It’s the yield, stupid!

habit-saving-moneyWhen it comes to building retirement wealth, you must keep your eye on the ball. What does that mean? Simply put, your goal is having the biggest after-tax cash flow when you reach retirement. Cash flow now, 25 years before potential retirement, is foolish. If you take a step that results in MORE cash flow today but produces LESS cash flow in retirement, then it was the wrong step.

Something to look at is the yield you currently receive. In essence, at any given time, you have a pile of cash. Your pile of cash should be earning some degree of cash. The rate it earns is the YIELD. If you have $100,000 and it nets you $5000 a year, you have a yield of 5%. We can discuss lots of different assets and their various yields. Real estate, CDs, mutual funds, bonds, stocks, whatever. Bottom line: your cash needs to be put to work. And the higher yield the better.

Duh! That part is obvious. What is more subtle is that you need to always look at all money coming in as cash flows. You may have a daytime job, which is one cash flow. But you may also have real estate properties generating cash. Your stocks may generate dividends and distributions. But at the end of the day, you need to know what your total yield. And then you need to be willing to investigate options that can increase your yield.

At that point, it becomes easy to evaluate whether or not debt will help or hinder your growth of wealth. When real estate can generate 5% growth and you leverage it 4-to-1, you dial things up to 25%. Borrowing money at 4.5% becomes a no brainer. The remaining hurdle is hedging the inherent risk that higher yields produce. One of the biggest ways to immunize yourself from real estate risk includes:

  • Having a big bag of cash sitting at the bank. How much? Think about 100% vacancy for a year.
  • Buying top quality property. This draws top quality tenants. It costs more but reduces the risk of renting to non-payers that must be evicted.
  • Renting in a landlord-friendly state. Hot tip: I don’t own rentals in California, and won’t in the foreseeable future.
  • Become a macroeconomic investor. Invest where the big indicators show a good rent-to-cost ratio (like Texas).

And never, ever, ever pass up opportunities to sell one asset if you find another that shows a consistent, sustainably higher yield. Because the higher the yield, the fast you can put that cash flow towards buying MORE quality assets to generate cash.

Good luck.

Is defeating the beast of debt the best way to reach retirement wealth?

wealthI’m back! I’m been on a hiatus for the past 4-5 months, nose to the grindstone writing Learning Spring Boot. But I turned in my last rewrite about two weeks ago, and after a bit of decompression, am more stoked than ever to write!

I was spurred to comment about cash and cash flow based on what I heard on the radio. I listened as someone talked about how to get out of debt and move forward with reducing costs. The person calling in was stuck with student loan debt. They had already tackled some other things like credit card and auto loan debt.

As I listened, I kept hearing the same things. Get rid of debt, get rid of debt, and more git rid of debt. On the face of it, it make sense. But I kept thinking, what happens when they get past all this debt? What then?

Consumer debt is a menace. Many people take on too much. They don’t budget well. Translation: we all make more than enough to get by. Because we don’t manage our money well, we end up spending too much on things we don’t need. Get it under control, and you can go far. But at that stage, people start stuffing their spare change into 401K plans and IRAs. They don’t realize how much they are shooting themselves in the foot.

401k funds have shown a 20-year history of performing at or below 4% annualized growth. How bad is that? Inflation is slated to be around 3%. This means that if you get the average (and don’t tell yourself you’ll beat the average), you are barely ahead of inflation. How good is that?

When you consult a financial advisor, they will talk to you about how this fund and that fund are performing. That may be true, but there are some innate biases built in that aren’t obvious. First of all, the funds that exist today aren’t the same funds that existed ten years ago. When funds perform poorly and people dump their holdings, brokerages houses end up closing things out. Those that are left, get transferred into another. And the next year, if you were to ask for the brokerage house’s average performance, the closed out fund isn’t part of that picture.

Another factor not mentioned is that funds don’t invest; people do! People buy funds. People buy stocks. People buy real estate. Hence, the question you should ask an investment advisor is how has his clients performed? What is his client’s average annualized growth rate? What is the average/minimum/maximum life he has held clients? A good investment advisor that is making his people wealthy should have long standing clients. Their annualized growth rates should be high. Measuring the performance via a prospectus is the wrong focus and won’t reflect how clients are doing. In other words, it won’t show how YOU will do.

