I’ve been… losing sleep over the past few months. Right now it's due to family shit, but overall it's been bad for a while now. My mind has been wandering ever since this year started. I keep going back to March's “What’s Missing” post because it weighs on my mind so much. I’m doing more than enough work, but I feel like there's more that I'm not seeing. I’m supposed to be doing something but I couldn’t figure out what. In order to help me answer this burning question, I decided to do something I’ve always been against: ask for help.
Enter Bob Rogers. Bob Rogers rents out a floor in the bank job’s building. His company, Bob Rogers Associates, is an investment firm that manages over $500 million dollars. When I first started working at the bank job in 2008, he came up to me and struck up conversation, asking specifically about what I do other than security. I told him nothing, as I found it strange that he was talking to me in the first place. He invited me to come up to his office sometime to talk about my future. Of course, I never went to him. I found it very unsettling that a guy with that much money was taking an interest in me for no reason whatsoever. There had to be a reason, I thought, and it can’t be good. As time went on, I completely forgot about him. This year, especially after that What’s Missing post, I started thinking about his offer. I mean, if a guy has enough money to the point that he can own a company with his name on it, I have to assume he knows something about finances. So I decided to take him up on his offer… my way.
Because my ego would never allow me to ask for help, I had to go junior high school mode. Whenever I liked a girl but was too afraid to initiate conversation, I’d get out of my class early and go to her class. Once the bell rang and her class ended, I timed how long it would take for her to leave the classroom, and then “bump” into her and start talking. So I waited for him to park his car in the basement, and then waited by the elevators. Once I knew he was coming around the corner, I turned the corner and “bumped” into him. After the initial greeting, I started in with:
Me: Does your company do financial planning?
Bob: Not really. Why?
Me: Oh. I was just wondering because I’m looking for some kind of financial guidance. I have a plan that I’m currently on, but I think I’m stuck on the numbers.
Bob: Well we work with a company that specializes in financial planning. But why don’t you come to my office and let’s have a look at what you’ve got.
Me: Oh ok. Great. Thanks, I appreciate it!
A couple of days later went to his office and I told him about my plan to retire from paycheck work in 3 years. He needed to see how much I was making from my properties, so I brought in a copy of my 2014 tax returns the very next day (with sensitive info blacked out, of course). Bob Rogers decided that he was going to help me instead of referring me to the other company. I kinda figured he would. He asked me how much money I need to live off of and how much I have in my accounts right now, and I told him $1500 a month ($18,000 a year) to live and $25,000 in my bank account. He told me to give him a week to go over everything, and we met up last week Friday.
Basically, Bob added everything together and said that I needed to make a rental profit of $43,000 a year ($18,000 + $25,000) in order to live comfortably without the jobs. For that to happen, according to Bob, I would have to duplicate exactly what I did with my first three properties. The first three yield blah a year. I would have to buy three more, and each property has to yield $833 per month, adding $30,000 to the existing blah to give me my $43,000 a year. Bob said that I have two ways of doing this. If I go the mortgage route, I can buy one property each year through 2017, and I can retire at the end of that year. If I choose to go the route I’ve been thinking about (paying off the mortgages), I’d probably have to keep working until the end of 2018. He asked me if I can handle six properties and I said yes. Hearing this, he said that his advice is to go the mortgage route. If I can handle six properties, then there’s no need to spend more of my own money.
The question he didn’t ask, or the question I should have posed to him, is whether I WANT to deal with six properties. To get the yield of $833 a month, I’ll probably have to get three properties that have at least 3 units in each. That’s nine more tenants. Add that to the eight units I have now, and that’s 17 units I’ll have to deal with when I retire. If I go the route I’m currently on, I can make the same amount of money but with less tenants. That’s less work to do and more "me" time.
I have more meetings with him to come, as he asked me to bring in any property I'm interested in and he'll help me out with the numbers. Numbers, as this blog can testify to, has always been my weak spot. I can easily plan out a successful strategy, but the numbers of that strategy are almost always off. And that's where guys like Bob Rogers and tax guy Matt come in. They can use their experience in finance to give me a clearer picture. With guys like these as my wingmen, the chances of me failing in my real estate goals go from "not likely" to "zero".
