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2018Q1 Goals

This year, I plan on reporting on my goals every quarter. I will keep you guys updated regarding not only the goals of each quarter but my accomplishments on each quarter.

As I said before, my number one goal this year is rebuilding my health, so it is also likely that these report posts will start off with my health goals. However, I still want to grow about 100k in my net worth, so I need to keep up with those high expectations as well.

If you’ve been reading my blog for a while, you know that I am a very goal-oriented guy, and so these goals should come at no surprise.

These are the goals for the first quarter of 2018:

Health (my no. one goal this year)

Improve my health tremendously by treating my gut, my adrenals, doing physical and mental detoxes.
1. Fix my gut. If you’re not aware of this, all disease begins and ends in the gut.
2. Resolve my dizziness. I’ve been dealing with this for a long time now.
3. Improve my energy and strength. I complain that I don’t have enough time, but I really don’t have enough energy.
4. Follow my “resting plan”. That is, I work on Tuesdays and Thursdays on 2018Q1 and stop on Wednesdays and Sundays in the rest of the year (check this out here).
Go to bed until 10:30 every single day.
1. This will help me fix my circadian rhythm.
Meditate and visualize every single day.
Follow my routine 95% of the time.

Be featured in a major newspaper.
Write at least 3 guest posts.
Write 2 posts every week without fail.
Increase the number of views steadily.
Be scheduled out until the end of the second quarter.
Increase my authority beyond 50.

minimalism save money

Company (co-owned by a partner)

Generate about 15k through my real estate company.
Have 150 high-quality backlinks to my companies site.
1. Write about 15 guest posts and 15 blog posts.
Have 3-5 products ready to be sold (my company will sell books, courses and what not).
1. Have our primary book (on Real Estate) rock and rollin’ hard.
2. On top of that, have our 6 main products (market studies) up and selling.
3. Have 3 agreements for books.
Hit 1000 likes on Facebook.

money

Net worth

Sell my primary property for a profit, and buy a primary property that is better (aka more valuable) for 75% of whatever I make on my property.
Finish my part-time job and move to a new one.
1. Save 3k.
Write another book.
Buy at least 2 properties.
1. I am truly excited about this!

Daily life, Health, Lifestyle, Planning,

My morning and evening routine for success (started January 1st)

My morning and evening routines – what I will do for my health in 2018

Given that I need to resolve a few health issues, especially related to dizziness, I need to come up with a morning and day routine that is really powerful against disease in general. I will be combining this with a fine-tuned diet, acupuncture and a few other things.

Waking up

Thank God for the day and promise Him and myself I will live to its fullest, as well as be generous, kind and happy.
Use positive affirmations.
Motivate myself, including convincing myself of my natural ability to heal.
Meditate for 5 minutes.
Visualize for 5 minutes.
Stand up and stretch.

Start the day with a vegetable juice (possibly with beets¹) with ionic minerals. Alternatively, I may have these ionic minerals with a citrus (mostly lemon) juice, or I will drink a ginger tea. Every quarter, I will do 1-month cycles of bromelain on empty stomach, to lower inflammation in the body.

During the day

30 minutes a day of infra-red therapy.
30 minutes of deep meditation.
Strech my neck (seems to work well against a stiff neck, like mine).
Do lymph drainage massages whenever possible.
Go for a run whenever energy allows and there is sun out there. Do that as close to noon as possible.

As for the lymph massage, I will go with this one:

Now, there are a few things that I will make a priority throughout the year because I am positive they will help me:

Detox at the very least 2 in the year, but probably once (meaning 7 days) every quarter and one day in the week (Sunday).
Drink bone broth² at least once a month. This is hard because we need to prepare it, and it takes a long time to cook. I don’t care, it heals a leaky gut 😉
Eat tons (I mean at least 20% of my food intake) of fermented foods and bring my gut to a whole new level.
Avoid ejaculation as much as possible, and at least for 60 days every quarter.
Massage my own body in a way that I work on the fascia of my stomach, back, and neck.
Put the computer away on Sundays (all of a sudden it feels that I have a lot of time).
Take care of my gut so that my bowels move at least once a day, minimum. Ideally, I will get to 2x/day.
Drink tons of water throughout the year.
Continue to learn about health, detoxing and gut health.
Learn how to do awesome bone broths, and fermented foods such as kombucha, water kefir and fermented vegetables and fruits.

Going to bed (always before 10:30!)

Thank God for the day and the great things that I had.
Thank God for all the good things that I have in my life. Being grateful is praying for real.
Meditate for 5 minutes;
Visualize for 5 minutes;
Use ho’oponoopono for the bad things that happened in the day or things that bother me.

Is there anything else you’d recommend me to do? 🙂 Go ahead and let me know in the comments down below. 😉

Ben

¹ – beets have betaine – a powerful cancer fighter and liver supporter, and nitrates – which relax blood vessels and improve the blood flow, plus it has a lot of iron which is great to fight anemia and fights inflammation.

² – bone broth is super healthy, especially if you’ve got leaky gut. Check out this presentation by Dr. Kaayla Daniel, who researched bone broth for over 20 years.

Planning,

Goals for 2018

Hi guys,

As I’ve been saying, I am very excited about 2018 because I have many goals and I deeply believe I will be able to reach them. This year will probably be the most important year towards achieving financial independence.

Don’t get me wrong. 2017 was awesome, from several different angles. It was also bad in the sense that struggled with dizziness and sickness the entire year.

Health (my no. 1 goal)

Resolve my dizziness and brain fog for good.
- By following my naturopath’s treatment, doing a lot of acupuncture sessions and having a healthy diet and routine.
Resolve my CFS.
- By following the plan above.
Go for a run whenever there is sunlight out there.
- Luckily I live in Portugal, where you vacation. 🙂
Get my circadian rhythm fixed.
- I will write an article called “the perfect routine”, which I’ve been following, and you’ll learn about this.
Do at least 2-4 detoxes in the year.
- Everyone should do this, but for me they are particularly important.
Eat tons of sauerkraut and start drinking kombucha. Eat tons of fermented fruits.
- Gotta move my lazy ass and start making sauerkraut.
Get bloodwork done every quarter (March, June, September, December).
- I will actually take 2 weeks at the end of each quarter to take care of lots of stuff, including this.

