Lakeville, MN
Quoted from Nevus:No reason to turn down tax free money.
Not only does it come out of your pay check pre tax, but you also pay no tax when you take it out.
Doesn't get much better than that.
(Topic ID: 286379)
Quoted from MrBally:I did at 56, I had to leave the funds in my employer 401k to be eligible. It was a requirement that I was at least 55 and that I had the required "86 points" fulfilling the requirement to officially retire.
I simply called the plan's Customer Service department to make a withdrawal. There was no penalty. Note that I had to wait until I was 59 1/2 to transfer everything to an IRA if I wanted to be able to withdraw in the "new" account without a penalty. I waited to be safe.
Thanks. I'm aware of the ability to retire and withdraw 401k funds at age 55 from your current employers 401k plan. There is some other provision that allows for 401k withdrawals before age 55 if the withdrawals are of "equal and substantial amounts". This is the case that I'm curious about.
Quoted from Eric_S:Thanks. I'm aware of the ability to retire and withdraw 401k funds at age 55 from your current employers 401k plan. There is some other provision that allows for 401k withdrawals before age 55 if the withdrawals are of "equal and substantial amounts". This is the case that I'm curious about.
Are you referring to pulling money from an IRA before you're 59.5yo? I'm not sure if you can do it in a 401k (before 55) but you can definitely do it in an IRA with Rule 72(t). The key is once you start you can't stop or modify the payouts until you turn 59.5.
Substantially Equal Periodic Payment, or SEPP, is a method of distributing funds from an IRA or other qualified retirement plans prior to the age of 59½ that avoids incurring IRS penalties for the withdrawals.
I never heard of this before googling it yesterday after the question was posed here. Very interesting..
Sorry I can’t help with any guidance, but hopefully someone else has some experience they can share.
Quoted from Hench4Life:Substantially Equal Periodic Payment, or SEPP, is a method of distributing funds from an IRA or other qualified retirement plans prior to the age of 59½ that avoids incurring IRS penalties for the withdrawals.
I never heard of this before googling it yesterday after the question was posed here. Very interesting..
Sorry I can’t help with any guidance, but hopefully someone else has some experience they can share.
https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments
"6. How are payments determined under the three methods?
Example:
Bob, age 50, is the owner of an IRA from which he would like to start taking distributions beginning in 2011. He would like to avoid the §72(t) additional 10% tax imposed on early distributions by taking advantage of the substantially-equal-periodic-payment exception.
Bob’s IRA account balance is $400,000 as of December 31, 2010 (the last valuation prior to the first distribution)
120% of the applicable federal mid-term rate is assumed to be 2.98%, and this will be the interest rate Bob uses under the amortization and annuitization methods
Bob will determine distributions over his own life expectancy only
Required minimum distribution method
The required minimum distribution method consists of an account balance and a life expectancy (single life or uniform life or joint life and last survivor each using attained age(s) in the distribution calculation year). The annual payment is redetermined each year.
For 2011, the annual distribution amount is calculated by dividing the December 31, 2010, account balance ($400,000) by the single life expectancy (34.2) obtained from I.T. Regs. §1.401(a)(9)-9 Q&A-1, using age 50 ($400,000/34.2 = $11,696).
For subsequent years, the annual distribution amount will be calculated by dividing the account balance as of December 31 of the prior year by the single life expectancy. Use the same single life expectancy table used in prior year calculations, but use the current age. For example, if Bob's IRA account balance, after the 2011 distribution has been paid, is $408,304 on December 31, 2011, the annual distribution amount for 2012 ($12,261) is calculated by dividing the December 31, 2011 account balance ($408,304) by the single life expectancy (33.3) obtained from Q&A-1 of I.T Regulations §1.401(a)(9)-9 using age 51 ($408,304/33.3 = $12,261).
Fixed amortization method
The fixed amortization method consists of an account balance amortized over a specified number of years equal to life expectancy (single life uniform life or joint life and last survivor) and an interest rate of not more than 120% of the federal mid-term rate. Once an annual distribution amount is calculated under this method, the same dollar amount must be distributed in subsequent years.
