On track to retire by age 27! Rachel from KY

[Rachel888]

Hey guys! First time poster here, but what an absolute dream to have found a forum with like-minded people. The only person in the world I have met who is as ambitious as me and shares the same goals and values as I do is my fiance, Andrew... so at least I am lucky in that regard! But a whole community of you... it's like Christmas morning!

So a little about me: I'm 25, I'm a finance analyst (sitting at my cubicle right now, not being the best employee...), I live in Kentucky with my fiance (30 yrs old) and our dog. Andrew and I had an incredible year last year. Here are some of the things we accomplished in 2017:

• We bought 2 rental properties, which bring in $3k/mo cash flow combined, 25% rate of return
• We started a POD T-Shirt business, earns about $1k/mo
• I got a promotion and a $10k raise
• I wrote and published my first ebook, Money Honey, earns about $500/mo
• I lost 20 lbs, Andrew lost 25 lbs... we are in the best shape of our lives!
• I won a $15k Sweepstakes the same weekend Andrew proposed... absolutely nuts
• We traveled to Colorado, NY, & Greece

The point here is that we went from $0 in passive income to $4,500/mo in passive income... all within a year! To top it off, we just closed on our 4th rental property 2 weeks ago which will bring in another $2k/mo. I feel like I can share these details / accomplishments with you all and it won't come off as braggy (because it sure feels like it and I don't mean to) but rather excited at how impactful the Millionaire Fastlane mindset is.

We are thrilled with our momentum and can't wait to retire early. So now for our goals...

• Retire by May 2020 (I will be 27, Andrew will be 32) and move out West
• Grow passive income to $10k/month AT LEAST with real estate
• Hire property management company for our rentals
• what else? (would love some suggestions)

I'm excited to be here, interact with you all, and hopefully make some new friends. Would love to talk to other real estate investors, authors, or POD business owners! You guys are awesome!

Are there any other youngins in here like Andrew and me? I would especially love to hear from those of you who ALREADY retired and that had to walk away from extremely lucrative full-time jobs. My worry is that our full-time/actively earned income is so high that we won't want to quit, even though we can!

Rachel

 

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[jon.a]

Very nice intro.

 

[biophase]

I probably wouldn’t say that you are retiring. It’s more like escaping the 9-5 and working for yourselves by 27.

The one calculation I would ask you to make is, how much can you save per year by staying at your 9-to-5 job? And how much faster and how many more properties can you purchase by staying at your 9-to-5 job?

Because once you quit, your cash flow drops to $40,000-50,000 a year. And you will find it hard to keep growing and investing because now you will have to live on the $40,000 a year. And without significant additional cash flow coming in, how are you going to be able to invest in more real estate or new business?

You don’t want to be 30 years old and have only added one more property to your portfolio because you were cash poor. So maybe work an extra 1-2 years and add a bunch more investments in before leaving your job. My gut is saying that it feels too early to me.

Now is probably the time that you should be accumulating investments so that when you really “retire” at age 40 you will have $10 million in real estate instead of $1 million.

 

[Real Deal Denver]

Welcome, and I read your bio for your book on Amazon. You don't need any advice from anyone here - you are way ahead of the pack. And at only 25. Color me jealous!

Your book has rock solid reviews, and it is on my list to read. Congrats on that!

The only advice I could possibly throw your way is to abandon your financial training that steers you towards the stock market. Why invest in a company you have no control over, and don't have a clue what they may do down the road (hello Toys R Us!). Not to mention that they will lie to you. As Warren Buffet said, he's never seen a bad P&L Statement. I wonder why that is? Liars. That's why. Build your own dream. There are plenty of people here that can give you advice based on hands on experience.

You are off to a fantastic start.

 

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[MJ DeMarco]

Wow, what a great intro! Almost missed it!

Welcome to the forum, so great to have another young couple making shit happen.