From Cents To Retirement

Grow my Facebook page to, at least, 5,000 likes.
- I will have to hire some FB ninja because my skills suck and I don’t have the time to do this.
Grow my subscriber list to, at least, 5,000 subscribers (currently at about 2,000).
- Start to foster subscribers to participate often in the “cult”.
Hit Domain authority >50, Page authority >60 and Spam score 0.
- Currently at 34, 45, 5.
- Create the FCTR-network, which will be a network of bloggers who help each other.
Hit at least 1,000 sessions a day from organic searches (I am currently at 120-150).
- Rank TOP3 for 200-300 keywords (currently at 30).
Grow monthly traffic to at least 50,000-75,000 readers often (organic searches should be a third at the very least).
- The goal is to have always at least 50,000 readers/mo even if I don’t drive additional traffic.
Post over 100 articles.
- This is roughly 2 posts/week.
Be scheduled out for 3 months all the time.
- And publish an interview/guest post every month.
Publish at least 10 guest posts.
- This year I will aim for the biggest blogs out there.
Hit $300/mo on truly passive income.
- This means without pushing a single sale.
Post a lot on psychology, business, and efficient spending.
- Because I got more interested in these topics as time went by and I want FCTR to be a reference for all this, not only ER.
Optimize the heck out of this site in terms of speed, resources, and UX.
- I have a specialist working on this already. Hopefully, we’ll have tremendous results. I want to have a very clean, easy to use, fast website.
Be featured on two global major sites.
- I managed to be featured in Business Insider last year, as a result of a post that I wrote for BudgetsAreSexy.
Publish 2-4 books.
- One is already written and the other one is already planned.

Finances

Hit a total net worth of €400,000-€450,000 (currently at 300k).
- And be ready to hit €750,000-€800,000 in 2019 so that I can retire.
Scale my RE portfolio as projected here, with lines of credit, as announced here.
- In theory, this should allow me to grow my assets’ value to $798,000 (this will come from deep-value deals).
Get way more exposed to dividend stocks and the stock market in general, even if I predict it will crash in the next 2 years.
- I always liked stocks but holding on to cash is SO boring… plus, I want to enjoy compound interest.
Increase my truly passive income (excluding rental income) to $700/mo.
- This will come from the stock market, royalties and stuff.
Be able to retire if I go with extreme minimalism.
- which I won’t, but this will provide a mental shift and an emotional comfort…

RE company

Bring at the very least 50k in revenue.
- In 2017, it brought in about €25,000 with a practically inexistent structure.
Hit 3k/mo (conservative goal) or 5k/mo (aggressive goal) on fixed-income (through contracts and investments).
- Currently at 0/mo.
- This is really what will enable me to jump to the next level, because I will be able to hire 1/2 full-time employees.
Keep costs below 10k, so that it makes 40k at the end of the year (which will be enough to buy a property).
- The main goal is to keep on acquiring properties for the company so that I am able to bring in 5,000€/mo on fixed income.
Be featured in at least one major newspaper.
- This will help me with exposure. I already have the contacts in place, it will simply be a question of time.
Publish 2 e-products (which will be big in the future of the company).
- I will probably publish 1 or 2 books in the first year.
- After that, I want to move into online courses, small e-books and what not. This is when I will capitalize on all the content I’ve been creating, e.g. articles like “invest in small towns or big towns“.

Personal development

Continue to learn about health and test what works for me.
- This is actually a big goal that I have in my life. I’ve been learning a LOT about health and next year I plan to keep it that way.
Being able to enjoy life every single day, being able to relax and not feel pressured to make money/whatever.
- The truth is that, since I started to execute my plan to retire early, I am obsessed with making money. This is not necessarily a bad thing, but I want to ease this feeling.
Follow a success routine that I carefully put together.
- I will write a post this month on a wonderful routine that will put my self-discipline to the test.
Not let other people influence me negatively.
- This is something I struggle with for a long time – this is the year to really make it happen.
Do a people and technology fast every quarter.
- I am so doing this!

As time goes by, I plan to talk release quarterly reports on these goals (both for what I have accomplished and what are the goals for the following quarter).

If you think I am forgetting something, please let me know in the comments down below.

Ben

Health, Lifestyle, Planning,

Relection on 2017 and a brief look at 2018 in terms of health, work and finances

Happy new year guys!

I am so very excited about the new year. 2017 was probably one of the most special years of my life and I learned a lot. It is scaring that 2017 is already over. Time flies even when you’re not having fun!

There were a few things that happened in 2017 that make me consider it very peculiar:

I moved to Portugal and I started living alone, in one of my beautiful rental properties. Living alone on this property is freaking awesome!
I felt dizzy/nauseous for the most part of the year, and my CFS/adrenal fatigue was exacerbated in specific parts of the year. This was so relevant and debilitating for me, that 2017 was marked by my dizziness.
Although I first considered doing a gap year, being off of work for 12 months, I ended up getting a part-time, reasonably well-paying job, which allowed me to focus on other projects in my life. This enabled me to grow wiser.
My real estate business took off and brought home some decent income. I realized I can retire earlier than I expected at first, especially if my projections for 2018 are met.
I was able to re-structure my real estate portfolio and hit €1,800/mo in rental income (with about €400/mo in liabilities).
…among many other things.

You can also check out the entire list of my goals I had for the year. Overall, I did pretty well:

