Can I liveaboard off my rental property?

[TrentePieds]

Avi_normal:

You say your mortgage payments and condo fees are 35 grand a year, call it 3 grand a month, for TWO condos in a major Canadian city??? And your rental income is $2K/mnth on one condo and $2.5K on the other.

The implication is that you are well into the Amortization Period on these mortgages, and that the market value of the properties is significant having increased since you bought them. I suspect, therefore, that there is enuff equity in the properties to warrant a careful consideration of a refinancing that just might be able to put your plan into realm of feasibility in such a way that you can go sailing soon, while a successession of renters pay off the new mortgages for you. Ergo, you get to do what you want to do for the next five and twenty years while OTHERS pay off your mortgages and, in effect, make you, in 25 or 30 years time, a present of two hignly value, increasingly valuable, condos!

You need to go and see a financial adviser with his head screwed on right. Do that before you even start to think about what it takes to be come a sailor.

TrentePieds

[valhalla360]

Originally Posted by TrentePieds

You say your mortgage payments and condo fees are 35 grand a year, call it 3 grand a month, for TWO condos in a major Canadian city??? And your rental income is $2K/mnth on one condo and $2.5K on the other.

With only two properties, the odds of bad renters resulting in 50% or 0% of projected rent for 6-12 months is a very real possibility...but the mortgage payment and maintenance costs keep piling up...plus legal fees to get them evicted and then pay to repair the damage they did.

Do you have enough funds to ride out this kind of issue?

[Salt to Sea]

I'm brand new here and have nothing to add to the sailing portion, but wanted to add my two cents to the financial side. Lots of great advice already, but here are my thoughts.

As others have mentioned, the numbers look super tight to me and I'd be worried about what happens the first time something major or semi-major happens (new water heater in one or both condos, vacancy for a few months, boat repairs, etc.). I don't know what kind of savings you currently have, but I'd want to have 6 months worth in the bank before jumping into something like this. Where will you live when you're back in Canada? How much will that cost? Will you need a vehicle when you're back home? Where are you storing it? Are you paying a property manager and have you factored in their 7-10% fee? How do you intend to get back to Canada every Summer? Can you afford the flights to/from the boat? Where is the boat stored while you're not on it? Cost of that? I'm sure you've thought through a lot of this, but these are just some of the things that jumped out at me when reading.

If you have to rent a condo for the 4 months a year you're in Canada, and the average rate is $2,000/month, there goes $8,000 of your $25,000 income - that doesn't include food, entertainment, transportation, etc. while you're on land.

I think it's an awesome plan, and I hope you're able to live it. Without knowing more, it looks like you need to save more and/or figure out how to make more than $12-$20K while on land. Good luck.

[GordMay]

Greetings and welcome aboard the CF, Salt to Sea.

[Mike Banks]

One could survive as long as nothing goes wrong, and that you have a fibreglass vessel thirty feet or more, but not much more. I have known several who have done it--myself included, but I did augment my income with the odd paying job. The mistake many make is the assumption that the rental income is a constant and will be paid on time. Often tenants leave--sometimes they damage property, and from my experience, for what it may be worth, I made very little real money because repairs and further capital works devoured what income I did get for the most part.

However, I did have a small pension which helped. My wife too had the same--so we managed. Were it not for the pensions, it could not have happened--but our vessel was larger than it needed to be, and maintenance on it was quite high, although the marina berth was extremely reasonable and included power and water. We had TWO properties we rented at the time--and the rent from ONE of them was less than the cost of maintaining and repairing the property, so I did not count that one in the initial argument.

What I will say though is that if I were to set out to live off property investments, I would be opting for non-residential property. The tenants are better and the laws pertaining to commercial tenancies are not as ridiculous, at least in Australia. Also the buildings are cheaper to build and maintain.

[TrentePieds]

Quote: "What I will say though is that if I were to set out to live off property investments, I would be opting for non-residential property. The tenants are better and the laws pertaining to commercial tenancies are not as ridiculous, at least in Australia. Also the buildings are cheaper to build and maintain."


This is true also in Canada. The ONLY way you can show a "contribution" (cash for your own personal use) as a rental property owner in British Columbia is by being a "slum landlord", and then only if you own the property/properties in clear title. The Residential Tenancy Act and the Regulations thereto are ALL in favour of the tenant. As it should be, given the proclivities of SOME landlords!

TrentePieds

[captlloyd]

Your basic plan is great, I think all you need to do is tweak your idea a bit. If I were you I would start to put a real plan together and put off the purchase of a boat for a year or two. Personally I have fallen in love with catamarans and this is the direction I would go in your situation. A small well cared for cat would be perfect for you. I’m talking about a 34-36 foot boat but you can buy what you want, either way saving up for a year or two will really help you achieve your goals. In the meantime, study sailing, study boats, study boat maintenance. I didn’t see anything about your DYI ability, this is were you can save a lot of money. Spend some time on both monohulls and catamarans to see what you like. By the way, I spent a month last winter on Isla Mujeres in an AIRBNB rental for only $1400 a month, so you can still have your warm winter while saving for a boat.

