Why I Keep Empty Homes

I recently put out my video called my master plan for living and traveling and buying real estate in which I laid out my plan to own homes in different places around the world that are sitting waiting and ready for me whenever I choose to come there it's part of the trifecta strategy that we talk about here at Nomad capitalist where you can have not just one home in one place but two or three or four or even six different homes however money that you want and travel between them but the one question that I get asked more than almost any other was Andrew why don't you rent these homes out when you're not there you want to know I'm gonna tell you [Music] [Music] hey guys I'm Andrew Henderson and in this video I'm going to tell you why I turn away tens of thousands of dollars every year in rental income from properties that I don't spend time in and the answer really boils down to a concept that we've talked about before it's what I call the success tax when you're successful you are often going to pay some kind of success tax as part of the price of just being in that that lifestyle being being successful and so the Nomad capitalist lifestyle allows people to be more successful let's say you make a million dollars a year if you live in New York City you're not gonna have that much money left over and so let's say you live in New York City for nine months a year you're traveling the world for three months a year you have a very expensive piece of real estate and local legislation banning this kind of thing aside you might want to go and try and collect an extra five grand a month renting that place out because if do you pay all your taxes all your living expenses you go out to some nice dinners you live that millionaire lifestyle you might have a hundred 200 maybe 300 grand leftover and so as a percentage of your world what you could get subletting your apartment out for those three months to short term tenants is a bigger piece of the pie now flip the script to the Nomad capitalist lifestyle I don't live in New York yes I occasionally go to London and when I'm there the hotel prices are absolutely insane I do try and stay in nice hotels even though I'm trying to stay in a lot fewer hotels by staying in my homes but the bottom line is my expenses on that say million dollars a year are much lower I'm living in places like Kuala Lumpur which I genuinely like but happens to be a heck of a lot cheaper I also happen to own my home so I have no carrying costs on them I have no monthly rent to pay I have no mortgage I have almost no bills and because my tax bill is very light I'm keeping you know in that same million dollar example I'm keeping maybe triple what the person in New York is keeping living a similar kind of lifestyle so not only is the amount of actual income I'll be receiving from renting out a place in Kuala Lumpur lower but considering that my actual net income after all my taxes and expenses is much higher the percentages are just totally different so when someone described my strategy of having these homes sitting empty as sub-optimal I said to myself part of the success tax is that things are going to be suboptimal another example that I talked people a lot about is I'll have to fight people sometimes I said if you want to save all this money in taxes by going offshore we might need to get rid of that miles earning credit card in your home country that's going to tether you to that country and it's gonna make our plan harder it's oftentimes hard for people to give up that one penny in mileage benefits in order to save 40 cents in taxes right so is giving up you know the ability to earn miles on a credit card to just go off shore and maybe at the worst case scenario get a debit card with no rewards is that suboptimal potentially but in the bigger scheme of things it's actually highly optimal because you're you're increasing the part that is optimal on a much bigger level and so for me why don't I rent the places out well number one I am the nomadic capitalist and a little paranoid about someone figuring out I'm staying the nomad capitalist house maybe I'm gonna rummage through his underwear drawer maybe I'm gonna put something into maybe who knows what could happen who knows this guy's really paranoid maybe but on a general level some fun paranoia aside the reason I own these homes and the reason I have them ready the reason that I literally go out and buy tons of Apple iPhone phone chargers and I literally just plug them in the first plug when you walk in the house on a desk or on an entry table or something like that it's because I'm designing it for my life I want able to walk in from a trip maybe have a low battery and just plug my phone in and just keep moving I don't want to rummage through a bag and have to figure out you know where's that adapter and what am I gonna do it I I lost a get plugged in into the airport it's still there I don't want any of that so I'm taking the effort to really be intentional about setting these homes up in a very almost fastidious way where you know I'm letting a friend of mine stay in this home later this year and I'm almost thinking myself like I'm gonna put like a red sticker on the iPhone Chargers do not move under penalty of death like I want them right where I left them it's a little it's a little intense but it's certainly because I haven't be able just to walk right in I don't want to anymore live the life where I'm going from hotel to hotel and place that's not mine to place