Life Changing Money.

[Unorthodox]

Only chilis without a bar I’ve seen is in happy valley.  Maybe it’s an Utah rebellion thing since the Zion curtain was laid low.  (Used to be no bars allowed in a restaurant. Removed to not look stoopid at the Olympics).

[Metaliturtle]

Over here in Wisconsin, it's very hard to find non-drinkers, I keep a few NA beers in the truck because lunch beer is very much a thing, and a late lunch rolls into 3pm happy hour and at that point you're locked in for the night.  Chili's has a bar here but maybe not all of them?  Most restaurants that are local are also bar forward here.  I definitely could sit with a buddy and do a case of 30 Busch Lights in an afternoon.  I've seen pukey the clown and I've done a shot before work to even out a hangover... very glad I quit.

[Buster's Uncle]

I'm very glad you quit.  I'm your friend, you know.

[Metaliturtle]

If you like doing all that stuff, I guess that's right for you - it makes sense.  -For me though, I wonder if chasing investments beyond eliminating any debt wouldn't be a source of not-worth-it stress which would be life-changing in a bad way.

I hear this, to be honest if I could figure out how to get my wife to be my sugar momma and be a stay at home dad I'd jump at the chance, but she's way better at parenting marathon style, and I'm way better at earning, and since we want our little people to have the best shot at pursuing their dreams, I go out and earn.  It's stressful, it's hard, the big wins are rare, but the process is mostly automated.  If I were able to hop back in time with the knowledge that my kids would be the ones that I got regardless of my actions, there is little beyond buying bitcoin at $10 (The first time I considered it but then passed because I didn't understand how it worked enough to be comfortable putting my money into it).

The problem I'm really trying to solve is "How can I keep this lifestyle for the people who depend on me if my employment were to disappear tomorrow?"  I recognized 5 years ago that the things I was good at were quickly being replaced by computers, and view my work with farmers as the best opportunity to keep the skills useful since farmers are slow adopters of new tech, but my company is planning a 10% staff reduction every year for the next 5, so I can fight with the others, or I can get along with the others and live off 40% of what I make and put the other 60% to work for me.

With the rental company, my whole focus is on systems, every unit gets the same paint color, same appliances, same carpet, same furnace when we replace them, we pay for software that lets tenants pay rent electronically and charge extra if they want to pay by check.  We have a system for move-in, move-out, showings, turns, property improvement planning, and property acquisition.  When something new comes along we discuss, make a call, and when it's more or less settled down we write out a procedure based on what went well and what we could've done better.  When we disagree, each of us has areas of expertise we've agreed to where the expert makes the final call.

Our tenants understand that if they break something we'll charge them for the fix, but if something is old or worn out we replace it for free with something better and new, each unit gets a new appliance or similar improvement at lease renewals or turns.  We will pay outgoing and former tenants $100 if they refer someone to us who winds up renting.  I'm proud to say that we provide affordable housing for 80 souls if we count the pets in a town where we know most of the people or are a person removed from them.  We tip our contractors cash and stay out of their way when they do work for us, so they answer our phone calls first.  Right now every penny we make goes back into the business, but we're about 3-4 more properties away from being able to replace our personal incomes with just the business, and for 3 years' of existence we're very proud of that fact.

[Buster's Uncle]

Well, this all sounds great.  Efficiency always pays, and it sounds like you have a priority of playing square with your tenants, and it's good long-term business practice to try to make people glad they did business with you.

On a point of wisdom, remember to love your daughters and your wife enough to take care of you.  Anything for your wimminz, yes, but if Daddy ain't happy, ain't NObody happy for long.  Don't let the rat race trap you, and always value your own time and peace of mind - money can't always buy those things.

[Metaliturtle]

Well, this all sounds great.  Efficiency always pays, and it sounds like you have a priority of playing square with your tenants, and it's good long-term business practice to try to make people glad they did business with you.