 

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[AgainstAllOdds]

I'll be retired for sure, because of that passive income! One of the goals I stated was to increase our passive income to $10k/mo from real estate alone, not including our other passive income streams, within the next 2 years. We have a solid plan to achieve this and are on track, fortunately! So by 2020 when we "retire" we will be making about $140k in passive income, not 40-50k.

By then we won't need to continue growing our portfolio, and we certainly won't be cash poor. In fact we'll still be able to save at an aggressive rate. We already have over $1mil in real estate and by the time we "really retire" (me at age 27) we will have about $3mil... not that the value of the real estate matters, because it's all about passive income. C'mon, Fastlaner, you should know that!

To add onto @biophase 's point: Make sure to build a large enough safety net before making the plunge.

I was your age last year on track to do a quarter million profit, could've done $100k passive if I so chose. One black swan came and knocked me out.

I'm back home now building the foundation stronger and bigger before even thinking about leaving again.

Don't "retire" too early. Retire when you're 99% sure that you can.

 

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[garyfritz]

I was your age last year on track to do a quarter million profit, could've done $100k passive if I so chose. One black swan came and knocked me out.

This. 20 years ago I started doing financial trading. Within a few years I was successful enough that I was managing $10M in client money, returning 35-40%/yr with modest drawdown. I was on track to clear at least $500k in management fees the next year, with no limit in sight.

Then 9/11 happened. The towers came down, everybody freaked, the market dynamics totally changed, and my trading models and approach never worked again. I'm still driving the fancy new car I bought that year before everything fell apart.

 

[BD64]

Hey guys! First time poster here, but what an absolute dream to have found a forum with like-minded people. The only person in the world I have met who is as ambitious as me and shares the same goals and values as I do is my fiance, Andrew... so at least I am lucky in that regard! But a whole community of you... it's like Christmas morning!

So a little about me: I'm 25, I'm a finance analyst (sitting at my cubicle right now, not being the best employee...), I live in Kentucky with my fiance (30 yrs old) and our dog. Andrew and I had an incredible year last year. Here are some of the things we accomplished in 2017:

• We bought 2 rental properties, which bring in $3k/mo cash flow combined, 25% rate of return
• We started a POD T-Shirt business, earns about $1k/mo
• I got a promotion and a $10k raise
• I wrote and published my first ebook, Money Honey, earns about $500/mo
• I lost 20 lbs, Andrew lost 25 lbs... we are in the best shape of our lives!
• I won a $15k Sweepstakes the same weekend Andrew proposed... absolutely nuts
• We traveled to Colorado, NY, & Greece

The point here is that we went from $0 in passive income to $4,500/mo in passive income... all within a year! To top it off, we just closed on our 4th rental property 2 weeks ago which will bring in another $2k/mo. I feel like I can share these details / accomplishments with you all and it won't come off as braggy (because it sure feels like it and I don't mean to) but rather excited at how impactful the Millionaire Fastlane mindset is.

We are thrilled with our momentum and can't wait to retire early. So now for our goals...

• Retire by May 2020 (I will be 27, Andrew will be 32) and move out West
• Grow passive income to $10k/month AT LEAST with real estate
• Hire property management company for our rentals
• what else? (would love some suggestions)

I'm excited to be here, interact with you all, and hopefully make some new friends. Would love to talk to other real estate investors, authors, or POD business owners! You guys are awesome!

Are there any other youngins in here like Andrew and me? I would especially love to hear from those of you who ALREADY retired and that had to walk away from extremely lucrative full-time jobs. My worry is that our full-time/actively earned income is so high that we won't want to quit, even though we can!

Rachel

Great intro and grtz on the successful year for you and Andrew.

Also yes, there are plenty of other youngins here, myself included (I'm 21 and newish to the fastlane)

Some other young guns who are killing it are @PTP @Envision @G_Alexander among many others...

Welcome to the forum

 

[JAJT]

The point here is that we went from $0 in passive income to $4,500/mo in passive income... all within a year!

