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Ultimate goal in Real Estate investing - Posted by Alexander - CA Bay Area
Posted by Alexander - CA Bay Area on October 04, 2007 at 06:28:17:
For you long-term real estate investors.
What have been your ultimate goal in Real Estate investing?
Have you been able to achieve this goal?
Re: Ultimate goal in Real Estate investing - Posted by Rich-CA
Posted by Rich-CA on October 04, 2007 at 12:07:13:
When it produces enough income to retire. This would be in conjunction to our other retirement investments.
Re: Ultimate goal in Real Estate investing - Posted by Eric (MI)
Posted by Eric (MI) on October 04, 2007 at 08:29:32:
Financial Independence of course! I would venture that is the goal of most young real estate investors.
For the foreseeable future I want to get as close as I can to it without ever obtaining a loan in my name by controlling property and not obtaining new financing. In order to replace my current lifestyle I will have to make, after all expenses and taxes, $75k a year in cash flow. Since I have 3 children ages 4 and younger and have full custody of them I also need to be able to replace the health care I currently have at my employer.
Re: Ultimate goal in Real Estate investing - Posted by arlan
Posted by arlan on October 04, 2007 at 07:35:35:
A pool of rental and rent to own houses, PAID OFF.
At my current rate of business, in 3 years, I will be at 2 Commercial and 25+ residential properties, paid off. At that time, I will be able to grow my RE business exponentially.
Right now banks are holding the purse strings too tight.
Answers will Differ - Posted by Jimmy
Posted by Jimmy on October 04, 2007 at 07:15:37:
for me, achieving financial independence was the goal. “FI” is achieved on the day when I have enough passive income to support me and my family forever (i.e., when I have about $6,000,000 in liquid assets, invested conservatively, and throwing off 300-350K in anual income).
I ain’t there yet…but each deal I do inches me ahead a little more. put enough inches together, and they will stretch for miles and miles.
Re: Ultimate goal in Real Estate investing - Posted by New RE investors
Posted by New RE investors on October 06, 2007 at 11:22:54:
After you reach Critical Mass how many RE investors diversify their investments? I would assume…I know never assume…that 25-35% of your investments should be in other realms than RE. On the other hand… some die hard RE investors will say that their assets will never go down to zero and that they are 100% invested in RE.
Re: Ultimate goal in Real Estate investing - Posted by KT
Posted by KT on October 04, 2007 at 12:00:45:
My understanding of Financial Independence is that you would NOT NEED TO WORK to maintain that 75k cash flow as it would come from investments.
Without buying anything such as rentals for cash flow, does that mean you are doing quick flips of some sort to build up cash? What do you mean by “controlling property”? Is the control long term or short term? What type of deals are you doing to achieve your goal WITHOUT TAKING OUT ANY LOANS? (cool!)
Getting a conservative return (5%) on liquid assets a person would need to put together about $1.5 million in cash to no longer work and still get a 75k cash flow. Is that your goal? Or does your method of creating cash flow last permanently without having to constantly work to replenish it with new deals? (otherwise I just see you replacing one job with another job)
With your methods, how quickly do you think a person could reach a 75k/yr cash flow goal?
Thanks for any answers.
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Re: Ultimate goal in Real Estate investing - Posted by REinvestor
Posted by REinvestor on October 06, 2007 at 11:12:21:
Great job at putting a short term and long term goals on paper and for using RE to achieve these goals.
One of the top 5 quotes that I like to pass on to other people is:
People do not plan to fail they fail to plan.
What percentage of the RE Investors at your local REIA group do it full time? In mine it is less than 20%. With many of the part time RE investors their goal is to do only 1 or 2 deals a year. Some are buy and hold investors others are happy with doing fix and flips. If either one manage to make $25K extra a year, in 10 years they will have $250K to put in their IRA or to use for their RE investments.
In less than 3 years I should be able to have enough in liquid assets to be able to pay cash for any SFH that I want to buy.
Good luck to all the Creative RE investors on this site.
Re: Answers will Differ - Posted by brandoncbsre
Posted by brandoncbsre on October 05, 2007 at 18:36:49:
I am with Jimmy. I want to own millions of dollars worth of commercial property. To do that I will have to work jobs I dont want to and buy and sell lots of single family homes to build up the downpayments. That is until the commercial props throw off enough cashflow and cashout refi’s to aquire others. I am determined to meet my goals one house at a time and then one strip center at a time.
Re: Ultimate goal in Real Estate investing - Posted by Rich-CA
Posted by Rich-CA on October 06, 2007 at 12:19:14:
Actually, I am the reverse. I came to RE investing after years of other investments (stock market, the safe “CD” and so on). Our only rental was the result of the late 1980s difficulty of selling a townhouse for more than you paid for it in No. CA where we live. Even with the appreciation run up, I have not achieved the 400% increase I obtained from the stock market.
For those who say that RE assets never go down to zero, that is not accurate. If you try and try to find a buyer and there is none and nobody looking at your property, then your assets are worth exactly zero. It takes a buyer to make assets worth more than zero. Until then, its all guesswork. Of if you put 10% down on houses in Tampa last year, your property is actually worth less than what you owe. They may try word games to claim the property is not worth zero, but their investment is worth less than zero because a sale would mean more money out of their pockets.
And there are the cases where toxics are found on the property. Federal law makes the CURRENT owner responsible for the cost of cleanup. They can sue the prior owner, but they have to prove that person knew there was a problem. Cost of toxic cleanup can easily exceed the value of the property.
Or the owner can lose a lawsuit where punitive damages are awarded. If the insurance is not high enough, the judgment attached to the property can also exceed its value, making the property worth less than zero.
There are a lot of ways RE can become worth LESS than ZERO. There are NO ways a stock ever is worth less than zero. Event a product liability judgment can only affect the company but not the owners.
Bottom line: everything carries risk and we can make guesses, some more educated than others, about what the future may bring, and we may be able to try an offset the risk (diversification is one way, but facing something like the Great Depression would wipe out everything except cash).
Every time one of my Investment advisers suggests I should “do something” with my cash holdings, I reply that I am doing something with it, I’m using it to offset risk in my other ventures.
Re: Ultimate goal in Real Estate investing - Posted by Eric (MI)
Posted by Eric (MI) on October 04, 2007 at 14:18:01:
Currently I am controlling property for 5-10 years by taking over the Sellers payments (various techniques, mainly Gatten’s EHT transfer) and, for the next couple years at least, continue to do so thus not obtaining any loans in my name.
In the near future I am looking at obtaining 2-4 unit Residential as well as apartments. I am also seriously looking at a Mobile Home park in the area.
Using my approach I will be getting lump sum payments along the way as well as cash flow and will need to continue, at least for the time being, to acquire new property as others will be ending 5-10 years down the road. That is what the apartments, park and 2-4 units will be for.
Time t reach my goal? Most likely a few years but I am doing the slow and steady approach until this week. I have just dedicated more hours per week to growing my business and to hopefully cut my time to what i consider financial independence in half.
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Re: Ultimate goal in Real Estate investing - Posted by suzy
Posted by suzy on October 06, 2007 at 17:04:43:
I know this is off topic of the board but, Rich i have never invested in any sort of stock… only R.E… I would like to start off small and get comfortable. I dont have a lot to start with but i could get my feet wet. What path do you suggest i take to start? Thanks so much!!
Suzy
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