So if you realize that 401K funds aren’t the answer, the next question is: what DOES work? What are you willing to do to get there? I invest in real estate, stocks, and EIULs. And being cash flow positive with no consumer debt, I am willing to take on debt. The caller on this radio show sounded unready for anything like that. I fear they will clear out all this debt and then be unready to entertain borrowing money to invest in real estate. Instead, they are going to go with the host’s plan of buying up mutual funds. Things will really sizzle, because they won’t be hampered by car payments, student loan payments, and credit card payments. And they will make it to retirement, perhaps saving up $1MM.

And that is when they will discover that it’s not enough. Their financial advisor will tell him or her that they can start withdrawing NO MORE THAN 4%, i.e. $40,000. Then Uncle Sam will ask that they submit $4000 in taxes. (I’m being gracious and assuming that landing in a lower tax bracket results in an effective tax rate of 10%). At the end of the day, this person that tackled small bits of debt thirty years earlier, is now raking in $36,000/year. That maps to $3000/month.

Can you comprehend living on that tiny amount of money? Do you see cruise trips or spending a month in France on that kind of cash? Was slaughtering the beast of debt and not considering future loans to buy cash flowing real estate worth it? Not for me. I plan to reach retirement with MUCH more than $1MM, because it takes much more than that.

Stay tuned for more discussions about building retirement wealth.

So you want to build wealth? Look for multiplicative ways, not additive ones

“Another day, another dollar” — common expression

This expression is commonly known by many. It represents a common, core feeling we get as members of the vast work force. We go to work, put in the hours, get paid our wages, and go home for the day. This is not the way to build retirement wealth.

When it comes to building wealth, getting paid on a day-to-day basis is additive. To accumulate enough wealth to last for years, we have to put away huge amounts of money. Typically 30% of our take home pay is a minimum amount.

Why do I say that? Because the tools we are being sold on for investments don’t work unless we compensate by over-saving. A good example is the classic skip-that-daily-latte and instead save the money, and it 20-30 years, you will be a millionaire. I had heard that a few times, and figured it sounded great. Until I read an objective analysis of that. Basically take $5/day and multiply it by 365 days. What do you get? $1825/year. Doesn’t sound too bad. Today. But let’s take this concept and back up to 40 years ago. What was the median income for people back then? According to one source, median household income in 1974 was $9780/year. That would imply that saving $5/day, the price of a cup of coffee, was like putting away over 18% of gross salary. If you can assume 28% in withheld taxes, the percentage saved against take home pay would be 25.7%.

Wow! If we are to read that correctly, it suggests that saving $5/day today may result in $1MM, but in 40 years (if you started this when you were 25), $1MM probably won’t be worth much at all. Instead, we should read that correctly as needing to save AT LEAST 26% immediately.

Many people, if they looked at that, would just throw their hands up in the air and give up. But if you’re here, you surely have guessed that I’m going to say something different.

We need to look for options that have a multiplicative effect. What is that? It’s when you make some making by direct action, but the more actions you take, the more they interact with other actions already in progress.

One thing that I realized as I wrapped up the last chapter of my 3rd book, is that doing something as small as writing books on the side can introduce multiplicative money making. Today I finally got some time to watch a TV series with Neil deGrasse Tyson. I’m quite fascinated by astrophysics and his series seems entertaining. In the opening credits, it notes that Dr. Tyson has written ten books. Something I can realize is that the more books you write, the more books you will sell. Not additively, but multiplicatively. Simply put, people that enjoy one of your books are VERY likely to go and buy your others. My first book has yet to earn enough to pay off the advance I received. The second accomplished that about two years ago. My dream is that my 3rd will accomplish that even sooner, possibly through more social media, more people that read my previous works, and that some will even go back and buy my previous writings.

It’s only natural. I read the first Jack Reacher book, got hooked, and have now read ten so far. I read “Schrödinger’s Kittens and the Search For Reality”, and have since ordered the predecessor. When you go out and invest yourself into more and more and more opportunities that can yield more and more wealth, the opportunities grow.

So I highly suggest that you take some time to sit down and think. Simply think. Look at what you are doing today. What you have done for the past week. And think about what else you could be doing that can generate secondary effects. What if you started a blog and wrote on a daily basis? It could be small stuff. But it might grow your public image. It might open doors you didn’t expect. Open your mind to looking for new opportunities such an endeavor could raise.