That's fantastic!

Great intro!

Welcome

 

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[JasonR]

Welcome - awesome intro.

We bought 2 rental properties, which bring in $3k/mo cash flow combined, 25% rate of return

I'm interested in this. 25% ROI/IRR is outstanding.

 

[racyred09]

Hey guys! First time poster here, but what an absolute dream to have found a forum with like-minded people. The only person in the world I have met who is as ambitious as me and shares the same goals and values as I do is my fiance, Andrew... so at least I am lucky in that regard! But a whole community of you... it's like Christmas morning!

So a little about me: I'm 25, I'm a finance analyst (sitting at my cubicle right now, not being the best employee...), I live in Kentucky with my fiance (30 yrs old) and our dog. Andrew and I had an incredible year last year. Here are some of the things we accomplished in 2017:

• We bought 2 rental properties, which bring in $3k/mo cash flow combined, 25% rate of return
• We started a POD T-Shirt business, earns about $1k/mo
• I got a promotion and a $10k raise
• I wrote and published my first ebook, Money Honey, earns about $500/mo
• I lost 20 lbs, Andrew lost 25 lbs... we are in the best shape of our lives!
• I won a $15k Sweepstakes the same weekend Andrew proposed... absolutely nuts
• We traveled to Colorado, NY, & Greece

The point here is that we went from $0 in passive income to $4,500/mo in passive income... all within a year! To top it off, we just closed on our 4th rental property 2 weeks ago which will bring in another $2k/mo. I feel like I can share these details / accomplishments with you all and it won't come off as braggy (because it sure feels like it and I don't mean to) but rather excited at how impactful the Millionaire Fastlane mindset is.

We are thrilled with our momentum and can't wait to retire early. So now for our goals...

• Retire by May 2020 (I will be 27, Andrew will be 32) and move out West
• Grow passive income to $10k/month AT LEAST with real estate
• Hire property management company for our rentals
• what else? (would love some suggestions)

I'm excited to be here, interact with you all, and hopefully make some new friends. Would love to talk to other real estate investors, authors, or POD business owners! You guys are awesome!

Are there any other youngins in here like Andrew and me? I would especially love to hear from those of you who ALREADY retired and that had to walk away from extremely lucrative full-time jobs. My worry is that our full-time/actively earned income is so high that we won't want to quit, even though we can!

Rachel

Damn, girl! $3k/month profit on your rental properties...that's amazing! I'm older than you but I still feel like a youngin I looked at your book reviews too, and now I kinda want to read it. Good luck with early retirement!

 

[Rachel888]

Is this the same as CAP rate?

No, CAP is the net operating income divided by the sales price of the house... ROI is the net operating income divided by the amount invested (basically down payment.)

Our cap rate for our duplex is $7,000/$93,000 = 7.5%. Our ROI is $7,000/$34,000 = 21%.

Our cap rate for our 11-unit is $32k/$430k = 7.5%. Our ROI is $32k/$110k = 29%.

 

[Rachel888]

Nice thread! Those numbers look very nice. Are they accounting for Maintenance & Repairs as well as CAPEX? Not having reserves usually kills the returns for many owners not saving for these


Sent from my iPhone using Tapatalk

Yep! For our 11-unit for example, we account for 8% vacancy, $300/mo capex, $50/mo maintenance, utilities /pest control / yardwork >$1,000. Great reminder... leaving that stuff out can kill a deal! We try to be super conservative in our estimates... so far our *actual* numbers have always been favorable to our estimates.

 

[biophase]

I'll be retired for sure, because of that passive income! One of the goals I stated was to increase our passive income to $10k/mo from real estate alone, not including our other passive income streams, within the next 2 years. We have a solid plan to achieve this and are on track, fortunately! So by 2020 when we "retire" we will be making about $140k in passive income, not 40-50k.

