How to best attain wealth?

[ickyrica]

a house I pay $45,000

lol, it kills me to hear of prices like this...

 

[Eman]

I was talking to one guy at the union hall who has borrowed to buy a new car twice. Once for himself and once for the wife. Paid it back with interest both times. Seems like a cool alternative to a traditional loan, given you aren't close to retirement age. I don't have any plans of borrowing against mine. I am shocked how fast it adds up. Now I need to start socking away in a savings account as well

IMO, it's actually worse to borrow out of it the further away you are from retirement age... Unless you plan to repay it lightning fast. Interest rates for an auto loan are usually less than the interest on your repayment interest to yourself, at least from my experience. The biggest issue is that you lost time with the money being in the market. Time is your best friend or your worst enemy with investment for retirement.

I'd rather take the auto loan and let the bank have the interest at a single digit percentage point than take 30k out for a car and lose out on double digit percentage point growth for a few years.

 

[Brandaddy]

in an extreme case, you gotta do what you gotta do but it's clearly not advisable. I mean, better than a loan shark

lol, it kills me to hear of prices like this...

Haha. Gotta love the desolate Midwest. In the last 6 months I have bought a $5,000 duplex, 2 houses for a combined price of $25,000, and a house for $10,000. I have pictures I can post of these places, they were FUCKING GROSS dude. Lol. Straight crack shacks. The $5,000 duplex was a condemned building they literally called "The Meth House". Lol. My workers seriously found leftover paraphernalia all over the place after it's already been ran through by however many government agencies already

 

[ickyrica]

Haha. Gotta love the desolate Midwest. In the last 6 months I have bought a $5,000 duplex, 2 houses for a combined price of $25,000, and a house for $10,000. I have pictures I can post of these places, they were FUCKING GROSS dude. Lol. Straight crack shacks. The $5,000 duplex was a condemned building they literally called "The Meth House". Lol. My workers seriously found leftover paraphernalia all over the place after it's already been ran through by however many government agencies already

God fucking bless lol. Worth every penny! Bad houses in ok neighborhoods?

 

[Eman]

Retirement is a tricky thing too. Contributing 3% of pay with a match or $.50/dollar is all most ppl vaguely understand about 401 participation so their happy and dont look much further in to it than that.

I think the IRS max allowable deferement is 19,500/yr per individual and 56,000 with the companies contribution. So that would be considered maxed out 401 every yr and thats far far more than the standard deduction most contribute. Its not hot in my head atm but iirc you really need about min 1,000,000(and thats not really alot) to 6,000,000 to retire "comfortably". At 1,000,000 only thats 50k a yr to live off from IF you live 20 yrs post retirement. Is that an ideal retirement? I think not.

Moral of the story? A 401 is not a good primary retirement period. Not unless your contributing the max every yr and living well below your means to set aside more. While its a great way to lower your tax shield AND save for the future there MUST be other things your investing in to make actual retirement happen. Because S.S they say wont be a thing for our and future generations. Even tho we all contribute to it.
Sad really. Retirement is tricky and the older i get the scope of that problem becomes more clear

Agreed. I am fortunate to have a few areas of investment and I've been able to max out my 401k for a number of years.

1mil is the generic number that's given out for what you need but I honestly have no idea what is comfortable at that age. I know that $50k isn't enough for me now but my lifestyle is going to be different at 65... Although I foresee myself at least semi retired earlier than that. Mortgage, car payments, no kids at home, etc etc are all going to be different in 3 decades... I don't know what my expenses would really be like.

Yep... My yacht and island should be totally paid off by then.

 

[ickyrica]

Yep... My yacht and island should be totally paid off by then.

 

[Brandaddy]

God fucking bless lol. Worth every penny! Bad houses in ok neighborhoods?

Yeah, I never buy in ghettos. Typically just more "ehh" neighborhoods, or what I would consider C class neighborhoods

 

[gr8whitetrukker]

Agreed. I am fortunate to have a few areas of investment and I've been able to max out my 401k for a number of years.

1mil is the generic number that's given out for what you need but I honestly have no idea what is comfortable at that age. I know that $50k isn't enough for me now but my lifestyle is going to be different at 65... Although I foresee myself at least semi retired earlier than that. Mortgage, car payments, no kids at home, etc etc are all going to be different in 3 decades... I don't know what my expenses would really be like.

Yep... My yacht and island should be totally paid off by then.

Id have to pull up the charts again to really soak it in. But a maxed out 401k every yr at full contribution of 56k plus an avg 8% return for 43 straight yrs of work only comes out to 2,500,000 to survive off for life after work is thru. Is that enough? I think so. Comes out to 125k to spend for 20 yrs in retirement. Thats not bad especially if your house is paid for have had no serious setbacks like divorce or illness and have managed to stay disciplined enough for 43yrs to max it out EVERY yr.

Lol

Think about that for a second

How many get divorced? Over 50% of the pop lol
How many max out their 401? I think the govt said only like 9% of ppl even CONTRIBUTE let alone max out
How many ppl make it clean thru life w/o serious health setbacks?

