Peace of Mind – True Freedom

by FI Fighter on June 12, 2018

in Real Estate Thoughts, Thoughts

On the journey to early FI, there is such a HUGE focus on accumulating wealth and building up our cash flow, net worth (or both) every step of the way… There is absolutely no denying that “money talks”, and for many of us, we won’t have the courage and conviction to walk away for good from our day jobs until we have amassed enough F U money…

For so many of us, quitting our jobs and having “all the time in the world to do whatever we want everyday” is the start of freedom!

I’ve been there, done that, and the above kind of goes without saying… However, lately I’ve been thinking a lot about True Freedom, and although the financial component plays a MASSIVE role into things, it’s NOT everything…

Peace of Mind is something so incredibly important that it’s worth mentioning from time to time…

You know, a few years ago, I was this total real estate junkie who wanted at one point in time to amass 10 rental properties… or more… As great as Real Estate Investing (REI) is, I soon realized that having more units isn’t always merrier… Don’t get me wrong, I’m NOT hating on REI (it has served me extremely well), and hats off to the folks out there who are working hard trying to build up their REI empires…

But for me, quite honestly, I can do without a lot of the stress that comes with the territory of owning a ton of rentals… With REI, I totally underestimated just how much work it takes to do well if you’re not able to buy during a period of extreme distress when there are “buying opportunities of a lifetime” available to you in abundance…

REI is not easy… at all… especially if you’re gonna go down the road of owning Class C properties…

Further, if you’re getting into decent/mediocre deals, be prepared to have to take on a part-time/full-time job, in order to keep everything moving along as efficiently as possible…

For some people, another job or “second career” is exactly what the doctor ordered, but for me?

Nah, I I’m a lazy guy who wants Peace of Mind, above all else…

When I was traveling overseas (and many thousands of miles away from my rentals), I soon realized that the last thing I ever wanted to have to deal with were: problem tenants, major repair bills, property managers, city violations, etc…

There is arguably no greater buzzkill while you’re traveling on vacation than having to stop everything to take care of serious issues related to your rental properties…

So, it all kind of dawned on me… What’s the point? Having more wealth is one thing, but if your life is forced into becoming increasingly complex with more and more responsibilities/tasks to have to deal with on a daily basis, is it all really worth it?

Some people would argue, “Hell yeah!

Others like me, would say… “I’ll gladly sacrifice some wealth, and go with the simpler life that gives me much better Peace of Mind.

Making more and more $$$, especially via REI, is an empowering feeling that is addicting af to a lot of people…

Just ask yourself, “Will having more and more money make me that much happier?

These days, I feel more and more inclined to take a lower rate of return (if I have to), and not have to worry about so many things (stresses)… So, I’m definitely passing up on real estate deals (what deals?), and am being extra, extra picky in this challenging market environment…

Quite frankly — These days, I much prefer the fully passive nature of stocks/index funds, in contrast to REI…

For example, I would much, much, much rather own a well diversified basket of stocks/index funds (e.g. REITs) that pay out 100% passive income of say $3,000/month as opposed to owning 10 Class C rental properties out of state that on paper look like they produce $7,000/month of income.

Because most likely, that $7,000/month of “income” is going to be erratic (unreliable) and have to be actively managed af to achieve… Further, Class C rentals don’t appreciate in value anywhere near enough to make the juice worth the squeeze to simply “buy and hold” long-term while letting the property crumble to shit along the way to “long-term”… No, with Class C properties, you’re gonna have to run a super steady and efficient ship (work, work, work, work, work) b/c if that cash flow ever stops performing… you’re likely fucked…

Remember — Stocks can’t go below $0… Class C rentals can (and often do) when shit hits the fan!

Yes, I believe there certainly is a time and place when folks ought to pay serious attention to REI (particularly after a catastrophic market crash), but when the markets are at/near record highs and there are very little (to none) REOs, foreclosures, short-sales, etc., why bother?

That’s like looking for a needle in the haystack…

Thanks but no thanks…

So much of early FI is made about securing financial freedom… but often we don’t think about — If maintaining that financial freedom requires a ton of: time, energy, effort… are we really free at all?

