Ha. I was kidding. I spent a lot of time in my youth cleaning up after, painting, and mowing those rental properties. I hated it at the time, but it has given my parent's some financial freedom later in life. Have some wild tenant stories from back then.
How did/will you make your decision to retire? SIAP
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Last: 10 days ago by jja79
MAS444 said:
I have rentals. But to act like they're the only way to financial freedom is nonsense.
They obviously aren't but they are a great income supplement. I'll never do it because I spent so much time dealing with it growing up. Plus, my wife would never be on board with it. She wants nothing to do with it even if we had a management company handling it.
Quote:
Ha. I was kidding.
I know!
This question has haunted me since ~2020, but in the end, the 7/1/2028 (57 yo) date has been set for me since ~2015 due to some incredible golden handcuffs. I hired a FA about 18 months ago and before she knew about said handcuffs, she asked me "why are you working?" When I told her, she then understood everything. I really like my work, but would rather be camping, skiing, hiking, fishing, mountain biking, swimming, snowshoeing, riding horses, etc.
I know my spending and I've run scores of Monte Carlo models, spreadsheets, etc. There's plenty of money. I've been most concerned about my healthspan (Outlive - a great book to read) and just working what takes to get me to 7/1/28 while optimizing my health along the way.
If not for said handcuffs, I likely would have retired a couple of months ago at 54.
I know my spending and I've run scores of Monte Carlo models, spreadsheets, etc. There's plenty of money. I've been most concerned about my healthspan (Outlive - a great book to read) and just working what takes to get me to 7/1/28 while optimizing my health along the way.
If not for said handcuffs, I likely would have retired a couple of months ago at 54.
Are you saying you already have more than you need, but if you work three more years you'll make so much more that you just cant justify walking away?
If so, what will you do with the extra money that you can't do now?
I was in a similar situation about age 40 where I turned down an additional 3-5 million for 3-5 more years at a startup, and the two biggest factors for me were 1) not missing key years of my kid's lives and 2) nothing I could have done with it 10m that I couldn't do with 5M.
If so, what will you do with the extra money that you can't do now?
I was in a similar situation about age 40 where I turned down an additional 3-5 million for 3-5 more years at a startup, and the two biggest factors for me were 1) not missing key years of my kid's lives and 2) nothing I could have done with it 10m that I couldn't do with 5M.
herewegoagain said:
Are you saying you already have more than you need, but if you work three more years you'll make so much more that you just cant justify walking away?
If so, what will you do with the extra money that you can't do now?
It isn't just about money, but essentially, yes. The "golden handcuffs" include very significant non-monetary lifetime benefits. So…it isn't about money as much as it is about incredible benefits like excellent lifetime health/dental/vision insurance, long term care insurance, lifetime tax advice/preparation services, etc etc. I'm being intentionally vague here, but these benefits are VERY significant. But….there is definitely more money involved that enables me to do more now and also into retirement.
My intention is to do more (talking mostly philanthropy here) with that extra money that I wouldn't have been able to do otherwise.
MAS444 said:
I have rentals. But to act like they're the only way to financial freedom is nonsense.
I haven't read one post on this thread that indicated that rent income is the only way to financial freedom. Yes it is one way but yes there are many others as well.
Someone mentioned Slumlord and I am not sure they meant in a derogatory way, but i know many real estate investors and none of them are slumlords, but they are financially well off, providing nice homes for people to live in.
MAS was responding to the guy who said slumlords, this is THE way.
Last thing I want to deal with is rentals when I retire. I have 2 and will sell them probably in 2027 or sooner depending on local markets. There are no property management companies here I trust and frankly I am tired of dealing with them.
Yeah, I understand why some value rentals. But dealing with tenants, my old ass running around with a constant fix-it to do list, or taking calls on what just broke when I'm on the golf course or 10 hours away at the beach is not my idea of how I want to keep myself "retirement busy". No knock if that is your deal, but not gonna be for me.
You also have to be able to maintain a certain level of emotional distance from renters, especially families and work out which ones are really trying to just take you to the cleaners.
