Passive Income?

[Danny Hoey]

How does a contractor or farmer become a millionaire ? start with 2 million.

I'm not farming. I want it zoned ag for the taxes. Doing it on 2 acres would be fine, 20 acres would be better so I could shoot something on it.

 

[Willie IV]

We are, we have $1.7M in 401k/IRA's, just very little cash and i was just looking for some way to put that equity to work for us. We have good jobs, great credit and rental property seemed like something i could handle in my spare time. Just thinking out loud and open to suggestions.

You guys appear to be in a great spot right now and close to retirement. I'd forgo the rental property idea and bank as much cash in the next few years as you can and invest with a good fund advisor. I bet your returns/growth will be substantial enough in the next couple years anyway, that it'll offset all the risk of buying a rental and being a landlord with a handyman job.

You've done very well - why create more work when you should be planning your next adventure!

 

[Crowmangler]

I'm not farming. I want it zoned ag for the taxes. Doing it on 2 acres would be fine, 20 acres would be better so I could shoot something on it.

I'd recommend talking to your local tax department. Just because something is zoned ag doesn't necessarily mean you get the lowest tax rate. Here for example, you have to have a min of 10 acres that is actively being farmed to get the reduction. And they measure that shit too. Friend of mine had to clear an extra half-acre around his field

 

[LFC911]

You guys appear to be in a great spot right now and close to retirement. I'd forgo the rental property idea and bank as much cash in the next few years as you can and invest with a good fund advisor. I bet your returns/growth will be substantial enough in the next couple years anyway, that it'll offset all the risk of buying a rental and being a landlord with a handyman job.

You've done very well - why create more work when you should be planning your next adventure!

I think that will be the plan for the most part, however we've tried a cfp for a year w/o good results. He was earning 3-4% annually and taking 1% on top of that. We fired him and I'm managing the portfolio again and doing good so far.

 

[johnw3474]

A lot people before me have spoken to the importance of not over extending yourself to get in the game - obviously that is the most important thing. But if you can do it I recommend it.

I was not a landlord three years ago - now I own two homes as rental properties and it has been a great experience. My situation was very unique so I do recognize that, but now that I understand the game some i would borrow money if it made sense to buy more homes. The first property I inherited half of and paid cash for the other half. It's a nice house in a nice town and commands a good rent. I would rate my tenant as a C. He is a single dad recovering from a bankruptcy. I wish he kept the yard in better shape and he is usually a few days late on rent but always pays the late fee. He has never called with a problem in two years and the house is in good shape. That experience went smooth enough that when we moved we kept our old house to rent. We refinanced during covid so the note is dirt cheap and we don't owe very much principle anyway (80% equity in home). Similar situation as before great neighborhood. Those tenants I would rate as an A. Young married couple in med school- not pets, not kids, no time to party. They pay early, they don't bother me, they keep the house very presentable.

You will quickly find connections of people that can do work you can't. I have a guy for everything now I feel like. I have a great local realtor that does the background checks and has found both my tenants.

TLDR: don't allow cats in the house. Find young married medical students as tenants. Its been a great experience for our family.
Ill be happy to discuss more details if you have any questions.

 

[signing off]

I'm around the same age with good diy skills from multiple HUD homes over the years. Trying to grow income outside of my 9-5 also. HELOC would be the source of funds like OP.
It's been challenging to find "profits not projects". We have watched for the right price on homes nearby, and also might develop empty ground into storage of some sort. For us, NOT jumping has been the right choice.
I bet if your boy bought a fixer upper, you could get him some equity with your evening and weekend time.

 

[Coopsdaddy]

You would be stupid to pay extra on your mortgage with a sub 3% rate. Bonds and HYSA are paying more than that.

If you want to shoot for the “legacy” part of a rental, you could achieve that by encouraging your son to buy a home that needs some work and offer to help him complete that work. I would have been more likely to do that if I had someone closer that was handy to help me tackle some projects.

You would be stupid not to pay off your home no matter what the rate is.
No debt is as close to freedom as you get.
Most never get it so they boast about there credit score or low interest.

 

[grossklw]

I own 94 units and aggressively expanded when I started buying 11 years ago but I’ve added a total of 3 duplexes in the last 2 years for a reason. There was a lot of late nights and the market could’ve tanked and I would’ve struggled, I don’t mistake luck for skill. My appetite for risk is a lot different with 3 under 7 than it was when I didn’t have kids.

Being a landlord isn’t all that it’s cracked up to be. There are significant tax advantages, but even with a full time property manager you still need to manage the manager.

At your age there’s zero chance I’d buy a rental, at least a traditional one. The 3 short term rentals I own do very well and kick off a ton of cash, but I bought right and have my systems automated. My long term rentals keep plugging along, but there’s still months I’m not net positive with new roofs, electrical etc. shit can and will happen.

Your best bet is like others have said; have your son buy a 4-plex with 3.5% down FHA financing or even 5% down conventional with less hoops to jump through. Have him wait a year and repeat the process. If he does this 3 or 4 times and never buys another unit 25 year in the future him will be thanking the present day version of him with sheep hunts and paid for colleges. Nobody gets rich on their first deal, you just can’t go broke buying the first.

Don’t hesitate to ask me any questions either here or in PM. Lots of good answers above (other than pay a financial advisor but that’s a different argument for a different day).

 

[Tahoe1305]

You would be stupid not to pay off your home no matter what the rate is.
No debt is as close to freedom as you get.
Most never get it so they boast about there credit score or low interest.

This isn’t sound advice for everyone. And has been argued in another thread extensively.

Mathematically speaking. If you can make more than your interest rate, that’s where the money should be invested.

Passionately speaking….sure you may “feel better” having no debt, but you’ll lose out on income.

His heads in the right place.

Thread 'Pay off mortgage or make monthly payments and invest the rest?'

Apr 14, 2025

A lot of us have mortgages with interest rates sub 4%. If you’re in that situation is there any reason to make additional payments toward the principal, or are you investing that cash with the expectation of earning a high percentage?

• Ucsdryder
• Replies: 574
• Forum: General Discussion Forum

• 
• 

 

[dreamingbig]

You would be stupid not to pay off your home no matter what the rate is.
No debt is as close to freedom as you get.
Most never get it so they boast about there credit score or low interest.

Wrong. If you have discipline and invest the money you have to pay it off you can usually make a positive spread.

If you have a rate below 4% for example on your mortgage there are several investment options that deliver tax adj returns well above that.


Sent from my iPhone using Tapatalk

 

[Coopsdaddy]

Wrong. If you have discipline and invest the money you have to pay it off you can usually make a positive spread.

If you have a rate below 4% for example on your mortgage there are several investment options that deliver tax adj returns well above that.


Sent from my iPhone using Tapatalk

It’s not wrong,that’s your choice but not the wrong choice.Don’t disagree a bit in your thinking but that’s not my choice.
That still dont help me sleep better or give me the option to change my employment at any given time.
I like to be in that place.
My investments have grown substantially without a house payment over the last decade.