Without Peace of Mind, no, I don’t think we are truly free at all… We lack True Freedom… which is what early FI is all about.

 

Fight On!

{ 7 comments… read them below or add one }

1 ANo Gravatar June 12, 2018 at 2:28 pm

I agree more and more as time has passed. I have hands in multiple jars and not only does it make it complicated for me, it also makes it complicated when others such as banks review your profile. I’m trying to get a mortgage and all my assets are under a lot of scrutiny.

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2 FI FighterNo Gravatar June 13, 2018 at 11:26 pm

A,

Sorry to hear that, I do very much remember how difficult it used to be for me to get loans the more and more properties I acquired.

If the rental property profit margin grows increasingly over the years, it’s all worth it. If not, it’s not worth the stress and hassle.

All the best!

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3 Midwestern LandlordNo Gravatar June 13, 2018 at 8:54 pm

You have proven the ability to make substantial returns via passive investing so I certainly understand your perspective. It has become obvious following you that dealing with real estate related investment issues is not something you are really all that excited about. I don’t buy into you being a “lazy guy”. I know that saying that was probably a joke but I just think you have other priorities and would prefer to build wealth in other ways (all things being equal) that are more passive.

If I could find a sustainable, accelerated, easier way other than real estate investing (completely passive) I would be doing that. The bottom line is if it wasn’t for real estate investments I would still be sitting behind a desk working in corporate america. I would have substantially longer hours, a boss, a corporate structure to deal with, annual reviews, office drama, little to no creative control, etc, etc. For the last several years, I am my own boss, have total creative control, and “work” less than 15 hours per week on average. Sometimes I get frustrated as well with the “drama” that comes from time to time with real estate investing. I am not a big fan of that but I look at the alternative and it is an easy decision.

You have been able to make accelerated returns on paper assets. You bet big and won. Most people out there are just not able to do that.

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4 FI FighterNo Gravatar June 13, 2018 at 11:31 pm

Midwestern Landlord,

Thanks for the kind words. I did get very lucky with my speculations and now looking back with the benefit of hindsight, I can see it was very high risk… The odds of me being able to replicate that success in the future would be close to zero.

In the case of rentals, I think you and I would both wholeheartedly agree that we were very very fortunate to be able to lock in some tremendous deals after the financial crisis and accelerate our path to early FI greatly during that wonderful window of opportunity that popped up over a finite period of time.

If you’re in the right deals, it’s tough to bet against and nitpick real estate investing. Particularly, if we’re talking about high end rentals, self managed, low maintenance, that not only cash flow tremendously but have also gone up in value a lot (your own situation).

On the flipside, I will freely admit that I got into some very bad/mediocre out of state turnkey investments. Those are a lot more hassle, stress, work, and energy drains… definitely I regret those decisions and wish I would have just bought stocks, or even REITs instead.

As always, it’s tough to paint a broad brush on everything, but b/c real estate is so illiquid, buyers should be very careful and selective on the way in. Obviously, that’s even tougher in this HOT market environment, which is why I have stopped buying real estate for many years now.

But if those wonderful deals return back, well, my tone and views will change again for sure…

Cheers!

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5 Midwestern LandlordNo Gravatar June 14, 2018 at 5:51 am

Jay,

I think you are being way too humble by saying you were lucky with real estate and mining stocks. Lucky maybe with the timeline and opportunity that was available but the idea came from yourself. You researched and studied and found value and acted. Same with myself regarding real estate. I was lucky in the sense that an opportunity presented itself that I was able to capitalize on. The right set of circumstances in the marketplace if you will. However, the rest of it was not luck, it was action. And it was the right decision.

I believe over the course of time, you will find other opportunities for value. Because you are good at that. You like to study, you like to learn.

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6 NoahNo Gravatar June 20, 2018 at 10:37 am

Thanks for the great content! Do you have any recommended reading on real estate investing??

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7 Financial SamuraiNo Gravatar July 2, 2018 at 12:45 am

Have you considered real estate crowdfunding instead? After I sold my SF rental, I plowed $550,000 if it in real estate crowdfunding for a target return of 15% a year. It’s no hassle, and so far so good. So much better than being a landlord!

Sam

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