I don't want to have to evict a family... You can always say you avoid that by proper screening, etc. But I watched a friend have to do it to previously good renters because they fell on hard times. Worked with them as long as he could but eventually had to evict them... not a good day for him.
I don't want to have to evict a family... You can always say you avoid that by proper screening, etc. But I watched a friend have to do it to previously good renters because they fell on hard times. Worked with them as long as he could but eventually had to evict them... not a good day for him.
Good for you to have the fortitude to do that. Walking away from $1M/year at 40(ish) is incredibly tough and is not something I would have done.
By the comments on this board I can tell that there is a lot of misperception on owning investment real estate.
Now don't get me wrong, real estate investing can be a hassle. In fact I would tell you that most successful real estate investors receiving rental income for a significantly portion of their retirement income has endured at one time all the ugly things mentioned in this thread.
And, if you are a fairly small investor like myself (18-20 doors), at two locations Austin and Bryan, you avoid using a property manager because profits are diminished and they will not do it as well as you can. That being said, I am now just a coordinator. Meaning if I have access to phone/text I can get anything fixed no matter where I am. While fishing in Alaska in early July, I had an AC fixed with a phone call/text. Even if I am around and the job is easy, I usually just call a handyman. Once you have established a good relationship with a few tradesman in the area, you are good to go. And in a pinch, even a realtor will list a rental unit, acquire a tenant and get you a signed lease for 1/2 months rent.
I do all my leasing. For Bryan I do pre-leasing in Feb-Mar for July move-in. Yes it takes a little more time but I am good to go in Bryan for another year. I may average one turnover in Austin a year. To be fair, I probably give 4 hours a week on average to my rentals. But you say, I don't even want to do that. Gotcha, no problem, continue running a business, or more likely giving a company a minimum of 8 hours a day, five days a week. And I mean that in the sincerest of ways. To start a rental business, takes an entrepreneur mindset, be mentally tough and be ready for a few obstacles in the early going. If you don't have those qualities then don't quit the day job.
Now don't get me wrong, real estate investing can be a hassle. In fact I would tell you that most successful real estate investors receiving rental income for a significantly portion of their retirement income has endured at one time all the ugly things mentioned in this thread.
And, if you are a fairly small investor like myself (18-20 doors), at two locations Austin and Bryan, you avoid using a property manager because profits are diminished and they will not do it as well as you can. That being said, I am now just a coordinator. Meaning if I have access to phone/text I can get anything fixed no matter where I am. While fishing in Alaska in early July, I had an AC fixed with a phone call/text. Even if I am around and the job is easy, I usually just call a handyman. Once you have established a good relationship with a few tradesman in the area, you are good to go. And in a pinch, even a realtor will list a rental unit, acquire a tenant and get you a signed lease for 1/2 months rent.
I do all my leasing. For Bryan I do pre-leasing in Feb-Mar for July move-in. Yes it takes a little more time but I am good to go in Bryan for another year. I may average one turnover in Austin a year. To be fair, I probably give 4 hours a week on average to my rentals. But you say, I don't even want to do that. Gotcha, no problem, continue running a business, or more likely giving a company a minimum of 8 hours a day, five days a week. And I mean that in the sincerest of ways. To start a rental business, takes an entrepreneur mindset, be mentally tough and be ready for a few obstacles in the early going. If you don't have those qualities then don't quit the day job.
I mean in the sincerest of ways option 4 which is the market will be working for me while I work 0 and spend my time on things I really enjoy. My mentally tough obstacle will be making sure my draw doesn't turn into a hook or figuring out what the fish are biting.
Honest question though, which I always wonder about folks being a hands-on landlord or running a business until 65-70+. What's the plan if you suddenly blow a gasket health-wise and end up unable to deal with any of it? Do you have someone to help with extrication? It may not be a ton of work when you feel good and your brain is working properly, but it also feels like a lot of concentrated risk.
Honest question though, which I always wonder about folks being a hands-on landlord or running a business until 65-70+. What's the plan if you suddenly blow a gasket health-wise and end up unable to deal with any of it? Do you have someone to help with extrication? It may not be a ton of work when you feel good and your brain is working properly, but it also feels like a lot of concentrated risk.
