As or even more important when it comes to retiring early is establishing sources of passive income. For example, we own a handful of rental properties. Those are going up in value as well as paying regular dividends far greater than any other investment we have.
A wild card for early retirement is healthcare. I really hope they lower the eligibility age for Medicare. Once I’m eligible for predictably affordable health ins: F U
I get it. This makes sense. The problem is that real estate as an investment has its own pitfall potential. Finding renters, covering the mortgage when you are between renters, repair costs, the hassle of getting calls in the middle of the night when the toilet is broken, periodic capital replacement/remodeling costs, renters potentially damaging your property, and real estate market values being quite random and capricious.
I have friends who have made fortunes in real estate, but they both lost millions (literally) in the market downturn in 2008 - 2010. One of them was threatened with a gun trying to evict somebody.
I don’t know if 2008-2010 will ever happen again. what I do know is that there are a LOT of empty houses/condos/apartments in every major city and the rich suburbs.
Fair and valid points all. If my SO was not a general contractor, I wouldn’t want to be invested in rentals. We have been fortunate in finding really good properties to own.
But it does get stressful sometimes. The houses get trashed. With Covid, some tenants had temporary trouble paying rent. I just told them: do what you gotta do and catch up when you can. All did.
Only once did I have to get nasty evicting someone. Not pleasant. But they did leave.
I’m guessing they had mortgages. I worked with a guy who became a negative millionaire doing this. Asset values fluctuate, being leveraged exacerbates it. If you put all your money in a 3x SPY ETF you could do the same thing in equities. No idea how much leverage Serena may or may not have.
Or maybe your friend started with $10M and wound up with $8M, in which case… not too much pity required.
I’ve seen good returns on rental property, but with the hassle factor I’ve avoided it and will likely continue to do so. $2M or whatever, properly diversified in equities and bonds, will do the trick and requires minimal upkeep/stress.
No empty houses around here. It’s the strongest sellers market I’ve ever seen. Houses go up and within hours, you have a dozen cash offers for 115+% of asking price.
I’ve heard anecdotally that in Washington/Oregon, people are making offers that aren’t even contingent on a home inspection because demand is so high.
I know in my city the norm is becoming to have an open house one or two days, then just pick from one of the many offers you get. No need to have your house on the market for months and show it a bunch of times.
If you are a first time buyer and need an FHA inspection, you’re screwed.
We just bought a rental in November. Asking $150, we offered $160, cash, no inspections, close in 2 weeks — and I was shocked that we got it. My agent knew the selling agent and we got bumped to the top of the pile of offers.
I’ve a friend in Cleveland who says non-contingent offers are happening there in the more desirable parts of town.
We sold last year in Denver, on the market two days, 21 showings, four offers. Three were over list price. Even here in Lawrence, KS things are getting pretty bonkers.
How long will it last? Builders are picking up the pace from the COVID slump, so supply will start inching up. Lumber prices are still bonkers, and concrete is up a lot (but less), etc, which is pushing up prices of new construction, which puts pressure on the whole market. So it looks unlikely to ease much in 2021, barring recession. Beyond that: it works until it doesn’t.
I feel bad for families who are just starting out. 10 years ago we bought our first house, 4 bedroom 2,000 sq ft and we got it for less than $70k (it was foreclosed). That same house now would sell for $300k probably.
We would not have been able to be home owners if the market had been like this. And the only reason we started looking to buy a house was because we weren’t able to afford rent anymore (which has also gone way way up).
Well, with regard to the empty homes comment, I was more commenting on the places that we were looking to move to: vegas, palm springs, phoenix, etc, so many new communities.
