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$70K in cash: can I quit corporate america?

gigant

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hello everyone ;-)

I am an accountant 39yo from Queens, NY; I am here to ask for advice on my situation;

Briefly, I have $70k in cash and a lot of desire to quit my job.
I have crazy dreams at night like moving to a small town, buy real rental estate and become financially free;
My goal is to have more time to travel and spend time with my family, (i am originally from Italy).


In detail this is my situation:
-house : I own a house in Ita worh around $400k, paid for, rented at 800 euros; (or $1,000.00/ circa)
-current Salary: $45k
-mo/ expenses : $1.500
-mo/ savings : $1,800 (including passive income from ita)
-cash : $70k in a saving account

I read many books about real estate but never actually took action;

does anyone have a suggestion on how to take the first step to freedom with the cash that I have available?

Thank you so much
;-)
 
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JEdwards

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Be careful.. You can blow through 70k pretty quick.

I would say it is not enough. I would work on RE on the side.

Good Luck though.
 

RealOG

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You are in a similar situation that I was in some years back. The most important thing is to develop your fastlane plan. If you dont have a plan, or a plan for a plan, you really have no reason to leave yet.

Check out the fastlane plan section.

One avenue would be to see how difficult it is to replace the current $1500/month expenses you currently have. Thats about $350/week, or less than $9/hr before taxes. My guess is it would not be very hard. This would provide you with enough time to work on your fastlane plan. If you factor in your $1k/mo italy income, you are only $500/month from meeting your goal. You can make up that difference donating plasma. :smug2:

The other avenue would be to become more efficient at work or work part time to cover your current expenses. Then use the spare time to implement your fastlane plan. Once the fastlane plan is in action and overtakes your accounting job, you can leave and focus full time.
 
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911Carrera

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You have more than enough asset to quit your job. It's not about how much cash you need, it's about your plan to produce income on your own and live your life a certain way. 70k can be burned pretty quickly without a plan.
 
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Kak

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Sell the house in Italy, your returns are only around 3 percent. That is a lot of money locked up at crap returns.

I have made much more than that in a week actively trading.
 

Rickson9

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If you weren't a successful investor or entrepreneur before having $70k, you're not going to be a good one after it's gone.
 

Lonnie

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-house : I own a house in Ita worh around $400k, paid for, rented at 800 euros; (or $1,000.00/ circa)
-current Salary: $45k
-mo/ expenses : $1.500
-mo/ savings : $1,800 (including passive income from ita)
-cash : $70k in a saving account

I read many books about real estate but never actually took action;

I got into buy-and-hold real estate in Syracuse, NY, one of the most stable real estate markets in the country. You can start here with very little investment. I bought one property for $16K and another for $14.5K. Really. But of course each one needed about $10-15K in rehab. That said, each one has always pulled in $600-700 monthly. I have another that I bought for $84K, invested about $20K, and rents for a total of $1700 monthly. It took time and effort to get the rehabs done, and it's a pain dealing with some tenants. The better the property, the easier the tenants are. They just have more money, fewer problems, less crime. But yeah, look at that pitiful ROI in your Italian house. It's barely keeping up with cost of living increases.

All that said, I'm getting out of real estate. I'm keeping the two that are owned by my IRA - the rehab is done, the tenants are good, they're just little tax-free money-makers now. But all in all, even in a market that attracts out-of-town investors, it's just too danged slow. I've learned a lot, including how to run a business, but I'm ready for that fastlane. Which is why I'm here: to do what the others have advised: MAKE A PLAN. Then, of course, execute!
 
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gigant

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I bought one property for $16K and another for $14.5K. Really. But of course each one needed about $10-15K in rehab


How! That is amazing, so let me ask you why then are you getting out of Real estate?

what is the main reason to quit a profitable business?
 

Kak

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what is the main reason to quit a profitable business?

Opportunity cost in both time and money. There are bigger returns on investment of time and money elsewhere.
 

