How to retire at 30 on $1 million
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How to retire at 30 on $1 million
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Re: How to retire at 30 on $1 million
#2You forgot to factor in capital gain taxes on the original sales price.
Depending on where you live that could put a substantial dent in your 'take home'.
And leveraging (to use a popular word) that money to obtain a much larger property by financing is actually a fairly risky strategy, especially if you are going to put the rest of your money in to different investments.
Re: How to retire at 30 on $1 million
#3You forgot to factor in capital gain taxes on the original sales price. Depending on where you live that could put a substantial dent in your 'take home'. And leveraging (to use a popular word) that money to obtain a much larger property by financing is actually a fairly risky strategy, especially if you are going to put the rest of your money in to different investments.
You forgot to factor in capital gain taxes on the original sales price.
I believe Tony already took that into account in his article?
Leverage increases the risk, yes, but that doesn't make it "risky". It's very much the norm in the real estate world, which has a pretty stellar track record for creating wealth, once you get out of the levels where soccer moms are flipping houses. Buying commercial multifamily real estate isn't about the value of the property; it's about the value of the cashflow stream that you're buying. For certain markets and with long-term demographic trends and forecasts being what they are, I'm very comfortable with that level of risk.
If it makes you feel better, run the numbers where you put $2mm or $3mm down, which reduces your return, but also decreases your risk.
Re: How to retire at 30 on $1 million
#4You forgot to factor in capital gain taxes on the original sales price. Depending on where you live that could put a substantial dent in your 'take home'. And leveraging (to use a popular word) that money to obtain a much larger property by financing is actually a fairly risky strategy, especially if you are going to put the rest of your money in to different investments.
You forgot to factor in capital gain taxes on the original sales price. I believe Tony already took that into account in his article? Leverage increases the risk, yes, but that doesn't make it "risky". It's very much the norm in the real estate world, which has a pretty stellar track record for creating wealth, once you get out of the levels where soccer moms are flipping houses. Buying commercial multifamily real es…
It makes it risky in the sense that if you only buy what you can pay right off the bat that you will reduce your income, but if the market tanks and you have to sell for whatever reason that you won't suddenly be working for a bank.
Tying yourself up like that might come back to bite you and if something unforeseen happens you're back where you started or worse.
Re: How to retire at 30 on $1 million
#5Earlier quoted context omitted.
You forgot to factor in capital gain taxes on the original sales price. I believe Tony already took that into account in his article? Leverage increases the risk, yes, but that doesn't make it "risky". It's very much the norm in the real estate world, which has a pretty stellar track record for creating wealth, once you get out of the levels where soccer moms are flipping houses. Buying commercial multifamily real es…
It makes it risky in the sense that if you only buy what you can pay right off the bat that you will reduce your income, but if the market tanks and you have to sell for whatever reason that you won't suddenly be working for a bank. Tying yourself up like that might come back to bite you and if something unforeseen happens you're back where you started or worse.
You do raise a good point, in that you're in some sense risking your other assets as well. You can secure nonrecourse debt for real estate like this, though this is harder to do than it was a few years ago.
But the other way to look at this is that you're going to risk the money one way or the other: either you risk it as indirect collateral by guaranteeing a loan at 80% LTV or you risk it directly by buying the property outright. The advantage in the first scenario is that you get a higher return. YMMV, but again, I'm comfortable with this level of risk.
Re: How to retire at 30 on $1 million
#6Earlier quoted context omitted.
It makes it risky in the sense that if you only buy what you can pay right off the bat that you will reduce your income, but if the market tanks and you have to sell for whatever reason that you won't suddenly be working for a bank. Tying yourself up like that might come back to bite you and if something unforeseen happens you're back where you started or worse.
You do raise a good point, in that you're in some sense risking your other assets as well. You can secure nonrecourse debt for real estate like this, though this is harder to do than it was a few years ago. But the other way to look at this is that you're going to risk the money one way or the other: either you risk it as indirect collateral by guaranteeing a loan at 80% LTV or you risk it directly by buying the prop…
I think that's why any investment advise or plan should always start with an analysis of the risk profile of the person doing the investing. And some of the risks are not always evident.
Re: How to retire at 30 on $1 million
#7Is this really retirement though? Or just using your retirement assets to fund a career change to apartment management?
Re: How to retire at 30 on $1 million
#8oh yeah that's a sure thing. no one has ever gotten fucked owning B grade multifamily housing. slam dunk.
Re: How to retire at 30 on $1 million
#9Is this really retirement though? Or just using your retirement assets to fund a career change to apartment management?
You're definitely not managing the property in this scenario; part of the operating expense is hiring professional managers. REITs and other institutional investors own and operate properties like this from a distance all the time.
EDIT: I should mention that I own several smaller properties in another state that are managed and I spend maybe an hour a month on them. I'd spend more on larger properties like this, but it's hardly a full-time job.
Re: How to retire at 30 on $1 million
#10oh yeah that's a sure thing. no one has ever gotten fucked owning B grade multifamily housing. slam dunk.
There are no sure things in investing. If you have some specific quibble with my scenario that you can back up with data or experience, please post it.