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SHOW NOTES FOR EPISODE 200: ASK BILL! BUY LAND AND RETIRE CHEAP, REAL ESTATE INVESTING TO FUND MINIMALIST LIFESTYLE AND TRAVEL
This is our monthly Fun Fact Friday “Ask Bill!” episode, where Bill answers specific real estate investing questions received from during the month from e-mails, in-person conversations, phone calls or through online portals such as BiggerPockets.com and Quora.
But before we get started…
HAPPY 200th EPISODE!!!!
Welcome to the 200th episode of the Old Dawg’s REI Network
We can’t believe it! 200 episodes! And we really have you to thank. If you weren’t listening, we wouldn’t have come this far.
Hopefully, there is a wealth of information here that you can continue to tap into, go into back episodes, articles and other resources to gain real estate investing knowledge that can help you.
We remain committed to:
- Being the only real estate investing podcast committed to serving those who are 50 years of age and older
- Addressing the special needs and challenges of those “old dawgs” who don’t have the same timeline and goals younger folks do
- Not constantly “up-selling” you on our latest products, programs or coaching
- Continually maintain, since our first episode that “cash flow is king”
We really want to be your #1 Real Estate Investing Podcast choice! Help us reach this goal
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Ask Bill! One person wants to know how you can buy land and retire cheap. Another person wants to know how she can use real estate investing to fund a minimalist lifestyle and travel the world.
Today, we’ve got a couple “minimalist-related” questions!
Question #1 – “Can you buy a land and retire there without a lot of money?”
Bill’s answer to question #1
Yes. But it really depends on how “economical” or “frugal” you want to be. If you are a simple person who is not particular concerned about where you want to live and does not require much in terms of personal comforts, you can very easily buy land and live without a lot of money.
First, let’s look at the land. This you can get very cheap, in fact, you can get land for free. That’s right! There are still places in the U.S. where you can acquire a nice piece of land for no money at all. There are cities and states that will GIVE you free land with the only requirement being that you live on the land. You can find out more about how to acquire free land in a podcast episode I did entitled: ep. 098 – 16 Places in the U.S. You Can Get Land for Free.
But, let’s say you want to be more selective about where you live. You can go to online auction sites and often pick the city and state you want to live in and buy property for less than $1,000, and even as low as $1. One such site is Bid4Assets.com | Online Real Estate Auctions | County Tax Sale Auctions | Government Auctions and go to the section entitled $1 No Reserve Land or $1 No Reserve Homes. There are lots of properties that you can bid online for a minimum of $1. Some land on this site also has houses on the land, although the houses will likely need some repair work.
If the property doesn’t have a house, you can always acquire a house, ranging from used trailers, prefab houses, mini log cabins, used container homes and even Yurts on eBay.com or Amazon.com. Yes, if you are a true minimalist, you could buy a Tiny House for less than $5,000 on Amazon and have it shipped to your lot for free! Here’s an article with some of those homes: 10 Amazing Tiny Houses You Can Actually Buy on Amazon.
The above idea would be the simplest solution. But on the Old Dawg’s REI Network, we’re not just about surviving — we’re more about thriving.
Now, I don’t know if the person writing this question will have income in retirement but if, let’s say, they are receiving only Social Security. The average monthly Social Security check is $1,400. If they have some money in savings, or maybe some home equity where they could purchase another small house, they could put the second house on the same property. And, if you are really entrepreneurial, you could make your second tiny house, into an AirBNB home. And, let’s say you can list it for $25 a night and, assuming you only rent it out 50% of the time, that could bring in an additional $375 in monthly income. Now, that’s being conservative. My AirBNB units are booked almost 100% of the time. That could bring in $750 a month. Increase the nightly rent to $35 and you’re closer to $1,050 a month.
Be creative, get a teepee or yurt on construct a Hobbit House out of mud and straw, or convert an old school bus… How much would people pay for the novelty of stating in something really unique??? Here’s an article about someone who rents out their backyard AirBNB tree house for $275 A NIGHT! Take a look! This Charming Atlanta Treehouse Is the Most Popular Airbnb Listing In the World. Some of the AirBNB units that command the highest rents are the most unusual.
