Lifestyle Design - What is it and how does it impact you?

[J. Martin]

@Ali Boone , @Charles McNelly, and others have talked about lifestyle design, and how it fits into their real estate investing - or should I say, how their real estate investing fits into their lifestyle design. I've always had the goal to have my real estate income on my "fix and holds" provide enough TOTALLY PASSIVE income for me to not wake up before 11AM and always be able to wear flip flops, from anywhere in the world :) More recently, I read some of Ali's blog posts, and it's a much more explicit and targeted form of something that has been less explicit in my own goals, investments, and work flow..

For now, I've been outsourcing whatever I can. My handyman takes tenant calls from tenants and does repairs, and shares a google doc with his hours and materials costs. I have a Virtual Assistant in the Philippines for a lot of administrative tasks. I do some of the lease-up and supervise rehab when the purchases are done on my investments (about 1-2 per year). So I spend some time on RE, but have been decreasing that time as my portfolio has grown. (Almost $1MM in gross RE assets, $100K+ in gross rents, 7 units, managing a few more on JV deals). And for now, a full time-ish job. (Although not working for the month of June ;)

It's been going smoothly enough that I was able to take a month and a half off late last year to travel Europe, without any problems - and used the money I didn't pay a property manager that year, to do it.. But I would probably hire a PM if I trusted them to do as good a job as myself (I have local investments). 

Ali, Charles, 

Care to share with others about what lifestyle design is to you, how your investment style fits into it, any tips for others, and any tips for my situation? 

Thanks in advance!

[Mark Ferguson]

Great topic. For me I have a lot of goals and things I am always looking to accomplish, while at the same increase my free time with my family. I delegate most of my job(s) and that helps me to focus on what I enjoy doing the most. I don't think I could pinpoint what I would want my perfect situation to be, because want I and is important to me is always changing. I also think the challenges in life are what makes it the most exciting.

[Charles M.]

J Martin
Hey J, the first time I read or heard about Lifestyle Design was in Tim Ferris' book that everyone always mentions on the BP podcasts called the 4-Hour Workweek. (You know, the book that Brandon Turner is always mentioning that Joshua Dorkin is still on page 13 after about a year now). Lol. Anyway, I definitely recommend reading it for a firm foundation of the philosophy. I'll post my thoughts tomorrow when I have more time. Thanks for mentioning me J.

[J. Martin]

@Charles M. ,

I forgot the phrase was from 4 hour work-week.. I only read the back cover in a bookstore one time - I'll have my VA send me a summary! lol

Where is the summary of every one of these guru books, all consolidated into one book? Maybe one per year? Does this exist? Or does someone want to jump on it? I don't want to take on another project.. But I find can find a good VA to do it.. hmmm.. lol

[Charles M.]

I'd also recommend that you go to the BP blog page and run a search for "lifestyle design". This topic has been discussed in depth if you're willing to read up on it. There was also a great podcast interview with Paula Pant on the subject, somewhere in the 30's I believe.

[Jon Klaus]

Where is the summary of every one of these guru books, all consolidated into one book? Maybe one per year? Does this exist? Or does someone want to jump on it? I don't want to take on another project.. But I find can find a good VA to do it.. hmmm.. lol

I like the Amazon reviews for this.  Not ideal, but I read looking for the key points of the book. If I want to go deeper, I get the Audible or Kindle version of the book. 

[J. Martin]

@Jon Klaus , thanks for the tip on the amazon reviews. Gets me about half-way there.. Rather than prospecting for books I'm interested in reading/listening to the whole book though, I'm more looking for something that is a "cliff notes" of each book, so I can digest just the most pertinent points more quickly..

@Charles M. , I've done some searches, read some blogs, and know a bit.. Part of this is to expound upon those thoughts for others's sake, so they can get the exposure, to your knowledge, and for my own sake get any personal advice you may have for a fellow "buy and hold" investor.. I'll be working more on my project management and process improvement later this month..

