Retirement / Rental incom (by Roy [AL]) Jul 22, 2017 8:30 AM|
Retirement / Rental incom (by RathdrumGal [ID]) Jul 22, 2017 9:00 AM
Retirement / Rental incom (by BRAD 20,000 [IN]) Jul 22, 2017 9:39 AM
Retirement / Rental incom (by David [NC]) Jul 22, 2017 10:35 AM
Retirement / Rental incom (by WMH [NC]) Jul 22, 2017 10:36 AM
Retirement / Rental incom (by Homer [TX]) Jul 22, 2017 11:16 AM
Retirement / Rental incom (by Susan [OH]) Jul 22, 2017 11:43 AM
Retirement / Rental incom (by Roy [AL]) Jul 22, 2017 11:49 AM
Retirement / Rental incom (by Roy [AL]) Jul 22, 2017 11:57 AM
Retirement / Rental incom (by razorback_tim [AR]) Jul 22, 2017 12:00 PM
Retirement / Rental incom (by WMH [NC]) Jul 22, 2017 12:03 PM
Retirement / Rental incom (by Doris [OH]) Jul 22, 2017 12:03 PM
Retirement / Rental incom (by Susan [OH]) Jul 22, 2017 12:12 PM
Retirement / Rental incom (by JR [ME]) Jul 22, 2017 1:05 PM
Retirement / Rental incom (by Homer [TX]) Jul 22, 2017 1:32 PM
Retirement / Rental incom (by Susan [OH]) Jul 22, 2017 1:35 PM
Retirement / Rental incom (by WMH [NC]) Jul 22, 2017 2:10 PM
Retirement / Rental incom (by Susan [OH]) Jul 22, 2017 2:39 PM
Retirement / Rental incom (by cjo'h [CT]) Jul 22, 2017 2:46 PM
Retirement / Rental incom (by Moshe [CA]) Jul 22, 2017 2:53 PM
Retirement / Rental incom (by Roy [AL]) Jul 22, 2017 3:03 PM
Retirement / Rental incom (by cjo'h [CT]) Jul 22, 2017 3:11 PM
Retirement / Rental incom (by cjo'h [CT]) Jul 22, 2017 3:29 PM
Retirement / Rental incom (by David [NC]) Jul 22, 2017 4:20 PM
Retirement / Rental incom (by David [NC]) Jul 22, 2017 4:27 PM
Retirement / Rental incom (by WMH [NC]) Jul 23, 2017 5:06 AM
Retirement / Rental incom (by Nicole [PA]) Jul 23, 2017 6:11 AM
Retirement / Rental incom (by RathdrumGal [ID]) Jul 23, 2017 7:58 AM
Retirement / Rental incom (by Deanna [TX]) Jul 24, 2017 10:28 AM
Retirement / Rental incom (by Pmh [TX]) Jul 24, 2017 2:00 PM
Retirement / Rental incom (by Not saying [AK]) Jul 24, 2017 2:19 PM
Retirement / Rental incom (by ntj [GA]) Jul 24, 2017 7:06 PM
Retirement / Rental incom (by Ray-N-Pa [PA]) Jul 25, 2017 5:09 AM
Retirement / Rental incom (by WMH [NC]) Jul 25, 2017 5:21 AM
Retirement / Rental incom (by Pmh [TX]) Jul 25, 2017 2:29 PM
Retirement / Rental incom (by David Krulac [PA]) Jul 29, 2017 12:53 PM
Retirement / Rental incom (by David Krulac [PA]) Jul 29, 2017 12:57 PM
Retirement / Rental incom (by Roy [AL]) Posted on: Jul 22, 2017 8:30 AM
This question is for anyone who considers themselves officially retired from the day job AND is using rental income as their primary source of income to fund their retirement years.
Now, if rental income funds your current retirement, how important is it to be diversified in other types of non-RE investments? If the economy goes south and the stock market crashes,...can you depend on rental income to keep you happy when during tough times?
Retirement / Rental incom (by RathdrumGal [ID]) Posted on: Jul 22, 2017 9:00 AM
We bought our apartment building as a way of keeping the same proportion of our portfolio in RE instead of being 100% in the stock market. We are debt free, and live simply in a low cost area. I will be retiring in November. Unless I buy a race horse or a yatch, Social Security and rental income will easily cover our day to day expenses. Withdrawal from 401K, an as needed basis, will cover cruises and Mr. Landlord conventions.