On a point of wisdom, remember to love your daughters and your wife enough to take care of you.  Anything for your wimminz, yes, but if Daddy ain't happy, ain't NObody happy for long.  Don't let the rat race trap you, and always value your own time and peace of mind - money can't always buy those things.

100% The time/income with the rentals is dramatically better than the 9-5, and business partner's wife and kids get along with mine, it's way more fun painting and cleaning for a couple days every 6 months to increase our net worth by $40k each, than it is to work the 9-5s for as long as it takes to earn the same. We do take full advantage of the tax system/write-offs etc.  We pay the accountant well.  Doubling our units may add a week of work but the trade-off in time with families and flexibility to pursue our passion projects the rest of the time is why everyone's on board.

[Buster's Uncle]

You make a convincing case.

[Rusty Edge]

[

100% The time/income with the rentals is dramatically better than the 9-5, and business partner's wife and kids get along with mine, it's way more fun painting and cleaning for a couple days every 6 months to increase our net worth by $40k each, than it is to work the 9-5s for as long as it takes to earn the same. We do take full advantage of the tax system/write-offs etc.  We pay the accountant well.  Doubling our units may add a week of work but the trade-off in time with families and flexibility to pursue our passion projects the rest of the time is why everyone's on board.

I often think about you and wonder how you are doing.  Usually when I walk past the Tayberry plant that that you once said you wanted a cutting from.  ( Sadly one of our WI winter relapses did it in this year while I was away.)  I'm glad to hear that you succeeded! My wife would say that you should pay down the card with the highest interest rate first, but I understand the allure of the sense of accomplishment gained from paying any card off, and if early success motivates you that's a good thing.

My Wells Fargo 401K has been invested in S&P 500 funds, and they usually outperform everything else available on a 5 year or longer horizon. I have diversified it into a NASDAQ index fund as well.   

My brother's boss asked his dad to take his college fund and invest in apartments in a university town, and then took a construction job while recycling apartment income into more apartments. He went on to become a young millionaire with his own rental and commercial remodeling business. 

I know somebody else that has a rental business in Florida university town. They bought in during Great Recession. It's a sound idea. Glad that you are making it work for yourself and are able to provide for your kids.

Did you meet your wife through your cat sitting enterprise?

[Metaliturtle]

[

100% The time/income with the rentals is dramatically better than the 9-5, and business partner's wife and kids get along with mine, it's way more fun painting and cleaning for a couple days every 6 months to increase our net worth by $40k each, than it is to work the 9-5s for as long as it takes to earn the same. We do take full advantage of the tax system/write-offs etc.  We pay the accountant well.  Doubling our units may add a week of work but the trade-off in time with families and flexibility to pursue our passion projects the rest of the time is why everyone's on board.

I often think about you and wonder how you are doing.  Usually when I walk past the Tayberry plant that that you once said you wanted a cutting from.  ( Sadly one of our WI winter relapses did it in this year while I was away.)  I'm glad to hear that you succeeded! My wife would say that you should pay down the card with the highest interest rate first, but I understand the allure of the sense of accomplishment gained from paying any card off, and if early success motivates you that's a good thing.

My Wells Fargo 401K has been invested in S&P 500 funds, and they usually outperform everything else available on a 5 year or longer horizon. I have diversified it into a NASDAQ index fund as well.   

My brother's boss asked his dad to take his college fund and invest in apartments in a university town, and then took a construction job while recycling apartment income into more apartments. He went on to become a young millionaire with his own rental and commercial remodeling business. 

I know somebody else that has a rental business in Florida university town. They bought in during Great Recession. It's a sound idea. Glad that you are making it work for yourself and are able to provide for your kids.

Did you meet your wife through your cat sitting enterprise?

I am doing better than I could hope or expect, thank you for thinking about me Rusty!  No worries about the plant, my gardening time consists of running the mower once a week while the 4 year-old wreaks havoc on the yard with sticks.

