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December 20, 2011


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I somehow believe you can reach your audacious goal of extremely early retirement. Nothing wrong with having an aggressive risk profile as long as your wife is on board. Who says having nice things is evil? Cheers.


It sounds like you are doing quite well. Good on you for taking the knowledge you are learning in your job and applying it to your investment strategy.


BG, you are doing quite well. Nice work.

I'm curious how the rental investments are structured. 7 properties with $50k equity sounds like they're pretty heavily leveraged yet you listed no rental related mortgages. Are you in an LLC with your partner?

How are you for insurance? I don't see any line expense for insurance.

BG what happened to your blog??? You disappeared off the face of the earth (the web anyway). You and I are in about the same life position and have about the same exact goals and expectations for ourselves. As a commercial banker you will have a lot more professional networking opportunities than me, so perhaps your plan will be accelerated. Anyway, sounds like things are going well for you. Congrats!

The first thing that impressed me was the way you went about making what appears to be a very solid marriage. This is getting rarer and rarer these days and many people completely underestimate its importance. My wife and I also dated for 6 years, came from the same town in the UK and have so much in common. I was 22 and she was 23 when we got married in 1956.

I am also very impressed that at age 27 you have a well thought out "Financial plan" and a very well thought out "Life plan". You made no mention of your parents but I would hazard a guess that they were good role models and gave you some good advice and lots of encouragement. They must be extremely proud of your accomplishments.

You show maturity way beyond your age and my prediction is that you will go far and have a long, happy, and productive life together. It's very heartening to come across a 27 year old that really has his head screwed on right.

Like yourself I took up golf when I was a young man, played 27 holes/week for a while but found it very frustrating and finally gave it up when it became obvious that I wasn't improving. Instead I did a lot of trekking, backpacking, and mountaineering, visited lots of exotic places and gained self confidence and satisfaction by getting to the top of some well known mountains in the USA and Nepal.

It's very heartening these days to read a very successful profile, it makes a welcome change from reading about people's failed marriages and financial screwups. I wish you a long marriage and all the success in the world!

jim -

All 7 properties are in an LLC. I just list the net equity on my personal balance sheet. We've bought the properties for about $40M each, which is well under market value. Total debt on the properties is about $200k. The $50k in equity that I show here is based upon a very conservative market value for the properties, less debt, less transaction costs. (my share is 50% of that net number).

I have $1MM in life insurance and we have $500k on my wife. I feel good about that for now. I have a decent disability policy through work, but have been considering buying a policy to beef that up. Its on the list to review in 2012.

Jonathan -

It has been a banner year for my bank, and also for me personally. The downside is that I have not had any time for blogging. I am contemplating picking it back up in the new year and focusing solely on real estate investing related articles. I think if I could develop that niche, it might better hold my interest. You know from reading my site that normal day to day finance items really did not interest me.

Bogey, that's great your year has been so good. If you do get back into blogging, drop me a line to let me know. Especially if it becomes a real estate blog!

One thought, going through the data you offered - consider increasing your giving. My wife and I are always torn between whether we want to give more now or invest more now with the expectation of being able to give much more in the future. We basically have realized that giving blesses us at least as much as it blesses the people who benefit directly from it, and also that the longer we put off being generous with what we've been given, the harder it would be to open our fists later.


At 27 your net worth is already $210K that is fantastic- it also means that you don't have to take as much risk- you've started early and saved a lot already.

Are you being too aggressive in your investments? Starting with $210K if you invest an additional $20K/year and get a 7% CAGR for 18 years you would have $1.4M, not enough to retire at 45 but not far from it. Investing in individual properties or individual oil wells isn't well diversified- it could be a large gain or a large loss. Are you earning enough additional returns to compensate you for the additional risk? Is your wife as aggressive as you are and will she be able to sleep easily at night with a highly risky portfolio?

I'm not saying that you shouldn't have some risky investments- but do you both have realistic understanding of the risks you are taking? Have you decided on what percentage of your portfolio should be in these riskier investments?

-Rick Francis

Old Limey -

Thank you. I couldn't get a better compliment than that. Especially coming from you.

Jonathan -

You must have read my mind. I recently gave away a large chunk of my year-end bonus and we'll at least double the amount we're giving away each month beginning in January of 2012. Our income grew a lot during 2011 and I just was not diligent in increasing my giving, but I will be in 2012. All of our giving goes to our church, except for a very small amount which goes to United Way each year.

Bogey, OK that % leverage is not bad and the insurance sounds good too. I had assumed the condos would be more expensive individually.

Rick Francis -

Which is more risky:

1. Investing in stocks and bonds of companies who are managed by people who do not know me nor care about me, people who get paid to manipulate the company's stock price in the short run, and also get paid huge sums of money when they get fired for doing a poor job (corporate America).


2. Investing in physical assets (real estate) which I select, manage and care for with my own interests in mind. I also like the fact that housing will always be needed, so I'll get some level of income no matter what.

Don't get me wrong, I invest a large amount in the markets via retirement accounts each month (15% to 20% of our gross salaries). But, I also don't have much faith in these investments given that the people controlling these companies really don't have my best interests in mind, no matter what the folks on Wall Street want to tell me.

If my retirement accounts grow to a huge amount, then great, but the rest of my free cash flow will be used to build an income generating portfolio of hard assets.

Perhaps I am overly pessimistic when it comes to the markets?

Rick, I also meant to address your questions about return. My rental portfolio is averaging in the neighborhood of 20% annual cash on cash return, and an overall return of 33% when taking principal reductions on loans into account.


There are still a lot of factors you can't control- demand for rental properties, condo prices, how your renters behave- so you are exposed to those risks.

20% is a huge rate of return, as long as you keep a sufficient emergency fund so that you don't run into cash flow problems (repairs, vacancies, etc.) you should do very well. You may not be able to scale these results in the future- if it is easy to get 20% returns every other investor in your area should be grabbing those condos driving prices up and reducing the profit margins.

>Perhaps I am overly pessimistic when it comes to the markets?

It sounds like it- I'm sure some CEOs are squeezing their companies for every cent with no regard to long term success. However, I'm sure others are more interested in making successful companies than short term results.

-Rick Francis

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