Post at least 3 times a week. ALMOST DONE. There was a period where I clearly published less often but I was able to keep 2 posts/week for most of the time. Sadly, anything above this is not realistic (unless I do like 90% of the bloggers – who hire ghostwriters – which I don’t want). In fact, many great blogs, such as Backlinko only have a few articles published and yet they get a ton of traffic.
I hope to complete the task of re-reading 100 books, and provide summaries and reviews for all of them. FAIL. This is more like “I changed the plans for the year. Entirely.” I do hope to read some books this year (and publish reviews and summaries) but it won’t be close to 100 for sure. I have plenty of things that I could do with my time beyond that.
Grow the number of subscribers of the blog to 6000 (I was at 650 last year), and 25.000 likes on Facebook. FAIL. This was also pretty unrealistic without spending more money on Facebook ads and what not. I am not disappointed though. This year, I hope to double the number of Facebook likes. Not sure if this is totally realistic, but I hope it is.
Find a fully flexible (probably freelancing or consultancy) job, which permits me to live in one of my units and make $25k for the year. DONE. I worked part-time at a Portuguese university and got a pretty nice salary for the Portuguese standards. I used most of it to fund the renovation of RP#3 so I definitely feel I put the money to work!
Rent out all my units and make $20k from that. DONE. Fortunately, the demand for apartments in my markets is pretty high, and so I don’t have many troubles in renting them out. I feel this will be the case in the following years, but I plan to rent out many or my properties to companies anyways.
Make $40k on my investments and businesses. ALMOST DONE. I only made 50-60% of that but I am still happy with this.
The ultimate goal was to make $85k, net $50k. DONE. I didn’t net $50k in cash, but I was able to grow my portfolio by LINK LINK.
I wanted to dominate the Portuguese fiscal code. ALMOST DONE. I sure learned a lot but mastering it like an accountant would retire me way more attention than I am willing to put into this.
I wanted to participate a lot on Quora. ALMOST DONE. I missed the stats that I aimed for, but I was able to reach more than 10k followers.
I wanted to publish 3 books. ALMOST DONE. The first one is published, the second one is written and the third one is planned. Good enough?
Not letting other people affect me in a negative way. FAIL. This is also why I wanted to fast from people during Christmas time LINK.
Cultivate all my friendships and create at least 10 new great relationships. ALMOST DONE. I was able to make 3 or 4 new great friends.
Learn a lot about renovating homes (and doing it myself). FAIL. I swear I tried, but feeling exhausted and dizzy all the time was a killer.
I wanted to regain the shape I had in 2011. FAIL. Again, I swear I tried, but feeling exhausted and dizzy all the time was a killer.
Do one or two 7-day juice cleanse with organic juicing. ALMOST DONE. I did at least 3 different detoxes so this is done.
Move to my dream home, and live alone. DONE. Just not the home I initially thought I was going to move to.

Why am I so excited about 2018

2018 will be big for me because I feel that although this may take a while, I am moving towards the right direction with my health, at the same time I am taking my company to a whole new level. The big thing for my company will be hiring 1 or 2 full-time employees and grow the fixed income to €5,000/mo.

In other words, I can now see the dream a few miles away from me. And the dream is to be healthy and set up an efficient real estate company that has a few employees and runs pretty much automatically.

I also feel that 2018 will be big for From Cents To Retirement. I will work badly to grow it to a reference blog in early retirement. I do hope to hit 3x more the traffic I currently have, by the end of the year.

As for my health, I have a few plans as well. And this year I will be sticking to them badly! I will write a complete article on my perfect morning and evening routines and I will cover all the plans for my health in 2018.

Later this week I will be publishing an article on the goals for 2018 and you can scrutinize them thoroughly. 😉

Let me know how 2017 was for you.

Ben

Planning,

Best investments for 2018 – what I will do to get richer and what you can do

This year is coming to an end, so it is about time to plan the next year. I will write a bigger post on the various angles of my life, but I’d like to cover the financial aspect right away, as I review some good investments for 2018.

First I need to say that 2017 was way different than what I anticipated. I actually thought about doing a gap year, by my type-A personally didn’t let me rest as much as I needed; I was offered a well-paying part-time position, which I took, and I did more business than ever before.

Planning things for 2018

Next year, I will be dividing my time in the following way:

Mondays. I will continue to have a part-time position which will pay me enough money to live off of so that my basic expenses are covered.
Wednesdays and Sundays. These are the days I will take to rest, and I will not think about work at all. I think I will benefit from resting sparsely throughout the week, thus splitting rest between Wednesdays and Sundays. On Sundays, I will also
Tuesdays, Thursdays, and Fridays. These days I will be working full time on my RE company, which hopefully will grow tremendously in 2018. I am aiming for a total revenue of €75,000, which is great as I won’t have full-time employees (only people to work with me seasonally and part-time).I will also have to invest a lot of time on my second RE holding, which will be easy to manage but may consume a lot of time during the process of negotiating lines of credit and acquiring assets. The projections for this holding were calculated here.
Saturdays. I will use this day to work on my side hustle, which guarantees my company a fixed amount of money every month. This is enough to pay for the fixed costs of the company and help me focus on other, variable and more risky investments that will hopefully help the company to grow.

This only applies from April 1st onwards… In the first quarter, I will be resting, as I want to fully reverse my adrenal fatigue/CFS and, even more importantly, my dizziness.

Monday, Wednesday, Thursday, Saturday, and Sunday: full rest.
Tuesday and Thursday: work on FromCentsToRetirement, my side hustle and on my RE company (I have suspended my part-time job in the first quarter. I will write a big post on this (and the first quarter as well).

How my RE company will operate

Having done almost €40,000 this year, I know exactly how to run the company and scale it. As I said, my goal is to hit €75,000. This is what the company will focus on:

Selling homes. This will be the biggest chunk of the revenue, I am sure. I have partnered up with another RE company which will probably help me sell even more. I may also hire some commission-based employees to put some gasoline in the fire. From this channel, I will probably make €50-€60k.
Market studies. This is a good thing to sell because you make it once and you can sell it many times. I am not sure what the size of the market is, but I guess I will learn that quickly. 🙂 This is an advertising play: I don’t think people will come up to me and ask for this service, so I will have to invest a lot into advertising (on Facebook, Adwords and e-mail marketing) to sell these reports. They are usually targeted at real estate investors who want to invest in Portugal or business owners who want to expand within the countr. I hope to sell €7,000 of these in the first year.
Dividends and rents. You got it – I also want to make this company a holding. This is because the dividends and rents I will get will allow me to build up some fixed income, thus allowing me to pay for the fixed expenses of the company and employees’ salaries. In the first year, I hope to bring in €1,000 from this channel (and boost it to €10,000 in 2019).
eBooks, online courses, and consultancy. I have identified a niche in the market which I can “easily” explore. As I bring in more people to the Facebook page and e-mail list, I will sell more. I’d be happy to have 10,000 people altogether in the lists during 2018. This should roughly translate into €10,000. In the second year though, I hope to sell more of these than selling homes, because this is way more passive.

Unless I really have to, I won’t cash out dividends from the company – I will re-invest all the profit back into the company and grow it as much as possible, so I make at least €150,000 in 2019 and €350,000 in 2020.

