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How to retire at 30 on $1 million

ryanwaggoner.com

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Re: How to retire at 30 on $1 million

#91

Post by rphlx »

ryanwaggoner wrote: post #64
illumin8 wrote: post #54

Seriously? You want to get into real estate in the middle of the biggest depression we have ever seen? When property values are still way over-inflated? This is only the start of the article's problems. The next thing he advocates is putting 20% down on a $6.5 million apartment complex, effectively leveraging 5 to 1. Leverage has no place in any retirement account, period! This entire article is a recipe for disaster…

"Be fearful when others are greedy and greedy when others are fearful." ~Warren Buffett Do you have any personal experience with multifamily real estate? It's valued based on the income stream, so unless the income stream is inflated, it's not really overvalued. And increasing population + more single-member households + fewer people buying houses now = more renters. Where the hell do you think all the people losing…

> more single-member households

Do you have a source for this? I think the number of single-member households is actually declining in most parts of the US. People move in together to reduce costs during a recession. College grads moving back in with their parents, 2 imigrant families share a 2BR apt, etc.

Re: How to retire at 30 on $1 million

#92

Post by ewams »

djm wrote: post #71
webwright wrote: post #66

Earlier quoted context omitted.

Regarding my assumptions, you're largely right... Though I take issue with: "(2) That you would invest your $4m in a low-return investment." My assumption is that you'd invest in a BALANCED PORTFOLIO. What sort of return do you think a balanced portfolio would get you?

When I read your comment I realised that I had made a rather foolish assumption myself - that most people would want to take risk. In practise most people do the opposite and seek to minimise their risk. Then again, your article was talking about startup founders, who (in general) presumably are quite willing to take risk!

The goal is to retire though, have a steady source of income. It would make sense to have low risk in this scenario.

Re: How to retire at 30 on $1 million

#93

Post by [deleted] »

revorad wrote: post #76

That's hardly retirement. You should re-title this to "How to invest $1 Million in multifamily real estate at 2010 prices". Doesn't quite have the same ring to it, but it's a lot closer to the truth. It's a shame that even intelligent and knowledgeable people like Ryan and Tony choose to write articles with linkbait titles. There is clearly some interesting and valuable stuff in these articles, but they would be bett…

[deleted]

Re: How to retire at 30 on $1 million

#95

Post by msg »

andreyf wrote: post #88
byrneseyeview wrote: post #83

Earlier quoted context omitted.

I've heard proposed property tax systems that work that way: you pick a property value on which you'll pay taxes, but you give the government the right to buy your property at that value.

Is there a name for this kind of game? I think the most common example I've heard is "you cut the pie, I pick who gets which slice (assuming everyone wants the largest one)".

"honor among thieves"

also, "fair division": http://en.wikipedia.org/wiki/Fair_division

Re: How to retire at 30 on $1 million

#97

Post by msg »

patio11 wrote: post #43
djm wrote: post #34

I didn't see Tony Wright's article the other day, but I've just read it and the article linked here. I have a few comments. First, for the rest of this comment I'll define income as 'what you've got coming in' and wealth as 'what you keep or what you grow'. Most people fail to make this distinction (If you ask somebody if they are wealthy they will start talking about how much they get paid), but it's important, espe…

how to you value the appreciation in somebody's house when the only meaningful way to value a property is to sell it? I think property taxes are fairly widespread in the US, actually. Your county has a group of assessors, who pick a SWAG based on comparable recent sales and -- ahem -- their desire to have the county generate tax revenue this year, and then you get to pay .8% or whatever of the assessed value in prope…

For what it's worth, my assessment went down this year (suburban Western Washington state).

Re: How to retire at 30 on $1 million

#98

Post by leot »

The major difference financially between the stock market and real estate seems to stem from the fact that real estate is costly to manage, and doesn't scale, and thus investment banks and major market players are unable to participate in a big way.

My knowledge of the stock market, even if I get a fancy MBA and specialize in finance, still won't be able to compete profitably with institutional investors that have massive pools of capital, inside knowledge, aggregated expertise, and highly optimized trading algorithms. As an individual investor I have no competitive advantage, even if I'm savvier than 99% of other individuals, because all the spread will be grabbed en masse by the big players.

By contrast, the number of non-experts buying and selling real estate, along with its relatively high transaction costs and necessarily local nature, means that even if I were only smarter than, say, 90% of people, I'd be able to do quite well because the spread wouldn't be gobbled up by the 99.999999th percentile financier.

As soon as electronically-managed liquidity is thrown in, and transaction costs become substantially lower for an elite subset, then it becomes much less "worth it" to participate. Thus, even REITs, by their very nature, are going to yield a lower return (pre-fees) than clever, well-managed individual real estate investments.

Re: How to retire at 30 on $1 million

#99

Post by HockeyPlayer »

andreyf wrote: post #88
byrneseyeview wrote: post #83

Earlier quoted context omitted.

I've heard proposed property tax systems that work that way: you pick a property value on which you'll pay taxes, but you give the government the right to buy your property at that value.

Is there a name for this kind of game? I think the most common example I've heard is "you cut the pie, I pick who gets which slice (assuming everyone wants the largest one)".

As patio11 mentioned, it is called a "shotgun clause". We share a ski condo with another family and we debated using a shotgun clause to help figure out the sale price when we decide to sell.

Re: How to retire at 30 on $1 million

#100

Post by endtime »

davidu wrote: post #30
endtime wrote: post #24

Earlier quoted context omitted.

> part of the operating expense is hiring professional managers. I don't think smackfu meant to imply you'd be replacing lightbulbs yourself. But if you have employees who provide a service, and if they screw up it can affect your future income (and you therefore need to do some degree of management, minimal though it may be), well, that sounds a lot more like a job than retirement to me. It might not be 40+ hours a…

Most property management companies are actually just managing the contractors who fix the sprinklers... those people aren't on your payroll. Usually property managers just take a fixed % of all the rental revenue.

I understand that, though I agree that my comment didn't make it clear. But you have to manage the property managers, no?
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