My main goal* was to build an investment and cash portfolio of $1,120,000* ($1,000,000 to retire on and $120,000 to pay off the house) in 1500 days**, starting from 1/1/2013 and ending in February of 2017. I made my goal in 2016, my 1500 Days are over, and I’ve left my job. In the interest of openness, I’ll continue to share my numbers.
Trailer Park Post-Mortem
And, the trailer park is… Gone! We closed on the sale back in January and just received our final payment. Let’s look at the juicy numbers.
Initial Investment (1/2017): $170,000
- 8/2019: $1,211.92
- 10/2019: $16,135.42
- 1/2021: $319,230.87 (sale)
- 4/2021: $16,135 (final payout from reserves)
Over 4 years, we made $179,445.65. ($349,445.65 minus our investment of $170,000). The extended internal rate of return (XIRR) suffered because we made most of the money at the end.
Questions and Answers
Were you happy with the investment?
I compare all returns against the S&P 500.
- S&P 500 with dividend reinvestment: The index increased 79.6% and we would have ended up with $305,320.
- Trailer park: $349,445
Even though the S&P 500 did exceptionally well, returning 15.765%, the trailer park still won. Put a check in the win column!
And the other partners did even better. We took a lower share of the profits because our role was completely passive. This is how the arrangement had to be since the rules of a self-directed solo 401(k) prohibited Mindy and me from being actively involved.
This investment cash flowed very poorly. You made all of your money from the sale! Please explain.
When we bought the park, it was in very poor condition. There were tenants who had not paid in years, a tenant who was a fraudulent prostitute on Craigslist, abandoned units, and empty lots. We spent the first 3 years (2017-2019) cleaning the place up. We demolished the units that were beyond repair. We fixed up others. We bought more units to fill the empty lots. We put almost every dime we made back into the property. 2020 was the year we really expected the property to cash flow. And then:
Had we not sold, we would have started seeing real cash flow in 2021.
Why did you sell?
- Real estate prices are frothy and trailer parks are especially hot. We received an offer that we couldn’t refuse.
- The older I get, the more I value simplicity. Almost all new money goes to index funds which aren’t flashy but are passive, simple, and deadly effective.
I probably wouldn’t invest in something like this again, but this was a good experience:
- We beat the returns of the market.
- We made the world a little better. We took a run-down property and invested in it. The park is now a better place for the inhabitants and still provides affordable living in an expensive part of the world.
Mindy and I put all of the proceeds from the sale into VTSAX. For the first time in our lives, VTSAX and its ETF counterpart, VTI are now the biggest holdings in our portfolio (see a complete listing of investments here):
March was a great month. Our net worth started the month at $3,642,156 and ended at $3,826,009 for a gain of $183,853.
2021 (as of 3/31/2021)
- Days elapsed: 90
- Net worth gains: $306,263
Since the Start (1/1/2013)
- Days elapsed: 3011
- Net worth gains: $3,089,966
Return To Normal
After 13 months of a pandemic, the death of my father, and being isolated from many of our human companions, life feels like it’s returning to normal. Last Friday, we saw friends that we had not seen in over a year. We’re still proceeding with caution, but the world is opening back up again.
At the same time, I’m wrapping up our remodeling projects. Soon, I’ll put away the tools and start cranking out the miles on the bike.
Normal will have never felt so good.
*My goal wasn’t to have $1,120,000 at the end of 1500 days, but at any time before the day count was up. Why? It all goes back to the 4% Rule. Remember that our little friend, Mr. 4%, is nothing more than the most conservative safe withdrawal rate. Since my investment portfolio now sits at $1,550,000, I can spend about $62,000 in my first year of retirement.
**My original goal was $1,000,000 and no debt, I later raised the goal by $120,000 to $1,120,000 because I will have debt in the form of a mortgage and I firmly believe in not paying it off (LOOK at the MONEY I’m MAKING!). My compromise was to have enough money put away to cover the mortgage at the time of retirement.
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