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SHOW NOTES FOR EPISODE 300: ASK BILL! 3 WAYS TO ACHIEVE YOUR “DREAM RETIREMENT,” HOUSE MOM UPDATE, CAPITAL IMPROVEMENT BUDGET
In this month’s “Ask Bill!” podcast episode, Bill answers questions on how our “House Mom” experiment is going, why it’s important to budget for capital improvements, and 3 real estate investing strategies that will help you achieve your “dream retirement” quickly and with little or no money. And to celebrate episode #300, we’re also sharing our Top 10 Most Popular Podcast Episodes!
SPECIAL FOR OUR 300TH EPISODE!!! SEE LINKS BELOW FOR OUR TOP 10 MOST POPULAR PODCASTS!
This is our monthly Fun Fact Friday “Ask Bill!” episode, where I answer specific real estate investing questions received during the month from e-mails, in-person conversations, phone calls or through online portals such as BiggerPockets.com and Quora.
One of our goals here at the Old Dawg’s REI Network is to help to educate and encourage fellow real estate investors, to share what little knowledge we have by answering your questions, and to help other investors to broaden their understanding of real estate investing and to, hopefully, avoid some of the mistakes that can cost you later.
Question #1 – How is the House Mom Working Out for You?
Answer to Question #1
- House Mom Update
- Responsibilities
- Watch the place, call police, report issues and/or problems with tenants to me
- Keep it clean (pick up trash outside)
- Enforce new rules
- No smoking
- No pets
- Do showings at off hours
- Try to bring in higher level of clientele
- Wanted artist… maybe not best idea
- Started good
- Brought in boyfriend
- Smoking pot
- Got lazy
- Responsibilities
Question #2 – How to You Allocate for Capital Improvements?
Answer to Question #2
- Capital improvements
- Set up your budget and accounts for this
- When you first buy a new property, many people set a special “improvement or rehab budget” for right after you buy to immediately boost value
- However, there are other very important property needs that are not considered maintenance and repairs items that can sometimes catch you off-guard. Here are some of the things you need to make sure you budget for separately that are considered capital improvements or capital expenditures:
- New, repair or replace appliances
- A/C and heater repair
- Water heater
- Roofs
- Weather damage
- Exterior sprucing up
- Turn-around expenses
- Clean or replace carpet
- Paint
- Thorough cleaning
- Upgrades to increase revenue
- Don’t make the mistake of not allocated funds for these items and having to go into debt
- Sure you can draw from reserves but better to have a separate fund so you can deduct come tax time
Question #3 – How Can I Fund My Retirement When I Have Limited Funds?
Answer to Question #3
Three ways in your retirement to find financial freedom through real estate investing when you have little or no money:
Realities:
- Pensions are a thing of the past
- Social Security barely covers anything and it might not be around for long
- Even if you have saved for retirement, is it enough and will it last as long as you’ll need it
What do you want your retirement to look like?
- Travel
- Hobbies
- Sports (golf, hiking, biking, sailing, etc.)
- Learn a new language
- Serve others
- Helping out your kids, grandkids, nieces, nephews, etc.
- First home
- Wedding of their dreams
- Education
- Medical/dental needs
- Practical stuff
- Able to deal with rising medical costs and quality of care
- Your long-term care, assistance or assisted living (so kids won’t have to mess with it) People are living longer!
To change your situation and create the retirement you want, you must be willing to do the following:
- Work hard (REI is hard work) – at least to get started and can scale
- The trick is to learn to scale so you can delegate
- Learn something new
- There’s a learning curve
- Spend some money
If you have little or no money, here are 3 different real estate investing strategies that can help you get jump started
1. House or apartment hacking (more costly)
- Need to purchase
- Prices vary
- Live in property for one year, move and do the same over number of years (5, 10??) depending on income
- ADVANTAGES:
- Get FHA financing (0 or 3% down but only up to 4 units) and can even get rehab money as part of loan
- You will build equity if you buy smart, in the right area
- Good long-term benefits
- Constant increasing equity, increasing income
- Can leverage
- Live rent free
- Apartment hacking
- Higher cost of entry
- But get great benefits
- Live rent free with nice income!
- W/property mgmt., can
- You will have a legacy to hand down
- DISADVANTAGES:
- Must live there a year (with your tenants)
- If you live in a region that does not have good ROI, may have to move to another state
- You are responsible for
- maintenance and repairs
- mortgage payments
- property tax and insurance
- evictions
- finding good tenants
- finding a good property manager
- Takes time to build up to let’s say $10k monthly income (must acquire a number of properties – unless apartment hack)
2. AirBNB Arbitrage (rent and lease it out)
- Average $900/month profit per property – get 10 to earn $9,000 per month in income
- The trick is delegating
- ADVANTAGES
- No…
- maintenance and repairs
- mortgage payments
- property tax and insurance
- Don’t have to buy
- No bankers, loans, etc.
- Can be located anywhere
- Can easily be scaled
- You can do while traveling
- No…
- DISADVANTAGES
- Local laws can change
- Labor intensive at start
- Bad reviews can be brutal
3. Wholesaling (matching buyers with sellers)
- ADVANTAGES
- Can start with no money
- Big pay-outs – $5,000-10,000 per deals
- DISADVANTAGES
- Longer learning curve
- Very labor intensive
- Marketing can be expensive
- Can be like full-time job
Well, I hope this at least gets you to consider various options that can help you achieve your “dream retirement.” However, please note — there’s no overnight millionaire scenarios! It does take a little hard work to get started but it can also pay off big in the long run!
** OUR TOP 10 MOST POPULAR PODCASTS **
Hey! Have you listened to all our episodes — all 300! (if you have, please email me at bill@olddawgsreinetwork.com so I can personally thank you!!) If not, maybe you might just want to make sure you’ve at least heard our TEN BEST EPISODES! Now you can! Below are our top 10 most popular podcasts, in order from #1 thr #10, from all 300 episodes. Just click on the link and you’ll be able to listen to each one! Enjoy!
#1
#2
#3
#4
#5
001: How I Grew My Real Estate Business to $28 Million in Three Years With Joe Fairless
#6
#7
#8
101: From Converted Duplex to Working With Robert Kiyosaki & Donald Trump to Multifamily Mogul
#9
003: Growing a Real Estate Empire While Working a Full-Time Job
#10
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Check out our other podcasts at olddawgsreinetwork.com.
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