I had an interesting discussion with a young man about getting into RE investing. During the discussion he kept talking about the "FIRE movement" so I got him to explain it and then did some reading on my own, I found quite a bit of info on the interweb.

It stands for Financial Independence, Retire Early. Apparently is gaining momentum with the under 30 crowd. The thought being to live the most frugal life you can live for a few years so you can retire early and/or in style. There are several variations of it. Hmmm, guess many on this forum were early pioneers.

One of the premise of the movement is to maximize income. Specifically, look for a side gig or second job to help increase the percentage of savings you can accrue. Which is what brought this young man to me.

Am I the only one that hadn't heard of this "movement" before? Makes me wonder if that's what's spawning the droves of new investors the last couple of years.

I had never heard of this either until now. That is probably what has spawned the droves of investors and the daily phone calls I receive if I want to sell my house.

It has been around for about a dozen or so years.

You establish a number that you will need to live on. Say that magic number in todays dollars is $5,000. If you have say 6 rental homes that generate $500 in positive cash flow, then you have $3000 head start. So what is up with the other $2,000? Well you phrase that as ..... how much money do I need that if I take X% of the whole, then I would be able to get the money that I need.

Typically that number is about 4-6% annually of your nest egg.

So assuming you needed $2,000 monthly and were on the younger side of things so you wanted to be conservative about withdraws, your nest egg would have to be $300,000.

The FIRE concept is hard for experienced real estate investors to wrap there hands around. Because we don't think that way. We think instead, with $300,000 I could pick up this many more houses and end having this much additional cash flow. If you can't find a place to buy, we end up lending the money out and get even more than 4%.

Many of my friends kids move back in with their parents because of poor financial choices. Credit card debt from over spending beyond ones means.

Last month one parent asked me if I had a 2 bedroom apartment in NoHo, a good part of town. I replied that yes I do. Their kids had been living with them for over a year and now can afford to move out and cover their rent.

So I met with the kids, a married couple with 1 child expecting a second. I showed the the unit. Ground floor. New kitchen, laminate flooring. New paint, appliances, etc.

The market rent is over $2,000 a month. But since their parents were friends I'd give it to them for $1,600 a month. But they had to fill out an application and come up with first and a deposit, totaling $4,800. But since I only had a carport parking spot they declined saying their car is too nice and had to be garaged.

After the kids, with parents in tow went apartment hunting, the only completable apartments were asking $2,400 to $2,800 per month.

FIRE is hyped on another real estate for called Bigger Pockets. You find tons of flash-in-the-pan newbs who show up claiming to be suuuuuper motivated and gonna get 100 doors and make $100,000 month cash flow in 6 months.... If someone would just be so kind as to mentor (hand hold) them through the entire process.

Then after a dozen posts or so they disappear.

I was on that site for a couple years, but it's the same schtick hashed over and over...and I didn't catch as much of a feeling of community as I find here.

No, the FIRE movement is just a combination of frugality and investing with a flashy name. I had a friend in HS whose parents banked the husband's salary in CDs and lives off of wife's for 20 years, then retired at age 50 to travel. Same thing basically, though not quite as intense.

The question I have for the FIRE folks is what they plan on doing after they "retire" at age 35. Most of them have no idea or say "volunteer". Okay... So you're going to live like a pauper, not have kids (this is a biggie among them...kids are too expensive), and eat generic toast for 15 years ... So that you can give "the man" the finger and go work for someone else for free? Mmmm...hmmm... Mighty fine "plan."

Sid,

I didn't find that to be the case with this young man at all, not saying it doesn't exist though. One thought did come through clearly though, he didn't want to be working for someone else his whole life and retire too old to enjoy life. I've heard that same sentiment expressed here on many occasions. He has a young wife and they do plan on having children. Wife is working but they are saving her income.

His two big goals were to retire by 45 and to have enough money to be able to travel the world when they do. I don't see those goals out of reach for someone who starts at 23 and invests wisely for 22 years. He has already saved up enough to easily purchase 2 small SFH's, he's been living the lifestyle for a couple of years now. That as well as his attitude gave me hope that he won't be a flash in the pan.

Personally, rather than run it down, I am going to encourage any young person (and older) to stick with a plan that encourages saving and investing for the future. That doesn't come naturally to everyone, some need structure and guidance to make it happen. I see this as another tool in the arsenal, much like Dave Ramsey, to encourage people in the right direction. There is way too much media attention on consumerism, it was a breath of fresh air to see that there is a "movement" in a different direction.

Same old song and dance,

I hear the young talking about it. Most of what they spout qualifies as meaningless platitudes but they don't want to hear any about any real problems they are probably going to encounter.

I suspect that the Gurus are making a lot of money off of this, just like they used to make a lot of money "teaching" the lazy public how to become a millionaire through real estate.

The attention span of a lot of the population won't last longer than 25 words. They want the easy route. They want the dream without the work, and they don't want to put in the effort to learn how to do it.

I learned about it a very long time ago, and adopted it early. I've always had my FIRE number in the back of my head, it is what I used to think about when I was working on my rentals on the weekends from my day job. I bought rentals because I viewed them as housing an employee who was buying an asset for me and making me a little bit of money each month. I combined this was maxing 401ks and IRAs and working my day job. And it worked, surprisingly quickly.

Oregon, I hear you. It seems like most wanting to get into RE are trying to get rich quick. I'm not sure why they think RE is such an animal.

That said, I don't mind investing a little time in the next generation. I also don't have a problem calling them out if they have the wrong attitude, they usually listen to what I have to say and then cut the discussion short and go lick their wounds. Maybe they will appreciate it in a few years.

I thought the post was going to be about flames moving through the duct work or along the roof line ... sigh.

I only read through Ray's explanation one time - I guess I'd need to read it several more to see if I truly understand it.

Work hard, save, invest wisely, don't be wasteful, toss in some good luck/right place at the right time. Aren't those the real keys? Mess up? Certainly, especially me, but get back on track and the forward movement, especially the work hard, gets you to a good place in life.