How Moving To The Midwest Can Help Speed Up Early Retirement

MOVING THE MIDWEST TO SPEED UP EARLY RETIREMENT

Have you ever thought about what kinds of changes you can do to your life to reach financial independence faster?   Life is a series of choices and every choice you make can get you one step closer to early retirement.   It is very important to plan out and strategize your life making decisions because in the end, they can propel you to reaching your financial goals.  But you must be careful as well as the wrong decisions can really set you back.

A long time ago I figured out all the minor financial steps I could take to increase my cash flow by cutting out all my unnecessary bills.  Shortly after that I was on a game plan to invest in real estate to generate passive income.  I knew that passive income was the key to my future and my dreams for retiring early were not just dreams anymore.    I bought four rental properties in less than one year to help me reach my financial freedom goal and now I am about to make a huge and unprecedented life altering change to propel my early retirement goal to new levels.  I will be able to reach financial independence much faster by making this drastic change in my life.

My Life Altering Decision:

I am officially moving from Austin, TX to Indianapolis, IN.  Whoa!!  Yes I am really leaving Austin for Indy!  You might be thinking I am crazy right now.  Heck there are nights I can’t sleep because of the anticipation of such a life altering move.   It really is a big deal for my wife and I but we think it is the smartest decision for us.   You will see below how moving to the Midwest can help speed up early retirement?

Why am I leaving Austin?

  • The real estate market is too expensive.  I am no longer able to find cash flowing properties for investments and any house we are interested in raising a family in is at least $400k.   I’m sorry but I refuse to pay that kind of money for a house.  At least not until I am filthy rich one day.    😉
  • Traffic is a nightmare!  Austin is a great city, don’t get me wrong, I have lived here for the past 13 years and have had a great time but man did they really screw up the road infrastructure here when they built it.   The roads were not built to accommodate even half the amount of population that exists today here.
  • In a nutshell it really is just that the city has grown too much and I no longer find it as desirable as I did when I first moved here.   There used to be a slogan in Austin called “keep Austin weird”, well those days are over and it’s pretty much just a normal big city now.   Not that this is bad but I would prefer a smaller city vibe with a much more affordable cost of living.
  • But the main reason I am leaving Austin is because I want financial freedom dag gummit!!  Yes I just said dag gummit which for those of you who don’t know, its kind of like saying g0d d@mm!tt but in a much cleaner way!   😉  It’s a Texas thing!

By leaving an expensive, hot market with a higher cost of living and moving to a lower cost of living market with cheaper real estate in the Midwest, it will allow me to really take control of my finances and accelerate building my mini real estate empire.

 

How is moving to the midwest going to help me accelerate reaching financial freedom?

  • I will have more cash.   I was fortunate enough to purchase 3 different properties in Austin while I lived here and I am taking advantage of the seller’s market we are in right now.  My primary house has appreciated over $125k in just a few short years and now that we are at what seems to be an all time high in Austin real estate, I am cashing out on one property!    $125k of straight untaxed profit sounds mighty good to me.   Because I have lived in the home as my primary house for the past 2 years I get the advantage of not having to pay any capital gains which is a huge blessing for me.  I will keep my other rental property as well as continue holding my performing note which are both also here in Austin.
  • I can buy more rental properties in CASH!!  My plan is to use the tax-free income and buy two new rental properties in Indianapolis with cash.  Not only will I have a MUCH lower mortgage payment on my new primary home but I will also be increasing my passive income to even higher levels with my two new rental properties.    This alone will get me so much closer to financial freedom!
  • I will still be getting paid a higher cost of living salary.   I have worked out a deal with my current employer in Austin to allow me to work remotely.  This means I will still be making all the income I get in a higher cost of living city but without the higher cost of living.   Honestly the idea of not having to go through rush hour anymore is already making me so much happier.  So what will I do with this income?  You guessed it, I will use it to buy more rental properties at a faster rate than I have been able to purchase them before.
  • Lower Bills!!   I will be literally cutting my mortgage in half.  I can’t even imagine the amount of money I will be saving on gas also.  My current gas guzzler destroys my pocket every week and this will be virtually eliminated.  I have also noticed in Indy that groceries and restaurant beverages (beers and cocktails) seem to be cheaper as well which is always a good thing.  🙂

I mean this obviously is a great move for me financially but even on a more personal level, life will be getting much easier and stress free for me.   Our bills will be super small, virtually no commute and we will actually be upgrading our new home to something nicer then what we have today.  I can’t wait for that!