2 tips and info for you to invest in 2018

The stock market

As I said many times before, we’re in the second largest bull market ever. This is not a good indicator of a possible crash in the stock market, but …

As a result, there are various industries that seem to be about to break out. Thus, investing in stocks in these industries seems wise even in a very bull market as we are right now. Some of these industries are:

Cannabis

Ideally, the best way to invest in these startups is to create one or be involved in the process from the beginning. As this is extremely hard, my fellow blogger Cody Shirk launched explorer partnerships that allow you to invest with him in these hot markets.

Car manufacturers

I personally think that we are walking towards a model where car ownership will be less and less relevant, and cars will be fully electric and eventually driverless. Thanks Tesla!

This will massively change the landscape of traffic, cars and… commodities. I expect that as the car industry changes, the other industries that depend on, influence or are related to cars also change.

Just so you have an idea of what is crossing my mind right now:

I believe that real estate will change a lot, because garages over the long run will be needed. As for short-term changes, we may see gas stations becoming obsolete and turning into stations of superchargers. Plus, as we see car ownership become less and less common, perhaps the need for parking lots will diminish.
Uber and uber-alike companies will become even more prominent and own the market entirely. As we move towards electric vehicles (and drones that deliver packages), we will witness massive layoffs in the transportation industry. If you drive a truck, consider starting doing something else.
Eventually, trains and plains will retain the technology that is being created for cars. Yes, I believe they will be electric at some point…

So, what is my point? Car manufacturers that are taking the lead in the electric revolution will be appealing investments.

Let me know if you agree or you have suggestions for good investments in 2018.

Ben

how many properties you need to retire early

Planning, Real Estate,

How many investment properties do I need to retire, Ben?

How many investment properties do I need to retire?

If you are a regular reader of From Cents To Retirement, you buy it that rental properties are a great way to fund a retirement. In my opinion, there are great advantages to rental properties, in comparison to other investments and I will go through them once again in this post. However, there are very low hanging fruit arguments: rental properties produce predictable income that is naturally indexed to inflation, have many tax advantages and allow for easy leveraged.

If you want to retire off of rental properties, you should have, in my opinion, a strategy and a philosophy. These are different things. A strategy is a plan that will tell you where to go next. A philosophy to invest in real estate is a set of rules that you’ll apply always, regardless where you are at that moment. My strategy is so complex that I actually wrote a book about it.

In this article, I will share how you should calculate how many rental properties you need to retire off of. I designed this article so that you ask yourself a bunch of questions that will give you very solid indicators on how many properties you will need. It is not a magic formula, though. It is more of a comprehensive view on the topic that will help you arrive at a number, type, and location of a rental portfolio.

How many investment properties do I need to retire?

“How many investment properties do I need to retire?” is probably in the TOP3 of questions I get, when it comes to retiring with real estate. After all, I set the goal to retire by the time I hit around 30 cash flowing units (meaning 20 more than what I have now). To be honest, I love this question, because we don’t need the same number of properties to retire… Plus, I actually found out that, working with clients abroad, this question can be easily answered if we understand some points about early retirement and real estate first.

Before we dive into the actual calculation of how many properties you will need, let’s review some real estate points before.

Why are rental properties a better way to retire than other investments?

The thing about investing in the stock market is lack of control. I love real estate because I can negotiate 1:1 and bring the cost of properties down. In fact, I love to shop around for properties and submit 30-50 offers in a matter of days. I submit these many offers because I go with very low offers – sometimes 20% of the listing price. And if I find a motivated seller, who had his/her property on the market of ages, I may walk away with a great deal. In the stock market, you can’t do this. Sure, you can find undervalued stocks but you can’t really buy a stock below market value.

Plus, you have very low flexibility with stocks. You buy them and you hope the companies you invested in do well. But you can’t run them. In real estate, you can negotiate the acquisition cost aggressively and monetize the property as you want. You can choose the renovation you want (and you can trade-off between renovation costs and income) and decide what and when to repair things (unless we’re talking about urgent things that needed to be repaired right away). The stock market is so far from this that many investors claim that if you’re going for the long term, it doesn’t really matter when exactly you buy in. Most investors think that the best thing to do is to buy a few index funds (such as a trident portfolio) and call it a day.

Retirement calculators

There are many retirement calculators that suggest you the number of properties you need to retire off of a rental property portfolio. I think that retirement calculators can be helpful but I don’t agree that they fit most people, as they are biased and usually designed towards a specific scenario. For instance, how would the same calculator work, not knowing if I live in the US, Portugal or Cambodia? Many people would say this is already factored in in the income I need to get to retire, but that completely ignores facts like the local tax code, how hard it is to leverage in those markets and how much that market will grow in the future.

I believe that the best way to determine your magical number of properties is actually my answering the questions below…

What is your goal?

My own goal is to become financially free by the time I turn 33. At least that was the goal when I started From Cents To Retirement, 2 years ago. Now, it is more like being able to retire by the time I turn 30 years old.

Your goal may be 60 years old. Or 25. It doesn’t matter, just set up the goal. The sooner you retire, the more sustainable your portfolio will have to be, but the more work it may require – at least in my perspective. Real Estate is never as passive as dividend stocks, for example. You’ll have to deal with tenants in one way or another – even if you hire a property manager. They may solve most of the property issues without needing your intervention, but you’ll have to be involved to some extent. Usually, the younger you are, the more willing you are to get involved.

So, set your goal in terms of age, income needed to retire and the level at which you’re willing to get involved in the investments.

Where do you live – and where do you want to retire?

This question is essential in two ways: first, it will help you determine how much you will need throughout your retirement. Second, it will clearly tell you whether you should invest.

As for the needed income to retire, you’ll have to come up with a reasonable figure that enables you to live well in the area you want to retire in. The good news is, you already know the area very well, and can easily determine what the perfect figure would be. Maybe it is your current salary (that would perfectly do the trick for me).

Although you want to invest in real estate that is physically close to you (unless you go with turn-key properties), you need to make sure that the markets near you are indeed profitable.

So, the bottom line is, arrive at a number – regardless you want to retire in your current location or abroad.

How much can you cash in, with the properties you’ve identified?

At this point you know where you want to invest, so you should also know how much money each property yields. This is because you’re familiar with the market, and you can quickly say how much property is supposed to cost and yield. My advice is to study the market inside out when you get to this point. Make the following questions:

Will there be enough rental demand over the next years?
What type of tenants will the market primarily be made of (e.g. students, nurses, families)?
Are there enough (and sufficiently competent) property management companies?
Are there enough contractors? Can you determine whether they are competent and affordable?

