Let Other People Pay for Your Retirement

[socaldmax]

This thread reminds me of a very shrewd federal employee I met in HI back in 1994.

He had gone to one of those "buy real estate" seminars, but he really paid attention. He used logic to zero in on Oklahoma City, where he could find foreclosed brick homes with 3 BR, 2 BA and a 2 car garage, about 1500 - 1800 sft in the $30,000 range. He found a very trustworthy agent who was finding the properties, sending him newspaper clippings of the houses and photos she took herself. He would bid on 1 or 2 houses and usually win one. She'd get a cheap local handyman to fix them up for under $1,000 and rent them out, charging him only 5% mgt fee. She handled all repairs and rent collection, his rental income usually exceeded mortgage by $400-500. He had a steady supply of renters from the local AF base, Tinker.

The excess money went into an account used for earnest money and down payments on houses he won, in addition to any repairs. Tenants were encouraged to suggest improvements, if they built a fence or added a spa, for example, they were reimbursed for materials and a small amount for labor by taking it off of the rent.

When I met him, he had already bought 20 homes at a rate of 2 or 3 per year, he was planning on buying 30 homes total. He was also making biweekly house payments on 15 yr loans, drastically reducing his payoff. He guesstimated that when all 30 properties were paid off he'd gross somewhere in the neighborhood of $30,000/mo., just in round numbers, since he really didn't know what the prevailing rent would be that far in the future.

He was doing all of this via email and phone calls from HI. He was also going to get a federal retirement check, which isn't too shabby either for a GS-13. He was actually living quite well since HI civil servants get 24% COLA, which is non taxable.

[socaldmax]

Originally Posted by SV THIRD DAY

The key that let us cruise off of our Renters monthly rent payment was that the house was paid for. After we took out property taxes, insurance, and income tax on the rental, we still had $1200/mo left over. But if we had to pay a mortgage...then forget it. The rental income game in retirement or cruising assumes, I believe, a paid off property.

Having a daughter graduating from High School tomorrow and a son starting his Sr year in high school next year, I feel that my financial responsibility is similar to Kenomac. We have always told the kids that we will pay for their BA/BS 4yr degree to whatever school they want or could get into with everything covered, books, car, car insurance, money for clothes, etc. Literally everything. All they have to do is bust their asses in school to take full advantage of not graduating with $100K in student debt like so many these days.

But, isn't there always a but...
They are not on the 5-7yr plan, they can't take gender studies or underwater basket weaving (sorry...only paying for a real degree) and I will see their grades to make sure its just not a party.
When daddy pays...daddy has a say.

They will work during collage and that money is their fun spending money and money to be saving so that when they graduate they have some transition money because that's it. Once they graduate the Bernie Sanders daddy ride of free is over and it's time to make their own way in the world. If they want Grad school or education past the 4yr BA/BS degree, then that is on them to pay for. No moving back home on the boat (because it will be gone) and the financial support ends. Houses in this area start at $500K, so if they want to live here on the Central Coast of California and be house poor, that is their call. Or they can move to a more affordable location, they can buy a boat and live aboard, or they can be bums living under a bridge with a Bernie sticker on their napsack...it's their call and their live to make at that point.

Sending kids to college reminds me of a friend of mine who was a Metlife fund mgr. I'm not recommending this path, but it fit his personality perfectly. Even though he made $3-4M per yr, he didn't want to pay for college. His kid played football, so he hired a videographer to make a highlight reel of his kid sacking QBs and they sent out 1,000 copies to the universities with football teams. St Joseph's replied and gave him a full ride scholarship.

Then he took a trip down there and put a deposit on a 4 BR house near campus, put it in his son's name. He bought him a brand new Escalade, dumped another $5K in the sound system, installed a kegger at the house and told his son to find 3 guys he wanted to hang with and rent the other 3 rooms to them and make them his "posse." So his kid shows up his freshman yr with a 4 BR party house, the loudest Escalade around, on the football team and he already has an entourage. In the summers, he went home and interned for his dad, who paid him way too much but it covered the mortgage and then some.