Lonnie

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Opportunity cost in both time and money. There are bigger returns on investment of time and money elsewhere.

Precisely. Buried in my text was the answer: "it's just too danged slow"

When I balanced out all the great deals with good tenants and the bad deals and the bad tenants and the catastrophes, I figured I'd been earning about $2/hour. Well, now I'm earning passive income on the money makers, but I got rid of the ones that were costing me. Aside from the fact that it's just too slow, I didn't like that lifestyle, always being a babysitter to an old house or to adults who should know better. I know a business needs babysitting, but I'd rather focus on babysitting something that's a heck of a lot faster.
 
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Sly

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I just finished the Millionaire Fastlane book the other day... and I've got the same dreams to dump my job and go for broke.

I'm not one to tell people how they should make decisions. There is no "wrong" way since you may succeed or fail either way. But I will tell you how I'm personally planning on going about my goal, what I call "Phase 1" of my plan.

Phase 1 is to simply work on my project (a website) as often as I reasonably can. The goal of this phase is to get it to the point where it makes enough money to just pay my monthly bills. Once I do that, I can then quit my "job." to free me of that burden. With my time fully free from "The Man," I can than focus full speed on this project and other ideas I have on the drawing board to grow further.

So now that I read what I wrote... my first goal isn't money. It's really about freedom.

But man-ohhh-man, I want to quit so bad right now. And it's a friggin' scary thought. Logically it's not a good idea. Need to support myself and pay my new mortgage until I complete my first phase. You should have seen my girlfriends eyes when I mentioned I really wanted to quit without having anything to fall back on. haha, not funny :).

But what if I quit and don't meet my goal by the time I burn through my savings? Homeless and girlfriendless... Ack! Not good. If I did that, I'd be SUPER motivated and make it happen... or a loser. But I still have obligations right now so it's not in my best interest to go that route. Good news is that I KNOW I can still get my Phase 1 done while still working by normal job. It'll just take longer and be a lot harder with the soul sucking going on. But I'm tough :) Just got to maintain the motivation (which is why I'm in this forum) and be persistent.

So I'm still taking action while keeping my job. Not easy, but I understand the pros and cons of the different forks in the road and it's the path I believe is best for me.
 

damien275x

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I rekon keep your job or scale back your hours. Use those hours to put that money to work and produce cash flow, whether that's buying and selling things, flipping things for profit etc. it can be done.

Look at the apple iPhone. All the little children with their high disposable incomes, they must have them. I have been buying 2nd hand iPhones and marking them up +$30. Now that doesn't sound like a lot but 30 x 30 = $900, and they are almost in as much demand as Gold!!

I really shouldnt give my idea away, but meh, most people are too lazy. I guess you do need a lot of $$$ to do this as welll, because 2ns hand iPhones are in the $300ish range.

Also put some of your savings into GOld because it looks like USD is going to lose value as they are abusing their currency
 

realestatetim

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Reply to Gigant

Hi Gigant,
In reply to your post....if I may ask, do you currently have a good credit score? There are a lot of very creative things that you can do to quickly (and very profitable) get started. If you'd like to email me direct, please do so. [REMOVED BY MODERATOR)]
I'm curious as to where in Italy that you're originally from? My family came from a little town called Capua....southern Italy.
Regards,
Tim
hello everyone ;-)

I am an accountant 39yo from Queens, NY; I am here to ask for advice on my situation;

Briefly, I have $70k in cash and a lot of desire to quit my job.
I have crazy dreams at night like moving to a small town, buy real rental estate and become financially free;
My goal is to have more time to travel and spend time with my family, (i am originally from Italy).


In detail this is my situation:
-house : I own a house in Ita worh around $400k, paid for, rented at 800 euros; (or $1,000.00/ circa)
-current Salary: $45k
-mo/ expenses : $1.500
-mo/ savings : $1,800 (including passive income from ita)
-cash : $70k in a saving account

I read many books about real estate but never actually took action;

does anyone have a suggestion on how to take the first step to freedom with the cash that I have available?