For 2011, the annual distribution amount is calculated by amortizing the account balance ($400,000) over a number of years equal to Bob’s single life expectancy (34.2) (obtained from Q&A-1 of I.T. Regs. §1.401(a)(9)-9 using age 50), at a 2.98% interest rate (April 2011 rates). The annual distribution amount is $18,811.
Fixed annuitization method
The fixed annuitization method consists of an account balance, an annuity factor and an annual payment. The annuity factor is calculated based on the mortality table in Appendix B of Rev. Rul. 2002-62 and an interest rate of not more than 120% of the federal mid-term rate. Once an annual distribution amount is calculated under this method, the same dollar amount must be distributed in subsequent years.
Under this method the annual distribution amount is equal to the account balance ($400,000) divided by an annuity factor that would provide one dollar per year over Bob’s life, beginning at age 50. The age 50 annuity factor (21.345) is calculated based on the Rev. Rul. 2002-62 Appendix B mortality table and an interest rate of 2.98%. The annual distribution amount is calculated as $400,000/21.345 = $18,740."
Quoted from MrBally:I did at 56, I had to leave the funds in my employer 401k to be eligible. It was a requirement that I was at least 55 and that I had the required "86 points" fulfilling the requirement to officially retire.
I simply called the plan's Customer Service department to make a withdrawal. There was no penalty. Note that I had to wait until I was 59 1/2 to transfer everything to an IRA if I wanted to be able to withdraw in the "new" account without a penalty. I waited to be safe.
Was that the rule of 55 or SEPP?
Quoted from jchristian11:Was that the rule of 55 or SEPP?
55 after reaching the required 86 retirement points.
Quoted from MrBally:55 after reaching the required 86 retirement points.
What was the math behind the 86 points? Years of service, age,...?
Quoted from Jarbyjibbo:What was the math behind the 86 points? Years of service, age,...?
Point calculator for you. https://kpers.org/active/retirementbenefits/85pointsK1.html
Here are a few articles about SEPPs, but I've never found anyone that took advantage of this to retire early, so just curious if anyone has any personal experience.
https://smartasset.com/retirement/what-is-a-sepp
https://www.forbes.com/advisor/retirement/rule-72t-early-withdrawals-sepps/
Quoted from DBLM:Point calculator for you. https://kpers.org/active/retirementbenefits/85pointsK1.html
Quoted from DBLM:Point calculator for you. https://kpers.org/active/retirementbenefits/85pointsK1.html
1 Point for each year of employment plus 1 Point for each year of age. But, you must be 55 years of age minimum to retire to collect your pension where I worked (Rockwell International). Bonus: Veterans, with an Honorable discharge get an additional Point for each year served.
The point requirement was changed to 86 aboot ten years prior to my retirement. Unfortunately, I had to work an extra year. Note that the Point requirement is lower for most Law Enforcement Officers and Firefighters. Usually 50 and even 45 or 48 points. As it should be.
1 week later
Quoted from Hench4Life:Not looking to reengage this argument again, but this is a good read.
https://www.financialsamurai.com/negative-real-mortgage-rates/?fbclid=IwAR0Jm3N_chAdaM2G3SbscdGBVoWRUSZhDKrsG8s3ZvbY5B7n_0S8_j_vwpM
THAT guy! He's known for a lot of clickbait headlines and not-so-accurate info. See our quick back and forth for an example:https://www.financialsamurai.com/negative-real-mortgage-rates/#comment-566804
Having said that, with all of his silliness he has lots of good points.
Quoted from arcyallen:THAT guy! He's known for a lot of clickbait headlines and not-so-accurate info. See our quick back and forth for an example:https://www.financialsamurai.com/negative-real-mortgage-rates/#comment-566804
Having said that, with all of his silliness he has lots of good points.
I was going to disagree with that article but then at the end he said if you don’t have anything else to do with the money it’s ok to pay down mortgage and also he said that invested money could lose value so it’s ok to pay down debt. Basically covering all the bases.