S&P 500 and NASDAQ funds I highly recommend if you'd rather be hands off with stuff. I've had the luxury of 20 years in banking and employer reimbursement for continuing ed courses and materials, as well as flexibility to read work-related books without too much pushback, even with that, it took me 17 years of prep and some lucky circumstances to get me to pull the trigger on real-estate.

Napkin math on S&P funds that I do is simple:  If I start with $20k to invest, and set it to compound, I plan for an 8% annual return, or about $1600 for the first year, and reinvest dividends until I need to live off the money.  If you work hard to set money aside, with a long enough runway, you will be a millionaire.  This is how I set money aside for my kids, the two younger ones get $1000/year invested, the 4-year old's investment is worth about 8k even though I've only put in 5k due to compounding.  (The older one's mom gets $1400/mo from me in child support so I don't save for her beyond a savings account to cover medical bills that come up during the year).

The math for rentals is a little more involved but I'll do the example of one of my properties.  Purchase price was $235,000.  Currently it has a 1-bed rented at $650, a 1-bed rented at $700, and a 3-bed rented at $1325, so total monthly rent is $2675/mo or $32,000/year.  Taxes and insurance are about $5800 combined so I'll call it $6k.  The loan is a 25-year term at 4.75% interest.  We had to put 20% down or $47,000, giving us a monthly payment of $1079.46 on a loan of $188,000.  Annualized, that payment is $12,960.  Rounding up again to account for changes to insurance or taxes, and setting aside $500/bedroom for potential maintenance costs and vacancy coverage gives the total cost for the building at $21,500 per year.  This leaves $10,500 a year in 'profit' for  the building.  Most people would divide that by the purchase price of $235,000 and say, "4.5% return is less than the stock market." This is technically true, except our investment was only the down payment, so the annual return on the $47,000 is actually 22%. It also doesn't take into account the growth from the principal paydown on the loan, and the increase in the property's value over the last 3 years, today that building is assessed at $300,000, and similar ones sell for closer to $350,000 in my town, which, after some paperwork, is the value that the bank gives to the building as an asset, or $38,000/year in annualized appreciation. It also doesn't account for the ability to increase rents, we increase rents by at least $50/mo anytime tenants move out, but we don't increase on our existing tenants until they've been there for 2 years. With 3 units in the building we assume $1200/year in income growth. Of our loan payment, annually about $4,320 goes to principal paydown. 

From a net worth perspective, our investment of $47,000 returns rent profit of $10,500, it's returned capital (building) appreciation of $38,000, annual rental increase of $1,200, and $4,320 of principal reduction on our loans, for a total of $54,020 in annual net worth change, or about 115% return for our efforts and using a week's vacation every year to flip units (clean, paint, repair, etc.).  We have the ability to borrow $140,000 against this property if we wanted to do a major renovation, or put a down payment on something else, or if we wanted, we could put that in our pockets, since it's borrowed money we don't pay taxes on it if we choose to go that route. 

Certainly we have some advantages over the average person, market knowledge, connections, skills, access to savings, good 9-5 employment, good health, but the steps we took to get there were all simple, the tricky part was mapping out the path.

As for my wife, I didn't meet her through cat-sitting, she messaged me on an online dating site and we just hit it off really well.  Our 9-year wedding anniversary is Wednesday.

[Buster's Uncle]

Shall I whoop it up Wednesday on your behalf, or shall we take it as read?

Congrats, either way.

[Metaliturtle]

Shall I whoop it up Wednesday on your behalf, or shall we take it as read?

Congrats, either way.

Thank you!  You're free to party any time, but as for me, I won't be around here that day unless I royally mess something up.

[Buster's Uncle]

[Rusty Edge]

Happy Anniversary to you, Metaliturtle.
It's cool to see how you did that rental business.

[Metaliturtle]

Happy Anniversary to you, Metaliturtle.
It's cool to see how you did that rental business.

Thanks Rusty! It's been a fun adventure for sure.