My Most Important Post Ever

by FI Fighter on August 1, 2017

in Podcast, Real Estate Thoughts, Thoughts

Let’s try this again… I recently wrote a post and recorded a video that I posted on Steemit and Youtube, which I feel is the most important two pieces that I’ve ever put out there on the web.

Here is a link to the article.

But as you guys know, I’m terrible with marketing and too oftentimes my best work gets lost in the mix with all my other posts…

Anyway, for anyone who is serious about getting to early FI (and I know there are a ton of people who are based on the number of emails, messages I get), please put in the time and watch this video in its full length and entirety.

I don’t pull any punches here and I’m telling it to you guys STRAIGHT UP what works and what doesn’t work.

If anyone was to ask me, “What’s the secret to early FI? How do I get there ASAP?

 

I’d say please go check out the above video.

 

Here is a link to the video, again.

Here is a link to the article, agian.

 

And in summary:

  • Owning the best Tier 1 assets (across all asset classes, don’t discriminate!) is the absolute best, most reliable, most sustainable, and fastest path to early FI. Period.

 

  • Tier 1 assets are not always on sale, that’s the dilemma here… Most people think I’m crazy but there is a very good reason why I’m so fixated on precious metals and clean energy stocks right now. Market cycles. Don’t ignore and dismiss Market Cycles; the macro always wins out in the long run. It may not seem obvious, but because I want to buy so many more tier 1 rentals, I’m concentrating 100% of my efforts elsewhere, trying to gobble up tier 1 properties (mineral deposits are properties, don’t hate) across different asset classes that are a hell of a lot more affordable than real estate is right now.

 

  • Buy low and sell high.” Everyone knows it, how many actually do it?

 

  • Day 1 cash flow is the most deceiving (misleading) metric newbies focus on when it comes to real estate investing.

 

  • Property value appreciation potential is far more important than Day 1 cash flow for long-term success (if a property has massive appreciation potential you will as a byproduct experience massive rent appreciation, which will inevitably churn out that massive cash flow you so desperately seek).

 

  • Anyone who thinks property value appreciation is overrated has never thought long and hard about exit strategy. World class tier 1 rental properties never make you feel like you’re trapped in Hotel California… Junk rentals that never go up in value do!

 

  • This ain’t rocket science! The best school districts, highest quality and most robust paying jobs environment, beautiful weather, world class amenities/infrastructure, low crime rate, etc. are the ingredients found in world class tier 1 rental properties! No wonder these investments only keep becoming more valuable over time!

 

  • Dividend Growth Investing (DGI) >>>> Turnkey Investing. DGI is 100% passive, Turnkey Investing is a pain in the ass. Again, don’t fixate on Day 1 numbers. The best DGI stocks start off at 4% yield but the growth rate will surpass turnkeys in no time so your Yield on Cost (YoC) starts to outperform only after a few years down the road. With turnkeys, properties need to be maintained and you can only defer maintenance for so long before those costs come due. Newbies never factor this into mind when doing their initial Day 1 analysis. 12% cash-on-cash return on Day 1 will NOT be 12% in Year 5 (probably)! A property will NEVER perform as well as on Day 1/Year 1! Dividend growth stocks get better with time, turnkey properties don’t! My biggest investment mistake ever was going out of state and buying turnkey properties.

 

  • The “slow and steady” approach is too much work, too many headaches, and does not provide enough “juice” to make it worth the squeeze. Focus on the “low hanging fruit” type of investments that offer a ton of upside potential at relatively low risk. Assets that don’t have the capability to significantly increase their value over the years are a waste of time.

 

  • When in doubt, stick to world class tier 1 assets and you won’t go wrong. Early FI beckons for those who are smart enough to not settle for junk.

 

  • Quality over quantity. I would rather own a single Bay Area rental property than to go out of state and buy ten properties out in the “hood”.

 

  • Speaking of early FI, when I’m out on the beach in the Philippines or the Dominican Republic, the last thing I want to have to deal with is properties and tenants! Tier 1 tenants are the best of the best and will leave you alone for the most part (they are too scared of you raising their rents again). Class A, tier 1 for the win, again and again! Class C tenants will never fear you, in fact you probably need them a lot more than they need you!

 

  • Making mistakes, having to jump through hurdles, and dealing with setbacks is all part of the process. Never forget, we are all human beings and constantly learning and evolving. Do your best to learn from the failures, pick yourself up off the ground, and continue to Fight On!