Thank you so much
;-)
 
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MJ DeMarco

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Hi Gigant,
In reply to your post....if I may ask, do you currently have a good credit score? There are a lot of very creative things that you can do to quickly (and very profitable) get started. If you'd like to email me direct, please do so. [REMOVED BY MODERATOR)]
I'm curious as to where in Italy that you're originally from? My family came from a little town called Capua....southern Italy.
Regards,
Tim

You need to stop pimping your stuff otherwise your stay here will be short.
 

bflbob

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Tim:

I went to your site before the links were removed. You look like you know what you are doing, and you've been doing it for several years. My suggestion to you, if you want to make it on this forum, is to post a good introduction, telling about yourself without selling.

After that introduction, read through the real estate posts and share your knowledge. Just realize that while many of us aren't new to this, many are. Expect some flack.

Once you have been generous with your information (50 quality posts), you'll be able to add a link to your site in the signature area. By then, most of us will know you well enough to understand that you are sincere, open, and experienced.

I hope you understand. We have a lot of spammers and "I'll be a millionaire by the end of the year" folks who visit here. If you wade through all that, there is a great base of knowledge here.

Bob
 
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realestatetim

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Re: my apologies to all!!

Bob, MJ, and others.....my sincerest apologies for jumping the gun with the insertion of my email address, and business opportunity....especially with being a new member to this site as of about 24-48 hours ago. This site does indeed look like a fantastic resource for helping one another. Hopefully, I can be a good resource with assisting others, learning from others, and will definitely not share any biz opps, personal email addresses, etc. Thank you again!
Regards,
Tim

Tim:

I went to your site before the links were removed. You look like you know what you are doing, and you've been doing it for several years. My suggestion to you, if you want to make it on this forum, is to post a good introduction, telling about yourself without selling.

After that introduction, read through the real estate posts and share your knowledge. Just realize that while many of us aren't new to this, many are. Expect some flack.

Once you have been generous with your information (50 quality posts), you'll be able to add a link to your site in the signature area. By then, most of us will know you well enough to understand that you are sincere, open, and experienced.

I hope you understand. We have a lot of spammers and "I'll be a millionaire by the end of the year" folks who visit here. If you wade through all that, there is a great base of knowledge here.

Bob
 
D

DeletedUser2

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70K is not enough.

Make a plan, Start working the plan, than after you have some momentum, THEN consider leaving your job.

If you identify the market you need to enter, and you have a clear path to profitablity, THEN sell the house if there is a good chance of reinvesting the money at a much better return.

dont cut and run, until you know exacly what your plan of action is.

Good luck
 

Imon32red

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Briefly, I have $70k in cash and a lot of desire to quit my job.

;-)

It is enough capital to start with, but what are you going to do to generate income? I know you are going to invest in real estate, but doing what? Have you written out your plan? I find it easier to play the devils advocate that way, and pick a part your plan. If I was you I would be asking myself why are you not investing in real estate now? Why do you need to quit to do this?

I am kind of in the same boat. I had a business running on autopilot that brought in 10k a month. I really haven't done anything all year to generate income. Well, all good things must come to an end. Others slowly figured out what I was doing, and to make a long story short, that proces just dried up. I am about to start on a new adventure starting a couple of new business's. So far, so good. Good luck to you on yours.
 
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MNentre

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Is there any reason you are keeping the property in Italy?! a 400k house renting for .25% of its value per month is pretty terrible (I dont know Italy RE, but as a comparison to US it is not good!)

If I were you, I would get more cash by selling that and buying residential rentals- look for houses that generate monthly rents of ~2% of purchase price. You'll have to get out of NY for that to be a reality, tho! :)

As many have said, 70k can go fast, but 470K, now were talking!!
 

gigant

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Is there any reason you are keeping the property in Italy?! a 400k house renting for .25% of its value per month is pretty terrible (I dont know Italy RE, but as a comparison to US it is not good!)