Once you answer these, the math becomes simple. Consider taxes, maintenance costs (usually 15% in the long run), vacancy costs (I use 10%) and property management fees. Then, arrive at a number of properties that enables you to retire off of (as you already know how much money you need to retire). Be conservative, as much as you can. But be realistic and don’t lie to yourself.

My own example…

My first goal is to hit a net worth of about €670k-€680k, which, considering a 2% inflation rate, should have the same purchasing power of €755,000 in 6 years from now.

In today’s euros, I estimate that such a portfolio will generate a net salary of about €29,000/yr (this takes an average net yield of 7% and 28% tax into account). Just so you know how conservative I am: I will break this down into 4% for my salary (which is €16,500/yr – if you think this is low read my post about retiring in Portugal and geographic arbitrage), 2% to cover inflation and 1% for portfolio growth.

I estimate that about 70% of that income will come from rental properties. As each property usually nets about €200/mo net in my region (considering a 28% tax, property management fees, etc), I would need about 9 properties to make it happen (9*200*12 = €21,600 ~= 70% * €29,000). This math assumes 0 liabilities, which is clearly not the case in my portfolio. If I take liabilities into account, then this ramps up to about 20 cash-flowing properties, the double of what I currently have.

Next year I should have a total of 20 properties, but my debt will be as high as never before, as I plan to use some acquisition lines of credit, mortgaging RP#3 to that end. This may mean that my debt will be higher than €200,000. A necessary way to grow…

How much do you know about real estate investing?

If you are a reader of From Cents To Retirement, you are probably an expert in real estate. However, I think that if you want to retire off of a rental portfolio, you must really know what you are doing. In particular, I think that these pointers will help you a lot, especially if you are serious about setting up a real estate business:

Simply take these tips and tricks into account when determining the number of properties you need to retire off of and starting a real estate business.

Conclusion

In my opinion, there is no magic formula that allows you to safely say how many properties you need to retire. We are all different, living in different places, needing different income to live off, and we all have different tolerance to risk and willingness to be active in our investments. However, there are a lot of questions you can make that will give you a rough idea of how many properties you’ll need. At the end of the day, it boils down to setting an income figure you want to receive every month and a plan to create as many properties as needed to create that income. Simply go through the questions and observations I’ve made in this post to determine how many.

Any comments? Let me know down below.

Your biggest fan,

Ben

mastering lines of credit Helocs to building a rental property portfolio

Planning, Real Estate,

Mastering lines of credit to invest in Real Estate

As you know, I will start to use lines of credit to grow my real estate portfolio. After I decided my early retirement portfolio would come essentially from a rental property portfolio, I decided to look at lines of credit from a different angle. Just so you know, big rental portfolios have been proven to be some of the fastest ways to reach long-term wealth.

In theory, you need some assets to ask for lines of credit, but you can also start this process with a personal line of credit or an unsecured line of credit if you don’t have any collateral to show. If you do use a line of credit to buy a rental property, I recommend you to choose a rental property with very good changes of being rented out. Otherwise, it is risky… very risky…

Yet, lines of credit can be a great tool to expand operating rental portfolios. Just to be clear, in this post, I am covering home equity lines of credit, which are typically called HELOCs.

Before I proceed with my own model, I want to first review the generic model behind HELOCs.

Say you want to retire early with real estate (just so you know, it is among the best ways to retire early). You have a real estate portfolio composed of, let’s say, 3 homes. Two homes were purchased all cash, and so you haven’t mortgaged them. This means that they can be provided as collateral for a new mortgage:

You’re bored with your growth and you think of using a line of credit for investing further. Note that this is yet another way to finance yourself – you’ve got several options. The cool thing about lines of credit is that you don’t really need to guess much because the collateral is already yours. Plus, should you need money, it will be on your account pretty soon (after it has been established, that is). You can simply have it appraised and ask for a credit line. If you use the line of credit merely for investment, this is typically called an investment line of credit.

Now, as your property no. 1 and no. 2 are free and clear, you can have them mortgaged as a collateral for a line of credit. For the sake of discussion, this gives you access to a line of credit of $100,000:

For the sake of discussion, it doesn’t matter whether you mortgage one or two homes to get access to a line of credit. Now, given that you have access to $100,000, you buy a new investment property:

The best thing about this is that that investment property is free of any mortgage. Therefore, you can replicate this process essentially forever. The only things that are required to replicate this on and on are 1) that you don’t default and 2) your appraisals are enough so that the bank lends you enough money to buy a new rental property. An interesting question is “can I still get a line of credit if my credit score is low?”. I am not an oracle, but I’d say you need a decent credit score, so get yourself a secured loan and build that thing up!

Keep in mind that lines of credit typically work on a 70% Loan To Value (LTV) basis. That means that is your homes are appraised for say $100k, the bank will lend you $70k. This is why I am only interested in homes whose appraisal is way higher than the acquisition cost.

A new LLC – my second holding

As I said before, I am establishing a line of credit of $180k, given that RP#3 was appraised at more than that. Plus, I have renovated it, so I can ask for a line of credit giving RP#3 as a collateral. I am creating a new LLC for that, although it is not simply to hold assets. I want to turn it into a big holding, but also a company to sell services, eventually. This new LLC will start with at least 150k of fresh capital. Essentially, I will have to build a rental property portfolio from scratch…

Within this new LLC, I hope to ask for a few lines of credit until the point I ask one or more every quarter. Eventually, I will simply be managing the ratio debt/income of the company. This company won’t be built just so that I build another real estate investment portfolio. My intention here is to leverage a lot and use HELOCs to build a very large rental property portfolio…

I believe that there will be a sweet spot of the income-to-debt ratio as time goes by. Here is a projection of what I want the company to make:

2018

Worst case scenario: revenue = $8,000/yr ; costs = $0 ; equity built $0 ; profit = $5,600

I will start this company with 150k and 0 debt (the 150k will be obtained at the cost of mortgaging RP#3, which belongs to another LLC), and it will take me a while to get my first line of credit accepted. Therefore, I am projecting 8 months to be running at full capacity (meaning having bought all properties and be drawing cash from them), which will create a revenue of $8,000 for the year. This is not particularly good, but it will be a start. In this scenario, I assume that, because the LLC is new, the bank won’t lend me money, which means I can only buy €150,000 worth of real estate. This should be enough to buy and renovate about 6-8 units.