I’ll say that both stocks and home prices are at or near all time highs so I won’t count on massive increase in stock or house prices and maybe some correction in both so just don’t say ‘inflation is 6% so therefore house prices will appreciate at 6% too’.
Also older folks that are approaching retirement may want to pay down mortgage because it’s one of the biggest monthly expenses so less to stress your retirement savings.
Quoted from arcyallen:THAT guy! He's known for a lot of clickbait headlines and not-so-accurate info. See our quick back and forth for an example:https://www.financialsamurai.com/negative-real-mortgage-rates/#comment-566804
Having said that, with all of his silliness he has lots of good points.
Did you notice that he went back and updated the article to “you could invest an amount equal to your mortgage into a 10-year Treasury bond. The interest income can then be used to pay your entire mortgage interest.”
Should have at least clarified the position in the response to your comment.
I don’t take any financial advise as more than a data point. IMHO there isn’t any gospel just a lot of different viewpoints. I try to keep an open mind, and seek out as many views as I can.
Quoted from Hench4Life:Did you notice that he went back and updated the article to “you could invest an amount equal to your mortgage into a 10-year Treasury bond. The interest income can then be used to pay your entire mortgage interest.”
Should have at least clarified the position in the response to your comment.
I don’t take any financial advise as more than a data point. IMHO there isn’t any gospel just a lot of different viewpoints. I try to keep an open mind, and seek out as many views as I can.
Yeah, I noticed. Some people don't like to say "Hey, I made a mistake, let me fix that". There was one blogger that changed MY extensive disagreeing comment to -agree- with his. I was beyond pissed. Then he made a whole post about his encounter with Poor Dumb Ron. Again, people don't have the grace to admit when they're wrong anymore. In contrast I apologized to my wife yesterday. Three times. 
Quoted from arcyallen:In contrast I apologized to my wife yesterday. Three times.
Did 3 new pins show up yesterday? "I'm sorry baby, it's an addiction, I'll get help"
Quoted from jaytrem:Did 3 new pins show up yesterday? "I'm sorry baby, it's an addiction, I'll get help"
That’s some funny shit! I just figured out that I’m ~$8k shot of hitting the next threshold on my Delta Amex that would get me enough bonus miles to push me to Platinum… If only there was a big purchase I could make on my Amex before the end of the month, hmmm…. NIB pin perhaps
Québec, QC
Thinking about buying some property in Florida, and doing AirBNB with it with some local manager. I do have some relatives that could occasionally check on things or whatever.
The primary goal isn't FIRE, but I'd like the thing to pay for itself + some more to offset the trouble (I would want to use the property a few weeks each year too). Anybody have experience with this kind of thing?
FIRE related: I started cutting my own hair during the pandemic and I've gotten pretty good at it, no going back! 
Quoted from PhilGreg:Thinking about buying some property in Florida, and doing AirBNB with it with some local manager. I do have some relatives that could occasionally check on things or whatever.
The primary goal isn't FIRE, but I'd like the thing to pay for itself + some more to offset the trouble (I would want to use the property a few weeks each year too). Anybody have experience with this kind of thing?
FIRE related: I started cutting my own hair during the pandemic and I've gotten pretty good at it, no going back!
PhilGreg, you can certainly have a beach house and make income on it using AirBnB and a local property manager. My wife and I are doing that successfully in the Outer Banks of NC. We only rent it out around Easter and then again Memorial Day through middle of September. It pays all expenses and we have plenty of profit left over to keep in the bank or use for beach house repairs/improvements. One thing that helped us was refinancing to a much lower interest rate last year. We've also done a bunch of renovations so that we could charge more. The key is appealing to moms who watch HGTV. The vast majority of people who book the vacations are moms and females who love watching HGTV. haha.
Quoted from DanMarino:PhilGreg, you can certainly have a beach house and make income on it using AirBnB and a local property manager. My wife and I are doing that successfully in the Outer Banks of NC. We only rent it out around Easter and then again Memorial Day through middle of September. It pays all expenses and we have plenty of profit left over to keep in the bank or use for beach house repairs/improvements. One thing that helped us was refinancing to a much lower interest rate last year. We've also done a bunch of renovations so that we could charge more. The key is appealing to moms who watch HGTV. The vast majority of people who book the vacations are moms and females who love watching HGTV. haha.