I'm no hero. I had 5M at age 40 and was walking away from a high liklihood of having 8-10M at age 43-45. But the cost just wasn't there for me. I have an amazing life. More than I could ever need already. And I'll never get these years with my kiddos back. No matter how much money i try to throw at it later.
There is zero doubt passive investing is far more chill than owning real estate. Anyone arguing otherwise is not being honest. This comes from someone who owns 20 SFH + an apartment complex with a partner. It's a great way to become wealthy. But it's work. Much more work than the markets. But it also makes more money than the market. My annualized return after factoring in paydown and average appreciation is in the 15-20% range across all our properties. The market isn't doing that. But again, it's a hell of a lot less work which counts for something.
herewegoagain said:
I'm no hero. I had 5M at age 40 and was walking away from a high liklihood of having 8-10M at age 43-45. But the cost just wasn't there for me. I have an amazing life. More than I could ever need already. And I'll never get these years with my kiddos back. No matter how much money i try to throw at it later.
The inverse of the Cats in the Cradle song... Good work.
DannyDuberstein said:
Honest question though, which I always wonder about folks being a hands-on landlord or running a business until 65-70+. What's the plan if you suddenly blow a gasket health-wise and end up unable to deal with any of it? Do you have someone to help with extrication? It may not be a ton of work when you feel good and your brain is working properly, but it also feels like a lot of concentrated risk.
To answer your question, my wife handles all the bookkeeping and taxes while I handle all the hands on with tenants, property and maintenance. Wife wants nothing to do other than bookkeeping. Since we have been investing in real estate for 22 years, all our properties are paid off. So our exit plan is to take advantage of the step-up in basis upon the first death of either my spouse or myself. If I suddenly blow a gasket health-wise we would have two options.....turn it over to a property manager or sell the properties and pay a lot of capital gains!! Either option is a very solid pathway. If my wife somehow blows the so called gasket then I could also step in and do the bookkeeping as well.
Bottom line, if managing rental property stresses you out then it probably is not a great option. I actually enjoy what I manage as I also take EXTREME pride in my properties and providing above average rental properties for my clients. My properties in themselves are easy to market, it is only a severe downturn in the economy that might make this endeavor challenging. However, since my properties are paid off, I have little to no chance my properties become negative cash flowing.
When you build a portfolio of low income housing (not to be confused with slum housing), there will always be a market for those properties. Any rent wars that may result will be won by owners who only have the stress of paying taxes and insurance vs those still caring a mortgage.
The same could be asked in managing your stock market related retirement accounts. Having been a financial advisor for 20 years total and 18 as an independent advisor, my experience with many of my clients is that only one spouse understood the complexities of the portfolio. So in the same scenario of "blow a gasket health-wise" might you have a similar concern?
Several benefits I have that I wouldn't just managing a stock market retirement account. In Bryan, two of my 10 units are furnished. I always keep one available for myself and friends to use. Football Game Days are fun! Taking in a baseball weekend or showing up for a basketball game spur of the moment usually allows me a place to stay. I like that flexibility. Lastly, I come from a large Italian family with many nephews and nieces. Some from not so wealthy families. I offer all nephews and nieces a free place to stay if they want to attend Texas A&M. I get a lot of enjoyment seeing them take advantage of my properties too.
One niece (a freshman) is in one of my properties now and one of my nephews (senior in HS) with his father are coming in from Virginia for the UTSA game. Purpose of their visit is to check out A&M. I hope he takes me up on free rent starting next year. That weekend we will all be staying at one of my furnished units. Football tickets on me, no not me, my tenants pay for them. Life is good.
scrap said:
The same could be asked in managing your stock market related retirement accounts. Having been a financial advisor for 20 years total and 18 as an independent advisor, my experience with many of my clients is that only one spouse understood the complexities of the portfolio. So in the same scenario of "blow a gasket health-wise" might you have a similar concern?