These are all important the rather narrow vision the corporate 401K plans have. The general idea of a 401K is to sock away money in a fund that doesn’t grow very fast. And when you hit retirement, you are required to cannibalize it. Why do I suggest this? Because the federal government has a schedule after which you are obligated to start taking withdrawals. If you’re retired and doing just fine, it doesn’t matter. The government set things up such that they can collect taxes on your withdrawals and they will NOT be blocked from you doing just that.

In case you didn’t know this, the rich NEVER cannibalize their assets. There is this mantra out there that rich people adhere to: NEVER TOUCH THE PRINCIPAL.

In essence you are on a mission to accumulate wealth producing assets that themselves generate wealth you can live off of. You can’t wait until you are retired to begin writing books, building a blogger reputation, or something else. Instead, that is what must embrace while you still can earn enough of a daily paycheck to keep afloat. This is your opportunity to start buying real estate, dividend yielding stocks, EIULs, and discounted notes. Simply putting away 50% of your take home pay and planning to live like a pauper doesn’t sell very well. Good luck!

Would you refi your house to invest? I would…AM!

house_cashListening to a popular radio show this afternoon, I heard caller ask about refinancing from a twenty year mortgage into a thirty year one. The host asked, “would you borrow against a paid off home to infest?”

I would.

The host went on to point out how you need to pay off your home as fast as possible.

Sorry, but mortgages are one of the best wealth producing vehicles out there. As Dr. Dave says, “we should wake up each day and figure out how to get more mortgages.”

If you’re new to this blog then these words must sound crazy. They probably go against every piece of financial advice you’ve ever heard.

But mortgages are the cheapest form of money you can buy. The trick is to use the money to buy cash flowing assets from which you can pay off the mortgage and then keep the cash flowing asset.

The concept of investing cash from your home and is known as equity harvesting. I used a Heloc on my house to invest in VNR. The results have been great.

Don’t invest based on negative news

Something I’ve discovered when I began researching stocks deeply back in 2012: there is ALWAYS bad news. Doesn’t matter what stock you investigate. You will find bad news lurking around every corner.

It can quickly scare you away from investing in really solid companies. One of the most solid stable companies I know about is Coca-Cola. I would own some myself, except I invested in other stocks before I became seriously aware of KO’s amazing profit growing ability. I basically didn’t have the cash to start and my spare cash currently is targeted at being applied to my real estate portfolio and my EIUL.

But what happens when you add KO to your iPhone’s Stocks app and check out the news articles linked every day via Yahoo? It seems just about every week, if not every other week, someone is writing an article bemoaning the decline of soft drink consumption. Sometimes they write it and sometimes they don’t, but you are supposed to infer that this might be the time to bail on holding soft drink companies. The world is getting wise to soda, and it won’t last forever. Sorry, but KO hasn’t stopped creating millionaires yet.

Some of the other companies I’ve invested showed various dips. One of favorite examples is the first stock I bought back then: General Dynamics (GD). I bought it at $72/share. My core reasons for purchase were that GD had a strong history of earning profits and making dividend payments. On top of that, I asked myself what the odds were that they would stop making aircraft? Very low! Well, almost immediately after purchase, their price dipped down to $66/share. That scared the heck out of me! But I stuck with my analysis and held on. Today it’s trading at $117/share. Further more, I originally bought 130 shares. Now I’ve picked up an extra 3.1 shares simply by clicking on the “reinvest” button. Total growth: 60% in two years.

To add to this, don’t forget that when companies do go under, they don’t simply go POOF! Companies are actually big entities with lots of holdings. As they adjust to any current fiscal climate, they can make changes, sell of assets, refashion plans and more. Since you own a piece of that company, you will be given pieces of sell offs, splits, etc. These other companies can sometimes do quite well on their own. It may be that these various components didn’t work well when they were under one roof of management. Your equity in the company doesn’t simply evaporate because the core company trends downward.

So don’t forget to do you in depth analysis and understand fundamentally what you’re investing in. Don’t let the highs and lows of daily news drive your investment plans.

Why you shouldn’t fear bankruptcies the way the press does

If you make investing decisions based on the news, you will suffer debilitating setbacks in your portfolio time and again.

What comes to mind when you think about Sears & Roebuck today, compared to what you remember as a kid, and what you may have heard about this company decades ago? Sears was historically THE company to buy general merchandise.