 

New Rental property acquisition plan

The last 4 rental properties I bought were all purchased via turnkey providers in which I have had good success with.  I was buying these properties in the Midwest and 3 of them were all in Indianapolis.   Wow imagine what I could do if I actually lived there and had my boots on the ground trying to score some deals?   My new plan is to purchase fixer uppers via wholesalers, fix them up myself, rent them out and generate more cash flow!   In theory, I should be able to generate higher returns and have an advantage over choosing what properties I purchase by living in this new city.  It is all very exciting to me and I just can’t wait to get out there and start property hunting.

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Why Indianapolis?

I have had the luxury of visiting Indianapolis multiple times and am always impressed with the city.

  • Big City, smaller town vibe.  Indy is smaller than Austin yet has all the amenities of big city living.  The roads for one are built to sustain a much larger population and as of now, there is very little traffic in Indianapolis.  I really like that even though I won’t ever have to deal with the traffic anyways.   Not to mention the airport, wow they have a really nice and big airport which I find to be extremely nice.
  • City on the rise.  I didn’t randomly pick Indianapolis to buy 3 of my existing rental properties.  Check out turnkey 1, turnkey 2 and turnkey 3!  All the research shows that this city is on the rise.  A steadily increasing population, economy, cultural scene and a sports mecca!  That is exactly the kind of qualities I look for in cities to invest in.   I was surprised to see all the craft brewery places popping up left and right and all the hipsters gravitating towards downtown living also which really caught my eye.  I just love that!

I’m obviously not the only one that thinks Indy is a super cool city on the up and up.  Check out these fairly recent articles being published about the city.

#3 Top Best Downtowns

#6 Top City for Tech Jobs

#10 Best City For Young Professionals

#2 Best City For Mid Career Professionals

#17 America’s favorite city

 

Honestly the list goes on and on.  Indianapolis is a very underrated city in my opinion and is flying under the radar.  All great things I want to see and read about coming from an investor and a new resident.   Now some people might be thinking this move that I am making is a little extreme or that my plans to speed up financial freedom will go sour but I just do not see that happening.    My absolute only concern that I have is having to deal with the cold winters.   I am not going to lie and say that they don’t scare me but the truth of the matter is that I grew up in a cold environment in the north-east and the main things I disliked about the winters were the mornings.   Having to deal with de-icing the car, shoveling the driveway and then dealing with the horrendous traffic was an absolute nightmare.   Well all that is eliminated for me as I will be working from the comfort of my own home.   How bad could it be?

Would you ever be willing to make such a drastic change in your life to help you reach financial independence faster?



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70 Comments

  1. I would definitely make drastic life changes to to reach financial independence faster.

    You make a pretty convincing case for moving a move to the midwest….the cashflow on your turnkey purchases are impressive, so it’ll be interesting to see what you can find when you’re living in the city!

    Is part of the motivation for moving the fact that finding good turnkey deals is harder with the market heating up a bit?
    Nate recently posted…Are You Missing Opportunities To Save $100,000+ In Order To Save Pennies?My Profile

    • Hey Nate! The thing is that it really varies based up everyone’s unique situation to be able to do something like this. If I had kids or if I wasnt able to work remote like that I probably would not be doing something like this. Who knows! But yes I am very excited to see what the future holds as far as my next rental properties. Part of the reason I am doing this is definitely because its getting harder and harder to find good turnkey deals. Its almost impossible to find the kind of numbers that I was able to get which sucks!!

      • Definitely situation matters, I would make drastic life changes, but I don’t think moving to the midwest is one of them haha.

        Looking forward to seeing how the move goes.

        • I dont blame you one bit! The midwest honestly has never appealed to me in my whole life until only recently. Ill keep you posted with updates though so you can see how it goes.

  2. Welcome to the Midwest (soon at least!). Our cost of living in my area in Wisconsin has always felt pretty reasonable and while it gets expensive from time to time, it rarely gets Austin expensive.

