High Finance -> Passive Income
Been running through this scenario in my head and frankly surprised more haven't pursued it.
Assuming you can get 10% cash flow on real estate/other passive investments (which is the standard for cash-flow focused real estate investors), it wouldn't take all that long to build up somewhere close to $100k/yr in passive income.
For someone in a high-paying job or better yet a couple, this seems like a viable option for those that want financial freedom.
If it were up to me, I'd get to that $100k/yr in 5-7 years, then move somewhere where I can play a lot of cheap golf, surf, travel, and do some side consulting gigs or take up a passion project for some extra cash here and there.
There’s no free lunch. $50K/y is much more realistic.
Agreed that 50k/yr (roughly equivalent to 500k in capital) is more reasonable. That's roughly 80-100k per year for a 5-7 year period, basically your analyst years through to your VP promote.
However, with some aggressive saving and/or a high-earning spouse, 100k/yr still seems doable before the age of 30
Nobody's getting 10% on real estate
10% annual CoC in real estate over this past bull run was 100% more than doable. As things reprice it will become achievable again.
I know a guy who saved 1.2 mil and put it all into dividend stocks and collects 12k a month in income. Thats one easy way if you have the cash.
Where's he getting 12% yields at lol
High dividend etfs and covered calls
lol
You can lock in several BDCs right now for low to mid teens dividend yields.
If you’re comfortable moving to a low COL place maybe this works but there is no situation in which ~$1 million is enough even in a medium COL location, especially if you’re retiring at 30 and need that money to support you for 60 years.
Which BDCs have that yield?
https://www.bdcinvestor.com/highest-yielding-bdcs/
Jfc how are you a mentor on this site and recommending BDCs in this environment
man this place is questionable
I just don't see an issue picking up high quality managers at 80% of NAV (or 50%).
I think you’re underestimating the required time / effort / sweat equity to yield 10% in real estate, overestimating when you say yield is typically 10%, and overlooking costs that come up (you’re hvac system in that multi family just crapped out, pony up $15k to replace etc etc). If you’re in the north east good luck given how high prop values are, better off investing out of state but then you don’t actually have great control over the property and it cuts into yield by way of travel / mgmt costs etc
Also think you’re underestimating how crowded real estate is now - go on bigger pockets Instagram or website and you will see that being a landlord has effectively turned into an MLM scheme on social media, and as a result a shit ton of people (some who can handle it, some who can’t) have piled in.
The people I’ve seen have the most success in real estate usually have the edge of working in the trades and thus being able to do all the work themselves / buying deeply underwater properties; people who have a shit ton of operating leverage because they’re wealthy; and people who leverage house hacking.
All that said it’s definitely doable I just think it takes more time and probably more effort + capital than most expect
1. a lot of people have this goal and are working towards it, including me. but it takes time.
2. 10% consistent and reliable cash flow return in pretty much impossible. it's possible on stocks on average, but some years will be -20% like last year. so if you want to withdraw consistent percentage without running out of the money, you prolly shouldn't withdraw more than 3-4%. and what is this real estate you're talking about? if you buy and rent out the place, the rent will just be covering mortgage, HOA, taxes, and insurance. and if the tenant stops paying, you're fucked.
3. nobody is having a couple of high paying jobs lol.
Haha I meant if you have a SO also with a high-paying job. That's a surefire way to accumulate a lot of savings very quickly, assuming you don't let lifestyle creep occur.
I see
Look at CEFs with long term (over 10 yrs) distribution history. Some have done quite well. Don't look at yield as that's just a function of price. Look at actual distribution. These can be great passive income generators.
10% on equity or total capital? 10% ROI on equity is reasonable, but on total capital pretty much unheard of.
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