Quoted from DanMarino:PhilGreg, you can certainly have a beach house and make income on it using AirBnB and a local property manager. My wife and I are doing that successfully in the Outer Banks of NC. We only rent it out around Easter and then again Memorial Day through middle of September. It pays all expenses and we have plenty of profit over to keep in the bank or use for beach house repairs/improvements. One thing that helped us was refinancing to a much lower interest rate last year. We've also done a bunch of renovations so that we could charge more. The key is appealing to moms who watch HGTV. The vast majority of people who book the vacations are moms and females who love watching HGTV. haha.
I've thought about doing the same thing after visiting the Outer Banks this past summer. I bought a game from someone who essentially did the same and is now living (retired) in said property. I'm guessing that is rather common in that area.
Cool, thanks for the feedback! I think I'll start by looking at what kind of mortgage I can get to see what my ballpark is... I figure property prices are going to keep climbing with inflation for a while so if I'm gonna do something, better sooner than later.
The property manager, how does that work? They charge you like a 15-20% and handle every single thing? Are you still the one managing the AirBnb account, but they take care of cleaning up, tending to whatever needs tending, etc.?
Quoted from DanMarino:PhilGreg, you can certainly have a beach house and make income on it using AirBnB and a local property manager. My wife and I are doing that successfully in the Outer Banks of NC. We only rent it out around Easter and then again Memorial Day through middle of September. It pays all expenses and we have plenty of profit left over to keep in the bank or use for beach house repairs/improvements. One thing that helped us was refinancing to a much lower interest rate last year. We've also done a bunch of renovations so that we could charge more. The key is appealing to moms who watch HGTV. The vast majority of people who book the vacations are moms and females who love watching HGTV. haha.
This is 100% true! Brother and I own and operate two vacation rentals in northern MI and MOST of the rentals are from Mom/Female. Pictures are what brings them in, cleanliness and stocked kitchens are what generate good reviews. Make sure to do your homework before buying anything. Understand the market, competition, rates, fees/taxes, and local ordinances.
Quoted from PhilGreg:Cool, thanks for the feedback! I think I'll start by looking at what kind of mortgage I can get to see what my ballpark is... I figure property prices are going to keep climbing with inflation for a while so if I'm gonna do something, better sooner than later.
The property manager, how does that work? They charge you like a 15-20% and handle every single thing? Are you still the one managing the AirBnb account, but they take care of cleaning up, tending to whatever needs tending, etc.?
You can find a property management company that will take care of everything, but you’ll be paying more than 20%… probably more than 50%, but it really depends on the area your looking. If you just want to set it and forget it, it would be worthwhile to have a company that does it all.
We use VRBO instead of Airbnb, and there are some smaller niche sites as well.
Quoted from Hench4Life:You can find a property management company that will take care of everything, but you’ll be paying more than 20%… probably more than 50%, but it really depends on the area your looking. If you just want to set it and forget it, it would be worthwhile to have a company that does it all.
We use VRBO instead of Airbnb, and there are some smaller niche sites as well.
Ok, so definitely a big part of the equation, what service is provided by the property management and at what cost. As far as VRBO vs AirBnb, any particular reason?
I don’t know if it’s still the case for new accounts, but when we started only VRBO paid when the renters paid, which is 100% payment at booking. Airbnb held the money until renters checked in. We prefer to have the cash flow available, but others might not have as much of an issue.
Quoted from DanMarino:PhilGreg, you can certainly have a beach house and make income on it using AirBnB and a local property manager. My wife and I are doing that successfully in the Outer Banks of NC. We only rent it out around Easter and then again Memorial Day through middle of September. It pays all expenses and we have plenty of profit left over to keep in the bank or use for beach house repairs/improvements. One thing that helped us was refinancing to a much lower interest rate last year. We've also done a bunch of renovations so that we could charge more. The key is appealing to moms who watch HGTV. The vast majority of people who book the vacations are moms and females who love watching HGTV. haha.