When I was young and wanted "things", there was never enough money. Now that I am older, it takes very little to make myself content.
Life can never be 100% risk free. The best you can do is to manage the risks and store some of your treasures in heaven. --98.145.xx.xxx
Retirement / Rental incom (by BRAD 20,000 [IN]) Posted on: Jul 22, 2017 9:39 AM
Retired at 41. Now been retired longer than I worked, all from rental income.
Debt is the FREEDOM!!! killer-the need for income to keep up with the debt. Eliminating debt reduces the income needed. A handful of debt free rentals can support a respectable lifestyle.
Rentals give me cash flow which is spendable for daily living . Wall Street is not usually a cash producer.
Stocks and market values go up and down but rents continue (with minor adjustments).
Landlording does not have an age limit.
Your recent experience shows it can continue with minimal personal input when you have a helper.
Retirement / Rental incom (by David [NC]) Posted on: Jul 22, 2017 10:35 AM
Just as aside. Remember with a 401K at 70 1/2 the government makes a guess how long you will live and mandates what you must take out or pay a penalty.
search for 401K required minimum distribution if you need to know more about it. --65.188.xxx.xxx
Retirement / Rental incom (by WMH [NC]) Posted on: Jul 22, 2017 10:36 AM
He is fully retired from day jobs since 2012, and me even longer. More money now than when we worked.
We were completely out of the market after the crash of 200(7?) I couldn't take it. But then our fathers both died and then my mother and we inherited a bit of stock and pretty much left it alone, except to pull some out to buy more houses now and again.
I would never depend on it to fund my retirement. We saw my FIL's income cut in half in 2007. --173.22.xx.xx
Retirement / Rental incom (by Homer [TX]) Posted on: Jul 22, 2017 11:16 AM
I started full time with my rentals 14 years ago, I am 50 now, the wife left her job in the medical field almost 3 years ago at 45. She does maintain her license, just in case things go bad. Diversification is important, never put all your eggs in the same basket. Invested in stocks as well, but we all know that could be wiped out in a day of computer trading. Gold and silver, us savings bonds, guns, classic cars, but most importantly are skills I have developed over a lifetime of getting er done, would come into play if things ever went bad. Honestly though, I do think rental income would sustain us, we have been blessed with quite a few paid off houses. --75.141.xxx.xxx
Retirement / Rental incom (by Susan [OH]) Posted on: Jul 22, 2017 11:43 AM
We've lived off our rentals completely since 2006. We owe NOBODY NUTTIN. Completely debt-free.
Next month, we will both get our first (of many, I hope!) Social Security checks. Honestly, I don't know what we'll do with the money-but I'm sure we'll find a way to deal with it!
We also have some individual stocks, bonds, and mutual funds, plus IRA money-and to be honest, our "problem" is different-barring a complete collapse of the countries' monetary system , our only problem is how to lower our taxes-once we hit 70 1/2, we'll have to start drawing down our IRA money-THAT will be a huge tax hit.
Toying with the idea of converting it all to a Roth. But I don't trust the government not to change the rules!
I think that "diversified portfolio" is more important to financial advisors-most of whom have no idea about real estate. I liken real estate to no other beast as a financial asset-it is the only one where you can have your cake and eat it too! --76.189.xxx.xxx
Retirement / Rental incom (by Roy [AL]) Posted on: Jul 22, 2017 11:49 AM
Homer(TX) - For whatever reason, if you were going to put all of your eggs in one basket,...can I assume rental properties would be your first choice?
Brad20K- You mentioned the debt issue. How important is it that you get all of your debt paid off (including your primary residence) by the time your first S.S. check arrives?
WMH - I got out of the stock market at about the same time you did,...it rattled my nerves too.
Rathdrum- I googled Rathdrum and it is actually a small city in northern Idaho. What is the rental market there like? Would Rathrdrum they allow someone with a southern drawl to live there? LOL. --68.63.xxx.xxx
Retirement / Rental incom (by Roy [AL]) Posted on: Jul 22, 2017 11:57 AM
The reason I made this post is because of something you just alluded to. Financial advisers, who are always preaching diversification, seem to know nothing about RE! Why is this? --68.63.xxx.xxx
Retirement / Rental incom (by razorback_tim [AR]) Posted on: Jul 22, 2017 12:00 PM
Roy - the reason financial advisors seem to know nothing about RE is because there is no way for them to earn a commission from it. --70.178.x.xx
Retirement / Rental incom (by WMH [NC]) Posted on: Jul 22, 2017 12:03 PM
We were working with a financial adviser in 2007...supposedly a good one (expensive too.) He subsequently left the business completely.