[Amit M.]

lifestyle design, eh? A fancy way to say, f*cking off from the rat race, if you ask me :)

As for the 4hour work week book, I personally found it weaksauce and full of hot air. Go ahead, build a money producing web site or app, and let's see you continue the income stream (dealing with me too competitors, for one), dealing with customers, and the endless tech and platform upgrades you will need to be on the cutting edge. A VA isn't going to cut it!

But, the idea of lifestyle design is a good one, and one I have been refining since the 90's. Basically it just means choosing the work or activities you want to do, and having passive income to sustain (and protect) your chosen lifestyle. It's very individualistic. Things I like to do/work on, may not be someone else's cup of tea. For instance, I like managing my (few) tenants. For a variety of reasons. A- Due to politics in San Francisco, good tenant management is key to your success, so I'm not keen to out source it. B- my tenant profile is all high end, so no biggie managing half a dozen well educated and well paid yuppies (I select a designated yuppie per household, so only deal with 1 person per unit.) C- My rentals are all near by, so an occasional property visit is usually accompanied by a nice walk and/or lunch at a restaurant in that area that I like. D- I need something to do, otherwise I get bored!

As for repairs and maintenance, I do have a few people to do any heavy lifting. But sometimes I like to try and fix certain things myself, mostly for sh*ts and giggles ;) I remember being real proud of myself for switching out the toilet tank thingy that controls the water flow :) of course it took me 4x as long as a professional plumber, and I ended up paying myself a whopping $5/hour, but it we fun! It's a nice physical break from playing on the ipad all day...

Of course I love all the strategy involved with the financing, acquisition, and development associated with bringing a newly acquired property to its highest and best use. But that is very part time work. I'm usually hunting for elephants- I'll have a big goal, and once achieved, activity goes way down. This is how I make my real money, but I am limited by the number of projects I can finance. And no, I don't want partners so I can 'part own' more projects. Not. Worth. It. (in my experiences.) I'm happy with the few, well executed and cash flowing projects I can acquire, improve and manage on my own. Remember the 80/20 rule here: 80% of your profits will come for the 20% brilliant projects you successfully executed on. I'd rather play on my ipad, take neighborhood walks, and enjoy a latte in the sun than work on the 80% dreck!

Ok wifey calling me...but one more thing. I don't like to do (or even manage) construction for any of my renovations. That's real work! Getting up early, buying materials, managing the workers. Fortunately I have a good contractor that I'm tight with, and I'm happy to pay for his overhead, to do all this. Construction is actually quite complicated. I spend enough time strategizing how to manipulate city rules and get the most bang for my buck; let him manage the day to day. Also taxes. Well worth it paying a good professional, who also understands your strategic vision. Get a guy/gal that has RE or small biz clients and they will understand you best. Turbo tax doesn't cut it.

Ok, wifey now mad, mad at BP! Gotta go!

[Ali Boone]

Yayy, I love talking about lifestyle design! Way more than I like talking about real estate actually, but everyone on BP seems to only care about real estate so I just go with it.

I mean, here's the thing. And unfortunately a lot of people in this world will never fully understand this. You can design your life to be whatever you want it to be. I don't care what excuses you come up with, you rule your life. It may be quite tricky to fully develop your life how you want it to be (because you do still have to pay bills and you will always have people nay-saying you and it is almost a job in itself to figure out what kind of life you really do want) but developing that is part of the journey it itself. One of the best phrases a mentor of mine ever taught me is, "Never ask if you can do something, ask HOW to do it." If you want something, you can get it. Just figure out how to do it. Chances are you won't have a lot of people in your corner supporting your idea so be strategic in who you ask for advice.