Having just stayed in two AirBnBs in Florida, I feel called out. Ha ha ha. It probably depends where, our Miami and Florida Keys places were more partying and drinking crowds.
Do you make considerably more money from it being a vacation rental and using a property management company vs. renting it year round? I own a rental, rent it and manage it myself, and most renters stay 2-3 years. It's pretty hassle free and paid off, so it's straight income for me. But it's just off a hip street with restaurants and clubs and has rooftop deck, it probably would do good as an AirBnB.
Quoted from nwpinball:Having just stayed in two AirBnBs in Florida, I feel called out. Ha ha ha. It probably depends where, our Miami and Florida Keys places were more partying and drinking crowds.
Yeah really not interested in these 2 places in particular (and Daytona, Orlando, etc.) - my relatives are around Jacksonville so that area would be interesting although pretty expensive near the beach (Jax Beach, etc.). If not I'd like to find the sweet spot between very touristy and run down. I like places where you don't feel like you're in a mall all the time but you're not worried about getting stabbed either.
I also prefer the cypress trees and swamps to the beach but I'm not sure my girlfriend would agree and I don't think it's as AirBnb-friendly.
Quoted from PhilGreg:I like places where you don't feel like you're in a mall all the time but you're not worried about getting stabbed either.
I also prefer the cypress trees and swamps to the beach but I'm not sure my girlfriend would agree and I don't think it's as AirBnb-friendly.
Actually the Keys does fit this bill if you go outside of Key West and Key Largo, anywhere in between. We stayed at a AirBnB condo in Marathon and it had a great boat/beach/Jimmy Buffet vibe, mostly people in their 50s and 60s that low key party, eat out, and boat and fish. Both mangroves and beaches. Islamorada was another cool Keys town with an artist community and 2 breweries, it's where the show Bloodline was filmed. Swamps = mosquitos and other bugs, and they can be bad in Florida even not near the swampy areas.
Quoted from wtatumjr:Our rental companies charge 18 percent. That seems to be the going rate in OBX. They take care of everything and you should be fully rented between May 15th to Sept 15th.
That’s a really great rate, I’m jelly. Rates are considerably higher Up North MI for full service management.
Quoted from nwpinball:Do you make considerably more money from it being a vacation rental and using a property management company vs. renting it year round? I own a rental, rent it and manage it myself, and most renters stay 2-3 years. It's pretty hassle free and paid off, so it's straight income for me. But it's just off a hip street with restaurants and clubs and has rooftop deck, it probably would do good as an AirBnB.
There are several variables you’ll need to evaluate to make that determination. Location, as you mentioned, is one. Also need to understand the market to determine the rate you could charge, the occupancy rate in your area, management fees, and utilities/taxes/other fees that would differ from long term rentals. If you place isn’t furnished you’d also have some up front costs with furnishing.
That said, for us, we bought the houses specifically as vacation rentals and we make considerably more as a vacation rental than a full time rental. However, it requires a decent amount of work for us as we don’t have a full service management company.
Quoted from nwpinball:Actually the Keys does fit this bill if you go outside of Key West and Key Largo, anywhere in between. We stayed at a AirBnB condo in Marathon and it had a great boat/beach/Jimmy Buffet vibe, mostly people in their 50s and 60s that low key party, eat out, and boat and fish. Both mangroves and beaches. Islamorada was another cool Keys town with an artist community and 2 breweries, it's where the show Bloodline was filmed. Swamps = mosquitos and other bugs, and they can be bad in Florida even not near the swampy areas.
Noted!
Yeah the swamp comment was irrelevant, no way my girlfriend and kids would be up for that - just to try and outline the vibe I'd like ideally (like if there was a coastal Florida version of Austin or San Antonio I'd go for that, but I don't think there really is such a thing )
https://crimegrade.org/safest-places-in-miami-fl-metro/
I don't know how much this site can be trusted but it might help in seeing the more "stabby" areas.
Quoted from Hench4Life:That’s a really great rate, I’m jelly. Rates are considerably higher Up North MI for full service management.