Cards are stacked against the vast vast majority of americans
And most dont even know they have this problem on their hands
BUT CMON PEGGY LETS GO BUY A NEW RAM DIESEL>>>>>>>>>60K and they feel good about it

 

[Logan44551]

IMO, it's actually worse to borrow out of it the further away you are from retirement age... Unless you plan to repay it lightning fast. Interest rates for an auto loan are usually less than the interest on your repayment interest to yourself, at least from my experience. The biggest issue is that you lost time with the money being in the market. Time is your best friend or your worst enemy with investment for retirement.

I'd rather take the auto loan and let the bank have the interest at a single digit percentage point than take 30k out for a car and lose out on double digit percentage point growth for a few years.

Good point. Thanks for the insight, I don't plan on doing anything with mine until I retire

 

[Logan44551]

Retirement is a tricky thing too. Contributing 3% of pay with a match or $.50/dollar is all most ppl vaguely understand about 401 participation so their happy and dont look much further in to it than that.

I think the IRS max allowable deferement is 19,500/yr per individual and 56,000 with the companies contribution. So that would be considered maxed out 401 every yr and thats far far more than the standard deduction most contribute. Its not hot in my head atm but iirc you really need about min 1,000,000(and thats not really alot) to 6,000,000 to retire "comfortably". At 1,000,000 only thats 50k a yr to live off from IF you live 20 yrs post retirement. Is that an ideal retirement? I think not.

Moral of the story? A 401 is not a good primary retirement period. Not unless your contributing the max every yr and living well below your means to set aside more. While its a great way to lower your tax shield AND save for the future there MUST be other things your investing in to make actual retirement happen. Because S.S they say wont be a thing for our and future generations. Even tho we all contribute to it.
Sad really. Retirement is tricky and the older i get the scope of that problem becomes more clear

Totally agree, I have an annuity account and a pension through the union, I'm doing the 401k on top of that, and I still worry if I'll have enough to retire. I'll stay in the field another 10-15 years, then try to get a business agent or organizer job through the union. If you hold one of those jobs 5 years you get a second pension. That's the plan anyhow we will see how it goes

 

[NovaFlex]

Oh fuck yeah. I buy 2% deals where I'm all in at 70% or less of the arv in emerging markets. You're almost guaranteed easy net worth gains from steady appreciation, you can refi all your money out and reap loan paydown benefits from your tenants. Plus, since it's a 2% property it cash flows all fucking day.

Bro I’m in the middle of a cash deal right now— $15k for a triplex, once the city approves the division. Only 2 of the apartments need work. I’ll be all in for about 50k, I believe... gross at least $2400 a month. Fucking perfection. Let that season for a year then refi to a conventional. Rinse, repeat.

 

[Safety First]

Stick to blue Chip stocks, you are almost guaranteed to make money given you have patience.

100%. I'm looking to invest soon. Hopefully it goes well.

 

[Brandaddy]

Bro I’m in the middle of a cash deal right now— $15k for a triplex, once the city approves the division. Only 2 of the apartments need work. I’ll be all in for about 50k, I believe... gross at least $2400 a month. Fucking perfection. Let that season for a year then refi to a conventional. Rinse, repeat.

Sounds like a deal to me! The only question I have is if you have the cash available to do it, have the know how to put the deals together and shit. Why wait a year to refinance? Is it just because that's what your bank told you? If so, go talk to multiple lenders. Specifically local credit unions and small community banks. They have more flexible lending guidelines and you can basically do whatever you want. I just bought a 8 unit apartment building to value add at only 5% down... Lol. Everyone always tells you you need 20-25% down to finance an investment property and you need to wait a year for deals to season. That's bullshit. All my multifamilies I've bought from my flip profits I've never put a full down payment on (for the typical 80% ltv loans I use) and I've never waited a year to refinance a place. I'm the kind of guy that won't even have the house finished yet and I'm already emailing leases over to my banker and getting an appraisal scheduled. Lol.

 

[rugerjitsu]

Sounds like a deal to me! The only question I have is if you have the cash available to do it, have the know how to put the deals together and shit. Why wait a year to refinance? Is it just because that's what your bank told you? If so, go talk to multiple lenders. Specifically local credit unions and small community banks. They have more flexible lending guidelines and you can basically do whatever you want. I just bought a 8 unit apartment building to value add at only 5% down... Lol. Everyone always tells you you need 20-25% down to finance an investment property and you need to wait a year for deals to season. That's bullshit. All my multifamilies I've bought from my flip profits I've never put a full down payment on (for the typical 80% ltv loans I use) and I've never waited a year to refinance a place. I'm the kind of guy that won't even have the house finished yet and I'm already emailing leases over to my banker and getting an appraisal scheduled. Lol.

Just getting started in my area...I've got a good salary from my 9-5, and a decent amount in savings. I've been thinking I would need to throw down 20% in order to buy my first rental. Are you saying it's possible that I could throw down less than 20% to get my 1st rental?

 

[Brandaddy]

Just getting started in my area...I've got a good salary from my 9-5, and a decent amount in savings. I've been thinking I would need to throw down 20% in order to buy my first rental. Are you saying it's possible that I could throw down less than 20% to get my 1st rental?