that's not mine I just want the flight anymore is is frustrating enough I want to go just to just to come in from the airport drop all my stuff and just be home my clothes are right where I left them my tees are right where I left them you know my my business stuff is in the desk all of that and it's just waiting for me and so to have people come in to me would be subduct all let's look at the case in Kuala Lumpur maybe I could make let's just say $2,000 a month maybe a little bit less because yields and quality low let's say with some occupancy issues I could make $2,000 a month times 8 months that's $16,000 for example I have a pretty nice camp that a photographer a friend of mine convinced me to buy it is a pain to travel with so I would like to leave it in one place and not have to carry it if I can no longer do that if I have to lock things up and I have to worry someone's gonna break through the door or do this or do that or break something it's really just suboptimal so if we assume in that particular scenario I'm losing sixteen thousand dollars a year the big picture is I run a rather traditional service business that we are really trying to grow very quickly you know we've a multi-million dollar business that we want to make a Multi multi multi-million dollar business and so for me productivity is everything remember we had a mastermind meeting a number of years ago in Kuala Lumpur and one of the guys who is pretty successful said you know what for all you you younger guys here understand there's gonna be a time when you're going to probably want to settle down to more of one place you're potentially going to want to start hiring people or even being yourself part of the time in you know the US Canada Australia you know some kind of first world country and he says you know if you want to build your business to a hundred million dollars it's not gonna be you know bouncing around you know from Bali to you know wherever else in the world now I'm at the thing whether these right or not what I'm saying is for me the ability to feel like I'm not bouncing around the ability to change environment have new restaurants have new environs you know get a change of scenery is nice without having a change in productivity sixteen thousand dollars a year eight thousand dollars a year but they're six grand over here it just doesn't really add up because not only am I going to come back to some kind of chaos there's more for me to think about I'm probably not gonna be it's productive that alone is gonna cost me money sixteen thousand dollars if it caught it could cause a hundred and sixty thousand dollar loss in productivity on top of that it's going to cost an additional lack of productivity not by just the way the house is in the and all everything we're involving having tenants or having short term tenants there but then you've got to deal with people renting it when you're not there ever dealt with a property manager there aren't that many good ones and so they're gonna call you hey can we rent it out hey where are you coming back our door there's a guy or the other if you talk to them all throughout the year and so yes listen we have some really good ones in our network here at Nomad comp list a couple of the cities where I have homes we've got some real ace performers and some of those cases it could probably work but the stumbling of every time I go out and get a new home having to figure out you know who's the person yeah I could throw that to my R&D team but obviously again there's going to be an ongoing effort in managing those properties and so if you're giving two three four five properties it's a lot of effort I know I know this is like you know cry me a river right but what I'm saying is productivity matters your best investment if you're in business is often yourself and what I've learned is you have to invest in your happiness you have to invest in your state you have to invest in your ability to perform if you've got a multi-million dollar business you are your best asset not some house you could rent out and so the simple answer is why wouldn't you rent your homes out when you're not there is simply because you could afford not to hi I'm Andrew Henderson from Nomad capitalist I wrote this book which you can find on Amazon to distill a lot of the stuff we talked about in these videos and a lot of the stuff I've learned over the last decade plus traveling all around the world teaching you about how to legally reduce your taxes build your personal freedom and create wealth faster definitely get a copy of this book if you want to learn more now if you want to watch more videos make sure you subscribe to our Channel and make sure you click the notifications bell so you never miss one of our new videos with more tips on how to go where you're treated best and if you're already a six or seven figure entrepreneur and you'd like to put these strategies in place for yourself go to Nomad capitalist calm and learn about how I can help you

Channel: Nomad Capitalist

Views: 58,464

Rating: 4.8658361 out of 5

Keywords: real estate investing, nomad capitalist real estate, foreign real estate investment, foreign real estate, multiple homes with nest, owning multiple homes, summer home, nomad lifestyle, rental real estate investing, rental real estate overseas, cash flow investing, cash flow investment property, cash flow investor, Graham Stephan, cash flow real estate, millionaire homes

Id: ibk0OGnSHgQ

Length: 10min 18sec (618 seconds)

Published: Wed Sep 04 2019