What I am doing works for me, for my goals, because of where I am in life. I am not investing FOR retirement, I am investing IN retirement. I retired from the corporate world and drew my last salary check in August 1998, seven months before I turned 50.
Up until then, I was in acquisition mode. My goal to become financially independent by growing my passive income to the point that it would replace my take home pay, and I could “retire”. My passive income would be more than enough to support my “retirement” lifestyle. I was not very aggressive about paying down debt in those early years, because I wanted to save all my excess cash flow to acquire the next property.
I could have just paid off the mortgages on a few proeperties to achieve my goal, but I chose instead to mitigate the risk of geographic concentration. I decided to diversify my holdings with a multistate investment plan. That way a negative economic impact in one local area might not affect my rental income in another state. Instead of having just a few free and clear properties by the time I retired, I decided to try to get the same income from more properties.
Now that I have a large enough rental portfolio, I just want to increase the annual income my current portfolio produces to stay ahead of inflation, and, consequently increase my net worth at the same time. My real focus these days is on preservation of wealth and estate planning.
Dave - thank you for sharing your experience. I am probably going through your first phase (accumulation of properties). I am in the Corporate world and I am accumulating properties now. Eventually I want to retire from my job and be able to support my family with my rentals. To be honest I have never thought about geographical diversification because of the hassles of managing properties in other states. However I can see why you did it. It makes sense.
This is actually quite simple for someone in my shoes. I would just like to buy 1 SFH property to hold (hopefully rent). It would be very nice if that house requires some rehab work, that should educate me about the process or give me a swift kick in the butt to shape up. If nothing else, maybe put together some deals for other investors.
I hope to have as active a year as I had in 2008. I bought and sold another 4 SFH this year, matching last year’s total. I also bought a 5 unit building early in 2008 for 22K, renovsated it and it now produces $2325 of monthly rental income. I currently am looking at 4 4-unit buildings that the owner originally wanted 700K for them, now she came back last week offering them for 560K. Don’t you love motivated sellers? I’m analyzing the numbers hard right now. Other than that I am looking for some year end reo deals but surprisinly there is very few that I have found that even warrant a secoond look.
I’m going the non-American overachiever route lol. I plan to buy, rehab and rent 7 sfhs this year. From every indicator in the market and current economy, this year should be a boom for investors acquiring reos, since there seems to be some massive reo reform coming up this year with the banks in the mess they are in. So keep your eyes open for sweet deals.
With 7 properties each earning between 100-200 positive cash flow my passive income should increase by over 1k per month at the end of this year
And this is only my first year investing. Once I set a good foundation for this year 2010 is where I really should be pumping my business. Call it naïve hope but I’m psyched about 2009.
We went to our house to paint a few rooms before we move our things in Feb. We spent a day w/ our Realtor looking at some properties. There was one I finally added to our list after seeing the MLS listing for quite awhile. The inside looked very good overall for the price range. It’s currently occupied by a woman and her two kids. She’s been there for 3 years, pays $450/mo, and is looking to stay there.
Here’s the specs:
3bd/2 full bath, 1118 sqft.
listed for $27,950
offered $19K
we’re under contract for $21.5k
taxes are $836/yr
insurance is $235/yr
The facia board on the back side of the house needs replaced and a cheap peel and stick floor in one of the bathrooms needs re-done. Other than that, everything looked good.
We approached the bank about this house prior to making an offer. This is the same bank (local bank…not a big corporate bank) we used for the last 4 we just got. They just asked us if we had the down payment and then gave us pre-approval. The bank VP told us we’re getting more favorable terms than what they usually do for other people (especially in this market) & that the bank President must have seen something in us from when he met my wife the first time she was shopping for a loan. I can only attribute this to the fact we had all our financials well organized for them to see and my wife did an excellent job of presenting the opportunity to them. It’s a testament to treating this as a business and staying organized.
We’re now halfway to our goal of 10 new units by the end of 2009. We’re using a company called GuideOne for insurance. Their quotes are roughly 1/2 of what everyone else quoted us. If you have them available in your area, you may want to check them out.
Picked up another place today. It’s a 3/1 1050 sqft house. It’s a bank repo (Wells Fargo). It has a really good roof and central HVAC looks nearly new. It needs a fair amount of drywall repair. There are some big holes and pushed in places that will need cut out and patched. It also needs the utility room floor replaced, new paint inside, some porch repair for rotten wood, new light fixtures, and possibly new windows. Estimated repairs $3000-4000. Purchase price $9,100. Should rent for $450 when I’m done w/ it. These should be a lot better numbers than what we’ve had on some of our other recent deals.
This is our first cash deal. My plan is to use our money for rehab, get a renter in there, and then go to the bank to try and pull out our money. The payments will be very low and I think I can get most of the money back out of the deal.
This was a quick turn around. We looked at this house last Friday, got it checked out Saturday, put in the offer on Monday, and found out today the bank accepted our offer.
Buy my first property!
Do some networking to get to know other investors in the area.
New REI club starting this weekend. Hope to meet some successful investors there.
Got my eyes on two properties, researching some details.
Want to purchase one and rehab over the summer, hopefully sell it late summer/early fall.
(I’m a teacher)
Then next year, start accumulating long term property.