What a self made multiple millionaire would do in your shoes to increase your net worth.

[Anonymous]

Holy crap. Most of you are already rich, as far as I'm concerned! If my HHI was over $200K, I'd feel awesome!

[Anonymous]

I'll be following your responses with interest, as I am a self made millionaire (okay, with my husband ) as well.

We are late 40s, make $400K to $450,000 a year, depending on bonuses. Both full time employees. Our kids are 10 and 12.

No debt of any kind.

Assets are retirement tax advantaged funds ($1.3 million); taxable accounts ($600,000); company stock ($120,000); kids' college funds ($140,000). Our house is worth about $750,000.

[Anonymous]

Can you put yourself in the shoes of someone who has very little? Is this just a thread for 6 figure families with real estate and investment accounts?

[Anonymous]

New poster here. Thanks for doing this.

DW: 42 YO, making $90,000/year
DH: 43 YO, making $450,000/year

Residence worth $1.8million, mortgage is 600,000 at 4.65%, 29 years left (recent refi). (We might refi soon to 15 year mortgage at 3%).

600K in stock market
600K in retirement accounts

3 kids in private school ($100k/year)
Saving for 3 college educations (we have 100k so far in 529 accounts)

[Anonymous]

New poster here:

HHI: $130k (2 FT Working Parents - 30yrs old)

Primary Residence: $405k (worth), $389k (left on mortgage)

401ks: $12k

Own two cars outright, live frugally, but want to figure out how to get ahead...

[Anonymous]

Wow, this is great, OP! I am excited to see what you might recommend for me.

HHI is $170K. I make $75K and DH makes $95K. We are both 33.

Retirement: $500K
House: $550K (mortgage is $410K)
No other debts
Emergency fund: $40K
529 for our toddler: $8000

[Anonymous]

Anonymous wrote:

Anonymous wrote:Sounds interesting. Here are our details:

Age 40
Income - about 95k combined
Property - our home worth about $600k with remaining mortgage of $190k. Other property out of state value about $300k not rented, currently listed for sale but market is slow.
Other assets: retirement = $380k
college savings (two kids under 3) about $45k
brokerage = 80k
money market savings = 40k

We live fairly frugally.

Anonymous wrote:Your personal residence:
What is your mortgage rate? how many years remaining on your current mortgage?

= 3.875, 19 years

Anonymous wrote:Out of state property:
Which state?
Is it mortgaged? Please provide details of the loan
What would the property rent for (I'm not suggesting that you do that, but humor me for the moment)
What price would get this property under contract in 7 days?
How long has it been on the market?
What commission rate are you offering the buyer's agent?
describe the property type.

== This is where it gets complicated. There are several properties. All beach front condos in Florida. We own them jointly with other family members. They have only been listed in the past few weeks. Two are already under contract. Condo fees and property taxes are high, and there is no family nearby it's not practical to manage them ourselves as rentals. There are no loans, but given monthly costs profit from rent would be minimal e.g. perhaps $5k per year (our share) if all were rented (though two are under contract, so assuming sale goes through it would be less). They would make good vacation rentals but unfortunately the condo boards prohibit weekly rentals. The $300k is a conservative estimate of our portion.

Anonymous wrote:Generally:
Are you happy living frugally? (this is not a judgment, but will affect my advice)

-- I should rephrase that. We are careful with our money, but I think we live well on the whole. We spend wisely but generally are able to do what we want.

Anonymous wrote:What is your financial goal? (retire comfortably at 65?)

-- I'd really prefer to retire comfortably much earlier. At least by 65. we'd also like to make some changes sooner. Currently I work full time, spouse largely takes care of our girls. We'd like to switch but my earning power is much higher. Or I'd like to go back to self employment, but then we have the health insurance issue.

Anonymous wrote:Retirement:
How much are you each contributing? Company matches (if so describe)? Does your company offer a Roth 401K? Is any of your retirement money not held by your current employer?