    Nice job on making the big change that will help propel you closer to your goals of FI! I would be willing to make the change, but I would need to be sure that it was going to be a big positive for me and my family. It looks like you have done your research and found a great opportunity!

    • My fellow midwesterner!! 🙂 Austin really got out of hand sometimes I cant believe how much some of these houses are going for. Its crazy! I have actually spent months researching and contemplating this move so by now we are well aware of we are getting ourselves into. Cant wait!

  3. Congrats on the big move. There is definitely a lot to consider but sounds like you and your wife have weighed the pros and cons thoroughly. Does your wife currently work and how will the move impact her? Also curious your thoughts on having to pay state income tax now? I always found that very attractive about Texas.

    Congrats again, Indy does seem like a nice city to live in. I’m sure you’ll get used to the change in climate.
    The Green Swan recently posted…My Small Business InvestmentMy Profile

    • Thanks so much! Yep at this point its clear to us that the pros outweigh the cons. We both are in a unique situation to be able to do this because we dont feel tied down to any city, have no kids (yet) and both have jobs that can be found in any city if necessary. My wife works in HR so pretty much every major company in Indy has one but I have already told her she now has the freedom to do whatever her heart desires. Her income is not really a factor reaching financial freedom so she literally is going to be able to do whatever she wants. We’ll see what she ends up doing but for now she is going to relax and take some time off for a bit.

      As for the taxes, it does make an impact but TX makes up for it by charging super high real estate taxes. So its really just trading one for another. I dont think it will affect me much.

  4. Wow, what a surprising move! Kudos to you for getting your employer to allow you to work remotely; that’s so nice. I think our biggest concern would also be the cold as neither of us are used to dealing with cold temperatures or snow/ice.

    We would definitely consider making a drastic change to reach FI even faster 😉 That’s why we’re traveling the world. We’ll be FI if we find an ideal place with a low enough cost of living!
    Believe Fire recently posted…The Simple Path to WealthMy Profile

    • I know!! We shocked our friends and families when we told them. It was crazy!! I feel so lucky that my employer is letting me work from home while retaining my income. Its amazing!! I think its super cool that you are traveling the world now and have the luxury of being able to see so many places to eventually decide where you want to end up. That is an amazing story!

    • Hey Gautam!! Thanks so much bud! The journey ahead is going to be a good one. Hopefully. 🙂

  5. I have to say, the first thing I thought of when I read your title was “I hope he likes cold winters.” They aren’t that bad, but 13 years of Austin will have thinned your blood considerably.

    When you get your IN real estate license, send me a note. I’ll need a Property Manager…

    • Mindy!! Long time no talk!! Miss you guys! OMG this first winter is going to be the real test. But my wife and I both understand that it will not be easy. I am looking forward to my first snowfall though. Its been so long since ive seen snow like that.

      Haha you know I just might end up getting my real estate license after all. Would be cool if my wife did too! Ill keep you posted. 😉

    • Agreed! I’m finally moving out of an area with a reputation for “mild” winters (Denver, CO) and cannot WAIT!

      I think you’re right that not having a commute will make things much more bearable. For me, simply getting a home with a garage made a HUGE difference, as I haven’t had to scrape snow from my car or get into a cold vehicle in the mornings for several years. I’m a teacher, so I often get snow days without a commute – but I still have to shovel my sidewalks! I’m more bothered by the short days and feeling cooped up. Every summer I realize how the cold limits my movements in the winter without my even realizing it, since I get out a lot all year long. Still, there’s no strolling leisurely down the street, meandering with my dog on walks, meeting up with friends at the park, etc. in the winter.

      I’ll miss that first snow, but not much else! Still, I think it’s a great trade-off for early retirement if you can manage it! Congrats on having the courage to take such a big leap!

      • Thanks! Oh those dreadful winter mornings! I never had a garage back when I lived up north so never had that luxury so my memories are painful. I think you make a valid point about just regular everyday wanting to get out of the house and how difficult it makes it to do that in those harsh cold months. This coming winter will be my true test to see how I handle it. Its just been so long since i have experienced cold like that. Ill keep my fingers crossed that we are okay with it.