I remember reading The Great Brain books as a kid. It’s a collection of stories told from a younger brother about his big brother, aka The Brain, who is quite smart, but governed by a money loving heart. Anyway, these books set back in the days when silver dollars were common currency, the character mentions having the rare and golden opportunity to order from the Sears catalog. As a kid, I remember that Sears was the place to get all sorts of stuff. But what do you think of it today? Do you flock to that store to buy things? Or do go elsewhere.

So would you consider investing in that company by purchasing its stock? Perhaps not. Take a step back. If you had the chance to buy stock in Sears thirty years ago, would you take it? Perhaps. But what if you knew everything you know now about how its gone down hill over the past years? Would you buy it then? Read this article for details on exactly how might fare.

Based on bad new stories over the years, you might say “no!” But if you actually looked at the balance sheets over that time frame, you would actually do quite well. Sears grew big and accumulated many various assets. As it crumbled, it sold off pieces into separate businesses. As a stock holder, you would hold lots of different companies, all generating profits. In fact, you would do quite well.

How can this be? As stated by the economic Nobel laureate Milton Friedman, “when a company or a person goes bankrupt, generally their first step is to contact reputed firm attorneys such as the bankruptcy attorney in Knoxville, TN. While filing for bankruptcy, their factories don’t go poof.” Assets are sold off. New management is hired. Things are repurposed. New businesses plans laid out. Mid and senior level managers may get rolled and some employees may suffer, but in general, the core underpinnings of the company get refreshed, not burned to the ground.

This point seems to be lost on the press in general. Any shutdown of a company seems to draw reporters to find the saddest stories and turn them into headlines. They never bother to find these people a year later, and see how they are doing. On rare occasion, I saw a journalist actually find one such employee, only to discover that they were doing WAY better than before. They used to putter along with a poorly performing company. But getting tossed forced them to find something else, and they actually found something better.

Where have you been? Retail investors vs. macroeconomic investors

It may seem as if this blog has fallen off the planet. There’s a good reason. At the end of May, I signed a contract to write the technical book Learning Spring Boot. Suffice it to say, that effort has consume all my spare time in the evening. Since my work couldn’t stop, the thing that suffered was this blog. If you ever run into a chance to tap your cognitive surplus, I suggest you go for it!

Technical writing aside, I was drawn into a discussion on Bigger Pockets. In the article, Jeff Brown shows how so many investors are focused on formulae, tricks, tactics, but never on the end results.

People have horrendous savings. They aren’t loading up their 401K plans, their personal savings accounts, or anything else, on average. In fact, whenever I hear this brought up, it reminds me of a finance show on TV years ago where Ben Stein was commented how “Americans aren’t saving enough money.” I didn’t think much at the time, but the comment, by itself, is incredibly insightful. The first step towards successfully building retirement wealth is recognizing when you AREN’T.

Jeff Brown has written a couple recent posts pointing out how even IF you can rack up $1MM in your 401K plan, you’re not DOING ENOUGH. Given that almost everyone has less than $100,000, the issue should drive anyone CRAZY with panic.

In the comments, someone nonetheless brought up “retail investors,” a term minted to refer to people that buy turn key rental property. Instead of buying good deals, i.e. making money when you buy, “retail investors” typically buy what they can find and, on average, crash and burn when Murphy visits, nixing their cash flow.

I wouldn’t stand for this short sighted characterization and remarked that the path to retirement wealth isn’t confined to fix-it-up rentals. I created the expression “macroeconomic investor” since I have invested in Texas-based rental properties. Texas has shown tremendous job growth. In fact, 2006-2011 demonstrated a stronger job growth that all other states COMBINED.

When a flood of people are headed to a particular thanks to a booming economy, there is a natural consequence. They all need a place to sleep. I went on to comment:

So…I can either invest a lot of time and effort locally, or I can take my investment capital to Texas and invest there. One option requires that I invest a lot item, even potentially ending my successful career as a software engineer to get the maximum cash flow. The other option says I can invest where I’ll get higher yield, better tenant options, and newer, fresher properties, if I’m willing to sacrifice a certain overhead for others to manage it.

People love to show off their rentals. Even better, they pride themselves on finding something local and able to drive by it and show it off! Sorry, but that is amateur. Critical thing is to look at total results, and see if your fix-it-up property can generate a better yield rate than buying new properties remotely and incurring the overhead of property managers.

I have had Murphy strike twice and knock me down to 75% occupancy. Thanks to having a pro team support me, I have been cash flow positive, despite pouring an extra $1000/month into one of the mortgages to pay it off faster.