-- we are contributing maximum. Company matches 6 percent. No Roth 401k offered. Yes, have 401k and IRA. $150k of the assets I included above in $380k for retirement are not in retirement accounts and could be accessed before then if necessary.

Anonymous wrote:College Savings:
Is this in a 529? How do the fees in your 529 compare to other 529 plans?

Only 12k is in a DC 529. The remainder is in savings or brokerage.

Anonymous wrote:Savings:
There may be a way to ramp up your yield with a laddered CD strategy. Can you provide me with your current return? How safe are your current jobs? What is the return on the money market, net of expenses.

Correction, money is in an Ing savings account. Return is minimal. But I think CDs are lower currently.

[Anonymous]

I am having a hard time figuring out how to model the below in excel. Can you help me understand better by reviewing my calculation and tell me if I am expressing it correctly? The one issue with my calculation is I am not sure where I can purchase a home for this price that rents for $2750, but let's suspend that part of reality for a moment so I can get the spreadsheet set up!

You need to pick a rate of return that is acceptable for you in rental real estate. When I first started that figure for me was 8% cash on cash return, net of all expenses, preferably with a fixed mortgage. The following is the rough formula I use to assess a property. Take the gross monthly expected rent and multiply time 85%. This affords me 5% for repairs, 5% for management fee and 5% for vacancy factor. You have to make 8% cash on cash return on 85% of the gross income after PITI (principal, interest, taxes and insurance). When I first started I always did my own management (and did until I had about a dozen properties). As a result of managing them myself my true vacancy rate was less than 1%. But, still you shouldn't buy something unless it works at 85% (if you have a property manager that charges more than 5%, you need to lower the 85% number accordingly).

Property Purchase Price: $400,000
Downpayment Required by Lender: $100,000 (25% b/c Investment Property right?)

Gross Monthly Rent: $2750
Less PI: $1520.06 (300k at 4.5%, 30 year fixed)
Less Ins: $62.50 monthly
Less Taxes: $375 monthly
Remaining: $792.44 monthly, $9,509.33
85% of remaining: $8,082.93 annually, which is approximately 8% of downpayment amount ($100,000)

[Anonymous]

Hey - how much would folks pay for this kind of advice? $25? $250? $2500? I am NOT the OP BTW.

[Anonymous]

We just met with a financial planner for the first time last week. That initial fee would have been $2500, but was waived because we have been close friends with one of the guys for 20 years.

[Anonymous]

Wow, OP this is cool of you. I am interested but wary of posting so much personal data. Maybe you can answer with some general comments based on the following. DH and I work in stable jobs making 225k combined. Have been contributing to 403b's and 529 for a few years, don't have enough cash for a 20% down payment where we would like to live, and would like to have a second child soon but feel like that will put us into the slog. No debt, but saving is slow. What should we do?

[Anonymous]

I think the OP took off when he realized all the responses are from rich people. It is shocking to me to see the low income to asset ratios represented here. Maybe OP will come back and ask where the hell everyone's income is going?

[Anonymous]

Property Purchase Price: $400,000
Downpayment Required by Lender: $100,000 (25% b/c Investment Property right?)

Gross Monthly Rent: $2750
Less PI: $1520.06 (300k at 4.5%, 30 year fixed)
Less Ins: $62.50 monthly
Less Taxes: $375 monthly
Remaining: $792.44 monthly, $9,509.33
85% of remaining: $8,082.93 annually, which is approximately 8% of downpayment amount ($100,000)

Not OP but I am an agent. A lot of lenders have 20% downpayment requirements for investors rather than 25%. Ask around. Your 4.5% interest rate is too high, also.

[Anonymous]

"I think the OP took off when he"

Hmm, I assumed OP is a she.

[Anonymous]

Anonymous wrote:"I think the OP took off when he"

Hmm, I assumed OP is a she.

Smarty pants! OP said this:

When I first started I always did my own management (and did until I had about a dozen properties).

The likelihood that "she" fixed the toilets, repaired the roofs and roughed up the deadbeat renters is comparatively low, so I went with "he." No apologies, either.