Assets worth = $250,000 (remember that I will buy way undervalue)
Costs = $0 (I only factor in big costs – general company expenses such an accountant are factored in the final profit)
Equity built = $0 because I won’t have any debt
Profit = $5,600 as I am using a 70% operating margin

In the math above, take into account that the debt on the 150k belongs to my other LLC that owns RP#3. That company will then have some debt on the balance sheets, but the rental income from RP#3 alone (projected to be more than €1,400 by February 2018) will be enough to pay for the installments of that line of credit.

Best case scenario: revenue = $16,000/yr ; costs = $6,400 ; debt = $120 ; equity built $4000 ; profit = $6,000

If the bank lends me money, I will assume I can get $120k in debt. This means a monthly payment of $1,000 which is roughly $666 principal and $333 interest, on a 13-year mortgage.

In this case, I could potentially hit 15 units, which would mean an annual revenue of $32,000. However, I’d need time to buy and renovate the properties. Projecting 6 months to find, buy and renovate some properties, I’d say I would hit about $16k in revenue and pay down $4,000 in principle. The profit would be 60% of ($16,000 – $6,000), which means $6,000. This means that I would create $10k in actual wealth, as I pay down $4k in principle.

2019

I will assume I ended up with the worst case scenario in 2018…

Revenue = $37,000/yr ; costs >= $15,000 ; debt = $150-200k ; com. equity built $9,800 ; profit = $13,000

If the bank doesn’t lend me money in 2018, it will certainly lend me money in 2019.

In this case, I could get about $150k in debt, which, on a 13-year, 3% interest mortgage would mean about $1,200/mo and roughly $385/mo interest and $815 in principle. I would operate at 100% the entire year, thus making over $37,000 in revenue. With $15k in cost, I’d make over $13,000 in profit and build almost $10,000 in equity.

At the end of the year, I need to have at least 18 units, regardless of what happens in 2018.

Assets worth = $550,000
Costs = $15,000
Equity built = $9,800
Profit = $13,000

2020

In 2020, I will definitely resort to lines of credit…

Revenue = $55,000/yr ; costs = $27,000 ; debt = around $300k ; com. equity built $26,000 ; profit = $16,000

Assuming I could create another $100k in debt during 2020, I will have 26 units in this LLC. This means that I would hit $55,000 in revenue for the year and have monthly payments of $2,300. This would roughly mean about $18,000 in equity, which builds up to $26,000. As for profit, we are talking about $16,000. With debt summing up to about $300,000, the company would hit $875,000 in assets and a net worth of more than half a million bucks.

Assets worth = $875,000
Costs = $27,000
Equity built = $26,000 (includes $9,800 from 2019)
Profit = $16,000

If everything goes well, I could retire at this point and live solely on the profit of this LLC, while making sure that there are no mistakes maken from this point on.

Any thoughts on this? Let me know in the comments down below!

Ben

Planning,

Early retirement in Portugal: geographic arbitrage on steroids

I talked about geographic arbitrage before, when I first considered moving to Portugal for good. Today I want to go deeper on this topic, as I’ve had lots of questions lately. First off, geographic arbitrage means taking advantage of different prices in different markets, for tax-, dividend-, rent-, or even the purpose of lowering your living costs.

In my book “My strategy to retire early“, I go over the reasons why I chose Portugal to retire in, and why it maximizes my chances to attain my goal of retiring by 33. In this post, I will go thoroughly over the nuts and bolts of that decision, as well as clarify important concepts and ideas under geographic arbitrage in general.

If you are looking for a geographic arbitrage example as you are planning on moving to a different country for tax or living costs purposes, you’ll likely enjoy this post.

Research

When I first considered moving to Portugal, I checked a few countries around the world and their suitability for early retirement. Geographic arbitrage is not exactly a new concept in this regard. People immigrate to other countries to earn larger salaries all the time. They usually immigrate, save hard and come back. The key idea is that the standard living cost and the standard salary is way higher in the country people immigrate to. When they come back, it all of a sudden looks like they are rich.

The first thing to do in order to consider moving to another country for geographic arbitrage reasons is to look at some key elements, including the average salary, the tax code, etc.

I too considered several countries in my research:

…and Portugal looked like the best country out there to roll out my plan. Here’s why.

Average salary: the #1 factor to consider geographic arbitrage

Prior to moving to Portugal, I worked in Germany for 5 good years. My salary in 2015 was 52k/yr, which means €2400 net monthly. In Germany, this can go a very long way if you save hard. I could live off of 800€, which means that I had €1,600 per month to invest. In 5 years, that is almost €100,000 free cash flow. This has allowed me to renovate my real estate portfolio (the killer being rental property #3, which I renovated in two different phases) and buy rental property #4.

In Portugal, the average salary is considerably lower. Officially, according to this source, Portugal’s average salary is $24,529. Having lived in the country for a few years, I can tell you I know very few people living off such a salary. Most people I know walk away with at least 33% less than that, averaging about €1,000 net per month (or €12,000 per year). Please remember that the minimum wage in Portugal is €650,00 per month!

Let that sink for a moment. If you wanted to retire early, in Portugal, with the minimum wage, you’d need about €200,000, assuming you could net 4% on that portfolio. Incredible, right?

The fact that salaries are so low in Portugal is the first hint that Portugal is a great candidate for early retirement. The country offers high living standards, and attaining the minimum wage is kinda “easy”, so choosing Portugal seems quite straightforward…

Now, the magic question: Ben, how much do you need to live well in Portugal? As I live in one of my rental units, I don’t have to pay rent anymore (although I do pay condo fees and property taxes, yes). As a result, my biggest expense is immediately taken care of. Could I live off €650,00 considering that I don’t need to pay any rent? You bet I could!

Taxes: a really important factor on geographic arbitrage

Ben, the infographics doesn’t say anything pertaining to taxes. Is Portugal still #1 when it comes to taxes?

The short answer: yes.

The long answer is more complex. Portugal has many advantages when it comes to taxes, especially if you are not a Portuguese citizen. If you retire in Portugal and collect a retirement pension from abroad, you don’t pay taxes. How cool is that?