So my "lifestyle design" in a nutshell- I started my own company that I work on whenever I want. I choose my hours and I choose how much work I do on it. More importantly (for me), all I need is the internet to work, therefore I can work from wherever I want as long as I have internet. To date (in only a year and a half of being in business), I have worked from home in Venice Beach (a block from the ocean), in Nicaraguan hostels between ziplining, surfing, and volcano boarding adventures as well as from high-end Nicaraguan hotels while drinking wine or margaritas (yes, while I work), throughout countries in Europe between sight-seeing, outdoor adventures and on airplanes to and from, in Colorado from a mountain house I holed myself up in for 2 weeks during an amazing snowstorm (and between snowboarding excursions), from Atlanta hanging out with my parents and friends for as long as I want to (weeks), and I've even worked on cross-country road trips.

I wanted a 'job' that was this flexible for a few reasons. One, to do everything I just mentioned above. Two, my real passion is flight instructing and god bless the job but it doesn't pay well, but now I flight instruct on the side whenever I want because I have income coming from somewhere else. And then three, I wanted to always be free to join someone for lunch or go to the gym when I wanted or take vacation without asking 'permission'.

Before I started my company, I was working a 9-5 (or more) corporate job. I had to wear business casual clothes, I felt like I contributed basically nothing to such a big company, I did enjoy my every-Friday paycheck but who cares about that if you don't have time to do anything fun with the money? I didn't have time to flight instruct, I only saw my friends and dogs at night or on the weekends, and anytime I traveled I had to request vacation time. I couldn't live at the beach because the commute was too far and I could only go to the gym in the evenings when it's so crowded there are no machines available. Weekend trips had to be kept short and I might as well have not even owned a bicycle because I hardly ever got out to ride (or hike or surf or whatever fun) just because weekends were the only time to do it and by then I was exhausted from working all week. Oh, and snowboarding cost tons more because I always had to by weekend lift tickets (way more expensive than weekday) and fight the crowds.

There are several paths to lifestyle design. Not everyone wants an adventure-filled busy traveling life like I do (I still plan to buy a VW bus in the future to become truly mobile with). Maybe you actually enjoy your 9-5 job and that is fine as well. Whatever it is you enjoy, that's what you should do. We only get one life and the whole idea of making it your own has been so far suppressed in society, people don't even know it's possible. But once you realize it is, you can start forming everything you do around designing it how you want it. It won't happen overnight. I was stuck in my corporate job for 5 years before I jumped out (and that was an intensive 5 years of researching and learning and experimenting and educating myself just to be able to do it). But if you figure out what path you want to go down, you can make it happen.

Currently, I live a block from the water in Venice Beach. I was sleeping in as late as I wanted every day (and therefore staying up as late as I wanted) until I picked up a flight student who flies in the mornings. But even that isn't until 9am, so I'm still not up that early. The rest of my day outside of flying is totally free. I either work, go to the gym, take the dogs to the beach, ride my bike, meet friends for lunch or tv marathons, talk on the phone, whatever I want to do. Except for Thursdays, I spend my afternoon writing my weekly BP blog :) Literally, that's my only deadline in life- my BP blogs. I do not watch the news because it's incredibly negative, I don't listen to or read negative things, as far as I know there is no bad in the world and everyone is really nice. I'm currently looking at plane tickets to go hang out in Atlanta sometime this summer and I can literally search fares for an entire month for the cheapest because it doesn't matter when I go or how long I stay. I'm going on an Alaskan cruise in late August and I didn't have to ask anyone for time off.

Longest post I've ever written, but you hit my favorite topic ;)

Oh, and since this is a real estate forum, I can address the real estate side real fast. I own rental properties and I use a property manager so that the properties in no way impede on any part of my life mentioned above. I don't have time or desire to deal with stress, so I leave landlording out of the equation. Very much the minority here on BP in that department, but I wouldn't change it for the world!

Here's to lifestyle design! I dare someone to tell me I'm doing something wrong :)

[Ali Boone]

@Charles M.

Lol... on all comments about who does and doesn't read the 4-Hour Work Week.

[Adrian Tilley]

@Ali Boone I only got through about the first 2 paragraphs before I up-voted your post.  Great inspiring info.  Thanks!

