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Message
re: Retirement planning advice
Posted on 2/23/25 at 11:23 pm to tigerbacon
Posted on 2/23/25 at 11:23 pm to tigerbacon
quote:
annual return rate of 17.1% currently.
You will not sniff this with rentals at today's prices and investments rates.
quote:
What do you guys recommend and why?
Keep doing what you're doing.
I love real estate but got most of them at good to great prices. Only a couple at high rates but great deals.
1
Posted on 2/24/25 at 2:53 am to tigerbacon
Like most peple have said, no to rentals unless it's your thing. You are doing great without rental property. MAX OUT YOUR ROTH EACH YEAR, please. There's no telling what tax rate we will be at when you retire.
Posted on 2/24/25 at 6:38 am to Billy Blanks
K. That’s what I thought. FOMO is starting to go away since that’s what I’ve been doing.
Posted on 2/24/25 at 7:36 am to tigerbacon
quote:
Now the question:
At what point do we start investing in rental properties if ever? I just don’t know because I feel we are in a great spot and I can see getting same ROA from the money being spent to add in out stock portfolio than on rental properties without the headache. What do you guys recommend and why?
If you dont want to be a landlord, dont.
Posted on 2/24/25 at 9:01 am to tigerbacon
To echo what others have said, I don't think you get into rentals to necessarily beat your other investments. 17% may not continue, but it's very passive if you're into index funds.
Part of what I didn't see you address is your child situation. I'm looking into buying a property to AirBnd, but I have to get my kids through college first. Once they're off the "payroll", then my expenses go down and I can afford to take a little more risk.
At 65, you're going to have $188k/year in retirement income (assuming 4% withdrawal rate) from just your pensions and 401ks alone. I don't know how that compares to your current income, but that seems like plenty to me to live comfortably.
I think the biggest reason I've seen for getting into real estate for others in your situation is 1) to diversify their investments and 2) because it sounds fun. I'd want to buy one of the properties we currently stay at each year in Tennessee because I'd get to stay there for free once a year, and it sounds like it would be a fun "old person job" as my daughter calls it.
Financially, I don't see that you HAVE TO get into real estate, but if it's just you and your wife and you can afford to take a little risk, you might just enjoy the diversification (in both your finances and in your day-to-day activities of managing it). Just my two cents.
Part of what I didn't see you address is your child situation. I'm looking into buying a property to AirBnd, but I have to get my kids through college first. Once they're off the "payroll", then my expenses go down and I can afford to take a little more risk.
At 65, you're going to have $188k/year in retirement income (assuming 4% withdrawal rate) from just your pensions and 401ks alone. I don't know how that compares to your current income, but that seems like plenty to me to live comfortably.
I think the biggest reason I've seen for getting into real estate for others in your situation is 1) to diversify their investments and 2) because it sounds fun. I'd want to buy one of the properties we currently stay at each year in Tennessee because I'd get to stay there for free once a year, and it sounds like it would be a fun "old person job" as my daughter calls it.
Financially, I don't see that you HAVE TO get into real estate, but if it's just you and your wife and you can afford to take a little risk, you might just enjoy the diversification (in both your finances and in your day-to-day activities of managing it). Just my two cents.
Posted on 2/24/25 at 10:22 am to tigerbacon
Some are too quick to dissuade you. The real estate market of the rental is a big factor to consider. Your temperament and skills set are factors.
I bought 9 or 10 rentals around your age. I live in a hot retail market that has been strong for years. All were on 15 year notes with a goal of not cash flowing them during my strongest income years. I "retired" at 55 and the wife and I started remodelling and,selling them. It gave us something to do, especially during covid, and we enjoyed the work. The strong real estate market provided good appreciation, and the payday ward nice since mortgage was paid off on each. The tax hit was significant, although 1031 options can help.
We always managed them ourselves. I wanted to become more skilled at home maintenance and my father in-law was skilled and available to teach me. Worked out well. We had mostly good renters, and a few bad ones. My temperament allowed me to generally deal with the bad renters without too much stress. My wife could not handle it as well, so I was always the primary contact for our renters.
We bought a couple of very nice lake houses in the past 10 years as short term rentals. Used money from the long-term rentals. Both are within an hour of our primary home. We use them as vacation spots and try to rent enough to cover maintenance, utilities, and insurance costs. Sold the first one with a huge profit to by the 2nd one that is a dream home type property.
There are plenty of downfalls that can occur with rentals, but there are benefits as well. It is a personal decision that needs can not be easily determined by anyone but you and your family. I have few regrets, and think my wife would have never bought the first one. It worked out for us because I shielded her from most of the negatives.
Also, you didn't mention Roth in your op. I would be maxing out Roth at your age and income. After taking advantage of any company matches, I would prioritize this higher than traditional 401.
Good job on managing your finances to date, and best wishes.
I bought 9 or 10 rentals around your age. I live in a hot retail market that has been strong for years. All were on 15 year notes with a goal of not cash flowing them during my strongest income years. I "retired" at 55 and the wife and I started remodelling and,selling them. It gave us something to do, especially during covid, and we enjoyed the work. The strong real estate market provided good appreciation, and the payday ward nice since mortgage was paid off on each. The tax hit was significant, although 1031 options can help.
We always managed them ourselves. I wanted to become more skilled at home maintenance and my father in-law was skilled and available to teach me. Worked out well. We had mostly good renters, and a few bad ones. My temperament allowed me to generally deal with the bad renters without too much stress. My wife could not handle it as well, so I was always the primary contact for our renters.
We bought a couple of very nice lake houses in the past 10 years as short term rentals. Used money from the long-term rentals. Both are within an hour of our primary home. We use them as vacation spots and try to rent enough to cover maintenance, utilities, and insurance costs. Sold the first one with a huge profit to by the 2nd one that is a dream home type property.
There are plenty of downfalls that can occur with rentals, but there are benefits as well. It is a personal decision that needs can not be easily determined by anyone but you and your family. I have few regrets, and think my wife would have never bought the first one. It worked out for us because I shielded her from most of the negatives.
Also, you didn't mention Roth in your op. I would be maxing out Roth at your age and income. After taking advantage of any company matches, I would prioritize this higher than traditional 401.
Good job on managing your finances to date, and best wishes.
Posted on 2/24/25 at 10:26 am to Bacchus
We don't have kids. Don't want them. And our current income is 140k with about a 3% increase yearly
Posted on 2/24/25 at 11:42 am to HailToTheChiz
quote:
Based on where you are right now, what's the need for rental properties?
Just depends on what you want to do with these rental properties. Is real estate an interest of yours? Is this something that you could possibly be setting your kids up with some form of future income? Based on your current financial situation I wouldn't spend the money unless you answer yes to these either of these 2 questions.
Posted on 2/25/25 at 11:29 am to tigerbacon
quote:
rental properties
I used to have 3 rentals back around 2000. I swore I wouldn't do it again without having a management company handle it. Once you get a mgt. co. involved, you're working a fairly slim margin. I wouldn't invest in rentals unless you can purchase outright with cash, and then have someone else manage it. It's worth it, and it would actually provide income rather than just building value through equity.
Oh, and stay away from slumlordship. I had a friend invest in a bunch of run down houses that he rents out. He paid cash at auction, but the maintenance and chasing people down for rent is killing him. The problem is that he can't sell these structures now without major renovations. He told me recently it would be more economical to simply tear them down and sell the lots.
If you're going to do rentals, get something small but nice, pay cash and have someone else manage it.
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