We had a few others in the past. I still have the expensive life plan booklet one put together for us...hahahahahah!
And we've had several recommend annuities. That's when you KNOW to run away!!! --173.22.xx.xx
Retirement / Rental incom (by Doris [OH]) Posted on: Jul 22, 2017 12:03 PM
We are in very similar circumstances to RathdrumGal, actually pretty much live on SS and retirement and mainly keep small apartment rentals for diversity from other investments. More worried about them going south than the property. --74.140.xxx.xxx
Retirement / Rental incom (by Susan [OH]) Posted on: Jul 22, 2017 12:12 PM
I think the reason financial advisors know/tell folks NOTHING about r.e. is because, despite what the IRS tells you, it is NOT passive income. You sure can't "set it and forget it".
And as someone else said, "if it was easy, everyone would be doing it" It is NOT easy...hard to get the courage to start, hard to keep on when it isn't going well, lots of times-it is just plain hard. Most folks do not like HARD.
As an aside, my cuz just contacted me to ask about some financial/Social Security stuff. (same age as I am-63)He is an engineer, owns his own biz, but it was startling to see how little he understood about finances! He told me, "I like engineering stuff-never was interested in financial stuff".
40 plus years ago, my hubby was laughed @ b/c of where he worked, compared to some of his friends who were working @ the automaking/sweeper/roller bearing factories-he was getting lower pay and a "profit-sharing" plan-that sometimes only added $400 a year to his retirement! That was when we saw the writing on the wall and said we need to find a way to fund our retirement-hence, the real estate.
(His company did in later years, start a 401-K plan-he ALWAYS put the max in, each and every year).
Nobody wants to believe it, but 40 years goes by FAST! I can't believe that we are going to be getting SS...for a long, long time, I hope! --76.189.xxx.xxx
Retirement / Rental incom (by JR [ME]) Posted on: Jul 22, 2017 1:05 PM
Unless one turns over 100% of the management and all operations of their rental property, they aren't really "retired" Most of the commenters on this board use their rental real estate as both an investment and a job (some part time, some full time.) Those who say they are retired while putting in hours per week running their rentals, whether it be scrubbing toilets or negotiating million dollar deals are not really retired. They may not have a boss that can give them orders day to day, but if their business requires their frequent input, they are not as "free" as they think they are.
Real investments require only minimal management. Think a couple of hours a week at the most.
The trouble with most of them is you need money to make money with them, your sweat equitiy doesn't count for much, and margin investing aside, no one wants to loan you money to make investments. You have to get it first.
Few of the 99% ers need a financial advisor, and almost never can they justify their fees in exchange for a higher return.
Keep your investments simple. Ideally, if you have the funds, a good mix is:
One year's expenses in a stable investment, like bank account, money market, etc. These pay 1% or less currently, but will not "tank"
Of the rest of bulk of your retirement assets, divide it 50:50 with an index fund that tracks the S and P 500 or the total market; and an intermediate treasury bond fund.
Buy these only from a no frill brokerage house like Vanguard, FIdelity, or Schwab. Ideally, keep your expenses low...on the funds 0.1% for the S and P and 0.5% for the bonds. Stay out of any hand-holding brokerage/advisor shops like Edward Jones, Merrill Lynch, etc. They will take many tens of thousands of dollars over the years out of a million dollar portfolio.
For 90% of the 99%ers this is all they need to do. Also, never invest in anything more fancy than this. Those that confidently tell you to invest in the stock of a single company like "my Apple shares have done well since I bought them back in '88" are BDing you. Many middle class dreams have been shattered by invesitning in single stocks or sectors, like gold, China, biotech. Just stay away from them. If you get shares of company stock in your retirement account, sell them as soon as you can without taking a penalty.
Some of us just have to fiddle with sh** all the time (me included) or we get bored. The object of that lesson is to have the "fiddle money" investments be not so terrible or large that they sink the rest of the investment ship. A couple of thoughts...