 

I am willing to share my journey and document all my progress so readers can avoid any pitfalls and learn from my fuck ups that I made along the way. Also, whatever I did that works, you can be sure I will emphasize that non-stop!

 

Tier 1. Tier 1. Tier1.

 

Please share this video, article and spread the word!

 

Cheers,

 

Jay

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{ 7 comments… read them below or add one }

1 Investment HuntingNo Gravatar August 2, 2017 at 10:30 am

Great post. I agree on selling high. I also agree that many don’t do it. I laugh whenever I blog about selling off shares. Many commenters freak out that I’m no longer a dividend growth investor. I disagree 100%. I’m capturing gains and putting the extra money back into dividend paying stocks.

Reply

2 FI FighterNo Gravatar August 8, 2017 at 8:51 pm

Nathan,

Thanks! Sounds good to me, gotta sell high! 🙂

All the best!

Reply

3 JPNo Gravatar August 2, 2017 at 6:13 pm

Great article and good bullet points. I purchased 3 Tier 2 rental properties that all became Tier 1. Luck or whatever, but I had a plan!! Boston area real estate has come up so much that I’m planning to condo my 4 family in ’19 and walk away with a quick $900k. I also snagged a vacation rental earlier this year that rents for so much weekly that sketchballs can’t afford it. At one point I toyed with the idea of selling 3 Tier 1 rentals and buying 6+ Tier 72 rentals and I’m really glad I didn’t. Tenants would have been awful and I would have missed out on more appreciation.

At this point our net worth has crept over 1.1MM, we have 100k in the bank, 250k available in Equity Lines with strong monthly cash flow to boot. I feel pretty good about my wife not working anymore and having the option not to myself. Thanks for keeping me interested over the years… I don’t touch base as much on my FI blogs anymore because I kinda made it to where I wanted to be.

Reply

4 FI FighterNo Gravatar August 8, 2017 at 8:53 pm

JP,

That’s awesome, congrats on all the success buddy!

You have accomplished a ton in a very short period of time. Goes to show what can be done when you put your mind to it and the market provides a good buying opportunity.

All the best!

Reply

5 Midwestern LandlordNo Gravatar August 3, 2017 at 9:40 am

Excellent post and video Jay. You hit the nail on the head, the name of the game is to buy tier 1 assets on sale. It is ironic that the great buys in the Bay Area that you took advantage of in years past were considered risky by some during that time period but now everyone wants to buy when it is truly risky due to sky high valuations. Precisely why you moved on to commodities. Although some see that as risky now due to the same factors. This human psychology plays over and over again.

You mentioned that in hindsight you would have allocated the capital for the midwestern rentals to the Bay Area which makes sense given the rapid appreciation during that period. Obviously no one can go back in time. Moving forward, do you still want to hold onto the midwestern rentals that you purchased or do you plan on selling and using that capital elsewhere such as in commodities?

Reply

6 FI FighterNo Gravatar August 8, 2017 at 8:55 pm

Midwestern Landlord,

Thanks very much for the support! Yeah, being fortunate enough to invest in Class A tier 1 assets really helped me to get to where I am today so I am most grateful for that.

Yup, human psychology never changes and we must stay disciplined in our approach to investing and never forget to buy low and sell high. Commodities are really cheap right now, so for the time being I am electing to play in that sandbox.

In regards to my Midwest portfolio, unfortunately I didn’t buy in the best locations with the best schools and into pockets where you can get good appreciation. For now, I am content with holding, especially my Indy property since it’s fully paid off and cash flows quite nicely. Over time, I may elect to sell some properties, or all if I see better opportunities elsewhere for my capital.

Lesson learned. If I ever invest back in the Midwest in the future, I am only sticking to the best locations that can provide both property value appreciation and rent appreciation.

Cheers!

Reply

7 Ten Factorial RocksNo Gravatar September 10, 2017 at 2:16 am

Great video Jay. I especially resonate with Dividend growth stocks – most of the times, if you picked them well, there’s no need to ever sell. The increasing dividend streams can finance a nice early retirement once the portfolio is of a decent size. I find Tier 1 DG companies an even better bet than Tier 1 properties mainly because of totally passive nature. I hope you and your readers find this series interesting: http://tenfactorialrocks.com/investing-series/

I would love to meet you in person in Hong Kong during my next trip. If you have plans to travel to Singapore or India in the near future, let me know as I am there often.

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