And if you are real enterprising, you can put your “cheap land acquisition skills” to work by learning to flip land to bring in even more additional income. See this podcast episode we did entitled: 083: Flipping Raw Land.
So, see — with a little creativity and ingenuity — you CAN acquire and retire for less than you think!
I hope that answers your question.
Best, bill
Check this out! A tiny house on Amazon under $5,000 with free shipping
Question #2 – Listener wants to invest in real estate to live a minimalist lifestyle and travel the world
Hey there Bill! Wanted to start out by saying I’m probably not your average “Old Dawg” listener. I’m a 26 year old female living in the suburbs of Chicago. Shortly after purchasing my first property last spring in 2017, I read Rich Dad, Poor Dad and have been hooked on real estate investing ever since. I have always had a knack for entrepreneurial endeavors and eventually would like to spend my life living through Airbnb properties around the world with my minimalist lifestyle.
That being said, I am looking for some advice. I do not have much money to put down (about $30k in cash), but am interested in purchasing my first multifamily/apartment complex with my next job move – I am currently applying for positions in alternate parts of the country now. Warmth is a rare sight with this menopausal weather in Chicago! That being said, what are your recommendations for moving forward, with a multifamily unit in mind.
My mind is wandering every day currently – do I purchase a multifamily to live in and fix up while in my new job (I am VERY industrial), how can I obtain a loan for a multifamily (my credit is great), do you recommend a HELOC, what are first steps, etc.?
Thank you for your help in advance and I greatly appreciate the knowledge you share in your podcasts!
-Alex
Bill’s Answer to Question #2
Alex,
Thanks for writing and for listening to the Old Dawg’s REI Network, even though you are far from being and old dawg.
I can totally relate! When I was single and in my 20s, I got a job with airline benefits and traveled free for as long as I could. Saw 29 countries. I did the European backpack thing and when I ran low on money, I’d open my guitar case in some subway or train station, sing some songs and collect enough to last me a few more days or weeks. Oh… the vagabond life. Jack Kerouac on steroids. Can’t say I would want to do it again. I’ll take room service any day to being woken up in the middle of the night again with a billy club in my stomach by the “Gendarmerie nationale” – French police. That was then. This is now. Hey, but it was great back then.
Anyway, congratulations on your discovery of real estate investing as a means to financial independence. It definitely beats open guitar cases in the subway. It really can be the perfect vehicle to set-up and sustain long-term financial independence. With smart planning, you can truly create a passive cash flow stream that will allow you the opportunity to enjoy travel and other endeavors you may love. But, keep in mind, the key words here are “smart planning.”
Now, I really can’t answer some of your start-up questions because everyone’s situation is different. You’ll have to do your own assessment a determine which approach is best for you.
To really make it work, you need to carefully research and develop your short and long term investment strategy. Therefore, I would recommend that you develop certain key skill-sets that will set the foundation for successful real estate investing. Keep in mind, you do not have to master these skills before you invest but you should always be focused on developing these skills as you move forward.
Here are 10 key skill set areas you’ll need to focus on:
1. General real estate education
Understanding the successful real estate investor mindset is critical to your own investing success. Read and/or listen to key real estate and business books, articles, podcasts, blogs, websites ,etc. that will help you understand real estate investing from a general standpoint (I’ll put some links to some of my favorites in today’s show notes). You need to develop a good general understanding of real estate investing, know the basic vocabulary, key terms and important criteria ratios.
2. Market research
To make the right investments, you’ll need to buy in the right location. You’ll also want to know how to research and analyze a potential investment market. The ideal investment is in a healthy, strong and growing market where you can experience equity growth, a strong rental demand, and will provide you with a steady, solid, reliable and stable tenant base to rent your properties.
3. Asset protection
Understand the basics of asset protection. If you are going to have renters, you will also be subject to lawsuits or other potential risks? Some people just love to sue others. Look into setting up a business entity, corporation or LLC to protect yourself and your investments. How will it be structured? What about insurance? Beside liability coverage, will you purchase an umbrella policy to protect you from frivolous lawsuits?
4. Property analysis
Know your numbers! You don’t need to be a math wiz, but you do need to understand how to properly analyze a property financially, operationally and in its relation to the local market.
