it will be better because I believe I setup a conservative plan. However, due to the fact that I am new to this and still learning, there is also a risk of not meeting the “conservative” goals I set for myself.
In short, I believe you need to set your goals, start executing, and then adjust as you go. And we are blessed because we have access to this great forum and to the Internet. I can’t imagine having to start a new business in an area that you don’t know much without access to all the information we have today. I guess there are some guys here in the forum that started when Internet and forums were not around… Kudos to them!
I use Money to track all my expenses. It is a great tool. The good thing in my case is that because I track everything in Money (and set a monthly budget) I can get my wife engaged. When we created the budget we did it together… I can’t tell you how hard it was to setup those $80.00 per month for beauty stuff (nails, hair, etc… :O).
Anyway - good luck with your plans. Keep us posted.
You must be talking about all those “BAD POSTS” I made 2 years ago predicting the MESS the real estate market has become and it’s crippling effects on the GLOBAL economy?
Personally, I think you buy these stocks when we are at the very bottom of the recession. We’re not there… YET!
Look at what we’ve been told over the last few months…
“We are going to miss a recession.” Yea right… HELLO, we’re IN ONE NOW!!!
“The housing market has bottomed” OH really?? Foreclosures are up 50% over last years DISASTER!!
I don’t even know where to start with these comments. If a GLOBAL HOUSING CRISIS can’t create a recession, then maybe OIL going up 100% in a year can do it? The media is a JOKE. We’re not even CLOSE to the bottom of this downturn. The big home builders will hit single digits before this is over.
Here’s a nice 20 year chart on CENTEX (CTX) Pay close attention to the late 1980’s to early 1990’s recession years. Anyone here want to guess what the path of least resistance is on this stock??? HINT…It ain’t UP!!
How do I know this??? Look at the historical charts on these companies. They TANK when the economy REALLY hits the skids. We’re NOT there yet… BUT…JUST WAIT…this little OIL shock we’re all dealing with now will have DEEP and LONG LASTING effects on an economy that is “already in recession” according to Warren Buffet.
One last point…Has anyone here noticed the GLOBAL impact of our economic situation??? IT’S HAVING A BIG EFFECT!!! Google search “England’s Housing Slump” then try “Spain’s housing crash” Keep an eye on these events because the LAST decent segment of the American economy is EXPORTS. As the global economy SLOWS so will foreign demand for our goods and services. In my opinion THIS will put the finishing touches on ANY debate about a recession. Once you reach a point where NO ONE is arguing over WHETHER there IS a recession, your probably near the bottom of it.
Start paying attention to the INVENTORY levels of UNSOLD homes, currently they are still rising nationally. When that starts to drop, or even starts to stabilize, the time will be at hand to load up on the home builders!!
But… you better be VERY patient. I mean 5 to 8 years worth of patience. If you are… Those stocks will make you a PILE of money.
I live in the NYC area. I have an apartment, paid for, and an investing property with 4 apartments. My credit is way over 700.
I want to move to CO. I will rent my place in NY. I am looking to buy 2 properties in the Denver area, one to live in and one to rent. I am a very conservative investor so I won’t mess with short sales or foreclosures. I want only REOs. How do I go looking for these sales. Is RealtyTrack the place to subscribe?
Thanks for your help
I’m a newb to REI and I’ll gladly take your advice. Now if only I could convince my Gen X friends that the road to financial independence is not paved by racking up credit card debt and spending all your time talking smack to 14 year olds online during the latest Halo tournament.
You’re ALREADY so far ahead of your competition (friends) it’s not even funny!
Just the fact that you realize the mistakes your friends are making shows how smart you are. Learn from their mistakes, and let those lesson MAKE YOU MONEY!!
The BEST advice I can give you is to SAVE like your life depends on it. No matter how much money you make in your lifetime YOU CAN NOT BUY TIME!!! By starting EARLY your getting as close to actually BUYING time as you can. Every successful investor I know makes the same comment…
I wished I started saving SOONER!!!
Oh…about your friends…take this from someone who’s been trying to convince friends to invest for themselves for 20+ years…
Plasma bank = $65 week paid for a divorce/ gas now
auto draft from checking to savings $75 every 14 days.
Have $350 month held in extra taxes from pay check = over 7K in refund this year
started a small business resulting in about 1k saveable monthly.
Results = over 16k liquid in 1 1/2 years
looking for a good deals in 1-4 unit buildings to get started, first one fell through not enough capital :banghead should be able to fix that by end of this year
just discovered business savings at Chase pays 5x interest of regular personel savings accounts.
Brad
brsdb3381 - not sure if you realize that you are lending money to the government at 0 interest rate. you may want to consider reducing the amount of tax withheld and invest the money in a savings account.
Even better than that - there are some local banks that offer checking account at 5 or 6% APR. I bank with Az Bank and Trust and they pay me 6.01% APR - all I need to do is to use my debit card as a credit card (basically I need to sign instead of use my PIN) 12 times per month - easy; and get electronic statements - easy.
It is a regular checking account. They offer this rate for the first $20k in deposits. If you have more than that you can open two accounts. And it is not an introductory rate. You may be able to find a similar account in a local bank close to you.
Thank you, just the exact reminder that I needed. I was feeling depressed yesterday because a friend who had shown interest in partnering with me for my first REI purchase in NYC is having doubts about staying in the US and wants to move back to Sweden. However reading this thread, I have my confidence back and will make tackle all the hurdles in my way with positive action.
I am already quite disciplined and have cut back on all unnecessary expenses. My two credit card balances are a little high so I am going to start paying those off as much as I can afford each week which will put a halt to damage to my credit rating.
I have started up a second part time job as a guitar teacher and up until I read this inspiring post, I was going to spend all that extra income on better musical gear, I now realize that if I am to take my investment plans to the next level, I need to continue to raise capital and so I have just set up a monthly deposit to a separate account and will be putting most of the money I earn from teaching into savings.
I can’t believe I had forgotten such important basics as not spending everything you earn…
So a big thank you for setting me straight again.
Peace
Myles
I am a newbie looking to purchase my first investment at the end of this year, meanwhile spending time researching. I guess i apply to the 1% rule, because I decided that I wanted to make this investment December of last year and started saving since January.
-Every week, 2/3 of my paycheck goes into savings; yes 2/3!!! i do ok for a recent grad so it is about 400-450 a week
i also invest 8% to my retirement savings account and have some other money (not much)invested in roth ira and mutual funds
-living cheaply, recently moved and considering moving in with family to save
-dont have a nice car or plan to invest in anything nice
-restrict some activiites when prices are steep
point is, at the end of this year, i plan to surely have a lot more than 10% saved from my gross. i have the disciple, desire, and work ethic…unfortunately i have no idea where to turn to for mentoring or guidance. i do not know anyone in the field or that is involved in this business to lean on. how can i find these people?? i blieve it imperative to being successful.
Looking to buy end of this year an investment property. currently dont own anything and bounce around a lot with my job. i plan to keep my full-time job while continuously investing but hopefully will be able to stop working full-time in the next 10 years or so. i am 24.
So thank you for the advice and i am already do that and more - but now what?!