How we used real estate investing to fund a nomadic lifestyle

by Tiffany Humfeld, founder of Peace Love and Wine.

Location independence. The nomad lifestyle. It sounds so glamorous.

You know what’s really glamorous? Freedom! The freedom to be able to be location independent, whether or not you choose to. If I want to run away with the circus (and I have literally considered it, even interviewed for it), how can I set my life up in a way that I can afford to do it?

For now, I am super happy playing mermaid in my sandcastle on the CA coast. I live on vacation, in a sense.

I don’t have the urge to pay to go somewhere more humid and have to figure out what to do with my fur beasts. But, let’s say I did. How could I set things up to make it work? I suppose I could arrange my home up as a corporate rental and lease it out to a company who has a need to house their employees (with the “bonus” of free felines included in the rent). Or lease it out to a company who houses travel nurses. Then I could move elsewhere. Or I could just rent it out as a furnished rental.

But how did I get here, to my sandcastle? It was deliberate. It was planned. And there was a little bit of luck involved. It took 5 years (shorter than expected, but longer than I wanted). Also, let me clarify that my sandcastle is a 650 square foot 1 bedroom condo and I have no kids (on purpose).

we funded our digital nomad life with real estate investing. here's the view

Sunset view from our building’s common area. The famous Queen Mary ship is in the background on the left.

When my husband and I got married in 2007, we lived in his first purchased home, a 1600 sq ft. townhouse in a desirable area (which he purchased in 2004, a really bad time to buy, in CA). Then I read the book that changed my life – Rich Dad Poor Dad by Robert Kiyosaki. It leaves out important details on “the how,” but the concepts within it changed the course of my life and the way I think about money. After reading that book (given to my husband by his first mortgage broker) I decided to become a real estate investor. Many an investor have had their real estate fire lit by this book.

You know what I love about housing as a product? EVERYONE needs a place to live. It will never go out of style.

Think about it…

In 2008 we entered the “REI” world (Real Estate Investor) and purchased our first investment property. We used the “house hacking” model where you buy more than one housing unit on a lot and live in one unit while using the other(s) to offset the expenses. (An online resource I like for learning is BiggerPockets and the podcast by the same now. You can find me on BP @PropertySolved).

We bought a duplex in 2008, lived in one unit and rented out the other. It was not in the most desirable area. It was a sacrifice in lifestyle and we continued to read, meet and network with other investors, and learn while cutting way back on entertainment and eating out. We lived there for 4 years and now rent out both units.

Living there gave us landlording experience and a better understanding about property upkeep and resident relationship management (tenants).

At that time, my husband had a six figure job so we were able to get traditional financing. But that was right after the big housing crash and we almost didn’t get that financing, even with strong credit. So part of investing is timing. You don’t have to time it perfectly and nobody I know has a crystal ball. But it’s a good idea to buy towards the bottom or at the very beginning of an upswing in prices.

real estate investing for digital nomadsThis was our first rental property, a detached duplex in Long Beach. We lived in the front house and rented out the back house.

We gradually bought more rentals throughout the years. Eventually my husband got laid off.

Luckily, he had been disenchanted with corporate employment and had started his own location independent business on the side a few years prior. He’s an app developer and has experience with different kinds of apps made for individuals and large companies. If you’re looking to chat about apps you can message my husband Kyle at [email protected].

What is something I wish we had known when we started?

Use 50% as an expense factor! This means if you get $1000 in rent, then expect $500 to go out the door in expenses. Over time this is likely to be the real number. It is perhaps a bit conservative. Banks typically use 35%, in my experience. But this will keep you safer, allow for some inevitable mistakes, and factors in a 10% profit and 10% management fee per month. Even if you self-manage you want to pay yourself separately for the management expense and have the freedom built in to hire someone if you change your mind or cannot do it for some reason.

The other big thing I wish we had known, real estate is cyclical (the crash). If you want to buy but feel like you can’t afford anything, this could be a really good time to stockpile your cash for the next market shift. If we understood this, we probably would have sold that 1600 square foot townhouse at the top of the market instead of paying out of pocket every month to cover the difference between expenses and rents like we currently do.

In looking at the Case-Shiller Housing Index you can see that the city of Los Angeles is currently close to its pre-crash high in 2007.

So what happens when no one in the household has a “normal” job and banks don’t want to lend to you?

Well, last year, all the properties we purchased were with private money. This means, we partnered with regular people who want to diversify OUTSIDE of the stock market. We use their funds to purchase property and pay them a much better return than they can find in the market. And, their funds are secured by the property, meaning if we get abducted by aliens, there is a public record that we owe that money and they can foreclose on the property and sell it or rent it out.

Now we are working on commercial refinancing to pay our private party lenders back so we can rinse and repeat. (Commercial lenders tend to put most of the weight on the income a property produces so our personal income is not scrutinized the same way the traditional Bank of the Bailout would calculate).

Never did I imagine I (a liberal arts major who studied theatre) would be involved in the investing world. For one thing, I have math class trauma from my childhood…but, investing is simple math to start…

That said, my love for the artsy-fartsy has been calling me recently. And my muse, a mermaid, came to me in an afternoon doze session. And I am now launching a side hustle where wine, mermaids, and creativity collide. My company is called Peace Love and Wine and it’s all about women taking time out for themselves, practicing mindfulness, and supporting other women.

In terms of product, we currently have several items from fun yoga and wine tasting shirts to monthly subscriptions with things like wine-themed coloring pages, handcrafted jewelry, and hand-poured candles made by US-based artisans.

The world is changing. No longer can one plan to go to school and just go out and get a high-paying job that they can count on for retirement. There are no guarantees and companies are not loyal to their employees. Pensions are going away. So, it’s up to the nomads and free-spirits to create our own economies and retirement plans. It’s not an easy path. It can be stressful. Your friends and family will probably not understand why you’re so crazy. But, I think it’s worth it and will become more and more common in the coming years. So, go plant your flag in Crazyville and get a headstart. Start a side hustle, even if you’re happy with where you are now.

Peace, Love, and Wine,

Tiffany

peaceloveandwine.com, (coming soon).

Instagram – @peaceloveandwineclub and @circusofhumanity

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