By then we won't need to continue growing our portfolio, and we certainly won't be cash poor. In fact we'll still be able to save at an aggressive rate. We already have over $1mil in real estate and by the time we "really retire" (me at age 27) we will have about $3mil... not that the value of the real estate matters, because it's all about passive income. C'mon, Fastlaner, you should know that!

I meant $1 million in equity, not overall market value. Unless you meant you have over $1m equity which is awesome.

And yes cash flow is great, but the REI value will matter to you later on. I’m sure you will eventually balance it out with higher value lower ROI properties when you move out west.

 

[Kak]

Congrats on your early success and engagement keep it coming! Fantastic first post.

My hunch is you will probably keep working deals long after you turn 27, by choice. “By choice” is such a great phrase.

 

[Rachel888]

Congrats on your early success and engagement keep it coming! Fantastic first post.

My hunch is you will probably keep working deals long after you turn 27, by choice. “By choice” is such a great phrase.

Thank you! And I appreciate the Rep transfer... I just had to do a quick search to see what "rep bank" meant and was for. Thank you for the kudos!

 

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[Rachel888]

I probably wouldn’t say that you are retiring. It’s more like escaping the 9-5 and working for yourselves by 27.

The one calculation I would ask you to make is, how much can you save per year by staying at your 9-to-5 job? And how much faster and how many more properties can you purchase by staying at your 9-to-5 job?

Because once you quit, your cash flow drops to $40,000-50,000 a year. And you will find it hard to keep growing and investing because now you will have to live on the $40,000 a year. And without significant additional cash flow coming in, how are you going to be able to invest in more real estate or new business?

You don’t want to be 30 years old and have only added one more property to your portfolio because you were cash poor. So maybe work an extra 1-2 years and add a bunch more investments in before leaving your job. My gut is saying that it feels too early to me.

Now is probably the time that you should be accumulating investments so that when you really “retire” at age 40 you will have $10 million in real estate instead of $1 million.

I'll be retired for sure, because of that passive income! One of the goals I stated was to increase our passive income to $10k/mo from real estate alone, not including our other passive income streams, within the next 2 years. We have a solid plan to achieve this and are on track, fortunately! So by 2020 when we "retire" we will be making about $140k in passive income, not 40-50k.

By then we won't need to continue growing our portfolio, and we certainly won't be cash poor. In fact we'll still be able to save at an aggressive rate. We already have over $1mil in real estate and by the time we "really retire" (me at age 27) we will have about $3mil... not that the value of the real estate matters, because it's all about passive income. C'mon, Fastlaner, you should know that!

 

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[EvanOkanagan]

We already have over $1mil in real estate and by the time we "really retire" (me at age 27) we will have about $3mil... not that the value of the real estate matters, because it's all about passive income. C'mon, Fastlaner, you should know that!

Welcome to the forum! And congrats on your success so far.

If it's all about passive income, then the value of the Real Estate should definitely matter! The value of your Real Estate is the difference between having to save for the next down payment (slow game) vs. using the equity in your properties to acquire more units faster.

 

[1step]

Hey nice into!

Don't see many other people from Kentucky here, welcome! Are you all in Louisville? Or Lexington?

 

[garyfritz]

I have four rentals netting about $5k/mo, but that's using equity I've built up (badly, slowly) over the last 40 years and some inheritance. If you're netting $3k at 25, after mortgage & other costs, you're waaayyy ahead of me. Kudos to you!

You're also kicking my butt on your ROR. I'm only getting about 6% on my properties. I **WISH** I could get anywhere near 25% !!!! But the deals I can find around here (northern CO, a VERY strong RE market) just don't support that. Apparently I'm looking in the wrong place, or at the wrong class of properties (single-family homes).

Those properties are largely fully paid-off. I've looked at increasing my return by leveraging -- borrowing against current equity to buy more properties. But I've done some rough calculations and it looks to me like the net return on invested cash is about the same, with more tenant hassles &etc. If you're confident the property values will go up then getting more exposure is good, but I don't see any way to use leverage to increase your rate of return.