Oh fuck yeah man. Lol. What I always think to myself is, "The whole point of investing is to maximize your ROI. So how can I maximize my ROI?" Well, 9/10 times even with reduced cash flow from higher payments, you still end up increasing both your front end ROI from your cash flow, but also you IRR over a long term hold. So it would make sense to me more often than not to put as little of my own cash into my deals as possible.

One last thing. I only do that to value add properties where I plan to refi very shortly on an 80% ltv loan. So I know I have a good 20% equity in the deal off the bat in currentatket conditions. Which will make me feel pretty comfortable about the impending market crash because I'm not overly leveraged. If you only have 5% down on a deal and a second loan to pay the other 15%, the bank will be first to foreclose on your property when the market crashes.

 

[Brandaddy]

Just getting started in my area...I've got a good salary from my 9-5, and a decent amount in savings. I've been thinking I would need to throw down 20% in order to buy my first rental. Are you saying it's possible that I could throw down less than 20% to get my 1st rental?

Oh. Ha. I suppose I didn't really tell you "how" just that it's possible. Lol. Typically you can use seller financing. I actually push seller financing on a lot of my single families now. The people will literally pay 20% interest loans, but now they take care of all the maintenance for you. Basically I'll BRRRR a deal, have none of my own money in it. Then get a 5-10% down payment from someone and move them in on a r2o

Typically you won't get charged that much. I always ask for a point over standard. I typically use a 300 month amortization 5 year business loan at 5%. So I will ask for another 5 year loan amortized over 300 months at 6% interest.

Another easy way is to mix seller financing with bank financing. How I got the 8 unit was it was listed for 500k. All 2br 1ba units with am attached garage, laundry room, dishwasher, etc. They were renting on average of $490/month.... The low income housing down the street for crackheads charges $500/month for 1br apartments in a highrise. So we knew we could turnover the units and raise the rents to $850/month on average with minimal work. Commercial properties are judged by caprate, this one will probably appraise around $700-$750k. In other words I will have created a big enough spread to basically flip the property to myself, pay off the seller second loan he held for me to pay my down payment, and theoretically have a $750,000 property that I only put $35k down to get

You need to go to local credit unions and small community banks. They typically can make in house decisions in minutes and can have more flexible lending guidelines. I know our credit union was just bugging me about using them for even financing my flips at only 10% down and then they basically fund the rest is draw schedules. But the way it was setup I would literally only need 10% down to start the project, the rest gets rolled in.

Another one is just by getting a capital partner. Exchange 50% equity with someone in return for capital. It may sounds silly at first. But on a deal when the capital partner would be making 40-60% on his own, he'll still be doing WAY better than his typical 7% he's used to at the local Edward Jones office. Also, there's a lot more people nowadays with a lot of cash and not a lot of time. So it's pretty easy to get them to invest with you when they're looking at doubling their earning. Doubling your ROI over the years has a HUGE difference long term.

 

[NovaFlex]

TBH, this will be my first BRRRR. I’ve watched a ton of biggerpockets, but never implemented the strategy. My first duplex was bought with an FHA loan, and I got it for basically free. Did the standard loan on my own place, though I should have bought something to rehab and treated it like an investment—stupid on my part.

But yeah, I just figured I needed to wait and have the tenants in place, etc.

Sounds like a deal to me! The only question I have is if you have the cash available to do it, have the know how to put the deals together and shit. Why wait a year to refinance? Is it just because that's what your bank told you? If so, go talk to multiple lenders. Specifically local credit unions and small community banks. They have more flexible lending guidelines and you can basically do whatever you want. I just bought a 8 unit apartment building to value add at only 5% down... Lol. Everyone always tells you you need 20-25% down to finance an investment property and you need to wait a year for deals to season. That's bullshit. All my multifamilies I've bought from my flip profits I've never put a full down payment on (for the typical 80% ltv loans I use) and I've never waited a year to refinance a place. I'm the kind of guy that won't even have the house finished yet and I'm already emailing leases over to my banker and getting an appraisal scheduled. Lol.

 

[Brandaddy]

TBH, this will be my first BRRRR. I’ve watched a ton of biggerpockets, but never implemented the strategy. My first duplex was bought with an FHA loan, and I got it for basically free. Did the standard loan on my own place, though I should have bought something to rehab and treated it like an investment—stupid on my part.

But yeah, I just figured I needed to wait and have the tenants in place, etc.

Not necessarily.. you can still use a HELOC to tap into your homes equity. So you can still leverage the money dirt cheap to go out and BRRRR more properties. In essence, other than the measly 3% interest you pay on the money, it's almost like it never left your checking account.

But yeah, I would definitely shop around at banks. My first bank turned me down... Said there was no way I could get a mortgage because I was self employed and couldn't source funds properly. Second bank practically handed me the money but at 6.75% over 20 years. Took me quite a few banks to finally get one that lets me bend the rules on down payments, let's me refinance as soon as I'm done with the place and not when it's seasoned, etc.

Everyone wants to use the same bank they've always used but in a business where the banks lending terms directly effects how well you do, it only makes sense to shop around the best you can.