How to retire early?

Finance, Taxes, Banking, Insurance and Retirement
41
What's a drop-ship arrangement with the maufacturer?

42
What scares me about renting residential real estate is what lousy tenants can do to a property. We have been tenants for the past 7+ years, having lived in two houses during that time. In both cases, the tenants that immediately preceded us had trashed the places, making nightmares for the owners.

How have you managed to prevent that kind of thing from happening to you?

43
real estate has positives and negatives. nice thing is that it produces inflation linked income and is a real asset.

on the down side it is a single expensive illiquid asset. can be subject to changing laws/regulations. can be hassle.

44
careful screening of tenants. taking security deposits. insurance.

45
The order is placed with the retailer (you, for example), and the product is shipped directly from the manufacturer (or wholesaler) to the purchaser at the retailer's prompting.

This kind of arrangement is not uncommon in the US, particularly where industrial equipment or machinery are concerned: Items are purchased through a dealer, but shipped directly to the buyer's location. The dealer is a local "middle man" for sales, service and supplies, but not for the initial delivery.

46
We bought a small studio as a first experiment. Then mortgage was very small so the risk was also. Unfortunately we had a lovable rogue move in and he did everything possible to make it a mess....

And I mean everything.

the one good thing is in CH you can register the debts still owed to you with the 'koncursamt' (not sure of spelling). They will periodically check his earnings and when he does get his act together.....even in 5 years.... they will take the money directly out and repay us out trouble.

Not perfect but at least there is an official way to go

47
I had one terrible first experience which was my fault. They trashed the joint before living with all the appliances. I did not do my homework.

Now I use managers that check credit scores etc... and so far so good.

I actually have real estate in your state (Austin). Utah is a very good place also. People are ethical, family oriented, and they often marry young so they cannot buy their own house for years.

In some instances I sold the house to the tenants (which is a good incentive for them to keep the place pristine).

48
We are trying something very much like that at the moment. Shipping baby carriers from nepal. Unfortunately the cost of small package post from Nepal makes it not viable.

Any ideas?

49
Please note that I am not an expert nor I pretend to be so. I am just an engineer, so my Finance knowledge is mostly based on what I read and common sense. What I've done for myself is to create a "rule" where I don't invest in stocks of companies that are relatively new or I never heard of; I prefer very traditional markets, such as mining and manufacturing. Since I don't know too much about banking, I tend to leave bank stocks out. Same applies to commodities. One thing I could recommend is to look at the mutual funds from large banks such as UBS that have comprehensive information about the performance of the funds they offer. You could even see the composition of the stocks. If you are risk-adverse, don't go for those with very high returns as they also tend to be the ones suffering most with the crashes (talking from experience ). The other important thing that I learned after few years is that you need to monitor the movement (performance) of your assets, but do not become obsessed with that (I remember just few years ago when I used to review the results every single day, not a good thing for my heart or my family life!). Last but perhaps not least, at the beginning I didn't invest (what in my limited universe is) big amounts of money, so I could understand better what I was doing and the mechanics of the process. I also heard that when you get closer to your age of retirement one should move from stocks to something more secure like bonds, and that is what I plan to do when the time comes, but not idea to share on that area at this point of my life.

Hope this helps.

50
If the cost of direct shipping from Nepal is prohibitive, it seems to me that your only alternative is to take delivery of them yourself — in economical quantities (bundled? via container?) — as well as taking on their local storage and delivery/shipment.

51
I am scared by stocks. My Swiss grandparents were very wealthy and the way they did it was by accumulating real estate in Vaud. Then my mother and her siblings inherited and sold all the properties in the late 50s. They all completely mismanaged the money they got out of it (stocks, failing investments, bogus financial advisors, fancy cars...). A very good lesson for me.

52
Yes 15 years is enough or it could be earlier depending on where and what you buy.

We are not quite there yet but are now at a stage where our properties are making money so from now on it will only get better.

We do pay tax but it's the cost of doing business

Good thinking and for US citizens with good income now is a good time to buy in the US. the US$ is still low and property prices are under a lot of pressure and still falling. We haven't bought in the US because we find it difficult to manage and the real estate agents I spoke to were not doing property management.

I agree, we never touched commercial and although there are commercial sites in busy locations which are easy to lease, the yields for such properties are usually lower (because the purchase price is higher), fees are higher etc.

The advantage with commercial (at least here in Australia) is that all site costs, council rates plus maintenance are the tenant's responsibility

53
And you have good reason to be scared but you can time the market and get in after the bust.

We made some money during the boom times a few years ago and when we saw the dark clouds coming we converted most of it to cash.

It was the best thing we did because a lot of people who didn't lost all of their gains and more...

Prices recovered a bit since then but I sense that they'll be going sideways for a few more years so although we hold some stocks we are not buying more.

54
Hi again

I'm guessing you don't live there so who is doing the property management for you? Also, do you buy complete blocks of apartments or individual houses?

cheers

Bill

55
It is mix of detached houses, town houses, and condos. I use property managers. I go and interview them beforehand. Some are great and proactive, some are certainly less good...

I actually prefer to have a neutral buffer between the tenants and myself. I used to take care of a house directly and the tenants were trying to be friends and asked for more and more favors.

56
Same here.

I generally prefer houses and townhouses because of the land content

but condos here have higher yields and as we get closer to retirement the yields become more and more important so I'd like to add some condos to the mix.

US properties are of interest as well but I can't do it alone.

I did try 2 agents in Chicago but they could not help me with the management and the tenancy legislation there was too much in the tenant's favour so I didn't see a point in investing in Chicago.

cheers

57
All this talk about buying property to fund early retirement. In my experience, property needs maintaining and needs to be managed, so they take a lot of your time and energy, even when they are fully managed by someone else. You still need to decide on which tenant to accept and what maintenance you will do. I wouldn't call having to deal with a property portfolio retiring

In my early 20s, buying, improving and letting out property seemed like a good idea. I have always made more from this than my day job and I had the time and energy to devote to it back then. Now with a family, it is way too much hassle for me.

58
When dealing directly with the properties, yes. But if you have a good rental property manager, they do the work and you just authorize things.

It is better than having a boss...

What convinced me is a visit to Arizona 15 years ago. I saw rows and rows of trailers/caravans with retired people living from their weekly Social Security $400 checks. It was so depressing and I did not want to end like that.

In Switzerland, you are better covered but in the US, if you don't pay attention to your own finances you can regret it dearly.

Due to the slow migration of baby boomers to the south, I would look at Utah or Tennessee for example at this point in time. Don't go for the obvious like Florida or Arizona that are too unpredictable.

59
I have a grandmother who must be 75 now and for the last ten years has refused to retire.

My Dad insists that he will pay for anything she need but she still goes to work for 6 days a week and some times 7

She says it's good to stay active. But 6 days a week is a bit insane.

I've just started the work life. But I'm hoping I won't be waiting for retirement in a few years time. But when the time comes retirement, I hope I will miss my work.

60
I am 50 and I am certainly not idling.

It really depends what you do. It is hard to be a 60 year old engineer in a corporation for example. You don't learn new things as quickly. The techniques you have learned and mastered are probably obsolete. I have seen some of those guys get really depressed.

It is okay if you get into management.