[Ali Boone]

Lol, thanks @Adrian Tilley!

[J. Martin]

@Ali Boone ,

Thanks for the flavor on enjoying the lifestyle!
I'm moving in that direction.. But haven't quite got there yet ;)
I think you are the empress of lifestyle design, so keep inspring us!

@Amit M. ,

I like your frank and simple explanation! lol I guess taking it beyond what you want to get the f*** out of, it's figuring out what you can get into that fits what you want to do in your life... 

@Jon Klaus , 

Thanks for the tips on the Amazon reviews. I'll probably start there.. 

@Mark Ferguson ,

I'm working on outsourcing/delegating more of what I can.. But a lot of things I just feel like I can do best for myself.. 

@Charles M. ,

Any personal tips on your systems/organization/project management or a link are appreciated! I think you have it more together and smooth than I do!

Thanks everyone for chiming in!

[Amit M.]

@J. Martin "it's figuring out what you can get into that fits what you want to do in your life..."

Yes, of course. And most of my post was about how that works for me.  But remember, it's highly individualistic, as everyone likes/dislikes different things. 

[Account Closed]

OK, this is my favorite topic yet so far :)

I guess I'll start with the goal we (hubby and I) have in mind. Basically we wanted to enjoy life without a day job, yet be able to maintain the lifestyle we love. In our case, it will be traveling as well as wine-and-dining. When we're here however, we don't want to get bored, so the vacation rentals will keep us busy enough. We have hired a property manager to run the SF rentals, so that should be off our plate starting August. SJ is a piece of cake since the the guests are just easier to manage.

As we all know, the challenge was to have enough income to allow us to live this kind of lifestyle. We did quite a few of tweakings in our invesment strategies and figured out a way to make enough between the rentals income and other investment to support this lifestyle. I suspect we'll be doing more tweakings along the way.

Our biggest expenses are really just F&B and airtix when we travel. We are not big into shopping and don't care much about keeping up with the Joneses, so that takes out the pressure.

I really think this is easier and much enjoyable to do because both of us are doing it together. But of course it comes with some risks as well. All the perks that came with being employed will now be fully on us: Health insurance, cellphone bills, even new laptops. But hey, you live only once and who knows for how long, so might as well enjoy it when we're young enough to climb those SF hills!

[Timothy W.]

I started getting into lifestyle design about 5-6 years ago when I read 4 Hour Workweek. One of the first pieces of advice I took was to spend less time in online forums. I'd say I was successful in that ;). More that that, when I truly examined myself, I discovered that I really didn't want to be a landlord. If you look back through my old posts, this is a big reversal from how gung-ho I was about it before. If I'm going to make any kind of investment again, it's going to be land and pecan trees but that's another story. I've since spent that time selling off (almost) everything and travelling all over the US and basically reinvented myself as a loss expert. I got to the point where I could work on average a day a week and more than cover my monthly expenses. About 8 months ago, I accepted the first "real" job I've had since 2007, mainly because I decided to pursue some professional development and they would pay for it. I'm just about done with that so I'll be going indy again, this time with a serious leg up on the competition.

[Amit M.]

@Account Closed  brings up a very good point above- you need to know what you want to spend money on, so you're retired and actually enjoying it, and what you don't need to blow money on. It's different thinking than say some over worked yuppie pulling in $250k per year. Yeah, that guy can splurge on a new car, take expensive vacations, and wine and fine....so long as he stays on the high income treadmill. If you're looking to retire on passive income, you'll want to pick and choose your perks. Otherwise you may have to wait until your 70!  (And what's the fun in that?). Sort out your must haves, your nice to haves, and extras. It's much easier reaching early retirements obtaining your must haves, and thus you can make a clear delineation in your mind on being "retired."  Then focus on the other things on your list. 