5. Financial preparation
You’ll need to identify early on, where you money is going to come from. Will you just take funds from your savings or liquidate stocks? Will you get a HELOC (borrow against the equity in your home)? How will you manage your money? Will you set-up a self-directed IRA or Solo 401-K? How much cash will you invest and how much will you finance? How much will you keep in reserves? Will you set-up separate bank accounts for your investments?
6. Banking knowledge
If you are going to finance the property, which I would highly recommend, you need to understand interest rates, points and other charges and terms that can impact future leverage and re-financing opportunities with your properties. You’ll need to know the various funding options out there: Conventional mortgage loans, hard money, private money, partnerships, etc. In addition, you might want to either get a pre-approval or lender commitment before you start looking for properties to give you negotiating power.
7. Due diligence
Once you find a property, you’ll want to make sure it is as good in reality as it is on paper. Learn what to look for and how to dig deeper and uncover those little surprises you’ll want to discover before you sign the escrow papers. Develop a due diligence checklist of things to look for each potential property before you finalize purchase.
8. Negotiation
If you want the good deals, you’ll need to learn the fine art of negotiation. You can be weak in other areas, but if you are a good negotiator, you can still be very successful.
9. Networking
Real estate is a people and relationship business. The most successful real estate investors build a solid team to work with, as well as have large networks and expertise within those networks. Key people in your immediate team and extended networks are your mentor, attorneys, CPAs, agents, brokers, bankers, investors, inspectors, assessors, contractors… just to name a few. Surrounding yourself with, and having ready access to, experts in the various aspects of real estate can help prevent serious mistakes in the future.
10. Property management
Whether you self-manage or hire an outside property manager, you need to understand effective property management. I will include a link to some great books, websites and resources that will help you here. Everything from keeping your expenses low to screening tenants, there is a lot to know to successfully manage your real estate investment assets. To me, as an out-of-state investor, this is the ONE KEY aspect of success. Without good property management or managers in place, your investment efforts of little chance of success.
These 10 key skills are essentials that every real estate investor must know and eventually master.
In addition, I would recommend that you listen to my podcast #006 on How to Get Started in Real Estate Investing. It will provide you with the 4 steps you need to do to get started.
And, finally, once you’re comfortable and ready to make that first purchase, you need to just do it! This is the single most difficult step for almost everyone.
If I Were You
Now, if I had $30,000 to invest, I would try to spend little to none of that amount if possible. Sure, you could buy one property for $30,000 to get started but then you would have nothing left and you’ll have to wait and save until you make your next purchase. You could also look at buying multiple properties at $50,000 each or less by putting $10,000 down for each (2 or 3 properties – closing costs not included), but again, part of your goal should be to spend as little as possible.
Try to find a property where the owner will carry back and/or you only have to put a minimum amount early on. Or try to find investors or get a grant that can cover your down payments. There are many options. I’ll provide some more links in our show notes to little or no money down techniques and strategies.
Or, my favorite, house hack! Find a duplex, tri, or fourplex. Get a 3.5% down FHA loan. Live in one of the units “rent free” for a year, move out and repeat the process until you’ve built up an impressive portfolio of passive cash flowing properties. When you have sufficient income to be financially independent (I would make your financial goal DOUBLE what you think you need), move out and SEE THE WORLD. Now if you’ve done your due diligence and have selected top property managers, you should have little to be concerned about while you’re on the road. But, nonetheless, make sure you carve out time to regularly communicate/check-in with your property managers while you’re traveling.
If you are open to where you can move, again, look for emerging markets. Great states to invest include Washington, Idaho, Texas, and Florida. For the best deals, try Michigan, Indiana, Tennessee and Ohio. I’ll include links to some of my top markets.
178: Top US Emerging Real Estate Markets for 2018 –
126: Top 15 Fastest Growing Sub-Markets –
Overall, Alex, you have the right attitude and I’m sure you will do great! Don’t be overwhelmed by my rather lengthy explanation. I would rather give you too much info than not enough . Hopefully, this answers your questions enough to get you started. If not, just dash off another email.
Best,
bill
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