You were a financial advisor for 20 years, and wonder what people do when one spouse dies? That's the only reason I would be paying a financial advisor, to know what's going on so if something happens to me they can handle it all for my spouse. What exactly were you doing for clients in that situation if you weren't handling it for the second spouse, with a plan to teach the surviving spouse what they are invested in or simplify the portfolio as needed to the point they do understand?
aggiebq03+ said:scrap said:
The same could be asked in managing your stock market related retirement accounts. Having been a financial advisor for 20 years total and 18 as an independent advisor, my experience with many of my clients is that only one spouse understood the complexities of the portfolio. So in the same scenario of "blow a gasket health-wise" might you have a similar concern?
You were a financial advisor for 20 years, and wonder what people do when one spouse dies? That's the only reason I would be paying a financial advisor, to know what's going on so if something happens to me they can handle it all for my spouse. What exactly were you doing for clients in that situation if you weren't handling it for the second spouse, with a plan to teach the surviving spouse what they are invested in or simplify the portfolio as needed to the point they do understand?
A couple of thoughts: Not ALL people employ a financial advisor, just like not all real estate investors have a property manager. I was basically asked: what do I do should I have a blow out health event. Did you notice one of my answers was to turn it over to a property manager. I have no idea how the individual currently manages his money.
The poster was indicating that it might be a problem if one spouse has a health event, would that have a negative impact because managing real estate can be daunting. I was just posing the same question in terms of someone investment portfolio regardless of stocks/bonds/estate planning. The concern is the same is it not, especially when one defers those duties/task to one spouse only.
It has been my experience that it is NOT uncommon that a marriage couple, only one of them is knowledgeable about their investments, whether they use a financial advisor or not. Not because they are intentionally excluded from knowing but because they choose it to be that way.
With investments, if you've done even the most rudimentary level of planning by documenting your accounts, your approach, and designating beneficiaries, it's a very easy hand-off. Could literally be done within a few hours once the death certificates arrive. I'm not day-trading my retirement portfolio. For most, it's a largely set-it-and-forget-it light touch strategy.
Anything involving rentals and real estate is going to be some degree of heavy lift at some point. You are basically taking over a business. Decide to find a property manager? Okay, who do you use and where so you even begin if you have not been involved and don't have experience. Likely taking a major haircut on ROI either way. Decide to sell? Okay, well, you have tenants to deal with and a property to prepare unless you are planning to take a haircut just to get out of it. I'm not saying this is a bad choice for some, but I think it's silly to think the amount of lift is remotely similar if it has been a hands-on business.
Anything involving rentals and real estate is going to be some degree of heavy lift at some point. You are basically taking over a business. Decide to find a property manager? Okay, who do you use and where so you even begin if you have not been involved and don't have experience. Likely taking a major haircut on ROI either way. Decide to sell? Okay, well, you have tenants to deal with and a property to prepare unless you are planning to take a haircut just to get out of it. I'm not saying this is a bad choice for some, but I think it's silly to think the amount of lift is remotely similar if it has been a hands-on business.
DannyDuberstein said:
With investments, if you've done even the most rudimentary level of planning by documenting your accounts, your approach, and designating beneficiaries, it's a very easy hand-off. Could literally be done within a few hours once the death certificates arrive. I'm not day-trading my retirement portfolio. For most, it's a largely set-it-and-forget-it light touch strategy.
Anything involving rentals and real estate is going to be some degree of heavy lift at some point. You are basically taking over a business. Decide to find a property manager? Okay, who do you use and where so you even begin if you have not been involved and don't have experience. Likely taking a major haircut on ROI either way. Decide to sell? Okay, well, you have tenants to deal with and a property to prepare unless you are planning to take a haircut just to get out of it. I'm not saying this is a bad choice for some, but I think it's silly to think the amount of lift is remotely similar if it has been a hands-on business.
Danny you win!
Rental real estate is just too involved and time consuming I don't have a clue as to why I do it. I should've just put all my money in an IRA or 401K and relied on the stock market to get me to the place I need to go. And then when I die I can pass it my heirs who don't get the step up on my retirement accounts and they get to lump sum it out because MOST do and pay the taxes all at once. I really don't know why I bought all this property?
To each his own. Cheers.