I was getting quoted 35-50% in Petoskey area. No bueno.
Our AirBnB property manager gets 12%. We also had 12% from the large vacation rental property manager companies when we were with them, but their rates are normally above 12%. Our beach house property manager is a guy who has a carpentry and remodeling business. He and his wife manage about 6 AirBnB properties. They respond to any problems the renters have, they communicate with the renters on AirBnb, the renters pay a cleaning fee and can rent bed sheets and towels from them as well. It's pretty easy to compare the rates that other AirBnB rentals are charging and what the large vacation rental property managers charge. We have our own website separate from AirBnb that we advertise on. People can direct book with us there if they want to save some of the AirBnb fees. We arrange for the grass to get cut and the pool and hot tub cleaning ourselves with local contractors.
Quoted from PhilGreg:This site might help in seeing the more "stabby" areas.
First time I've heard that term used. Around Chicago we only have the more "shooty" areas.
Quoted from SNES:I was getting quoted 35-50% in Petoskey area. No bueno.
Are you not able to rent the home out 52 weeks of the year due to weather? Most property managers look to earn $X per home annually. Seasonal cold climate areas outside of the high priced ski resort ares usually rent out far below 100% of the year so the fee percentage has to be higher to make a fair value proposition for the property management company.
Quoted from MrBally:Are you not able to rent the home out 52 weeks of the year due to weather? Most property managers look to earn $X per home annually. Seasonal cold climate areas outside of the high priced ski resort ares usually rent out far below 100% of the year so the fee percentage has to be higher to make a fair value proposition for the property management company.
Petoekey is a high priced ski resort area. Don’t let the vertical fool you, Boyne is a big time resort that drives enough traffic to support winter rentals. I believe the high rates is due to a lack of competition, there just aren’t that many providers up there.
3 weeks later
Quoted from Jackalwere:I love this thread, probably my favorite new thread on Pinside. I love hearing about other people's stories.
The rule of 55 is really cool. My 25 years will be next year when I'm 55, but I'm going to probably wait. I'm respected at my job and have a great boss, which makes a huge difference.
Everyone's story is different. Sometimes it all comes down to luck, both good and bad. Mine has balanced out over the years. Here's what I did right and what I did wrong, and where luck played a factor.
Served in the military for 4 years and then left. I wanted to stick it out and retire at 38 but couldn't take the B.S. and suspected the government would not honor its promises at some point.
- The good: VA Loan, served my country, out at an early enough age to conquer the world, and my military service and experience got me my next job.
- The bad: didn't get that early 20 year retirement.
Went to work for a semiconductor company.
- The good: started contributing to 401k early. Bought a nice starter home with my VA loan (0 down) in a poor neighborhood and built equity. No apartment living! Used the company's education assistance to get an AS in Computer Science. Worked my way up to jr engineer, sold the starter home and bought a house on a river. The fly fishing was phenomenal.
- The bad: my boss sucked, I hated my job. I took out a 401k loan to buy the river house, figured "hey I'm paying interest to myself instead of someone else". BIG MISTAKE - don't ever do this. I got laid off the following year. I couldn't immediately pay the balance of the 401k loan back so the account was closed. The taxes, penalties and loan balance wiped out the 7 years and $60,000 I had in it. Blew through my 3 months of savings trying to keep up with the bills. Was denied unemployment (fuck Oregon). Mandatory flood insurance on the river house was insanely high, and my loan was a whopping 8.5% (normal for that time).
My best friend was able to get me a job at his semiconductor company.
- The good: re-started my 401k. Used the company's education assistance to get a BS in Business Management. Worked my way up to supervisor. Moved in with my friend (neither of us is married) and rented out the river house for about 3 years. Bought some great pinball machines cheap. Bought a salvaged vehicle and repaired it (no car payment). Managed to save up some cash over time. Sold the river house, bought a bank repo on 5 acres, 23 miles from town with 3 buildings on it including a 6800 sq ft shop.
- The bad: took a big pay cut over my previous job and took years to get back. I had 4 bosses over the years, most of whom sucked, and I hated my job. Serious health problems manifested - only fantastic insurance kept me afloat. Internet on the rural property I bought was slow and expensive. My gas costs increased.