4 yrs later, his kid graduates with the confidence that some men never achieve, sells the house for a very healthy profit and starts off at MetLife right next to his dad with a nice bundle to invest for himself. And his dad never paid for college. I wouldn't have trusted a 19 yr old kid with a house and a kegger, but I gotta hand it to him, it certainly worked out for him.

I think the other lesson his kid learned was that there are some really elegant ways to skin the cat without affecting others, if you're creative enough.

[Kenomac]

Originally Posted by socaldmax

Sending kids to college reminds me of a friend of mine who was a Metlife fund mgr. I'm not recommending this path, but it fit his personality perfectly. Even though he made $3-4M per yr, he didn't want to pay for college. His kid played football, so he hired a videographer to make a highlight reel of his kid sacking QBs and they sent out 1,000 copies to the universities with football teams. St Joseph's replied and gave him a full ride scholarship.

Then he took a trip down there and put a deposit on a 4 BR house near campus, put it in his son's name. He bought him a brand new Escalade, dumped another $5K in the sound system, installed a kegger at the house and told his son to find 3 guys he wanted to hang with and rent the other 3 rooms to them and make them his "posse." So his kid shows up his freshman yr with a 4 BR party house, the loudest Escalade around, on the football team and he already has an entourage. In the summers, he went home and interned for his dad, who paid him way too much but it covered the mortgage and then some.

4 yrs later, his kid graduates with the confidence that some men never achieve, sells the house for a very healthy profit and starts off at MetLife right next to his dad with a nice bundle to invest for himself. And his dad never paid for college. I wouldn't have trusted a 19 yr old kid with a house and a kegger, but I gotta hand it to him, it certainly worked out for him.

I think the other lesson his kid learned was that there are some really elegant ways to skin the cat without affecting others, if you're creative enough.

I've also met people like this, but unfortunately the genes don't run in my family or the cash.

When I was tuning pianos at the Andover Prep school, ten years ago I met a family who purchased a Guaneri violin for their daughter to take beginning violin lessons. She kept the $1.5 million dollar violin in her music locker, so when the staff found out, of course more precautions were taken. But the bottom line was... even though the kid never took an interest in playing violin, the family most likely flipped the instrument a few of years later and made a significant profit large enough to cover her 4 year tuition of $225,000. For high school.

The wealthy didn't get that way by punching a clock.

I just checked, if they still have the violin.... it's now worth $15,000,000 USD

[lorrie]

Originally Posted by Phisher

We are checking out on 10/1!! I thought I was ready 5 years ago, made an emotional and ignorant purchase of a boat and realized I was not ready financially. So I bought another restaurant (its what I'm good at really good!) in 2011. Worked my ass off for 4 years, purchased 2 more properties paid them off in 2 years. Business is sold and I will be carrying some paper to add to my monthly income. With rental income alone after taxes, insurance and money i put aside for repairs we will clear 4k a month. I still have $1,200 an month for 7 years on the sale of my first restaurant which I never touch, it buys quantity dividend yielding stocks,with the dividends being reinvested. My wife and I live well below our means and have zero debt. We will go to Brazil and spend some time with family and friends, when we return we will buy our boat.

A close friend died last July, 52 years old. I told my wife at his funeral we were selling the business and moving forward with our plans to cruise. Tomorrow is not guaranteed my friends!!! If I have to go back to work at some point, no big deal!! I know what I'm good at and I'll just do it again!

This is my plan to finance the rest of my life.

Brian

Good for you. Time waits for no one, always remember that! I lost my sister at 40 years of age and no doctor could tell me why. That greatly impacted my life.
Now I am in Bucerias and realize the time is here and now.
Fear of the future is not part of the equation as I may not even be here. I have lived many more years than my oldest sister, grateful for the time.
Go and Enjoy!


