Author Topic: Mustache question  (Read 2548 times)

Zachzurich4

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Mustache question
« on: May 30, 2014, 05:46:54 PM »
Current situation:
25 y/o
401k: 35k, will max out 401k this year and receive 5% company match.
Roth: 12k, maxed out 2013 and 2014
Taxable: 3k, putting around 300 every two weeks here.
Cash/Savings: around 5k
Annual income:85k, just got the promotion
Just bought home w/ mortgage of 958 a month. Have a detached garage apartment that will rent for 500-600 a month in next month or two once settled in.
Annual savings rate: somewhere around 35% currently.

Question: I want to obtain 3-4 buy and hold rentals before 30 y/o. Any benefit to lower my 401k cont. to just company match so I can have more cash to obtain the houses, or keep maxing 401k and just obtain homes when I can?  Also will add I live in oklahoma.

nereo

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Re: Mustache question
« Reply #1 on: May 30, 2014, 06:40:22 PM »
advantage of maxing out your 401(k) is it lowers your taxable income.  As for whether it's worth it to put less in your 401(k) and divert that to rentals, that depends a lot on your market and the properties and your own personal goals.

personally, i'd keep stuffing my 401(k), start renting out your detached garage apartment soon, and then pick up rentals as the opportunities come up.  You've got lots and lots of time - opportunities to buy up properties will come along.
But really, you sound like you're on the quick path to FI.  Well done.

Zachzurich4

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Re: Mustache question
« Reply #2 on: May 30, 2014, 06:55:22 PM »
Thank you. Goal is retire at 45, the 3 or 4 rentals primarily funding it by that point with around 1 million stashed away in different accounts.

frugally

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Re: Mustache question
« Reply #3 on: May 31, 2014, 07:59:02 AM »
I agree with nereo, it totally depends on how lucrative your market is.  I can barely find a SFH that gets 1% total value/month in rent in my area.  If you're consistently finding 2%ish homes, though, it might be worth looking into more.

Zachzurich4

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Re: Mustache question
« Reply #4 on: May 31, 2014, 08:02:19 AM »
That's why I put generally. Also getting married in October so an engagement ring, wedding, just bought the house, and moved all that stuff has ate up some of it. I also just got the raise. So prior it was over 50%, and it will be again once get settled in, moving is rather expensive, but worth it in long term.

Here in OK there are plenty of 1% homes but finding over 1.5% are a bit more tricky in nicer neighborhoods.

nereo

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Re: Mustache question
« Reply #5 on: May 31, 2014, 08:19:12 AM »
That's why I put generally. Also getting married in October so an engagement ring, wedding, just bought the house, and moved all that stuff has ate up some of it. I also just got the raise. So prior it was over 50%, and it will be again once get settled in, moving is rather expensive, but worth it in long term.

Here in OK there are plenty of 1% homes but finding over 1.5% are a bit more tricky in nicer neighborhoods.
In your case I'd keep building your savings as much as possible, including maxing out your 401(k).  That will get your 'stach growing and also give you the opportunity to pounce on a property with a large(r) down payment if/when they become available, but mostly I'd aquire rental properties slowly (and by slowly I mean buying one or two every decade).  I'd worry about having too much in real-estate this early in the game.  You already have one potential rental in your detached-garage-apartment.

Finally, just an aside from another fellow mustachian getting married - weddings don't have to cost a huge amount of money.