My company got bought by another company and I thought "here we go again".
- The good: the new company was amazing. Big bump in pay instead of a pink slip. They didn't tolerate my boss's crap, he saw the writing on the wall and retired. New boss is great, I work long hours but I enjoy it and I like my co-workers. Now thanks to COVID I work from home 3 days a week which is awesome! Company stock has doubled in 2 years and my 401k earned a 35% return in the past year (I've somehow recovered from the first 401k fiasco). I live in a state with no income tax and high sales tax, so as long as I control my spending the tax impact is minimal. 3 years ago I bought my parents' beach house on 10 acres about 3 hours away (they were going to lose it). They divorced and moved on. I rent it to a friend of my parents for the exact mortgage amount. I give them a discount because they are friends, take excellent care of the place and always pay on time. Interest rate is good for an investment property (5%).
- The bad: health problems continued but insurance got much worse and has cut into my savings. My property has gone from valued at $165k to $600k and the beach house from $165k to $340k, so property taxes are painful. The property values, stock and 401k returns aren't sustainable and will probably drop a lot by the time I want to retire (6 years). And pinball machines are too damn expensive!
Work isn't bad if you enjoy it, and it can be quite fulfilling, but when you don't enjoy it and your boss is a dick, it's fucking miserable.
My house will be paid off when I'm 60. The beach house rental won't be but I'm thinking that when I retire I'll move to the beach house, sell my main place and pay off the rental with plenty left over, even if the housing market drops. The beach house is on 5 acres with the adjoining 5 acres already paid for, which I can sell off if I need more money. I'll live of the 401k for 2 years then claim SS. My health has been so poor that I don't think I'm going to make it past 70, so I want some of my money back, dammit! I'll take Cobra and get by until Medicare.
I made plenty of mistakes when I was younger. I probably could be debt free and retired by now if I had made smarter decisions. And I was miserable at my job for many years. But I wanted to enjoy life when I was young and my quality of life (away from work) was good. That includes buying and playing pinball machines. In retirement I'll wistfully think about my expensive vacations, my pinball machines, and my own private fly fishing spot I got to enjoy in my youth, which I wouldn't nearly enjoy as much at 60+ as my health goes from bad to worse.
It's amazing how much life can change in just one year. My roommate passed away a few months ago. He left me most of his assets, including enough to pay off the house. I'm devastated and would rather have him back, but unfortunately it doesn't work that way. So the house will be paid off shortly once probate is settled.
It got me thinking about what I want to do, especially being alone. My company was great at first but some of the policies they are now implementing have killed my enjoyment. I was always a hard worker doing 10-12 hour shifts but my heart's not in it anymore. So I started making some new plans. I re-financed the beach house down to 3.325% (pretty great for an investment property) and though I've restarted the clock on the 30 year mortgage, I'm now +$250/month in rent. I'm also looking to buy a house in Florida to rent, maybe Tampa or Orlando.
I turn 55 in a couple of months. My plan now is to use the Rule of 55 and retire in November. Then I'll take a work from home part-time job and work while I'm retired lol.
I bought a new Mazda CX-5, it was priced the same as 2-3 year old used CRVs and Rav4s...the used car market is crazy. I paid cash so no car payment and I'm selling my previous car that I bought 5 years ago for $1000 less than I paid for it thanks to that same used car market. CX-5's have a pretty good maintenance rating.
My 401k isn't quite as high as I'd like it to be, but it should be fine since I won't have any major expenses except COBRA, taxes, and insurance, and I will have some rental income.
I do plan on buying a few NIB pins and selling off my other collectibles. Pins just seem like they keep going up and up in value and I can play them all day long. I just want to have fun and not worry a ton about the future, because as my roommate proved, after he got only 2.5 years of retirement, tomorrow is promised to no one.
Townsville City
We have some experienc with AirBnb in Australia. A lot here are discussing holiday places, also consider apartments (we call them units here) in cities/towns.