  6. Congrats! Sounds like a solid plan. Anytime you can maintain salary and move to a cheaper cost of living area sounds like a win to me. I see it often in the Northeast, people heading South. Sounds like a great time to make the Move. We had considered it over the years, but never had the right opportunity and as our three children got older is was tougher to make a move. Good luck!
    Brian @ debt discipline recently posted…Book Review: Above Average FinanceMy Profile

    • Yeah to me it seems like a huge win! At least for now, we’ll see after that first winter. Thanks

  7. Wonderful Alex! this is a big decision and glad it is working out in your favor. Your employer allowed you to work remotely which is huge. You can stretch $$$ so much considering lower cost of living in Indy with Austin paycheck. Congrats and good luck friend. keep us posted how things turn out in Indy. Who knows one day I may pack my bags to head over to Indy to follow my dream after inspired by your story..

    • Hi Mayank! I agree and am very grateful for my job allowing me to work remote. Ill definitely keep you posted on how it turns out. Haha yeah well if you ever come to Indy you should look me up. 🙂

  8. I think it is a fantastic idea! Indy is a fantastic city and I agree that it’s under-rated by a lot of folks. There are plenty of wonderful things about winter and I bet you will adjust just fine. Welcome to the Midwest! It is a great place to be!

    • Thanks so much! I am definitely looking forward to my first big snowfall. Havent experienced that in a very long time.

  9. Congratulations buddy, and great plan. We spent some time around Indy on our extended roadtrip this spring…..and really liked the areas 40-60 minutes east/northeast of downtown. You have spent more time there scouting rentals than us, but give me a call if you want the names of a few cool towns. Indiana wasn’t what I was expecting…..but it certainly had an appeal. Hope to catch up soon!
    -Bryan
    Income Surfer recently posted…Recent Buy: Lazard (LAZ)My Profile

    • Yeah apparently those suburbs up there are nationally ranked for best suburbs in america. I personally am a city guy so I will be living downtown or right on the border of downtown but once I start having kids, who knows, I may end up in that area. Indy is a really cool place I think.

    • Thanks Brian! Honestly the thought never really crossed my mind to do something like this until earlier this year and the more I thought about it, the more it made sense. Unless something bad really happens, I dont see how this will not accelerate my financial freedom. Keeping my fingers crossed that everything goes well.

  10. That is so exciting! My step-daughter moved to Indianapolis from the northeast about 3 years ago and she loves it there! She said there is a ton to do and she has done well with finding high paying jobs in a low cost of living area! You younger folks can definitely make these moves easier than we can (with kids in high school!) I am sure you have done your “due diligence” as explained in your post and you already have set up a business there. Excited to follow your progress!
    Vicki@Make Smarter Decisions recently posted…What is the cost of not learning? Or not learning how to make better decisions?My Profile

    • That is so awesome! I have signed up for all the social media and culture type events in Indy and they are nonstop, there is always something going on and my wife and I will take full advantage of that. If we are going to live there then we are going in full steam and will enjoy all the city has to offer. Im really glad to hear your daughter made out well like that.

  11. Congrats on your move. Can you please share your Indy turnkey provider.

    Best wishes.

  12. Congrats and Good Luck !!! This sure will help you source and find better deals and have tighter control over the properties.

    • Yeah I can pretty much skip the middle man now that I will be living there. A few weeks after I move there I will begin the hunt for my next rental (fixer upper).

  13. Congrats on the big move. I am also thinking of buying my first rental in Indianapolis, currently setting up my LLC and bank account. It gets a bit difficult for foreign investors (BTW I am a New Zealander). I am thinking of either visiting Indianapolis or Memphis (still weighing my options) end of July to see the rental investment properties first hand and then decide on buying.

    All the best with your move.

    • Thanks and congrats on setting up your LLC and bank account. That is one step closer. I personally like Indy better then Memphis because it seems to have a higher population growth which I love. More people = more jobs = more money = more renters!

  14. This is absolutely fantastic! You know, Indianapolis is high on my list of places I want to live. The only thing for me is that I don’t drive – so I’m stuck living in places with a comprehensive public transportation system for now. That will change in the future!
    Aliyyah @RichAndHappyBlog recently posted…What Financial Health Means to MeMy Profile

    • Thanks Aliyyah! Ill keep you posted on how Indy living will be but you are right about the transportation. Its too bad they dont have a metro/rail/train/subway. That would really step it up if it did. I will be living practically downtown and plan on biking to most places. At least until winter comes. 🙂

  15. Compared to Northern Indiana, the winters in Indy are pretty mild (no lake effect). There might be 1-2 bad snows a winter, but most of the time it is just cold. But get used to not seeing the sun for a few months.

