Being a real estate investment broker has been rewarding. It has kept food on the table, shoes on the kids, paid for college, and allowed various totally unnecessary luxuries. But these days, though the tangible rewards are still pretty cool, I primarily work for those few times a year when the high is so euphoric all I can do is pace around and smile. The feeling gets extended when I’m home and able to regale Diane the Trophy Wife.
This past Friday afternoon I met two of my favorite long term clients, Cher and John to lay out an update of their Plan. They’d finished refinancing just over half of their crown jewel investment property (bunch of fourplexes) in another state. Where to put the newly found tax free gold?
And that’s when they told me their news. They told me like they were ordering more coffee. They had no idea they were about to supply the BawldGuy with a giant fix of his favorite drug.
Their property managers said that beginning in a month or two, their cash flow will be about $12-17K a month. I’m sure those are just numbers on a page for you, but not for them, and certainly not for me. You see, this property has been designated from the day it closed escrow, as their Golden Goose. I’d been saying since they exchanged into it that it would end up spinning off at least $120-144K in totally tax sheltered annual income. It’s been a bumpy road, as they’ve had to turn these units around. It’s very well located, but had poor management and much deferred maintenance when they closed in the spring of ’04.
The Plan called for this property to make their retirement dreams reality. Now reality is here. They’re both now retired, in their 50’s, and as excited as kids just minutes from entering Disneyland for the first time. Imagine their thoughts as they fell asleep Friday night. They have a secure, tax sheltered income in the range of $144-204K a year for as long as they like. And that’s not all they have to be happy about.
There’s another basket we started several months ago, which in about five more years (their early 60’s) will add another $50-70K a year — TAX FREE FOR LIFE. You know, spending cash. They’ll probably keep it in the sock drawer. 🙂
When they first came to me several years ago, they had four very small, very pathetic income properties. (OK, one of them was fine.) Seriously, I’m not exaggerating, they’d have to move up three levels to have been average. They’d also not done well in the stock market — having lost about 40% of their life savings. They were wounded and a little down in the mouth.
What’s the basis for their huge success? The answer may surprise you. Though I was the architect of their Plan, 60% of their ultimate success is a direct result of their dogged determination to stay the course. If you climb Mt. Everest, do you give all the credit to the guy who drew the map for you? Of course not. He didn’t climb the dang thing, you did. Early in their Plan they were asked to execute some pretty aggressive tax deferred exchanges. With just one exception those exchanges included what they always described as “an extra property” on the upleg side. (What they exchanged into.) Their courage under fire is the reason they’re where they are today.
So when they informed me their Golden Goose had finally laid the Ultimate Egg, I was high as the clouds in the 75? San Diego sky. You can’t buy that kind of euphoria — it has to be earned. Clients like Cher and John, and what they’ve accomplished, are the drug that’s had me hooked for so long.
I want my son, Josh to have moments like Friday. The first time a client gets that look on their face — the look showing they’ve realized their life has just changed from working and sweating to deciding which European country they’re visiting for the entire summer. Or if they’ll just stay in Tahoe for a month of skiing next winter. That look. When he sees that look, he’ll be an instant addict. And there’s no known cure, at least none I’ve found. Of course I haven’t looked very hard. 🙂
Cher and John started like thousands of investors did — but don’t bet the ranch most of them are experiencing the same happy ending. And the reasons? They don’t have a Plan, and are not doggedly committed to their retirement. Courage and determination are often the difference between doing OK, and an early, abundant retirement.
I’ll be writing about Cher and John at my blog later this week. I want to tell their story from the beginning because I think they, and their story are inspirational.
OK, the real reason is because I get to relive the whole experience and get high all over again.
Life is good.