We had a unit in a small block of 4 in a major regional town (200k people) close to the main central area. Were getting around $200/week rent for years - and were losing money on it.
we then took the plunge to Airbnb. Its a 2 bedroom place, we spent around $6k furnishing it and started advertising around $90/night. Over the last 12 months, we have had less than 20 vacant nights! It has been great for us - yes we have to pay electricity (tenants leave air conditioners running constantly) and wifi - but we are getting much better returns than renting.
We manage it ourselves, and my wife does the cleaning - every booking has a $70 cleaning fee, so that goes to us. we also have a backup cleaner if we are away or can't do it.
We have not had any bad expereinces - one tenant who had a bit of a whinge when the clothes dryer belt broke (can't predict that!). We have got an average rating of 5 stars and now are classed as superhosts. This is important and we get elevated in search results. We also keep it very affordable compared to other similar places, which we beleive keeps our tenancy high and ratings high (value for money).
Being a unit, there is no outside maintenance, so i would encourage anyone to consider this. Just make sure you have enough travellers coming through the area. Most of our tenants are 5-14 days stays, and 70% short term work, the rest holidays or visiting relatives. We have had some 2-3 month stays which we offer a very significant discount for.
2 weeks later
Did some more digging into that - got in touch with a short term lease property manager whom I really liked and he gave me a few pointers. One of those is that he really doesn't like condos much - HOAs are a PITA and are pretty restrictive on BnB type stuff.
Another reason is that according to him, I'm better off finding a little family house further away from the beach than a condo closer, for the same budget, because you can typically charge more per night for the same investment and get better ROI.
1 month later
Quoted from PhilGreg:Did some more digging into that - got in touch with a short term lease property manager whom I really liked and he gave me a few pointers. One of those is that he really doesn't like condos much - HOAs are a PITA and are pretty restrictive on BnB type stuff.
Another reason is that according to him, I'm better off finding a little family house further away from the beach than a condo closer, for the same budget, because you can typically charge more per night for the same investment and get better ROI.
For those that do AirBnb - what occupancy rate would you guess you have on average? Trying to crunch the numbers to see if it would potentially pay for itself or not.
I do track mine but it’s really dependent on location. Without going back and rereading your posts, where are you looking to buy a short term rental?
Quoted from PhilGreg:For those that do AirBnb - what occupancy rate would you guess you have on average? Trying to crunch the numbers to see if it would potentially pay for itself or not.
Quoted from Hench4Life:I do track mine but it’s really dependent on location. Without going back and rereading your posts, where are you looking to buy a short term rental?
Jacksonville area, not beachfront because I can't afford that, about 250-300k budget, picking the house mainly for its AirBnb-friendliness but someplace I can spend a month or 2 in the winter with my partner and the 2 kids. With an all-included property manager.
I figure if it's rented about 1/3 of the time it should pay for itself. Does that sound unrealistic?
Quoted from PhilGreg:For those that do AirBnb - what occupancy rate would you guess you have on average? Trying to crunch the numbers to see if it would potentially pay for itself or not.
We have an AirBnB beach house in the Outer Banks of North Carolina. Last year we rented something like 156 nights. Most rentals are May through September.
Quoted from DanMarino:We have an AirBnB beach house in the Outer Banks of North Carolina. Last year we rented something like 156 nights. Most rentals are May through September.
Was that enough to cover all expenses? Looking do something similar. Don’t really care about making money. Just want it to break even and get some free vacations in March or October when it’s slow
Quoted from PhilGreg:Jacksonville area, not beachfront because I can't afford that, about 250-300k budget, picking the house mainly for its AirBnb-friendliness but someplace I can spend a month or 2 in the winter with my partner and the 2 kids. With an all-included property manager.
I figure if it's rented about 1/3 of the time it should pay for itself. Does that sound unrealistic?
I have 2 seasons in my market (Winter and Summer) and have averaged ~140 nights a year the last 3 years.
I would do some research on the available short term rentals in the area, and establish how busy they are throughout the year. I target larger properties that can accommodate multiple families, large extended families, or large groups. In my market there is a substantial drop off of properties above the sleeps 12 threshold.
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