Real estate has a low "beta" that means it is unlikely to follow the stock markets ups and downs. That is good of course. Other low beta strategies include hard money lending, peer to peer lending, buying tax notes, etc.
To sum it up, if you can be fortunate to have even a year's living expenses in a stable investment, you almost surely can ride out any stock market dumps, because you can live on the inome from the stable investments first, the bonds second, the alternative investments third, and by then the stock market has bounced back. Easy peasy.
Retirement / Rental incom (by Homer [TX]) Posted on: Jul 22, 2017 1:32 PM
Roy, the thought of every egg in the same basket is freighting. What if the fox got in the chicken coop? You are right though, if I had no choice and had to pick one. Real estate it is. The equity build up over time is staggering. If it wasn't for real estate, I would have no eggs to spread around. --75.141.xxx.xxx
Retirement / Rental incom (by Susan [OH]) Posted on: Jul 22, 2017 1:35 PM
JR (ME)-good advise.R U one of the 1%?
According to the chart I looked @ on Fisher Investments, my hubby and I are-or are danged close. We *could* turn over all our real estate to a property manager.Wouldn't make it so we are unable to live on our rentals. Just haven't yet-if you've been around this forum for a while, most folks think 99% of all property managers are not worth their keep. Blood-suckers who do a lousy job.
Just my 2 cents.
Retirement / Rental incom (by WMH [NC]) Posted on: Jul 22, 2017 2:10 PM
DH is eligible for SS, me not for a couple of years. He wants to hold off taking it, I want to take it now on the off chance we get hit by a bus while waiting for the "huge" increases...
Our fluid plan is to use the SS money to hire someone to run the biz. Like one of our kids or grandkids. --173.22.xx.xx
Retirement / Rental incom (by Susan [OH]) Posted on: Jul 22, 2017 2:39 PM
Now, WMH-there's an idea I hadn't thought of... --76.189.xxx.xxx
Retirement / Rental incom (by cjo'h [CT]) Posted on: Jul 22, 2017 2:46 PM
WMH,as they say in England "eggs is eggs".In my opinion,you know more than most financial advisors,even if you tied them all together. Some are ok,but most have an ulterior motive.I left school at 14,I acquired a trade,which no one can take away from me,its worth much more than all the university degrees you can accumulate ,but something like that is sadly lacking in this country a d until someone cops on,we're in sad shape especially with the character in Pennsylvania Ave,Paddy Powers the bookies are giving odds that he'll be impeached before too long,they're seldom wrong.you're your own financial advisor,select wisely.......Charlie.................................................................. --174.199.x.xxx
Retirement / Rental incom (by Moshe [CA]) Posted on: Jul 22, 2017 2:53 PM
You need to fund retirement out of what you have. So, where to look for retire funding is dependent on what you can do to generate income from what you have, and thus, the question is, how to take what you have and generate profit from it. Strangely enough, thats what most of us have been doing for years, but now the details are a little more critical.
Generating income the same way that you have already been doing it is attractive, because you think that you know how to do it. If so, that’s good advice: stick to what you know.
Most “financial advisors” are at most Jr. College graduates, on the same level as insurance salesmen. The good ones know the product that they are selling, but are not really competent in the wider sphere of making good money from what you have. Its not as if they were trained at one of the good graduate schools of business to be financial analysts.
There is more money to be made in the stock market, in today’s environment, then there is in Real Estate. BUT, you have to know what you are doing, or the ones who do know will go home with your money. Thus, sticking with what you know, is the best advice for those who don’t want to learn.
The stock market ISN’T going to crash. It might CORRECT (actually it WILL correct, and regularly) and those occurrences are predictable and their effects are manageable. If you want to cook in this kitchen, then you must learn how that works. Even a crash is recoverable, but retirees can’t wait too long. Even the cyclical boom-and-bust cycles are manageable.
Market-based products sure CAN produce cash flow. There are dividends, distributions and gains. The best strategy is to draw out a regular stipend from portfolio to use, while investing the remaining portfolio to get gains that will restore the draw-down, if you can.
It may seem that stocks and market values go up & down, but they actually go up & down within a trading range, and, if properly invested, will not go down outside of that range. So again, you have to know what you are doing and stick to what you know. If you make a mistake, then take your loss and move on.