You seem really emotionally attached to the rental vs investing strategy. No one is saying it's wrong and it obviosuly works great for you. But it's not the only way and it absolutely is more work on all sides than just straight up investing and forgetting, which also works well for lots of folks.
You are correct Mas, there are numerous ways to secure a retirement.
Pros and Cons to each as well. No one way is the prefect way for everyone.
Pros and Cons to each as well. No one way is the prefect way for everyone.
I reiterated numerous times that it works for some. I was not the one throwing out the choices that it's real estate, running a business, or working 8-5 for the man.
Also, as someone that managed his parents finances for 8 years and thru each of their decline and deaths (first mom after 3 years and dad at 8), ease or difficulty of stepping in is something I dealt with and think about. I was happy to do it, but it was also financial (my field) and light touch. It also happened quickly - mom declined FAST with ovarian cancer and dad declined in a hurry with a series of strokes but then lived for another 6 years. In their early 70s, they were hiking 14k ft peaks in CO and my dad was racing bicycles in senior games across the country - then that all came to a sudden halt within a year. So these things are something I think about what I'll be leaving for my own wife and kids to deal with when they have their own lives.
Also, as someone that managed his parents finances for 8 years and thru each of their decline and deaths (first mom after 3 years and dad at 8), ease or difficulty of stepping in is something I dealt with and think about. I was happy to do it, but it was also financial (my field) and light touch. It also happened quickly - mom declined FAST with ovarian cancer and dad declined in a hurry with a series of strokes but then lived for another 6 years. In their early 70s, they were hiking 14k ft peaks in CO and my dad was racing bicycles in senior games across the country - then that all came to a sudden halt within a year. So these things are something I think about what I'll be leaving for my own wife and kids to deal with when they have their own lives.
That transition can be difficult. I've done it twice with family members Those 2 were both fairly difficult. Doing it now for FIL. IF prepared properly the transition can be very easy now.
But, like Danny, ease of the transition is always one of my first thoughts.
But, like Danny, ease of the transition is always one of my first thoughts.
this looks like a pretty awesome job once I pull the plug on corporate legal in 2027. have a condo overlooking Hampton Roads:
Sales interpreter - Raleigh Tavern Bakery
Job Category: FOOD AND BEVERAGE Requisition Number: SALES003231 Schedule: Full Time Job Location Type: On-site
RALEIGH TAVERN BAKE SHOP
Colonial Williamsburg, VA 23185, USA
As a Sales Associate at the Raleigh Tavern Bakery, you will greet guests in the perfect place to stop for apple cider, root beer and food-related gifts. Nestled in the heart of the Historic Area behind the Raleigh Tavern, the Raleigh Tavern Bakery serves up delicious goodies and picturesque surroundings.
Sales interpreter - Raleigh Tavern Bakery
Job Category: FOOD AND BEVERAGE Requisition Number: SALES003231 Schedule: Full Time Job Location Type: On-site
RALEIGH TAVERN BAKE SHOP
Colonial Williamsburg, VA 23185, USA
As a Sales Associate at the Raleigh Tavern Bakery, you will greet guests in the perfect place to stop for apple cider, root beer and food-related gifts. Nestled in the heart of the Historic Area behind the Raleigh Tavern, the Raleigh Tavern Bakery serves up delicious goodies and picturesque surroundings.
scrap said:DannyDuberstein said:
With investments, if you've done even the most rudimentary level of planning by documenting your accounts, your approach, and designating beneficiaries, it's a very easy hand-off. Could literally be done within a few hours once the death certificates arrive. I'm not day-trading my retirement portfolio. For most, it's a largely set-it-and-forget-it light touch strategy.
Anything involving rentals and real estate is going to be some degree of heavy lift at some point. You are basically taking over a business. Decide to find a property manager? Okay, who do you use and where so you even begin if you have not been involved and don't have experience. Likely taking a major haircut on ROI either way. Decide to sell? Okay, well, you have tenants to deal with and a property to prepare unless you are planning to take a haircut just to get out of it. I'm not saying this is a bad choice for some, but I think it's silly to think the amount of lift is remotely similar if it has been a hands-on business.
