| Need help on retirement strategy |
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dro
New Member
Cash: $ 1.15
Posts: 4
Joined: 20 Oct 2007
Location: washington
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| Need help on retirement strategy |
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i posted this in another section and I hope I didnt break any rules by posting it here too. I just wasnt sure were to post it.
I have a piece of property that is .92 acers. My real estate guy informed me today that it is worth between 800 to 900k.
I owe 430k
If I sell I receive the cash and you can all calculate that I cant retire off of that (I'm 40).
However, I've got this bright idea of putting storage units on the property and renting them out at say $150-200 a piece (10x20 ft in size) and retiring off the income.
I'm only in the infant stage of this right now because I allways said that if my property hit the 800-900k mark that I would sell and move to someplace that is cheap to live and put the money in a high yield index fund and draw 5% off of it...but it's hard to live off 20k nowdays anywhere in the US!.
I'm just not sure if I really want to move away to some other country.
What would you guys do if you were in my position. No kids. No wife, but I do have a dog and cat.
I dont want to look back 20 years from now telling someone that i wish i would have done "this".
Looking for a mentor here.
I'm just rambling now.
Suggestions?
Thanks,
Dro
P.S. I forgot to say that if I'm not posting in the correct area, please inform me or maybe a moderator could redirect this post to the correct area. Thanks.
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Sat Oct 20, 2007 4:58 am |
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Apollo
Senior Member
Cash: $ 73.85
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Joined: 10 Sep 2007
Location: New York
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| Re: Need help on retirement strategy |
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Don't forget that you will be taxed on the sale of ypur real estate (unless you use the proceeds to buy a bigger property).
How is the demand for storage in your area? Would you have your units occupied or will the majority of the units remain empty? What about pricing per storage unit in your area? Do you want to rent units for residential or commercial purposes?
Those are some points you should research and think about. If demand is strong and your units are likely to be occupied the idea is not that bad at all.
What would I personally do?
Since you owe about 50% of what the property is worth and given the current circumstances I would sell it (I know this will cause a huge tax charge and the majority of people would not sell for the cash but to reinvest it into a bigger property), pay off the 430k you owe and invest the rest. That is only my personal opinion and I would sell it because I know that I can do more with the money invested in global equity markets then any other option available. To be completely honest I would not even pay back the 430k in one payment of the proceeds from the sale but continue to make monthly mortage payments on the 430k which I would pay for with the monthly cash-flow from my equity investments. The majority of people may consider this as way too risky but it depends on the individual investor. That's the strategy I would choose becasue I know it would be the most beneficial strategy for me.
If your not open to equity investments you should do a little more research if you want to convert it to storage units. To sell the property and reinvest into a bigger property may only increase your total debt but if the storage units will have a bright future in your area you may even want to consider that.
Since you planed to sell once it hits the 800k-900k range it would be best to stick to your initial strategy and sell now but I doubt that it will be enough to retire on and you're still young so you have plenty of time and opportunities to add to your retirement budget.
I would not recommend to sell a part of it and pay off your debt because you owe about 50% of the total and given the tax charge you will face and the high amount you owe there won't be too much left to convert to storage units which will drastically reduce your monthly cash-flow from the property.
In the end it really comes down on how risk averse you are and what type of strategies you choose to follow.
It is not smart to play it safe but it is safe to play it smart.
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Sat Oct 20, 2007 12:58 pm |
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dro
New Member
Cash: $ 1.15
Posts: 4
Joined: 20 Oct 2007
Location: washington
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Thanks for the reply!
I know what you mean about sticking to my original scheme.
That scheme also included putting the funds in a high yield mutual fund, moving to Panama and basically getting out of the rat-race.
From what I gather $400k in those kind of funds (drawing 5% would yield about 2k a month.
2k is not alot in US, but in Panama, from what I recall, I'd be setting pretty decent.
Incidentally, Panama was my favorite choice but not the only one.
The only thing that changes things is that if I could have a monthly income off the property of say 10k a month that would be worth it 'cause I can live off way less than that but it creates a very nice "buffer" and I can continue to save more and stay in the US at the same time. Plus, I'm not the kind of person that would be able to sit around 12-14hours a day and do absolutely nothing so i would probably still do some kind of business. The nice thing would be I would have the option.
BTW, the storage rentals are very strong in my area. That's what gave me the idea. It seems that their all filled to capacity.
I've made some stupid financial decisions in my life and I'm simply trying to make at least one good one...just one to make all the other ones worth it.
Thats why Im looking for advise.
dro
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Sat Oct 20, 2007 10:36 pm |
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