    I love the low cost of living of IN, there’s no way I’d ever be able to buy my own house if I still lived in CA. There is a great college town about an hour south of Indy that is great for raising kids. All the best things about a big city (culture, history, diversity) and very few of the bad (crime, pollution, traffic) 🙂

    • That is music to my ears! I really only want like 1 or 2 bad snowfalls. I cant imagine how cold it is in chicago. That is scary!! I keep seeing how there are multiple suburbs around Indy that are ranked really high for raising families. That is a huge benefit!

  16. Way to go! Austin is great, but you’re going to kill it in Indy.

    We did a similar thing when we moved from Wisconsin to Colorado. Taxes are so much cheaper here and we felt the area had more room to run. While we haven’t purchased a rental yet, we’re planning on a couple flips.

    How soon are you moving?

    Are you going to FinCon this year?
    Mr. 1500 recently posted…Ping Pong Machines and Jet Fighter DreamsMy Profile

    • Im truly hoping to make a killing in Indy. Just need the stars to align just right for me. 🙂 Im actually also considering doing some flips when I get to indy, just need to get a better feel for it when I actually move there. So I listed my house for sale here in Austin and its already under contract. So if all goes well I will be moving to Indy at the end of July. Its coming quick!!!

      Unfortunately I am not going to fincon this year because I will literally be on my honeymoon at the exact same time. But im definitely going in 2017.

    • Thanks!! Haha yeah it seems to be a pattern with me and doing things “drastic”. All in or nothing!! j/k 🙂

  17. Location can be a major factor in retiring early. It think it depends on your trade and whether it can be done from anywhere. For me, being in the tech world, it makes sense to be closer to the source. So I live in a very expensive place, but salaries here are also double or triple what I’d make in other parts of the U.S. So it’s a trade off for sure. But in many cases, I think this makes perfect sense. Finding a state with not income tax and low housing costs; sounds good to me.

    • Oh yeah I agree. You really have to be in a unique situation in order for a move like this to work out in your favor. Mainly the income needs to remain the same. Now if Indiana nad no state income tax then I would be extremely happy but cant win at everything i guess. 🙁

  18. The problem with Indianapolis is the crime. It is getting bad enough that uber drivers are offering up to strangers how scared they are. That they are unwilling to drive after a certain hour or in a certain neighborhood. It’s definitely cheap to live there, but not worth it in my opinion. (I have a huge bias against Indianapolis after living there previously, but ymmv)
    ZJ Thorne recently posted…What Financial Health Means to Me – Fincon 2016My Profile

    • Oh I didnt realize you had lived there. Indeed the crime is definitely more then in Austin but like you said it matters what parts of town you are in. Im just going to do my best and stay away from those areas. Hopefully it works out.

  19. Having lived in Austin, I can say that you really must see a lot of opportunity in Indianapolis because Austin is a fantastic city to live in! Congratulations and hoping for the best in your move. Those snowy winter months will certainly keep your blood flowing through the winters!

    • Hey FS! Yeah I mean the main reason I am leaving austin is because I cant invest in real estate here anymore. Everything is crazy expensive. But yes I have enjoyed living in Austin the past 13 years for sure. I am looking forward to the next chapter in my life though so that is exciting.

  20. Good luck with the move! I’ve always heard that Austin was a great city which was still relatively affordable. It’s great that your company will allow you to work remotely. Geographic arbitrage is the best…early at a higher income but living in a lower cost of living area. A big part of mean wants to move out of NYC but our family and friends are all here…it’s tough.

    • Hi Andrew! Austin is affordable if you compare it to the West coast and other really expensive markets but I have seen it change in the past 13 years and its way different then it was before. The hardest part leaving is definitely losing touch with all the friends and family in the area. Its definitely tough but at the end of the day for me its all about securing my families future.

  21. I’ve never been to either States but good to see you’re doing well! I am thinking about investing in real estate because it seems like it’s the most legitimate and fast way to have that second income. I’m pretty sure it’s a lot of work though right?

