This is for all my fellow NPs or anyone who wants to chime in, not sure if this is right location for thread, please relocate if need be.
How is everyone saving for the future? I started my 401k 2 years ago after realizing the biggest financial mistake of my career. As an RN I never started a 401k because frankly I was young and dumb and didn't know too much about them. 8 years later I finally realized a 401k doesn't really change your paycheck by much because the money comes out before taxes. So now I put 10% of my pay a month into a 401k and my pay check may be 300$ lower each month which isn't bad. 3600$ a year I lose after taxes but 12000 goes into my 401k, it's a no brainier now!!
I also have a Roth IRA which by law only allows 5500$ I think each year. This allows me to put post tax money into retirement and any growth I make I can take out tax free after the age of 65 I think.
I started a money market account with a brokerage company as well last year which acts like a retirement account as far as growth but I can touch it at anytime if I need the funds with no penalty.
This is is my PSA to anyone who reads this, don't make the mistake I did, please start a 401k with your employer if you haven't started one already!!!
I have to offer the disclaimer that the low income landlording route is not for the faint of heart or those with the shortage of patience. The poverty that you will have to deal with is something you have to prepare/brace yourself for....but if you can do it the payoff is huge because you are able to grow quicker because you can buy cheaper properties that offer the same rental rates as properties that cost two, or three times, as much in purchase price. Affordable rentals near colleges where you can rent to students is my favorite niche that I prefer to buy these days.
College towns are a great idea especially if you get Mommy and Daddy to sign the lease but with regard to the low priced rental areas my biggest concern in addition to getting people in who truly just can't afford to pay the rent is the resale. I've stretched my budget, probably further than I should have in some cases, to buy in the nicest neighborhood I could afford and I've had no problem with my resale value. So far in all cases I have made a profit on the sale as well as collected the built up equity. Has resale been a problem for you in the less desirable neighborhoods?
You should also max out hsa. Hsa is much like a Roth ira, and you can withdraw from it for nonmedical purposes after age 65. Also look into something called backdoor Roth ira if you make too much for the Roth ira.
I'm thinking about buying a franchise and hiring a manager to run the business, a personal friend I know of. I want to keep buying more and more.
Yikes talk about babysitting. I have no interest in something that would require this much attention but certainly admire anyone willing to do things that the ordinary Joe wouldn't ever consider in an effort to achieve a secure financial future. Kudos.
Specializes in Psychiatric and Substance Abuse Nursing.
Your income is at the mercy of the tenants but hopefully the good tenants will out number the bad ones especially if you are particular going into the arrangement. As for the housing bubble I took almost a decade off from buying properties when prices went so high. It was like with the stock market it just couldn't have possibly made sense that it would continue so I waited it out. It definitely isn't liquid and requires work and can be annoying at times such as when you get that late night call that the sewer is backed up but overall my net worth is 10Xs what it would have been if I didn't invest in real estate.
Smart move. The numbers have to make sense. It's hard to keep the proverbial gun powder dry for so long while what seems like the rest of the world is drinking the kool aid and paying too much. That was a time that was prime for refinancing or locking in home equity loans when the value of the underlying collateral can be appraised high. If your tax situation allows, you can even sell while prices are high, wait, and then buy back in (sometimes the same exact house that eventually goes into foreclosure from previous buyer paying too much) and come out ahead. Using that wash, rinse and repeat strategy it's easy to see how riding only 2-3 complete real estate cycle price waves can leave you set for life.
Specializes in Psychiatric and Substance Abuse Nursing.
College towns are a great idea especially if you get Mommy and Daddy to sign the lease but with regard to the low priced rental areas my biggest concern in addition to getting people in who truly just can't afford to pay the rent is the resale. I've stretched my budget, probably further than I should have in some cases, to buy in the nicest neighborhood I could afford and I've had no problem with my resale value. So far in all cases I have made a profit on the sale as well as collected the built up equity. Has resale been a problem for you in the less desirable neighborhoods?
Yes, I try to get the whole family tree onto the lease. Mommy, daddy, grandma, auntie...anyone is better than nobody, but preferably that somebody has good credit and income because otherwise you'll get the same amount of blood out of two stones as you would out of one.
Yes, low income properties in sketchy neighborhoods definitely don't command the same resale value when it comes time to sell. For me, I am at peace with that fact going in and know that and all the handholding that goes along with that type of property. But, I can always sell it at breakeven at the prices that I decided to buy. When I can purchase a 2 bedroom, 1000 sq ft rental condo for $27K and put $2K into it and rent it for $1,000.00/mth it's a no brainer, in my opinion. Most people pay that much for a new car. The bonus is when the real estate market bubble builds up again and is on the brink of popping I can sell or exchange it for almost $100K to a buyer that is drinking real estate market bubble kool aid that gets passed around roughly every 9 years or so.