I can’t guarantee I’ll blog as frequently as I did before my current writing endeavor. But I just couldn’t keep this to myself. (Seeing some  of my past readers comment how they enjoyed my writing was inspirational as well!)

Can you really live your retirement tax free?

TaxesI have heard a lot of radio ads for various shows and products where they like to brag how you can live on the “tax free side of life”. Perhaps you’ve heard them too. If this really possible? Or are they selling a bunch of malarkey?

Let’s dig in and find out. If you’ve read some of my past entries from here, you’ll surely have noticed me talking about things like EIULs, real estate, and MLP stocks and their tax advantages. In this article, I want to look at how EIULs operate compared to a 401K in the arena of taxes.

Now before we go any further, I want to make one thing clear.

There ain’t no such thing as a free lunch, especially in taxes.

When you dig in and see how various investments operate, it’s more about picking the best, most efficient tax strategy that will serve your needs. Since this blog is about building retirement wealth, I generally talk about the best tax strategy for your retirement.

401K taxes vs. EIUL taxes

That sounds pretty vague, ehh? Let’s use a concrete example: 401K taxes vs. EIUL taxes.

If you use your company’s 401K plan, you get the nice benefit of writing off your contributions. You don’t have have to pay a nickel in taxes for every dollar you stuff into your plan…today. The trade off? (There’s always a trade off). When you start making withdrawals, you will be subject to full income tax rates on every dollar you take out.

Many people are drawn to the allure of avoiding taxes today. It sounds great to take home more pay. I certainly liked the sound of that when I got started at my first job. The problem was, there was no one there to coach on the options and benefits of other vehicles by which I could pay taxes today and pay considerably less in retirement. As the saying goes, you don’t know what you don’t know.

If you buy an EIUL instead, you fund it with after tax dollars. Every dollar that goes in has a certain amount skimmed off for Uncle Sam based on your income. Then when you decide to withdraw money later on in retirement, you do so tax free. The trade off is that by paying taxes up front, you can skip paying taxes in retirement.

Which is better? Well from a tax perspective alone, I prefer the EIUL for two reasons.

  1. The total amount of taxes I pay will smaller, because the total money in action is smaller. In general, as I get older, I make more money, and pay more taxes. So the sooner I can move that money off the tax rolls, the better.
  2. Tax rates and policies are always moving around and the subject of elections. What will this country’s entire tax structure be like in twenty or thirty years? Who knows. I’m still waiting for my crystal ball to get out of the shop. Until that time, I’ve decided that I don’t want to gamble my retirement on such a huge unknown.

If you’ve read this blog, then you know I also advocate EIULs due to better and more consistent historical performance, but I’m leaving that aspect out of this article. For tax purposes alone, it’s generally better to pay up front than later on in life. (But this never precludes doing a complete analysis!)

The tax man cometh

I’ve run into people that don’t understand why EIULs let you “get away with dodging taxes.” Some of these people I’ve chatted with tend to believe any chunk of cash you receive should be subject to income taxes.

For starters, any time you start making withdrawals from your EIUL, the first batch of money is considered return of capital. Essentially, whatever money was put into your cash value holdings is simply being handed back to you. And as pointed out earlier, you already paid taxes on it. Is it really fair to tax you twice on money that effectively didn’t go anywhere?

After you get your premiums back, then you begin taking out loans against the cash value left. Loans are non-taxable events. For my friends that believe this is trickery, I wonder if they are ready to pay income taxes every time they finance a car. If you borrow $200,000 to buy a house, do you think you should suddenly be hit up with a $48,000 tax bill that year? And what about using your credit card? Every time you use it, you are borrowing money to buy something. Should that also be taxed?

I’m sure you don’t want to pay taxes on any of that debt, but what’s the underlying reason you shouldn’t? Because you will ultimately pay off your debt using taxable dollars. The government WILL get their cut of money based on this debt. They just get it in smaller chunks. Bought a $20,000 car? You will end up paying it off with $20,000 of hard earned money subject to good ole’ income tax laws. In fact, thanks to financing, you might actually be shelling out a little bit more, all paid with taxable dollars.

But wait! EIUL loans aren’t paid off!!! How can you justify THAT?!?

An EIUL is a life insurance contract. The amount of money you pass on to your heirs is tax free. It is an enticement by the government to leave something to support your family, friends, or whomever you wish. When you take out loans, the loans+interest are paid off by the death benefit. And don’t forget: it was funded with after tax dollars.