    • Hi Aaron! I would say that yes its a lot work involved in learning how everything works and dealing with people on buying/selling real estate but in my opinion its worth it. If you want to make a 2nd income then real estate investing can definitely provide that.

      Good luck bud!

  22. this is great!!! I had to do a similar mini move. I have been living in Austin the past 4 years and when I first got there my first apartment was $650 in a great area. I built a mini property management office in my families hometown of Fort Bragg NC/ Fayetteville NC. I am able to pick up homes for as little as 20,000 to 45,000 that i rent out for 700-900 or fix/flip more to resale for 75,000-112,000. Its a great area for investing. I connected with investors in charlotte and raleigh since they are on the up and coming lists for relocation, best city for young adults to move, among many other lists. I will be back in austin full time later this year, but the almost one year break has been amazing. it makes me appreciate austin more (fun/young adult activities) but also see the value in NC and Tennessee especially Nashville area. Texas is just so hot right now.. when I went to a few conferences they just said go invest else where austin and houston too high. even in small size apartments dallas is hard to get into. Good luck up north, you will have boots on the ground.

    • Wow $650 for an apartment in Austin is a steal. I think most apartments now even for a 1 bedroom are at least $1100. The prices here are insane. Even in the surrounding areas like Round Rock, Cedar Park, etc…

      I think its great that you are able to score such awesome deals in NC like that. That is exactly what I am trying to do by moving to Indy. The cool thing about Indy is that there is a ton of stuff going on all the time and a bunch of young people. At least from what I have seen. I just need to be sure and take advantage of all the cool things Indy has to offer which I totally will.

      Good luck with the move back to Austin and I hope you can find a good place to live at a reasonable price.

  23. Congratulations on making such an important decision and choosing your financial success. I’ve honestly thought of making such a move out to KC for my properties. Though I haven’t been able to convince my wife. We both have family in Southern CA and both of our careers are out here. That’s amazing that your employer is flexible enough to let you work remotely…I wish i could say the same about mine. Congrats again and looking forward to future updates in Indy.

    • Thanks OB. You know KC was actually the runner up for picking where to move. If I did not pick Indy, it would have been KC, I only picked Indy because i know a few people there already and have a more established team to work with for building my empire.

    • Thanks! Austin is a great city but we are ready to move on to a new chapter. I have a feeling we will be wandering the USA during the next 10 years looking for our own little family paradise. Im excited for Indy though.

  24. I think Indianapolis is a great city to live comfortably. The MidWest is by far my choice of a place to live. This article is spot on!

  25. Alex your level of commitment is astonishing!! I’m so inspired by what you’re willing to do to reach your goal faster xD

    I’m glad I read this again because this time around, I’m actually questioning my $450k budget for a house! I just accepted it as is here in Calgary and I’m so attached to the neighbourhood my family is currently living in that I’m willing to pay up that much without much hesitation. I never thought about other alternatives. I have no clue what I need to do now to make my two wishes – of home ownership and being financially free early – work together but you have caused my mind to start rethinking things. And I’ll have to somehow make my partner understand because he’s caught up in home ownership at all costs.
    Jaymee recently posted…My First Net-Worth Report – June, 2016My Profile

    • Hey Jaymee! Yeah I tend to go a bit overboard sometimes but it has been working out well for me doing stuff like this so far. Im super passionate about retiring early and it just feels like this is a necessary move to get me where I want to be. I totally see where you are coming from and I think its healthy for you to be questioning a purchase like that because its so much money. How bad would it set you back if you have a huge mortgage like that?

      At the end of the day you have to make the decisions that will put you are your partner where you want to be. Good luck with it all and let me know what happens. 🙂

  26. Hi Alex! Congrats on the bold move! I was looking to invest in Indy myself, and I was wondering if you could let me know which TK and PM companies you would recommend, or maybe more importantly, which ones to stay away from (based on one of your previous posts – http://www.cashflowdiaries.com/fire-property-manager/)! If you’d rather reply offline to protect the not-so-innocent, I completely understand!

    Congrats again and good luck!

  27. Well congrats on the move buddy! 🙂
    You should really consider moving to Sydney, Aus ;), although I feel that the traffic & cost of living out here would shock your pants off haha..

    Not sure if you’ve moved yet however hope all goes well

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