[WindwardPrinces]

Originally Posted by GordMay

I suppose, one could live on anything between <$4,000 and >$5,000,000 per year. People do.

Philippines: The survey results showed that the average annual family income of Filipino families was approximately 267 thousand pesos. In comparison, the average annual family expenditure for the same year was 215 thousand pesos (<$4,200US*).
In 2015, about 41.9 percent of the total annual family expenditures was spent on food. For families in the bottom 30 percent income group, the percentage was much higher at 59.7percent, while for families in the upper 70 percent income group, it was 38.8 percent.
*1PHP = 0.0195185 USD → 215,000 PHP = 4,196.05 USD
➥ https://psa.gov.ph/content/average-f...-family-income

In 1990, Donald Trump’s empire and image were imploding. Running short on cash and having already missed a bond payment to the backers of his Trump Castle casino in Atlantic City, Trump was on the precipice of bankruptcy. If he defaulted on the loan, banks would swoop in, seize his prized properties, and sell them off to get their money back.
But those banks offered Trump a lifeline. They agreed to loan him more money so he could keep making payments on his various debts—under a few conditions. “The banks will name two executives to run the Trump empire, bar him from moving money among his companies without the banks’ permission, and limit him to a $450,000 allowance for ‘personal and household spending’. That`s $450,000 per month, not per year.
➥ https://www.chicagotribune.com/news/...222-story.html

If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem — J Paul Getty

[WindwardPrinces]

If you have a year's worth of expenses saved up (both potential for something going wrong with the rental properties, and living expenses), this could work as far as cash flow.

I still think you need to have some additional funds set aside for retirement, and the boat needs to be paid for, not financed.

That's my opinion. You want enough financial cushion so that someone else's arbitrary decision (insurance decides you need to buy a new water heater, marina doesn't renew your slip and you need to move somewhere more expensive, hurricane makes you move into a hotel for a month) doesn't force you into a bad spot.

[leftbrainstuff]

We live off rental income. And we don't have to worry about getting enough footage for a weekly YouTube video.

[theDangerz]

Yes, you can.

But - here's the thing... nobody here can tell you exactly how, or what "the" number is, or when you should leave or any other details because its all completely up to you. The best anyone here can do is give you a little positivity (that is also highly likely to be lost in the mix of those who tell you that you cant/shouldn't even try).

You're the only one that has control over how/when this happens, but yes.. you also have the control to make sure it can and will work. Others live off the same or less and are flexible/willing to figure it out when the big expenses hit. So can you - if you choose to.

Are you willing to make change and stop living at/beyond your means to make change in your life? If so - then anything is possible. AND you can start doing that today. You can also do what it take to ensure maximum value from your rentals. Are you living in one of them now? Can you move somewhere else that would have a lower rent/monthly expense to you even if less comfortable/convenient? Maybe downsize to a van/rv/boat to start living small and saving money more rapidly? Can you take over the maintenance/cleaning or other expenses at your rentals after your regular job to save more money and/or take side jobs/projects to help make the numbers work out better?

I find that for most people the numbers are fine (or can be if they live within them), but the fact that they are already beyond their means make it an impossible task to see a path to living so minimally.

Try to make this decision less huge and less black or white. Take the boat out of the equation (for now).
Can you live on that amount month to month and save the amount you're outlining here? Try it for a few months/year and see. If you cant - adjust, move forward, downsize further... and keep tracking where all the money is going so you know exactly what needs to improve.

If all goes well you find out you can not only live on that amount but you might not need to go back and work a few months every year (which unfortunately will also cost you a ton in rent/living expenses while you're there working)... or maybe you'll just need to work less or can find a way to work from the boat or who knows what else you create or stumble over??

That's the thing that I wish someone had told me or convinced men of before we quit the jobs 7years ago... When you're busy/stressed/exhausted from working/living the same old life you've always known and spending the same way you've always spent it is almost impossible to know how little you can live off of or how creative you can get.

Just start making change toward your eventual goal and the next steps will become more clear and seem less drastic. Take control, make change, don't take no for an answer and most importantly... ignore everyone here and everyone in your life that tells you anything different or suggests that it isn't possible.

[MVDarlin]

Try cruising the Sea of Cortez. Very economical. Many reasonably priced boats in Mexico. Folks live the dream for a few years and don't want to hassel with taking boat back to the US. Anticipate you need $1,000 per week after you buy the boat. I found a nice 34ft C&C in Alaska for $18,000 with new Yanmar engine.

[5ailinFool]

Don't forget to add in the cost to replace a broken dishwasher in the rentals or fix a leaky sink.

[BuckeyeTom]

Wellllllll ..... you can try. ! But by the end of your first year your live-aboard may more closely resemble Waterworld than Life Styles of the Rich and Famous. That's OK if your bat-**** crazy like Mel Gibson but you sound somewhat lucid.

[GordMay]

Greetings and welcome aboard the CF, 5ailinFool.