Retirement Planning - Lessons Learned

[MoKelly]

My best investments the last 15 years, when I hit the workforce, has been real estate. Rentals.

The capital appreciation and ability to use refinancing to pay down the principle faster has really provided a real cash flow that is not tied to anything. Free cash flows.

Real estate has some great tax hedges and overall it's a hedge on the stock market assets.

My parents have around 20 rentals that allow them a great retirement now. I now pay my father and his company to remodel the houses I buy. He is a retired contractor, but he can't stop working. He has a few older guys that work a few days a week and they go in and fix stuff. It's a win for everyone. It keeps him out of my moms hair and her out of his.

Just curious. Has all the COVID stuff about not paying rent and not being able to evict impacted you? I really feel for landlords based on what I see around St. Louis.

MoKelly

 

[drssg]

Please see my response to JethroB - The article also said 42% are working from home. While not stated, I'd think common sense would dictate they are also essential. Otherwise, why would they be working from home?

Perhaps you are using a different definition of essential. From a COVID standpoint, it means they are essential to society on a daily basis, such as police and ambulance services.

Based on that definition, there would be plenty of nonessential employees working from home. They are still essential to the business long-term goal of making money.

 

[dmccarty]

They sell them to a developer at a loss and write it off. Then the developer turns them into upscale work from home flats and there you go.

Well, some of the buildings can't be turned into flats, not only because of location but also because of the building's construction. If employees are leaving the cities, and there is plenty of evidence they are, and the old office building is in the city, who is going to buy the flat? Flip side, is that there might be some really good deals on some buildings. :laughing:

Are we at a nexus point where people are going to return to living in the country because of

• The pandemic driving/allowing people to work from home,
• StarLink, and eventually other ISPs, bringing faster internet rural areas,
• High taxation and cost of living in cities,
• Crime, riots, traffic, and other quality of life issues in cities?

I think there is a good chance of this happening and it seems to be happening already.

Later,
Dan

 

[Snobdds]

I have not had any issues with someone using the rent cancelling provisions as an excuse to not pay rent.

I also only rent to older people and charge below market rates in return. I don't have turnover and they are really the best tenants. My parents discovered this years ago. You can't proclaim you do this, but it's in your best interest to wait for the right tenant to come along instead of filling the place with the first warm body.

My parents have had places sit idle for months before the right tenant comes along.

 

[Hay Dude]

If you bought gold in 2011 hoping to be safe, and wanting to retire in 5 years, you'd have lost 45% of it's value. It's still not back to 2011 level today.

Right, because the economy was TRASHED in 2011. Where you think its headed in next couple years?

From Investopia:

“ If we look instead over the 15 years from 2005 to 2020, the price of gold has increased by 330%...... Over the same period, the DJIA increased by only 153%.1 “

It’s also the best investment over the last 50 years. Nobody invests for 100 years. 50 years is an excellent long term goal.

You or I can state segments of time where each others investment vehicle was better. So what? :laughing:
The point you are missing is that I have it as a PART of a portfolio of investments, just like many countries governments and huge investors in the world. I would never suggest anyone be 100% gold. It’s about 20% of my portfolio. I increase/decrease all investments as the economy changes.
But yeah, Dave Ramsey is be all end all.

 

[Wakey]

The Grand Plan, which we have been talking about before we even had built the house but after buying the land, was to get a boat and travel the world. We have been actively looking, planning and training for this since 2014.

Have you settled on a particular boat? I always wanted an RV but that changed about 15 years ago when sailing replaced it. I’ve read countless blogs and several years back people started making vlogs (YouTube)

I do worry that world cruising won’t be normal for some time due to COVID. As an American hopefully at the very least the Bahamas will be welcoming. I could do that for a few years alone.

*edit.. If it were me in your position I’d consider selling now before the next correction and buy something small that you could rent after you shove off.

 

[KennyG]

I have not had any issues with someone using the rent cancelling provisions as an excuse to not pay rent.

I also only rent to older people and charge below market rates in return. I don't have turnover and they are really the best tenants. My parents discovered this years ago. You can't proclaim you do this, but it's in your best interest to wait for the right tenant to come along instead of filling the place with the first warm body.

