Admittedly a thin premise to base an AMA on... but whatevs.
FIRE: Financial Independence + Retire Early
I am retired.
Admittedly a thin premise to base an AMA on... but whatevs.
- Multiple questions above. I’ll try to hit them all.
How was it done: There’s a giant post on here where I detailed it. I don’t want to retype all that.
Pls answer: Blind keeps locking me out for posting too many responses. Sorry.
40k/yr: My expenses are food and travel. COBRA will run me $5k this year. Property tax is $2k. Of course that’s just for my home. Rental properties are not included. I don’t want to work to live like a king. I quite enjoy my life as-is
40k in LA?: I’ve never lived in LA. Oklahoma either. I’m farm born and barn raised. Hoosier all the way.
40k a year??? See above.
Crypto: I wish. I bought bitcoin at $6. Sold at $250. Pocketed $3k profit. Thought I was hot shit. Oh well...
@36: I had 929k. I had just been though the 2008 shitstorm though
Best question so far!
Yes, I leveraged OPM. I still am. I never earned a ton and I’m a marginal at best stock picker. So, I used a lot of side gigs to build the capital to buy RE. I bought a bunch before 2008, I bought even more after. I’ve never (till today) pulled cash out of RE investments to do anything other than leverage other RE.
Is this risky? Certainly. 2008-2011 were not comfortable years. But ultimately RE was the right call and has been very good for the last 8 years.
- I don’t have any meaningful quesitons as I lurk on r/fire. just came to say congrats!
- Lending Club oh_well^^ who says prenups need to be fair. Mine wasn't. Saved me big bucks in my divorce. No alimony and no access to deferred compensation are the keys to self protection. Best language insert I ever made 10 years ago.
With the divorce rates what they are I would not get married again without one. Even if she had hella money.Aug 20, 20181
- What is the break down of the net worth? What inflow of money will you get to fund your retirement?
- Not to butt in entirely but a property cashflows positive even if you spend the extra cash flow on paying down principal.
The cashflow calculation is based on existing liabilities. Any extra or loss defines the cash flow nature.
Spending the extra income on paying down principal does not change the cash flow.
- OP has 140k cash flow now bc he put the money back into his investments. Similar to what I’m doing. I’ll end up with probably 5-6 rental properties paid off and all that cash will be mine. The properties will be worth millions and I’ll have 100k+ income from it.
Following in OP’s shoes.
- Yes that is the problem these days. I’m waiting for a bit of a dip. I bought 2 rentals during last dip so benefited from that.
In my situation even if my latest doesn’t cash flow positive my overall rental properties will bc I will have 2 fully paid off and will put all rental income into paying of third.
OP, did you always have properties that cash flow positive or you were in the same situation as me?
- Really sorry to hear that OP. please let us know what company you were laid off from so we don't accept an offer there. If you need a referral let me know.
- North American Bancard IFAx35How many rental properties do you have? How many units? How long have you been doing that?
- How much did you save per year? From which source of income? Job, dividends, investment, side gig?
- Microsoft / EngGoivenglavSame desire in my heart. My mom will work 2 jobs living with a chronic illness and supporting a worthless pile of shit excuse of a man (not my father, though he wasn’t in the best of situations either) the rest of her life. It’s driven me to not want to struggle.
- Microsoft HalJordanDo you have kids? Are you not planning to leave an inheritance for them?
- Google JfofoansndI am also FIRE. What are you doing so far to keep busy? Honestly I am getting bored and debating going back part time.
- Heres what I have on the docket for the next year to pass time.
Turo - no one has trucks on it
Uber Select - Tesla Model X on event days. plus I get tax benefits this way
Teaching - My friend owns a training firm
Day Trading - buy high, sell higher. I hope.
Sports betting - Go Colts!!!
Craps - recreationally
Benefit corporation to renovate housing in rural IN.
Grow worms - don’t ask
Buy a Sawmill - self explanatory
3D print stuff - guns fuck yea
CN11 Cocoa product
Conference Speaker - 2 gigs
Start Book #4 - maybe.
Kickstarter - Kickstart awesome LED product idea
- Google / EngsergeymoreWould you regret anything if you find out today that you will die in 3 months?
