This morning we had a monthly board meeting for Walker Fire (this is the department where I've been volunteering for last 19 years, the last 10+ as chief). Making idle chit chat, one of the board members asked me how our Airbnb rental is going, if we're getting a lot of bookings.
We live at the end of our road, there's only one other cabin near us and it's kind of close. So the back story is that in 2017 we bought that neighboring cabin with the intention of renting it out on Airbnb. We did not want full time neighbors and we'd be just fine carrying the mortgage if renting it out failed.
The cabin is pretty neat and the views are epic, also the only reason anyone is driving by is because they're lost so it's a great getaway. Bookings were very good, then Covid hit and we benefited from get out of the crowded city demand so we're pretty much booked solid.
The board member at the meeting this morning was happy for us and half kiddingly said we should quit our jobs and buy a couple more to manage. We own the cabin next door on a little mountain that gets no traffic. We have one mortgage payment that's pretty modest and save for the occasional expensive repair, it's inexpensive to maintain. In short it is very simple.
When Covid ramped up a couple of years ago there were a lot of stories circulating about Airbnb hosts who owned dozens of properties, with mortgages of course, and how they were on the verge of bankruptcy after no time at all for having to make a bunch of mortgage payments. No matter how successful any of these were or were not, managing a dozen rentals, even half that, is a very complex enterprise.
Two years ago, the 15 acre parcel next to us was put up for sale. The buyer, who saw our episode of Cash Pad before they bought which is kind of funny, planned to subdivide the parcel into approximately 3-acre parcels. We bought the 3 acre slice closest to us as a buffer, thinking it's not easily buildable although it looks like it would lend itself to a container house if we ever wanted to pursue that. If we did that and rented that out I think it would still be relatively simple, only modestly more complex.
As things are now, the income from the one rental is a lot, relative to our needs which are low for living below our means. It's a simple but robust fallback plan if we ever need it.
I think this sort of simplicity should be sought out wherever possible.
Let's talk about diet. There's nothing simpler than food with no ingredients like meat, fish, cheese and eggs. There's nothing to read. Compare that to the ingredients for Beyond Meat.
Seed oils, cellulose (which I'm pretty sure means paper) and an assortment of acids. There's no convincing me this is healthy. Seed oils, there's a bunch of them listed there, are obesogenic and promote inflammation. It's a complex amalgamation of chemicals. It may not be realistic to avoid all processed food but building meals around simple food with no ingredients is an easy way to reduce your exposure dramatically.
This can be applied to just about every aspect of life, seeking simplicity when possible. Since this is an investment blog, it is common for people to make investing far more complicated than it needs to be. It can be as simple or complex as anyone wants to make it. I can believe that one person's complex is another person's simple so the way I would think about it is to say that for most people, they should think their investment portfolio/process is simple. I certainly think that of my process.
Simple does not mean no engagement. In the context of a 60/40 equities/fixed income portfolio model, having 40% in some sort of aggregate bond fund has been a very risky position. Rates have been rock bottom for ages, I have no idea if this current spike is the big one but anyone who has bought an aggregate bond fund in the last however many years bought high and now the price is going lower. In the first quarter, bonds did worse than equities. I've been writing about this forever. The decision to avoid buying high is obviously an active one and can happen in a two or three fund, simple, portfolio.
Two or three funds is a little simpler than I want to go but is absolutely valid even if not always optimal. If I wanted that simple of a portfolio, at my age or older I'd probably set two years of expenses aside to avoid sequence of return risk, I'd have most of the portfolio in a broad based based equity index fund, some in a an alternative that is a reliable bond market proxy but that doesn't take interest rate risk and a narrow slice in asymmetry, some sort of crypto is an easy example of asymmetry but not the only asymmetric investment out there.
Again, that's not set and forget, it's merely simple. Like any portfolio, it needs to be combined with an adequate savings rate, suitable asset allocation and the learned ability to not panic.
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