My parents have had places sit idle for months before the right tenant comes along.

In some parts of the country, you would be in court very quickly with this approach. There are organizations that actively survey rentals for inappropriate tenant mixes and create lawsuits. Each to his own, but having rental property doesn't sound like retirement to me. Too much worry and potential headaches.

 

[MoKelly]

Right, because the economy was TRASHED in 2011. Where you think its headed in next couple years?

From Investopia:

“ If we look instead over the 15 years from 2005 to 2020, the price of gold has increased by 330%...... Over the same period, the DJIA increased by only 153%.1 “:

The S&P 500 (including dividends) returned 326% from 2005-2020. I think the S&P 500 is a better yardstick as it’s more diversified and is what most market investors utilize.

MoKelly

 

[ultrarunner]

In some parts of the country, you would be in court very quickly with this approach. There are organizations that actively survey rentals for inappropriate tenant mixes and create lawsuits. Each to his own, but having rental property doesn't sound like retirement to me. Too much worry and potential headaches.

Yes... very easy to file discrimination complaint and have the full regulatory weight come down on you.

It's happened to me but investigation showed it was a mute point...

A single parent african american women filed a discrimination complaint it turned into a full investigation even with testers... or a tester.

Thing is the person I did rent to was also a single parent African American woman... the difference is the one that filed had pages of charge off on credit report and the one I rented to had none... not sure the outcome would have been the same had my tenant not been identical except for credit report...

Also, we can no longer check criminal records as it is discriminatory to those with criminal records...

 

[Snobdds]

In some parts of the country, you would be in court very quickly with this approach. There are organizations that actively survey rentals for inappropriate tenant mixes and create lawsuits. Each to his own, but having rental property doesn't sound like retirement to me. Too much worry and potential headaches.

You're doing it wrong then. If you fix up a place and make it not a slum, you really don't have much left to do but upkeep. Then don't rent to idoits.

Wyoming really hates wokism and identity politics. Not a single judge here would play into the quota game.

 

[MossRoad]

My grandparents had 3 duplexes. Older ladies were the best tenants. Quiet. Clean. Paid on time. Stayed for 10-15 years. Problems came up when they rented to young couples. Man, could they trash the place. They'd pay first and last month's rent. Maybe 1-2 months after that. Then nothing. By the time the eviction was processed, it was usually a loss of at least 3 months rent, hammer marks in the plaster, kitty litter down the drains, basement door kicked in and a pile of dirty diapers and garbage at the bottom of the stairs. All the lightbulbs would be gone, too. Why lightbulbs? Sheesh. Just spite. We were very happy when the last duplex sold for the 3rd time and she was finally out of it.

I think you need a place with a nicer clientele or maybe commercial property. Anyhow, I'm at the age where I don't want to deal with it. Had I started when I was young, I might have had a go of it, but the experiences of my grandparents left me scarred for life. :ashamed:

 

[MossRoad]

You're doing it wrong then. If you fix up a place and make it not a slum, you really don't have much left to do but upkeep. Then don't rent to idoits.

Wyoming really hates wokism and identity politics. Not a single judge here would play into the quota game.

It's not so much a quota game as it is a discrimination game. If someone can prove you didn't rent to them based on their race, religion, ***, etc... you're screwed. Even if you don't a lawyer can make it look like you do. Gotta keep meticulous records.

 

[deserteagle71]

It's not so much a quota game as it is a discrimination game. If someone can prove you didn't rent to them based on their race, religion, ***, etc... you're screwed. Even if you don't a lawyer can make it look like you do. Gotta keep meticulous records.

^ This!

 

[Snobdds]

It's not so much a quota game as it is a discrimination game. If someone can prove you didn't rent to them based on their race, religion, ***, etc... you're screwed. Even if you don't a lawyer can make it look like you do. Gotta keep meticulous records.

I think I would be congratulated by providing affordable housing to our fixed income class here.

When everyone can be discriminated against by some inherent trait, it means nothing can be discriminated against. Again it goes back to identity politics, which is hated worse than Liz Cheney here at the moment.

 

[Fuddy1952]

In some parts of the country, you would be in court very quickly with this approach. There are organizations that actively survey rentals for inappropriate tenant mixes and create lawsuits. Each to his own, but having rental property doesn't sound like retirement to me. Too much worry and potential headaches.