- Amazon / OtherQuadruplemoreI know you made this tremendously personal decision to remain single and childless. What do you want your legacy to be? Who are you leaving the fortune and assets to?
- Would you agree that not having a family was a key for your FIRE? Or was it RE all over? And had you not the pathology it would all work out same way with wife and kids?
Trying to predict our FIRE... Our cash burn is $75K(correction from 60K). But two of us yet, in the Bay Area. Net wealth is 100K at 32. Debt free but renting.
- This steps a bit into counterfactual territory but I have to concede that things may have turned out different. Or at least delayed.
For one, I worked a schedule in 2008-2010 that would have ended most marriages.
Second, having kids would make it hard to take some risks that I’ve had to take. I think.
That said, married with no kids would have accelerated my FI date. But ultimately many women prefer to procreate and so the choice of not settling became entangled with that.
Cash burn of $60k for 2 is impressive. Especially in HCOL area. FIRE has to be a shared goal because there are sacrifices involved. For everyone.
There was an 8 year period where I spent every vacation from job one, doing side gigs on the road.
That killed some relationships, and would test most marriages
- Since majority of your $$ seem to have come from real estate, how does one get started? I’d like to buy a Condo in a desirable neighborhood in Boston (Brookline, Backbay, Beacon hill, Cambridge etc)., live there for 4-5 yrs and then rent it out and move to the suburbs.
I’m just browsing through Zillow and Redfin without any actual leg work and things generally look north of 700k for a decent place. There’s talk of real estate price corrections and such as well so don’t know if it’s a good idea to take the plunge.
- That is a very good point. I own several and I pay a lot of attention to this.
I once had to team up with other investors to wrestle control of a condo complex board and prevent them from enforcing draconian rules.
But zoning boards can also be as draconian. Eternal vigilance is key.
- Maybe OP can comment but I personally just do syndications.
I give up a good chunk of returns but I get immediate exposure to commercial real estate. Just gotta be careful not to get mixed in with a bad operator.
Typical returns are 8% cash-on-cash, projected IRR 18%. 8% is preferred returns
- Congrats and enjoy being on FIRE. My husband and I set a plan to retire by 50. We are in late 30's and early 40's and don't mind working for ten more. The first 20 were aimless but the last ten will be with a goal of enjoying that day in the sun where we will not have to check email from work or have that getting fired cloud over our head. God Bless you with good health and surround you with happiness. You deserve getting to FIREd...Huggs!!
- What do you want to do next? I imagine you worked very hard to get here and will have trouble doing something without any meaning
- So my friend. What makes you believe that his life will stop having meaning just because he stops working? Bill Gates stopped working more than a decade or more ago. He found meaning in life and claims to be more busy working on the Gates foundation. Similarly our friend here may find happiness in growing a backyard garden, coaching kids, teaching at a university. From your post is almost feels like continuous suffering is the only way to happiness. Also how do you define trouble of something without meaning? Whose definition of meaning are we talking here? The TC and bank balance chasing majority or those who feel liberated just going on a morning walk or find meaning watching the sun rise of set. Let the man enjoy his life. And let's all respectfully stop interrogating him or try to scare him. Simply put. His money, his life and his decisions. I am out of this post
- I have 400k cash, and 400k in retirement account. How can I retire? If I spend only 10k / year, can I retire?
- Safe withdrawal rates are around 3-3.5% of your nest egg. So 0.03*800k = 24k / yr.
Depending on your luck, the market could take a nosedive for a couple of years during which your 3% could be worth more like 12k / yr or, on the flip side, it could do extremely well in the first few years leaving you with a lot more as well.
See firecalc.com for some sims.
Edit: this is assuming a standard portfolio of 60-40 stocks and bonds in low cost funds. YMMV if you have all the $ in FB
- Real estate and stocks have pretty much the same long term risk and return characteristics. There's no free lunch. I could just as easily cherry pick a time period where stocks clobbered real estate, but what would that prove?
- I honestly have no idea what point you’re making.
I’m not advocating against equities. That’s 25% of my NW. I responded earlier to a specific ETF question.
If I had a crystal ball I’d have gone max margin and put everything into AMZN way back in 98.