If I were you, I would get more cash by selling that and buying residential rentals- look for houses that generate monthly rents of ~2% of purchase price. You'll have to get out of NY for that to be a reality, tho! :)

As many have said, 70k can go fast, but 470K, now were talking!!



That house was built with saved money from my family, so it has emotional value to me;

The rent is 800 euro, after taxes it becomes 500 euro e month (or $600.00); is
it really that bad as return?

if i sell it i wouldnt even know what to buy and where: i ve been renting a
room in Queens ny for the past 10 years; houses here in Queens sell for 700K, 500K
now i see some houses in South Queens sell for 200K but are in bad areas and are short sales

i would be thrilled to ask you:: what would you do with 400K to invest?
 

H. Palmer

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Gigant, if that is really the question you are asking yourself, I would be very careful.

The return on investment is not so much dependent on the asset class like stocks, bonds, gold or RE, but depends on your own experience with the asset class and your measure of control over the investment.

For example, someone who has virtually no experience with real estate can blow 400 K in a few years with nothing left in case he uses the wrong type of leverage. Whereas someone with experience can invest it with a yearly ROI of 20 pct or such.

Starting from a point of no experience it usually takes years to become an expert in any asset class. And part of that comes from books and advice and part from experience. If you are very new to a field and need experience, the smart thing to do is to start small.

So say you want to try out RE, then purchase a small property with only limited bank financing (avoid too much leverage), put renters in it and expect issues to come to you that you need to learn from. Of course, always inspect several properties first, analyse the cash flow and negotiate on the deal.

Then after a while when you feel comfortable with cash flowing real estate, you can consider your next step.

ROI comes from knowledge and experience, not from a hot tip.
 
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gigant

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Gigant, if that is really the question you are asking yourself, I would be very careful.

The return on investment is not so much dependent on the asset class like stocks, bonds, gold or RE, but depends on your own experience with the asset class and your measure of control over the investment.

For example, someone who has virtually no experience with real estate can blow 400 K in a few years with nothing left in case he uses the wrong type of leverage. Whereas someone with experience can invest it with a yearly ROI of 20 pct or such.

Starting from a point of no experience it usually takes years to become an expert in any asset class. And part of that comes from books and advice and part from experience. If you are very new to a field and need experience, the smart thing to do is to start small.

So say you want to try out RE, then purchase a small property with only limited bank financing (avoid too much leverage), put renters in it and expect issues to come to you that you need to learn from. Of course, always inspect several properties first, analyse the cash flow and negotiate on the deal.

Then after a while when you feel comfortable with cash flowing real estate, you can consider your next step.

ROI comes from knowledge and experience, not from a hot tip.


i am surprised when you say "avoid to use much leverage" : i thought it was the opposite: someone with
little experience needs to use little of his own money,

can you explain your statement?
 

The-J

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$70k, depending on your lifestyle, can support you for 5 years or one year. If you have a family, a wife, kids, you might not want to quit just yet. Not until you have an actual fastlane plan ready.
 

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I agree with gigant.....I also have no RE experience and should I buy something, I sure as hell am not going to dump a lot of cash into something I know nothing about.
 
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MNentre

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For example, someone who has virtually no experience with real estate can blow 400 K in a few years with nothing left in case he uses the wrong type of leverage. Whereas someone with experience can invest it with a yearly ROI of 20 pct or such.

This is a great point! Of course, I was under the impression that you had an idea on how to run an RE business, but worst case, you can always outsource to a property management firm.
That house was built with saved money from my family, so it has emotional value to me;

The rent is 800 euro, after taxes it becomes 500 euro e month (or $600.00); is
it really that bad as return?

if i sell it i wouldnt even know what to buy and where: i ve been renting a
room in Queens ny for the past 10 years; houses here in Queens sell for 700K, 500K
now i see some houses in South Queens sell for 200K but are in bad areas and are short sales

i would be thrilled to ask you:: what would you do with 400K to invest?


