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    Financial Independence Daily FI discussion thread - Wednesday, September 29, 2021

    September 29, 2021

    Financial Independence Daily FI discussion thread - Wednesday, September 29, 2021

    Daily FI discussion thread - Wednesday, September 29, 2021

    Posted: 29 Sep 2021 02:02 AM PDT

    Please use this thread to have discussions which you don't feel warrant a new post to the sub. While the Rules for posting questions on the basics of personal finance/investing topics are relaxed a little bit here, the rules against memes/spam/self-promotion/excessive rudeness/politics still apply!

    Have a look at the FAQ for this subreddit before posting to see if your question is frequently asked.

    Since this post does tend to get busy, consider sorting the comments by "new" (instead of "best" or "top") to see the newest posts.

    submitted by /u/AutoModerator
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    Weekly Self-Promotion Thread - September 29, 2021

    Posted: 29 Sep 2021 02:00 AM PDT

    Self-promotion (ie posting about projects/businesses that you operate and can profit from) is typically a practice that is discouraged in /r/financialindependence, and these posts are removed through moderation. This is a thread where those rules do not apply. However, please do not post referral links in this thread.

    Use this thread to talk about your blog, talk about your business, ask for feedback, etc. If the self-promotion starts to leak outside of this thread, we will once again return to a time where 100% of self-promotion posts are banned. Please use this space wisely.

    Link-only posts will be removed. Put some effort into it.

    submitted by /u/AutoModerator
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    FI through Real Estate and truly "retiring"

    Posted: 28 Sep 2021 04:30 PM PDT

    It seems that most people who FIRE here do so through securities in the markets, which are relatively easy to manage in retirement. But most of my net worth and planned FIRE cash flow is from rental properties. I'm currently at 4 units and should have 5 in a few months, and from there I plan on increasing my net worth through securities and other, more passive investments.

    In addition, I am most likely going to receive inheritance in the next few years that will increase my property portfolio to anywhere from 15-25 units. Some of those units will have an on-site manager, but close to half would not.

    I'm in my mid 30s so I don't mind actively managing it, but I see my parents and older relatives still actively managing into their 70s. I feel like even with a management company, there is quite a lot of work, but I don't work with any personally at the moment.

    Ultimately my question to anyone out there is, even if I were to pass all of my properties to a management company, do people still feel like they are truly retired if they are dealing with these properties all the time?

    submitted by /u/PlaneCandy
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    First Home Purchase on Road to FIRE: Help Me Think of What I Missed

    Posted: 29 Sep 2021 02:45 PM PDT

    As the title says, I am looking to buy my first home with my wife. I tend to overthink things and try to anticipate everything, especially when it comes to personal finance. Given this is a large purchase that could potentially set back our FIRE goals, I would appreciate any help / feedback from this community on what else I should consider.

    Note: We are relatively "well off", but that does not mean this is a "show-off" post. I am genuinely trying to figure out if this is a good idea and what potential risks I might have missed. I also posted in r/personalfinance, but this sub has the additional perspective of FIRE that we ascribe to. Been a long, long time lurker here on my main account.

    About Us

    • Married with no kids yet
    • $300K combined annual base + $800K annual bonus to scale significantly over next few years
    • Wife is fully remote, and I work hybrid, hence the want to upgrade our residence. Our current rental is a 700 sqft 1ba/1br that is very dark all day. Been living there for 4 years now.
    • We plan on semi-retiring in 4-5 years to have kids, lowering our current elevated earnings to more like $300K combined annually
    • $800K in brokerage accounts + $700K in retirement / 429 accounts. $50K auto loan.

    About the Property

    • 2021 new construction modern townhouse with warranty, so minimal repair costs needed
    • $1.3MM 3br/3ba in HCOL. 1,800 sqft + 500sqft private rooftop with tandem parking. Amazing natural light, modern interior finishes, etc.
      • $450 monthly HOA
      • 3 of the 5 units in the complex sold quickly for around the same price range, despite move-in date being mid-November. Units were put up for sale staggered, and this particular one has only been on the market for a week, so it is not like this unit was "the last kid picked"
    • Good, up-and-coming neighborhood in a good school district relative to surrounding area, with bougie coffee shops / restaurants and reputable offices nearby. Obvious signs of gentrification-in-process though, with some random car repair shops and unlabeled white buildings around
    • Neighborhood seems very safe despite big gun shop nearby. Gun shop is legit and has good Yelp reviews, parents let kids play at night in park nearby, very low crime rate, etc.

    Concerns / Considerations

    • Buying at a high? A bit of a cliché question, but with the COVID buying frenzy slowing and rates potentially rising to combat inflation, this is my top concern
    • Not staying there for long? We are planning on moving to a MCOL in 4-5 years, so we would not be at this property for long. General rule of thumb I've heard for buying over renting is over a much longer time period. We could just rent it out though (see below)
    • Good rental property? Does not quite fit in with the surrounding houses, which are much older, single-family homes. Families might want to rent for the school district, but the unit is very modern looking which families might not value as much for the higher rent. The neighborhood is getting more upscale though, with big tech offices moving in, so may be less of a concern in the future. Tandem parking might deter a group of younger professionals looking to rent?
      • Potentially a ~5% unlevered yield before taxes / fees / repairs, which I heard is nothing to write home about. Net neutral all-in cash flows at best.
      • Unsure what the rental group would be, because people who can afford a $5-6K monthly rent would just buy their own place if they had the down payment / save up ASAP to move out if not. Maybe families unsure if they want to stay in the area long term?
    • Potential construction next door? Unit next door is looking to sell to a developer to be converted into a modern townhouse complex like what happened with this property. There will likely be 1-2 years of construction during our stay there (i.e., loud noises). Plus, if another 2-story townhouse complex is built, it will block a lot of the natural light currently coming into the ground floor (next door unit is currently a single-story home)

    I think we can afford the property based on what I know so far, but as I mentioned at the start, it would be helpful if there is something I did not think of / is more of a problem than I think it is.

    submitted by /u/curious-and-anon
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