Self-confidence is also important. The slings and arrows of outrageous fortune aren’t for those who can’t take it. Medical bills alone can eat up grand profits. The purpose of investing is to make your life better, so if you can’t sleep, why be in the market?
One day of trading shouldn’t wipe you out. If you are worried about that, don’t get in. Stick to what you know,
Remember that most “financial advisors” work for a company and are told what products to sell and what arguments to use. Big brokerage houses provide research to the salesman, and everyone is selling the same products to you and to the next guy. Very few (usually independent) advisors understand enough to really tailor a portfolio to individual needs. If they did, they wouldn’t have to take a job as a salesman.
The times are also important. Now happens to be a once-in-a-generation opportunity for growth in the US. Housing is and will benefit from it, but not like other opportunities.
Index funds can be useful, but they don’t gain more than the index. They have only one advantage, and that’s why Warren Buffet advises their use for simpletons. They will also crash, if the market crashes, correct whenever the market corrects, and be equally unresponsive to a weak economy.
On the other hand, real estate investments are highly dependent on the individual market in which they are located. Obviously, they have more value in a vigorous market area than in a complacent one. And those situations change, with time. After all, a market is a market.
Retirement / Rental incom (by Roy [AL]) Posted on: Jul 22, 2017 3:03 PM
Thanks JR in ME for that detailed answer.
Most doctors that I know seem to be poor business people. How did you get so smart beyond a stethoscope?
Retirement / Rental incom (by cjo'h [CT]) Posted on: Jul 22, 2017 3:11 PM
Roy, I'm surprised Google didn't hit in on the original Rathdrum in Co.Down.close to Holywood where McIllroy hales from.Your Southern Drawl would really stand out over there.Doubt you could get anything in the price Range you normally do,so right away you have two strikes against you! Just saying.Aye, surly!!.
Retirement / Rental incom (by cjo'h [CT]) Posted on: Jul 22, 2017 3:29 PM
Roy, I think Doctor Mike has what many people lack in this country"Common sense ",It's too bad the can't teach it in school along with something in finance, like the simple task of even writing a check........Charlie................................... --174.199.x.xxx
Retirement / Rental incom (by David [NC]) Posted on: Jul 22, 2017 4:20 PM
My rough calculations are that if you take SS early at 62 it is only after age 77 to 79 that waiting gives you more gross cumulative money. Seems to me that if you have enough income through other means there is no reason not to take social security early. You don't know that you are going to live to 77 or 78 and if you live longer you probably have had enough income through other means that it doesn't really matter. If you live to 90 and took the social security at 70 instead of 62 you only got an extra 190,000 and really only have 78 are you making "more". --65.188.xxx.xxx
Retirement / Rental incom (by David [NC]) Posted on: Jul 22, 2017 4:27 PM
Not sure my last post was on topic but it was something I was thinking of and I was working on a spreadsheet on social security benefits coincidentally. --65.188.xxx.xxx
Retirement / Rental incom (by WMH [NC]) Posted on: Jul 23, 2017 5:06 AM
Yes, David, there is an arc and that's why I want to collect NOW, as soon as we can, and save it, rather than leaving it in uncertain government hands. --173.22.xx.xx
Retirement / Rental incom (by Nicole [PA]) Posted on: Jul 23, 2017 6:11 AM
David - I've been doing the same rough calculations - not as detailed I'm sure as your spread sheet but on notebook paper. Isn't it a great way to plan the rest of your life ... "guess when I'm going to die".