I want to take a minute to put this into perspective. right now you are making $600 per month/ 7,200 per year with your $400,000 house.

Assuming expenses run ~50%, you're netting $3,600/year.

Now you have 400k in equity, so your cash on cash return is $3,600/$400,000= .9% NOT EVEN 1 PERCENT RETURN!!

Frankly, you can get this same return from a nearly risk free bond/CD. Instead you are getting that return with a very volatile investment in RE. Next year the house could be worth 300k and you are taking that risk for a 1% return.

With little experience, i would take the 400k and either 1031 tax deferred exchange into a stable longterm single tenant property (if you dont have RE experience) and make ~8% owning a property with a bank or strong credit company on a long term (10+ year) lease.

If I was experienced, I would buy as many foreclosures as I could get my hands on, assuming their good deals :)
 

Steven Williams

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Don't worry about what we think...you should do what you feel is right!

Do you want to do real estate or are you just looking at that because it sounds like a good way to make money?

If you're going to be in the real estate business you'll need to be in the real estate business. It's a EASY business for those who want to be landlords, flippers or long-term investors.

It's a HARD business for those who just try to make some money. If you read a real estate book do your research on if that individual is really an investor or just writing books on real estate.

Here's a question that everyone that's really in the real estate investing business would know and the one's that are just writing books wouldn't know.

Question: Why buying real estate as an investment what is the "one" constant that every real estate deal has? Regardless if you buy a piece of Shit property or a upper / high end property.

HINT: If they started the book off with the answer to this question most "would-be" investors would close the book and do something else.
 

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i am surprised when you say "avoid to use much leverage" : i thought it was the opposite: someone with little experience needs to use little of his own money,

can you explain your statement?


Using someone else's money doesn't get you off the hook. It means you have a debt to that lender, be it a person, bank or otherwise.

Your logic goes like: "If I don't have experience driving a car, I just borrow someone else's". Really? Well, if that car happens to be a Lambo (why not) and you crash it, you'll probably have bankrupted yourself.

From a investment technical point: leverage works both ways, up and down. If you know what you are doing, it increases your cash flow. If you don't know what you are doing, it minimizes your cash flow or you go into negative territory.

If this still isn't clear enough: using someone else's money is called borrowing. You have to pay it back and as long as you don't, the cost is the interest rate.

So therefore, if you don't have a lot of experience with RE, be careful with leverage. Your early years will be your education. Failing is OK, just make sure that failing does not wipe you out. If you are inexperienced, too much leverage can wipe you out.
 
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gigant

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Using someone else's money doesn't get you off the hook. It means you have a debt to that lender, be it a person, bank or otherwise.

Your logic goes like: "If I don't have experience driving a car, I just borrow someone else's". Really? Well, if that car happens to be a Lambo (why not) and you crash it, you'll probably have bankrupted yourself.

From a investment technical point: leverage works both ways, up and down. If you know what you are doing, it increases your cash flow. If you don't know what you are doing, it minimizes your cash flow or you go into negative territory.

If this still isn't clear enough: using someone else's money is called borrowing. You have to pay it back and as long as you don't, the cost is the interest rate.

So therefore, if you don't have a lot of experience with RE, be careful with leverage. Your early years will be your education. Failing is OK, just make sure that failing does not wipe you out. If you are inexperienced, too much leverage can wipe you out.


ok i get it , i agree with you re starting by buying a small property
using little leverage,

so let me ask you, for example a 60,000 house in philadelphia
with 50% of my own cash may be the case?
is that what you mean by starting small and little leverage?

im just trying to come down go a practical level

thank you
 

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Nope $70k is nothing. Work at developing a bit of passive income while you still have a job.

IE get rents and make money off them first while your working. Once you have $30k-$40k or so coming in, in rental income you can leave your job.
 

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