Enter Bob Rogers. Bob Rogers rents out a floor in the bank job’s building. His company, Bob Rogers Associates, is an investment firm that manages over $500 million dollars. When I first started working at the bank job in 2008, he came up to me and struck up conversation, asking specifically about what I do other than security. I told him nothing, as I found it strange that he was talking to me in the first place. He invited me to come up to his office sometime to talk about my future. Of course, I never went to him. I found it very unsettling that a guy with that much money was taking an interest in me for no reason whatsoever. There had to be a reason, I thought, and it can’t be good. As time went on, I completely forgot about him. This year, especially after that What’s Missing post, I started thinking about his offer. I mean, if a guy has enough money to the point that he can own a company with his name on it, I have to assume he knows something about finances. So I decided to take him up on his offer… my way.
Because my ego would never allow me to ask for help, I had to go junior high school mode. Whenever I liked a girl but was too afraid to initiate conversation, I’d get out of my class early and go to her class. Once the bell rang and her class ended, I timed how long it would take for her to leave the classroom, and then “bump” into her and start talking. So I waited for him to park his car in the basement, and then waited by the elevators. Once I knew he was coming around the corner, I turned the corner and “bumped” into him. After the initial greeting, I started in with:
Me: Does your company do financial planning?
Bob: Not really. Why?
Me: Oh. I was just wondering because I’m looking for some kind of financial guidance. I have a plan that I’m currently on, but I think I’m stuck on the numbers.
Bob: Well we work with a company that specializes in financial planning. But why don’t you come to my office and let’s have a look at what you’ve got.
Me: Oh ok. Great. Thanks, I appreciate it!
A couple of days later went to his office and I told him about my plan to retire from paycheck work in 3 years. He needed to see how much I was making from my properties, so I brought in a copy of my 2014 tax returns the very next day (with sensitive info blacked out, of course). Bob Rogers decided that he was going to help me instead of referring me to the other company. I kinda figured he would. He asked me how much money I need to live off of and how much I have in my accounts right now, and I told him $1500 a month ($18,000 a year) to live and $25,000 in my bank account. He told me to give him a week to go over everything, and we met up last week Friday.
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The only thing he got wrong was the length (maturity) of the loans, which is my fault because I never told him. Other than that, these numbers are solid. The "Pro Forma" is what each of my future properties would have to make if I want to retire with six properties under mortgage. The fact that he put this much thought into this freaked me out. I mean, this guy has an entire investment firm to run and he’s busy going over my shitty finances like we’re friends or something. |
Basically, Bob added everything together and said that I needed to make a rental profit of $43,000 a year ($18,000 + $25,000) in order to live comfortably without the jobs. For that to happen, according to Bob, I would have to duplicate exactly what I did with my first three properties. The first three yield blah a year. I would have to buy three more, and each property has to yield $833 per month, adding $30,000 to the existing blah to give me my $43,000 a year. Bob said that I have two ways of doing this. If I go the mortgage route, I can buy one property each year through 2017, and I can retire at the end of that year. If I choose to go the route I’ve been thinking about (paying off the mortgages), I’d probably have to keep working until the end of 2018. He asked me if I can handle six properties and I said yes. Hearing this, he said that his advice is to go the mortgage route. If I can handle six properties, then there’s no need to spend more of my own money.
The question he didn’t ask, or the question I should have posed to him, is whether I WANT to deal with six properties. To get the yield of $833 a month, I’ll probably have to get three properties that have at least 3 units in each. That’s nine more tenants. Add that to the eight units I have now, and that’s 17 units I’ll have to deal with when I retire. If I go the route I’m currently on, I can make the same amount of money but with less tenants. That’s less work to do and more "me" time.
I have more meetings with him to come, as he asked me to bring in any property I'm interested in and he'll help me out with the numbers. Numbers, as this blog can testify to, has always been my weak spot. I can easily plan out a successful strategy, but the numbers of that strategy are almost always off. And that's where guys like Bob Rogers and tax guy Matt come in. They can use their experience in finance to give me a clearer picture. With guys like these as my wingmen, the chances of me failing in my real estate goals go from "not likely" to "zero".
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