Roy - I am not big on debt free but on controlled debt. I've got a house I've been paying on for 13 years at $164 a month. 1.5 years to go and it's paid off ... that $164 isn't going to do much for my monthly cash flow. I've got a few other mortgages and to pay them all off tomorrow will generate me approximately $2200 per month. I will also then be short on my cash by about $100,000. Since there is plenty of cash flow without the $2200, there is no way I am going to "hand out" $100,000. The key I learned a while ago was to pay them down one at a time rather than paying extra on every loan. That way if you need to sell or mortgage later, you've got several that are paid off. --72.95.xx.x
Retirement / Rental incom (by RathdrumGal [ID]) Posted on: Jul 23, 2017 7:58 AM
Roy (AL) the rental market is great in Northern Idaho. Lots of the rental stock is being converted to short term rentals, rents are way up on the remaining units. Idaho has fair laws. The biggest problem are the low wages, it is harder find tenants who meet the 3x rule. --70.199.xxx.xx
Retirement / Rental incom (by Deanna [TX]) Posted on: Jul 24, 2017 10:28 AM
Re: eggs, from Andrew Carnegie:
"The concerns which fail are those which have scattered their capital, which means that they have scattered their brains also. They have investments in this, or that, or the other, here, there and everywhere. “Don’t put all your eggs in one basket” is all wrong. I tell you “put all your eggs in one basket, and then watch that basket.” Look round you and take notice; men who do that do not often fail. It is easy to watch and carry the one basket. It is trying to carry too many baskets that breaks most eggs in this country. He who carries three baskets must put one on his head, which is apt to tumble and trip him up. One fault of the American business man is lack of concentration." --96.46.xxx.xx
Retirement / Rental incom (by Pmh [TX]) Posted on: Jul 24, 2017 2:00 PM
Carnegie lived in a different economic & financial environment. In his time it was railroads. That is where he made his $. At that time they were the grease - moving raw materials and then finished goods across an expanding country.. he was so rich he wouldn't notice if a few eggs were broken in his basket. For the rest of us now we need a picnic hamper with different baskets inside. Still, I imagine Gates et al probably have different baskets..... --104.218.xxx.xx
Retirement / Rental incom (by Not saying [AK]) Posted on: Jul 24, 2017 2:19 PM
I work for the government an see who qualifies for food assistance. I have seen a few financial planners an feel sorry for there clients. I don't want to take advise from someone who can't support themselves or family --70.210.xx.xx
Retirement / Rental incom (by ntj [GA]) Posted on: Jul 24, 2017 7:06 PM
While I love RE as an investment, I would advise against putting all eggs in one basket.
Today rents are healthy and RE demand is healthy. In my area, the houses I bought in 2011-2012 have appreciated significantly.
If you woke up tomorrow and your news feed informed you of some financial collapse that dropped RE prices by 50% and rents by 33%, would you still want to be all in on RE?
A bit in RE, a bit in stocks, a bit in J.O.B for me cause the other 2 aren't enough to cover everything.
Predicting the future is crazy, so once in awhile I suggest you play devil's advocate and think about what happens should your investment strategy go sideways.
I hope your investment strategy never goes sideways - but if it does I hope you have a plan. --24.98.xxx.xx
Retirement / Rental incom (by Ray-N-Pa [PA]) Posted on: Jul 25, 2017 5:09 AM
Property management is an active sport to do it right.
I feel more comfortable about rental income than I do about the stick market. Everyone on earth need: shelter, air, water and food......we don't need shares of Microsoft to survive.
Where does food, water and air come from? It comes from the land......the land that houses them and our financial future --24.239.xx.xxx
Retirement / Rental incom (by WMH [NC]) Posted on: Jul 25, 2017 5:21 AM
I agree with Ray-N-PA. Everyone needs a place to live. Yes, if the rental market drops 33% we can still survive. Because we are debt-free. I'd have to dial back the Amazon Prime purchases a bit but I guess I could live without 2-day shipping on laundry detergent and I still haven't figured out what to do with my Echo Dot ;)
We never counted on appreciation as we do not intend to sell. Our exit plan is death, and leave it all to the kids. --173.22.xx.xx
Retirement / Rental incom (by Pmh [TX]) Posted on: Jul 25, 2017 2:29 PM
for me. RE is a basket of several. rentals & reits in that one. exit plan is sell rentals to the kids. take the cash, spend it all and then die & bounce ck to the undertaker... --104.218.xxx.xx
Retirement / Rental incom (by David Krulac [PA]) Posted on: Jul 29, 2017 12:53 PM
Hi Roy, when I retired from my day job it was in another century. Real estate in one form or another has been the income producer, whether it was from rentals, flipping, rehabs, land development and subdivision or even writing, real estate is the bread winner. --152.208.x.xxx
Retirement / Rental incom (by David Krulac [PA]) Posted on: Jul 29, 2017 12:57 PM
Roy, btw, real estate has been our income before, during and after the 2008 recession. We paid full boat college tuitions
and throughout 2008 and the aftermath NEVER lowered rents and never had any vacancy for longer than normal.