Author Topic: Budgeting Questions, RE investing, Planning for total FI  (Read 1445 times)

disneyfan

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Budgeting Questions, RE investing, Planning for total FI
« on: May 20, 2015, 05:41:56 AM »
Hi folks...just a brief synopsis

I run a small marketing agency that's netted me roughly 750k/yr in income the past 4-ish years each year. We have only a few big clients at this point and income this year will probably be closer to 5000k. I suspect within a year or two those clients will go away. Why not scale you ask? Well...

The market I operate in has seen significantly shrinking margins in the past 3 years plus my goal when I started the company was to remain super small and profitable while avoiding scaling up and being forced to compete on "volume" with respect to clients. I know people in the industry whose agencies have similar revenue to mine yet their overhead is crazy compared to mine (large staffs, lots of travel for the owner to speak/mingle b/c they are required to sell sell sell to stay in business).

So overall I think the strategy has worked out. I have some other irons in the fire, mostly being a self publisher and selling some information products in the travel space but that may or may not work out..not a lot of financial risk if it doesn't.

In the past year I've gotten into multi family investing as a way to supplement my income and eventually produce enough cashflow to "hopefully" live on while building equity for my kids future. We've accumulated 5 properties, three 3-fam's and 2 4-fam's...overall they cashflow close to expectations (125-200 per unit per month) and I use a property manager (and still get that return) so it's pretty passive.

All have mortgages with 25-30% put down upfront. Looking back on it now I wonder if a diversified mix of REIT's wasn't a better choice. Here's why:

-It seems like in RE it's a pretty sweet idea to have the most number of units in the least amount of buildings possible (as a baseline philosophy). Locations and quality of building being equal. Because each building has its own roof, heating systems, windows, trash, etc.

I can probably sell my 3 fam's and make a bit of money and reinvest in more 4 fam or 6 fam (though I like 4's b/c I can still get residential mortgage terms), not sure if that's the right play though.

I don't have a mortgage on my home, though I do have an open but unused HELOC at about 80% of it's value.

We own one of our cars and I have a loan on the other. Could easily pay it off but seems like dumping cash into a depreciating asset is not a great idea?

I do have a question on budgeting though...

Despite my drastic increase in income from 50k a year as an insurance agent, to roughly 3/4 of a mill, we've managed to keep monthly expenses fairly simple.

It's about 6-8k a month but that's adding in some pretty heavy travel and lots of things i could do my self (pool cleaning, landscaping, plowing, house cleaning, etc).

How do you build a budget that accounts for many things that do not occur monthly? We have non-monthly things like-

home insurance
auto insurance
life insurance
disney vacation club dues
family birthday and holiday gifts
friends birthday gifts
kids tuition

etc etc

Do you build that in per month and just transfer it to a savings account then when it comes due pay it from savings? Seems like that'd be tough to track? Any recommended tools (preferably cloud or mac based?)

Sorry for the book but I thought in order to get the best feedback I should roughly outline my situation. I have some other questions on REIT vs MF's but I'll do that in another thread after I browse around b/c I see that topic has been discussed.

Thanks in advance for any advice!

MDM

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