[J. Martin]

@Timothy W. ,

You're both right about both deciding what you want and need, and finding the right balance between not squandering money and not purchasing bulk grains in a shared trailer in a flyover state! lol

I could live semi-frugally but comfortably now w/ my RE income, but not with great international vacation, and not having w2 job in next year or two would hurt w/ loans on growing the portfolio.. I'm planning a 3 month vacation to SE Asia in 2015/16, and was joking w/ someone that I could retire there very comfortably right now.. Then got to thinking.. hmmmm... not the craziest idea in the world, even if not forever..

[Amit M.]

@J. Martin  yeah, I know several people who have temporarily checked out of high stress Bay Area to sling in a hammock on ko phan gan for 6 months!  They have wifi there too, so you can stay "plugged in."  SE Asia is the bomb for living inexpensively, adventuring, certainly eating well, and having fun!  I've been there 5 times :)  The funny thing is the regular monthly money you spend here can cover you there, including a modest hotel room.  Outside of the transpacific airfare, you don't have to spend a lot of extra money on a daily basis. It's a sweet deal :)

[J. Martin]

@Amit M. , for sure! Probably even less, right?! That's why I figured I go at least 3 months. Maybe longer.. Once you pay for the flight, the ongoing living is relatively inexpensive. I have some friends, friends of friends, points, and I'm a bit flexible on lodging right now.. I don't have to have all marble & granite with grand ceilings. But I'm not going all hostels either..

With my sublease deal I should be signing now on my existing unit, and what should be a good AirB&B rental in my new apt in the building, (w/ 2br/2ba, w/ 2 separate entrances), close to BART, 1 block from Lake Merritt, studs-down remodel.. I should be able to make some good supplemental cash while I'm out and about - on top of the other RE income.

So I'm not as concerned about the cash I spend while I'm gone. But I'll miss out on a few $10's of thousands of dollar taking the unpaid vacation from work. That's about how much I've leveraged to get into 50% of a 2-4 unit property in the past.. So a big investment to pass up by traveling instead.

But I'm only young, and able to travel extensively, for so long, right? It's one of those balances to strike.. My desire to grow my portfolio, so I can ease off the job earlier in the future.. And taking the time and money to set aside to go enjoy myself now - which may delay that growth for a bit..

But you only live once! I think I've been finding a nice mix so far.. Not working 8-5 job for June, until after July 4th, so I've definitely been getting closer to my goals because of the income from RE. This property is going to tack on a nice chunk of income for me to free up more time in the future.. and get closer to my ideal "lifestyle design."

[Amit M.]

@J. Martin  yeah I think you're making the right trade offs. It can't all be about maximizing investments...otherwise making Jack a dull boy!  I first went to See Asai when I was 30, and it changed my perspective on life. Quality travel experience is irreplaceable. 

So if you're off work until 7/4, try to make it out to the city by then and we'll hang out!  PM if you can. 

[Account Closed]

@Amit M. and @Johnson H. Too bad I really dislike hot weather. Otherwise I'd be completely happy to leave in SEA. I lived in Bali before, for work. That wasn't ideal since things are very slow there. Guess it's like Hawaii (which I've never been). I can handle the slowness when I'm completely retired, but the heat is something else. Your skin is sticky all day long and when I get that kind of heat, I feel like strangling everyone around me :)

[Johnson H.]

Thanks for tagging me in this @Account Closed. Unfortunately, I still sometimes work 60 hour weeks like the past two weeks. What does keep me sane is that I make it a point to travel out of the country at least once a year if not twice. I do a lot to earn hotel points and airline miles on the side so that I can travel and live in luxury at times. It is fun to fly business/first class and on the new A380 and Dreamliner to me for. In addition, staying at 4 and 5 star hotels like the St. Regis and Conrad are a blast, especially when its all or near free! Also, traveling out of the country gives me perspective on life, especially in third world countries like Burma and time to think as I am not fighting fires on a daily basis.

I'm still looking forward to the day when I don't have a boss like you Joanna, @Amit M. and @Account Closed. You guys are what I am striving for, time that I manage and control!