Yes, low income properties in sketchy neighborhoods definitely don't command the same resale value when it comes time to sell. For me, I am at peace with that fact going in and know that and all the handholding that goes along with that type of property. But, I can always sell it at breakeven at the prices that I decided to buy. When I can purchase a 2 bedroom, 1000 sq ft rental condo for $27K and put $2K into it and rent it for $1,000.00/mth it's a no brainer, in my opinion. Most people pay that much for a new car. The bonus is when the real estate market bubble builds up again and is on the brink of popping I can sell or exchange it for almost $100K to a buyer that is drinking real estate market bubble kool aid that gets passed around roughly every 9 years or so.
So they actually do sell you just can't count on making money on resale? Makes sense, anything will sell if the price is right and you aren't in a hurry. My way works kind of opposite in that I rarely make any money on the rent but am paying the mortgage and building equity. I had a friend who did all Section 8s in the city and like you got great rent. Something he did that I thought was especially brilliant was when he had a prospective tenant he would meet them at their present home first that way he could see how they took care of the house they were in and he rarely had problems. Interesting thanks!
Specializes in Psychiatric and Substance Abuse Nursing.
They will appreciate in price for a fraction (50%) of what a similar house in a nice area would. This is due to supply and demand, because there are far fewer landlords, or would be new landlords, who would be willing or have the experience of dealing with these higher crime areas and lower income tenants. The exception is during the peak of housing market bubbles where people are completely priced out of buying in the nicer neighborhoods and are willing to try their hand at the lower end of the market...that's when you'll get top dollar.
What you are doing works for you. You are still benefiting from mortgage paydown, appreciation, usability and possibly tax advantages (although a lot of these get phased out as you earn more ordinary income from your NP earnings).
Yes, your friend is very smart for doing a home visit at the applicant's prior living situation as the "last step" in the application process. The key is to show up unannounced. Another trick is drive by applicant's current home and compare the names of the proposed applicants with the names of the people actually on the mailbox. Usually, there are others on the mailbox that will be moving into your place next as well. Sometimes those other have pending legal issues after running a quick search on the local courthouse website. This simple mailbox check causes you to not even bother with doing the home visit and just eliminate them from contention. There is a great book out there titled "The Section 8 Bible" written by a couple of Philly based landlords that own hundreds of units that has a lot of these great tips.
We are actually fantastic at retirement savings. Have always maxed out the 401K and despite 2008, I think we will be recovered enough when the time comes.
But I will add my biggest regret: Not saving enough for my kids college. Husband and I are both self-made professionals, worked our own way through college. But that was back when college (undergrad) cost $8,000 a year so you could do it! With average state tuition now $24-27K per year, it is almost impossible for an 18 year old to work their way through school. There are now limits to federal student loans (limit of $5,500 their first year and maxed out at like $6500 their jr and sr. year...which barely makes a chink in $25,000 per year!).
Start early and save just $50 a week. Have it auto-drafted to a 529 account. Start it when they are young. You won't miss the money.
The average state school now costs $25K a year and a lot of them give very little merit aid. Most NPs + spouse salary will make too much money to qualify for much meaningful need based aid at the elite privates or LACs.
Message me if you want college planning tips! I love sharing what I have learned!
Readers, I encourage you to seek advice from professional, certified financial planners -- and not make specific financial decisions based on what a stranger says on the internet. Seek good counsel from qualified professionals tailored to fit your specific situation.
There's nothing wrong with seeking advice from 'strangers' as long as you don't put all your eggs in one basket. For instance, Dave Ramsey is a 'stranger' but he gives terrible retirement advice, although his getting out of debt ideas are sound. The Bogleheads forum is full of 'strangers' who know more about retirement planning and investing in general than all the Dave Ramseys and Suze Ormans combined. Just because someone has a TV/radio show doesn't mean they know what they are talking about.
Nonetheless, seeking advice from a professional financial planner is a good idea for everyone, as long as the financial advisor is fee based and fiduciary. Dave Ramsey is awful because he recommends you use his network of advisers (who pay to get into his network), and they push front-loaded actively managed mutual funds which are costly, instead of low cost index funds. Dave actually recommends against both index funds and bonds, cementing the fact that he has no clue what he's talking about. Anyway, fee based fiduciary financial adviser is what you want. In the meantime, Bogleheads wiki is a great way to start learning about retirement planning and investing.
Dave Ramsey actually uses index funds for shorter term investing (5 years or so) but I've heard his argument against using them in general is that you can seek out funds with long histories of good track records that beat the index funds on rate of return since index funds only do the average of what the market does and half of mutual funds will beat the market average. I guess I don't see what's wrong with that. Would you enlighten me?
Jules A, MSN
8,864 Posts
College towns are a great idea especially if you get Mommy and Daddy to sign the lease but with regard to the low priced rental areas my biggest concern in addition to getting people in who truly just can't afford to pay the rent is the resale. I've stretched my budget, probably further than I should have in some cases, to buy in the nicest neighborhood I could afford and I've had no problem with my resale value. So far in all cases I have made a profit on the sale as well as collected the built up equity. Has resale been a problem for you in the less desirable neighborhoods?