At the same time, due to the progressive tax bracket system of the national IRS, you’ll be penalized if you earn too much. In Portugal, your actual tax bracket depends on the number of kids you have. Pretty cool huh? Because there are more than 25 brackets, you really need to make a lot of money to be taxed a lot. For instance, up to almost €3,000, the IRS will only tax you at 28.5%. Plus, you don’t have to sum up all your income (including rental income and dividends). As of today, that can be taxed separately, at 28%.

Unlike other countries, such as Germany, traveling to your home country doesn’t allow you any write-offs, though.

As I have a PhD and I am paid through grants (which are NOT considered income, i.e. they are tax-free), I can sum up my rental income and dividends and be taxed accordingly. As I also did a lot of renovation this year, I will have a lot of write-offs so I don’t expect to pay much to the IRS in 2017 and 2018…

Rental income

As I said above, rental income can be taxed on its own at 28% (unless it comes from a holding, which is even more tax friendly).

For both tax and security reasons, opening up a holding for real estate may be a smart move for RE investors in Portugal. This will both minimize taxes on rental income and provide the investor with some security in case of lawsuits. This is why I only keep one property under my own name – the rest is held in a holding.

Real Estate Investing (REI) during geographic arbitrage

In most countries I know, rental income in a different country is never taxed in the country we live in. In Portugal, that is no different. The same way you’ll still pay your rental income in Portugal, even if you immigrate to the US, you’ll not be taxed for rental income in the US if you decide to live in Portugal. Although this may look almost irrelevant, it is actually very important for geographic arbitrage.

Because Portugal’s real estate is so cheap, it is common to see US citizens coming to Portugal and acquiring properties over here. I think this is a great hedge to have if you plan on living in Portugal for geographic arbitrage reasons because your income will increase if living costs increase. In fact, I can’t think of a better hedge to have against increased living costs.

At the same time, Portugal’s real estate is one of the cheapest in western Europe. While it would not be wise to talk about market corrections in the future, I personally think it is safe to assume it can’t go any lower. This, along with the following reasons make it interesting to invest in Portugal.

In fact, from the countries, I considered when doing my geographic arbitrage analysis, I determined that Portugal offered the cheapest and the highest-yield real estate. As I said before, buying real estate where you retire is a great hedge against increased living costs, so this is great news if you ever plan to retire in Portugal.

Rent

Although you may invest in Real estate, you may come to the conclusion that renting your own place is better for you. Say you want to retire in Lisbon. Most likely, as of today, it would be clever to rent instead of buying.

Now, more great news: renting in Portugal is cheaper than in comparison to other countries.

Wait, is that good if I invest in Real Estate?

Yes, as long as you use different tactics to rent a place for yourself and invest in real estate. This is why I love multi-units in Portugal. A x-plex doesn’t cost x times more than a single condo, but it can rent for way more than x times what the condo rents for. In mid-sized cities in Portugal, you can definitely find nice flats for under €500 or even €400, which compares really well against countries like the UK, Germany, and Finland.

Weather and quality of life during geographic arbitrage

It cannot be all about the money! Moving to a new country due to geographic arbitrage reasons should not be only about saving or making more money.

If I were to tell you that Lisbon is the sunniest capital city in Europe, with an astonishing 2,799 hours of sunshine per year… wouldn’t that be great to add to your geographic arbitrage masterplan? 🙂 Plus, the entire country, on average, gets about 3,300 hours of sunshine per year, meaning more sunny days than almost anywhere else in Europe. How much would you save on Vitamin D supplements? 🙂 Just kidding…

But Portugal is not only about the sun and saving money on supplements. In my humble opinion, it is one of the most beautiful countries in Europe, if not the most beautiful one. Have you been reading FromCentsToRetirement for long enough so you recall my previous header? 🙂

Food

Having lived in many countries to this day, I can certainly attest that food is generally cheaper in Portugal. What I really like about the prices of food in Portugal is that going out for lunch or dinner is incredibly cheap in Portugal.

There are cheap prices everywhere. When I order take away, I can actually split the mean and eat it for lunch and dinner, because the Portuguese are used to big portions. Eating out at restaurants is also very cheap, and I usually eat at a restaurant nearby, for $3,5. That includes a meal like in the picture, one drink and one expresso at the end of the meal (which the Portuguese cannot go without).

I also order take away a lot, like I said, and that typically costs €4 to €5 but that is almost always enough food to have lunch and dinner.

Compared to the other countries I lived in, this is peanuts. Plus, the food is great. I think that restaurant prices are well congruent with the average salaries, in most countries. Therefore, a country with low average salaries cannot afford to have expensive restaurants, as food is a commodity. This is, of course, if you don’t decide to go and live in a touristic place, like the Algarve.

These low prices actually spread to other commodities. For instance, expressos are really cheap, if you are a coffee lover. In Portugal, they typically sell for 60 cents.

How about yourself? Up to geographic arbitrage? Want to share your experience? Let me know in the comments down below!

Your biggest fan,

Ben Davis

invest in real estate buy property in portugal

Planning, Real Estate,

Investing in Real Estate in Portugal

Do you want to invest in Real Estate in Portugal? Here’s what we can do to help you!

The first time I decided I wanted to invest in Portugal, my family asked me why. To them, it would have been more natural to invest in Italy or Canada, where we spent some time. I am very happy I decided to invest in Portugal, for a number of reasons, but the first one because my investments have been working great.

There are a number of reasons why people want to invest in Portugal when they want to invest in Real Estate:

They want to get a Golden Visa, a resident permit that is obtained when investing a certain amount (typically €500,000).
They want to invest small amounts of money. The Portuguese Real Estate market is great because Real Estate can be really cheap.
They are looking to invest in the coast, close to beaches. Portugal has the best coasts and beaches in Europe.
and more!

If you follow my blog you know that I invest in Portugal for a while. All my investments have been performing really well and I am looking to invest more until I hit about $6000/mo in rental income (I am at about $1350 right now and will hit $2000 until the end of the year).

Buy property in Portugal

In my company, we work with many types of people:

Buy and hold and fix and flip investors.
Second home buyers (both coast and non-coast homes).
Developers who want to develop properties.