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[landlockedsquid]

I tried the rental game for a few years. I didn't have very good luck with it. I couldn't believe what pigs some people are, and out of three renters 2 actually worked with my wife.
So I can't do the renter thing.
My plans are when its time selling the house and taking roughly half the profit (that should be about 50K give or take) and buying as good of a boat as I can get ahold of, investing the rest. I will then live aboard and work a regular job of some kind for 6 months a year, and sail for 6. If I decide on a circumnavigation, I will take time out for that and do what I can to make cash. Clean boat bottoms, paint, crew for someone, deliver boats. Whatever.
And most of all live cheaply.
At the end of my sailing career I will sell the boat and hopefully the investment from the other half will allow me to live out my days in some semblance of respectfulness.
My wife is currently fighting cancer, and Ive come to the understanding someone mentioned about "go now" Well, I can't go now, but I will as soon as I can. I understand life doesn't last forever.

[lorrie]

I have been reading a book about exactly what I already knew. By the time you have enough money to do all the things you think you want to do, you are too old to enjoy them, go now! While I do not have the ability to handle a cruiser financially or otherwise, i do my fair share of travel and Mexico is my home port.


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[MichaelW]

Hi Guys,

New member here, haven't contributed much so Hi!

My wife and I are planning on retiring to the Med in about 10yrs time and living off our rental property income derived in Australia to do so. We could actually retire right now and start cruising in the Med, except we have a 10YO son who we can't just abandon in Aus to do so.

We've bought a 1988 Catalina 30 here in Brisbane and are learning what it means to be boat owners in Australia to get ready for our retirement plans. She's a nice old boat, well maintained by her former owner Albrecht, a German engineer. I've done a bit of sailing, but never been an owner. So its good to learn all the maintenance side of things on an older boat before we step up to something bigger and newer in the Med.

Can't wait. I get a bit melancholy when I have to step off Blue Moon and head home or contemplate going back to work on Monday. I'm 45 now and my wife's got a few years head start on me, so waiting until I'm 55 and her a touch more does seem a bit too much delayed gratification. We are comfortably well off and could relocate to the Med, owning a nice yacht and service all our debts at home and still receive a very strong passive rental income immediately. Maybe circa $80K pa gross after debts and home expenses. That only goes up every year as our rents increase but interest expenses stay the same on our Interest Only loans.

Sorry for the long post. Look forward to reading and learning more here in prep for our ultimate retirement.

Regards,
Michael

[Kenomac]

We're anchored here in Montenegro next to two Australian families who are living off rental and passive income. It works.

[poiu]

A friend used to leave all his money in the bank and got a great income, then everyone started buying houses for buy-to-rent investments, and for themselves. The price of houses sky rocketed. Then came the recession. To stop the economy crashing and to prevent the mass bankruptcy of th half of the population who took out NINJA loans to fund such investments we got stuck with zero interest on bank deposits. He can't buy property anymore as prices are maintained still sky high by low interest rates. Now that high income friend is stuck with zero income and the property renters have a great income - thanks to him and others who the government doesn't give a fig about.

So if you are funding your rental empire with loans up to your eye balls, spare a thought for those poor sods who are baling you out at great cost.

[bletso]

Originally Posted by Kenomac

Three months on, then nine months working... Geez, teachers do it why can't you?

Sorry but most of the teachers I know are anything but idle during their summer 'hiatus'. They work at preparing for the next year. New texts, new curriculum, new outlines, continuing education. Yea, they don't work full time in the break, but they don't sit idly by either.

[Kenomac]

Originally Posted by bletso

Sorry but most of the teachers I know are anything but idle during their summer 'hiatus'. They work at preparing for the next year. New texts, new curriculum, new outlines, continuing education. Yea, they don't work full time in the break, but they don't sit idly by either.

Balogna. We have 4 teachers within the family and I know many more. Not one of them even thinks about any of those things during summer break.

They use the same lesson plans year after year and only attend inservice when required to do so.

But this isn't a thread about teachers or a place to post teacher's union propaganda, it's about how to fund a cruising lifestyle so other people can enjoy the great view of a medieval town here in Montenegro like we have today.

Please take your lame argument elsewhere. Thanks.

[brownoarsman]

I've been looking into rentals recently. It seems the biggest risk is that most small landlords aren't going to have a diversified portfolio of rental properties due to the cost to acquire, the management benefits of proximity, etc. Does anyone carry rental loss and/or rent guarantee insurance?

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