Dad had friends who had rental houses, I have too. None lived to be that old. Coincidence maybe, but last one was a contractor who had some houses he showed me that he renovated. One tenant was perfect, the rest all problematic.
I felt sorry a couple years ago and let one of my Mom's caregivers live in my grandparents home next door, a single Mom with two kids. Rent free...just pay utilities and peace of mind for Mom knowing someone is next door especially at night.
She had to be vacated...house is completely trashed. Still owes a few $hundred for utilities, left 6 months ago.
My wife inherited her parents home...I suggested renting it. She said no way and sold it.

 

[MoKelly]

Yes... very easy to file discrimination complaint and have the full regulatory weight come down on you.

It's happened to me but investigation showed it was a mute point...

A single parent african american women filed a discrimination complaint it turned into a full investigation even with testers... or a tester.

Thing is the person I did rent to was also a single parent African American woman... the difference is the one that filed had pages of charge off on credit report and the one I rented to had none... not sure the outcome would have been the same had my tenant not been identical except for credit report...

Also, we can no longer check criminal records as it is discriminatory to those with criminal records...

Interesting story. Not easy to make a living anymore.

MoKelly

 

[Snobdds]

In all the years my parents have been renting houses, they have had one renter that was bad. He happened to be an airman at the local air base here. His commander found out what he did and that guy spent the next 3 weeks cleaning the place with a toothbrush, literally. The commander came after a week to inspect. He had to start over again top to bottom just to prove a point.

I was only 15 or 16 at the time, but I will never forget that poor guy with his toothbrush and bucket of soap.

Wyoming is what America was 50 years ago. We still have decent people here.

 

[drssg]

Also, we can no longer check criminal records as it is discriminatory to those with criminal records...

Oh good gravy! Does that also apply to employment? If someone establishes a proven track record of being a crook, someone else just might think he's a crook.

 

[ultrarunner]

Interesting story. Not easy to make a living anymore.

MoKelly

Plenty of minefields these days... even a simple mistake can put you into hot water...

Insurance Company instituted a list of prohibited breeds... OK... no more pit-bulls, etc... then tenant rights said owner cannot prohibit animals to those with disabilities... so if tenant claims animal is needed for disability the owner can do nothing unless it can be proven vicious.

There was a case where a very religious women advertised seeking Good Christian family... well you can guess how that went.

About the only avenue to specify is when renting a room in the home where you reside...

A very wise elderly retired woman gave me advice as a teen... take care of the property and it will take care of you... she lived in a Alameda Victorian that had basement apartments fashioned in WWII when there was an acute wartime housing crisis.

The people she rented to were like family and as Mary aged... they would cook and take her to Doctor appointments and such... she was such a nice lady and still drove her black 1930 Model A Ford Coupe and had been doing so for 60+ years.

I took heed but the playing field has changed dramatically...

In the old days the simple way to part ways with a troublesome tenant was to simply not renew the lease... this has not been an option for many years with Rent Control and Just Cause Eviction Statutes... and why many owners resort to Cash for Keys as hard as that is to stomach...

A tenant that does not want to leave has almost unlimited assistance... and if their minor child is the terror the records are sealed... even from the property owner.

You must prove a valid reason from the list of reason to proceed if the tenant wishes to stay...

Also... you may not have a choice of tenant or screening if the unit is subsidized... or was subsidized decades earlier... criminal background checks prohibited as mentioned and source of income cannot be discounted if legal... this is to address Section 8 refusals.

With the changes to California Property Tax Law I expect more small Housing Providers will leave... already seeing 1-4 rentals going totally family occupied...

My retirement planning revolved around income property... it was tried and true forever but the burden keeps shifting to the property owner to deal with society problems...

I have been relatively unaffected by non-payment due to Covid... but all of my SF owners have problems and some very serious with remedies off the table...

 

[ultrarunner]

Oh good gravy! Does that also apply to employment? If someone establishes a proven track record of being a crook, someone else just might think he's a crook.

Here you go...

Oakland Landlords May Not Ask Tenants About Criminal Records on Applications | Astanehe Law