Reasons why investors like to invest in Portugal

After working in over 20 transactions with investors, I am able to say why they typically want to invest in Portugal:

There is a lot of opportunity for high-yield investments. My own portfolio has been operating at a 10%+ net profit. I have been looking into the multi-unit market and I found more opportunity there than in any other market.
It is one of the cheapest (if not THE cheapest) real estate markets in Europe, therefore we should expect a correction to normalize the markets in Europe.
Because it is cheap, it is also much easier for you to begin investing.
The tax code offers many advantages in comparison to other tax codes (in particular, that of the US).
You can get 100% financed. Have a look at my portfolio; I was 100% financed on my deals, except for the closing costs (about 2% of the purchasing price).
The fix and flip market is safer than other markets.
It offers a great market for time-sharing models for beach homes.
It allows investors to diversify.

Reasons to buy Real Estate in Portugal

I could talk all they long about this, because there are very many (and so compelling) reasons to buy Real Estate in Portugal, especially as a retired foreigner. Here are some:

If you buy Real Estate in Portugal, you’re well on your way to get a permanent visa permit.
You can travel to any other location in Europe, Africa and the US/Canada spending less than
The weather is great!
It is one of the most beautiful countries in the world…
Everything is cheap, so many people buy properties in Portugal just so they can spend some nice vacation over here. I can tell you that I live where you vacation!

Where to look / what to do if you want to buy Real Estate in Portugal

Buying real estate in Portugal can be hard for foreigners. The first thing that a foreigner has to know is where to buy. However, all markets are very different from one another and from my experience investors have no idea how different they are.

On top of that, they barely know important aspects, such as tax, transactions, and construction itself.

I typically invest in mid-sized to small cities, and I typically go after motivated sellers when I want to buy properties for me or the investors I work with. I feel comfortable in those markets are I know that I can always make money when I buy, as I usually buy way undervalue.

Our services

I offer consulting services if you’re looking to invest in Real Estate in Portugal, depending on the region you’re looking to invest in. I provide reports on the markets and I look for investment properties – both buy and hold and fix and flip.

If you want to have a simple report with data on te markets where we invest in, we usually charge from €700 to €2,900 + VAT. We also provide market studies and reports on specific cities and markets.

Our second service is to help the investor with the transaction, from the beginning until the end of the transaction. Our rate is 6% of the purchasing price, with a minimum of €5,000 + VAT. We can also represent you in the transaction too.

If you are thinking about buying a property in Portugal or if you want to know more about our service, send me an e-mail to fromcentstoretirement [at] gmail [dot] com.

Daily life, Planning, Real Estate,

Renovation of RP#3: the second phase has begun!

The moment has arrived. My favorite part in REI…

In fact, if you read about renovating properties, this can be quite fun!

I am very excited to say that the second renovation phase of RP#3 has finally begun!!! In this post, I will go through the nuts and bolts of the renovation and the deal itself.

Property specs

I have bought this property more than one year ago, but at the time I only renovated part of it. This property has 6 different units and I only renovated two of them when I bought it. I rented out those two units quite fast, for a total of €515/mo, which eventually became €500/mo as some problems popped up in one of the units and I decided to lower the rent to keep the tenants happy.

You may recall that the cost of that renovation was largely undercalculated, and I ended up spending way more money than I anticipated at first. The first renovation covered two units and one common area inside the building.

The building is divided into two parts, each of which contains 3 units:

Sketch of my 6-unit building.

After the renovation, I decided to put off the renovation of the second half – or right half, in the figure above – of the building (and I actually ended up renting out one of the units as it was (LINK)). The main reason was to preserve liquidity. Now, that my real estate company did well, I decided to cash out some monies and go ahead with the renovation on the second half of the building. This second half is promised to be rented out to the sub-leasing company I work with, for €540/mo, which will be instrumental for me to hit €2,000/mo until the end of the year.

Renovation Costs

First, the costs:

Labor: €24,000.00 (this includes renovating the facade, the electric part, plumbing and all the material for the walls and ceilings);
Tiles, tubs, taps, vanities and what not: about €4,000.00;
Kitchen cabinets and countertops: about €3,300.00;
Windows and outdoors: about €2,000.00;

Total: about €33,300.

To pay for this renovation, I will withdraw as many funds from my RE company as possible. At first, I thought I could cash out €30,000, but due to the amount of taxes I will pay to do this, I will only be able to cash out around half of that (unless we have big sales until the end of the year). I am also relying on a €2,500 work bonus that I will collect by Christmas. At the end of it, I will have no money in the bank, which means that I will feel comfortable – remember, if you have money sitting the bank something’s wrong! 🙂

The deal

This is a building in the very center of a mid-east city in Portugal, with a very big and reputable university. The building is also relatively close to the university, so renting it out will be easy in the long run. Just to let you know, I wrote a post entirely on this unit a while back ago.

How much I spent so far

This has been my biggest deal so far, if we account for renovation costs. I have bought RP#3 for €31,500 but I was 100% financed. Here’s the rest of the costs I’ve had with this property so far:

Closing costs summed up to €3,900. These were especially high, as closing costs in Portugal tend to be lower, especially if you’re 100% financed.
Renovation cost to this day €26,600. Keep in mind I do clever renovations.
Appliances and equipment €500.
Total mortgage costs paid to this day €1,700.

Total invested to this day = €32,200.

Given that I will invest another €33,300 into this renovation, at the end of it, I will have €65,500 invested, and I will have a mortgage of €31,000.

Yield

As this property will safely yield €1,260 in December, we’re talking about a 23% cash on cash return and a 16% yield. I am not sure about you, but this looks like a great investment to me!

As I will write off the expenses with the renovation of the property, I will get, at least, 2 years of tax-free rental income on this property. This means that the 16% yield will be net. Well, to be fair, we need to deduct the property taxes and the insurance (together that is something like €500/yr). Therefore, the net yield is 15,15%. Still awesome, right?

Next year I will pocket €14,520 after all the renovations. I will get a line of credit on this property, of about 175k. On a 3%, 13-year credit line like this, I will pay €1,220 every month, which is essentially the rental income of the property. Note that, in the first year, €837 of the €1,220 is principle. After this, it allows me to have about 150k to go out for shopping. 🙂

Aspects of the renovation

I didn’t want to show much of the building online, but here it goes a little bit of unit. This is the lower unit of the right side of the building, which we just guttered:

As well as part of the 4th unit in the picture above:

We are still working on guttering it, actually, as we simply torn some walls down up until now. As you can see, they seem like a very small 1-bedroom (which in fact they are) that you would typically rent out to one student.

I have actually decided to start by tearing down the walls of every unit, so that we can plan the several rooms in a better way.

More to come soon! Stay tuned!