Danny you win!
Rental real estate is just too involved and time consuming I don't have a clue as to why I do it. I should've just put all my money in an IRA or 401K and relied on the stock market to get me to the place I need to go. And then when I die I can pass it my heirs who don't get the step up on my retirement accounts and they get to lump sum it out because MOST do and pay the taxes all at once. I really don't know why I bought all this property?
To each his own. Cheers.
FYI, retirement accounts do get stepped-up.
Here are the instructions for Form 8949: https://www.irs.gov/instructions/i8949#en_US_2021_publink1000306805
You just need to adjust the cost-basis to date-of-death. Also be sure to write "inherited" in the "date acquired." Sale of inherited asset are always treated as long term gain/loss.
Yeah, that lump sum stuff is jus hissyfit stuff. The most rudimentary plan results in:
1) a step-up in basis for all non-IRA/401k accounts
2) for 401k/IRA, you have 10 years to take distributions if you are a non-spouse. The government never taxed it to begin with, so yeah, they are going to get their taste eventually because they never did. But with 10 years, you can do that strategically. Apples and oranges to real estate which equates more to 1 above; choosing to invest in rental properties vs regular investments is more of a choice of what you are doing with after tax cash and both will step up in basis. If you chose to never use any pre-tax investment vehicles and you have your entire nest-egg in real estate, well, ok. Quite a bit of risk concentration
1) a step-up in basis for all non-IRA/401k accounts
2) for 401k/IRA, you have 10 years to take distributions if you are a non-spouse. The government never taxed it to begin with, so yeah, they are going to get their taste eventually because they never did. But with 10 years, you can do that strategically. Apples and oranges to real estate which equates more to 1 above; choosing to invest in rental properties vs regular investments is more of a choice of what you are doing with after tax cash and both will step up in basis. If you chose to never use any pre-tax investment vehicles and you have your entire nest-egg in real estate, well, ok. Quite a bit of risk concentration
DannyDuberstein said:
2) for 401k/IRA, you have 10 years to take distributions if you are a non-spouse. The government never taxed it to begin with, so yeah, they are going to get their taste eventually because they never did. But with 10 years, you can do that strategically.
Learned this after my dad passed away as it was a first in my life in seeing it. We used it last year to withdrawal 100% to taxes so it offset any IRS money owed. This year, we knew we'd have 3 less months of salary with our twins so we took out 3 months worth of salary including paying the taxes.
It's been a blessing to mix it up and have it as our own "insurance".
Yeah, with the IRA(s) I inherited from my dad, my distribution window is age 51-61. With my plan to retire at 55, I'm taking nothing now and then expect to take it over the course of 56-61 when I can really limit the tax impact by having by optimizing ordinary income at a level that makes sense. At the same time, he had some regular investments that stepped up.
RangerRick9211 said:
FYI, retirement accounts do get stepped-up.
Here are the instructions for Form 8949: https://www.irs.gov/instructions/i8949#en_US_2021_publink1000306805
You just need to adjust the cost-basis to date-of-death. Also be sure to write "inherited" in the "date acquired." Sale of inherited asset are always treated as long term gain/loss.
Ranger, you might be a bit confused. I don't think Form 8949 applies to retirement accounts like IRA, 401k, SEP IRA, 403B etc. Even real estate inside an IRA will not get step-up either.
But does it really matter. Since one is just taxed on how much is withdrawn. So the basis is not relevant.
This thread has taken some interesting twists and turns and has been a good read. Like others who have shared stories about loved ones who passed away I have lost a few people close to me who where in the "one more year" spiral and ended up having no retirement. The math will always be better waiting another year so at some point you have to just say enough is enough and pull the trigger while you still have time to enjoy it.
The equation of time, health and money never changes.
I spent yesterday with a friend at MD Anderson Phoenix where they're having chemo for stage 4 pancreatic cancer. Plenty of money to enjoy another 20+ years but won't have the time.
I spent yesterday with a friend at MD Anderson Phoenix where they're having chemo for stage 4 pancreatic cancer. Plenty of money to enjoy another 20+ years but won't have the time.
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