So I'd love to hear how you're doing that...!

 

[cwalto12]

Welcome to the board! Great first post. I just joined recently as well. I am 24 and have lived in Louisville for almost 2 years now - originally from TN. You and your fiance are killing it! A few of us from the area are currently trying to schedule a meet up in Louisville if you and your fiance are close by or interested!

 

[Xavier X]

My worry is that our full-time/actively earned income is so high that we won't want to quit, even though we can!

Rachel

Congrats on your successes so far.

With this particular potential hurdle - I too had a good paying 9-5 I knew would be hard to walk away from.
Here's how I went about it.

I cornered myself way ahead of time. I made it so that when the time came, I would have NO wiggle room to chicken out.

About 10 months before my intended exit (December, 2013), I met with my regional director and let them know my plans.
I told them, in December, I would be moving on to focus solely on my business. That I was giving ample notice so they could start scouting for my replacement in good time.

About 4 months later, I signed a permission allowing them to put my position up as "available," even though I'd still be there another 6 months.

Two weeks before my exit, I put in the traditional 2-week notice. My replacement was already standing by.
I and the company parted ways with mutual warm and fuzzy goodbyes, and I haven't looked back since. I was 27.

I wish you strength, when that time comes.

 

[Rachel888]

2 rentals making 3,000 month that's great. Was it single family?

One was a duplex, makes $500/mo, another was an 11-unit, makes $2500/mo! Then we also have a single family and now another 12 unit.

 

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[jcvlds]

Nice thread! Those numbers look very nice. Are they accounting for Maintenance & Repairs as well as CAPEX? Not having reserves usually kills the returns for many owners not saving for these


Sent from my iPhone using Tapatalk

 

[Merging Left]

Do you factor in a management fee of 8-10% of monthly gross rent? Since your eventual plan is to move out west and hire a company, be sure you're including that in your numbers. It sounds like you have plenty of margin for that, though!

Where is "out west"? California?

 

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[Rachel888]

Do you factor in a management fee of 8-10% of monthly gross rent? Since your eventual plan is to move out west and hire a company, be sure you're including that in your numbers. It sounds like you have plenty of margin for that, though!

Where is "out west"? California?

We always run two scenarios when we are looking at acquiring another property... once where we manage them ourselves (these are the #s I have been quoting) and one where we hire a property management. Obviously the #s aren't quite as good but returns are still around 20% with the property management company.

And yes - we just got back from vacation in San Diego and we have settled on that as our dream place of living! Cost of living is a bit different though Good thing we have already factored that in to our retirement plan!

 

[IGP]

What's your contingency plan?

What happens if the economy dumps the bed, like many expect it to do, and your properties are worth a lot less than what you think they will be? Are you going to be cash strapped?

There is definitely a thing as growing too fast.

Just some things to keep in mind. I'm sure you've already considered it.

 

[Rachel888]

What's your contingency plan?

What happens if the economy dumps the bed, like many expect it to do, and your properties are worth a lot less than what you think they will be? Are you going to be cash strapped?

There is definitely a thing as growing too fast.

Just some things to keep in mind. I'm sure you've already considered it.

We plan on holding onto our properties for at least 10-15 years, so when there is a decline, we should have enough time to ride it out and wait for the value to increase. I think if anything, with the way our rentals are, and the housing market goes down, our rentals will do even better... so cash should never be a problem. Just gotta time it right when we eventually sell. Lots to think about, and obviously nothing ever goes perfectly to plan!

 

[M Eve]

Welcome to the forum and congrats in you and your fiancé success.

If you're looking for people to talk about real estate would recommend reading absolute beginners guide to TMF by @jockinbox.

There are lots of people here but it gives you a start.

 

[Patrickg]

2 rentals making 3,000 month that's great. Was it single family?