I guess what’s being proven is we need to accelerate the development of crystal ball technology
- Twitter NWoj07What was your compensation in the last decade? Did you get wealthy through investing or getting paid well?
- Blizzard FFWi76You said you had a mix of commercial, condo, SFH and apartments. What works best and worst of those? Where are the properties located?
- I’m entirely Midwest located so my answer may make sense only in this region.
SFH are the best because they have the greatest appreciation Though they don’t have the greatest rentability.
Contrary to popular thought on the topic, I love condos both for the rentability and ease of management. It’s the HOA I don’t love as much.
I bought a 6 unit complex before I was ready to own something that big (3rd property) and it almost broke me. My lesson was this: never expand faster than you can bear
- Facebook NSnI12Is RE really worthwhile compared to VTSAX? I'm not convinced the premium is worth the management effort and stress of schmoe tenants. Please quantify the difference, assuming you made this decision rationally.
- For me it is. You get the compounding benefit of leverage on RE. It’s like buying VTSAX in a margin account.
VTSAX went from 30 in 2000 to 72 today. Honestly there’s no comparison.
A property I bought in 1998 for 60k with $12k down now rents for $1300/month and can be sold for $175k. And that’s not anomalous.
- AppDirect EROU22Average TC and how many years to get there? Do you think you saved more or was it "compounding interest" that made up the majority of your networth?
- Previously answered above.
I started working at 14. Saved enough to put $7k into Netscape, Lucent, Agere, Microsoft in the dotcom bubble.
So, the short answer is 22 years in tech but I’ve spent lifetime plotting retirement. I’m from rural IN where folks work till they drop. Like my dad.
That’s a life that I’ve tried to avoid for myself.
- How is your social security affected by retiring early? Would you still collect at the highest levels as long as you put in the 10 years required? Or does it account for income right before retirement (in which case would they consider rental income as income? Or does it have to be w2/1099?)
- After reading all the comments and OP’s replies, I think the biggest risk for someone who wants to FIRE here in the US is the health care expenses. The US sucks (say that as a US citizen). I saw this New Zealand guy’s talk on TedTalks on how to experience living without a job and thought to myself “he could do it because his health care is fully covered”. Did I mention the US sucks?
- Also, I have to say, your path seems a lot more complex than usual. But what do I know..
- Amazon / EngRiemannWould you have been better off just buying the S&P 500, or did all the leverage (I assume) work out better?
- You said you live frugally. How frugally? Do you travel? Buy nice things? Go to the opera? What is your biggest money sink? You are single but seem to enjoy sex. How do you find women who want to have sex regularly without wanting the marriage commitment?
- My cash burn is $40k/year. That’s frugal to me but I know that median income is $58k/household so... frugality is relative.
Opera? Seriously? No, I wouldn’t do that to my worst enemy.
“But enjoy sex” I hope this isn’t just for single people. It’s a human trait.
Did I mention I’m 44? I’m not chasing after 20 year olds. I have a coterie of lady friends with shared interests. Most have been through at least one marriage.
- What do you think of P2P lending as an income vehicle? Lending Club is averaging about 17% returns right now I understand.
- I’m not a fan of P2P lending.
Lending Club had soooo much promise but got very greedy. I used them for a bridge loan before (I needed to buy something for $150k cash). I got $50k in 3 days at 5%.
5 years later I returned and this had jumped to 11%. DF?! Hard money lenders do 8%.
[soapbox] There should be a short term liquidity product for RE investors similar to commercial paper. Sometimes I get a call from wholesalers who would sell you a property for a 30% discount if you can close in 5 days. I don’t have 300k cash sitting around and I had always hoped the P2P market could morph into this. Sadly it hasn’t.
Except maybe SoFi. But I don’t know a lot about them yet
Also @square is is right on the money!
- [small rant]
I’m EST based and it’s waaay past my bedtime. I hope I answered everything so far. Still not sure why Blind locked my initial account. I don’t troll or shitpost. Life is too short for either.
Anyways, thanks for participating.
Oh, and a little bit of what’s GML at the mo: https://youtu.be/mSgnC5eQ5u0
- Salesforce BUjF63Congrats on being FIRE’d. Can you share what years you hit intermediate milestones of 1M, 2M, 3M?