So as I wrote early on, there is no free lunch. You aren’t “getting away” with anything. You funded a plan with taxable money and structured things so that you could pay the taxes now instead of in retirement.

Mutual funds are just fine…if you’re rich

rodin_thinkeI listened to a famous financial radio host talking on another radio show this morning. The question was asked, “do you still believe in the 401k?”

His answer? “I invest in some mutual funds in a 401k along with rental property I pay cash for.”

I listened to this and could immediately see the fallacies in such a statement. Let’s dig in and examine them.

First of all, the key to building a retirement portfolio is putting money there. Duh! The reason many of us read a report or a prospectus is because we don’t have gobs of money to fund a portfolio. Instead we have much less so we must lean on the power of ROI and compound interest.

What do I mean? Imagine you made $1,000,000 each and every year. What if you could live off just half of that? I promise you: saving $500,000 every year for twenty years will set you up real nice.

With no growth at all, that adds up to $10 million. And if you bought something that yielded a paltry 1%, you would be raking in $100,000 forever without dipping into the principle.

Instead of plowing half a million into some 1% CD, what if you peeled away half of that and bought a new rental every year all cash? I think accumulating twenty rentals would be very nice.

$5 million in rental equity could easily yield $20,000/month in rent. Apply Murphy’s rule and assume you only get half due to repairs, maintenance costs, vacancies, etc. $10,000 is still pretty good.

Combine that with an adjusted $4000/month in CD interest, and you will do just fine.

As a side effect, people would probably stand up and take notice. The synergistic effect would let you write books that would sell like hot cakes because everyone would want to know how you did it.

So how did you do it? The secret is the original business you built that generated all that capital in the first place!

If none of us become entrepreneurs, we have to think up other ways to scrape up some capital. If your rich, you can afford to pay all cash. Not rich? Then your stunting your returns by going too debt-is-evil. There are good ways to take in debt and mitigate the risk.

Make no mistake. We can still accumulate $5-10 million in rental property. We just have to be ready to take on strategic debt, hire the right experts and do things smarter. We have to keep our eye on the ball.

We can become very successful. Sadly no one will want to read a book about how we did it. Oh well. You win some you lose some

But it irritates me when certain rich people go out of their way to tell us that mutual funds are great for everybody. They’re not. They suck. It just doesn’t matter how badly they suck when your pile of gold is really big.

To generalize that this approach to building retirement wealth works for eveyone is ridiculous. History doesn’t support it. And this is where I must part ways with this radio host when he begins to talk about investing.

Rental property requires patience…and cash

habit-saving-moneyIt looks like we finally have tenants for my unit that has been vacant since the end of January. We’re talking three months of lost rent. In that time frame, I have had to pay for utilities. I will also have to pay a finders fee to my agent that located these tenants.

Last year I instituted paying an extra chunk of change on the smallest mortgage. Basically I was pushing the bonus rent into that mortgage to pay off as fast as possible. Turning it off was too hard, and I assume it would get filled quickly, so I never turned that off. It has made me cash flow negative for this short time frame.

Perhaps I should have turned it off immediately. I need to think that through, make a plan, and go through with it the next time we have a vacancy.

Do NOT act desperately

Having one applicant fall through, another possible applicant pass on behest of finding a better deal has given me every reason to get desperate. What do I mean?

Just last week, I had an applicant shoot to get the unit. The trick was, they had been foreclosed on and actually had a huge outstanding judgment to pay. I wanted a tenant, but I knew I might be taking on someone that would cost a lot more money to get out of. So I passed. And then in the middle of this week, I got a couple college kids who have their parents ready to co-sign.

Things looked much more solid, so I jumped at it. They want to move in today. Not sure all the paperwork can get pushed through that quick. But it will be nice to get the rent flowing again.

Do what makes sense, NOT what feels better

Most of this time, I had a persistent feeling that having an empty unit was bad. It pushed on me, stressed me, and strained me. But I KNEW that I needed to pick up a solid tenant. The cost of not waiting for such would probably any carrying costs.

I also knew I had a LOT of cash in the bank and could ride this out. Too little cash, and desperation can easily become reality. I had the benefit, thanks to Jeff Brown’s insistence on cash reserves, to weather this storm until a good tenant could be found. Well things look solid, but only time will tell if I picked the right people to rent out my unit.

And I get to through this again next month as another one of my units becomes available at the end of this semester!