A former homeowner on track to retire early explains why he switched to renting and isn't incorporating real estate in his investment strategy
Courtesy of Andre Nader
- Andre Nader sold his Austin rental due to stress outweighing financial benefits.
- He and his wife, who moved to SF in 2014, have found renting to be more cost-effective than owning.
- Nader says he doesn't need to own real estate to hit his FIRE goals and focuses on index fund investing.
Andre Nader has been both a homeowner and a landlord — and neither are for him, at least at this moment in time.
Shortly after getting married in 2012, he and his wife bought a home in Austin. When they moved to San Francisco in 2014 for a job Nader landed with Facebook, they kept it as a rental rather than selling. Their original plan was to move back to Texas.
Nader decided to self-manage the rental from nearly 2,000 miles away, which he did for a year and a half. When his tenant gave notice to move out and Nader flew back to Austin to deal with the turnover, he was surprised with what he found.
"The place was just kind of trashed," he told Business Insider. "It needed all-new carpet. It needed a lot of work."
While the extra income had been nice — he said the property generated a cash flow of a couple of hundred dollars a month — ultimately, it wasn't worth it.
"The stress and the mental overhead were drastically outweighing any of the short-term financial benefits," said Nader, who decided to sell rather than find a new tenant. Plus, he and his wife, who had started working as a designer at Uber, were enjoying the Bay Area and found themselves pushing out their timeline. "I was never convinced we would stay in San Francisco for the long term, but I became more and more confident that we wouldn't be immediately back to Austin."
Choosing to rent to save on housing in SF and leaning into index fund investing
Nader, 37, has been pursuing FIRE (financial independence, retirement early) since his 20s. He and his wife have always lived below their means, and for years, they kept their expenses low enough so that just one of their tech incomes could cover all of their household expenses, allowing them to invest about half of their combined income.
When they moved to the Bay Area, renting made sense from a budget perspective: It was cheaper for them to rent in the pricey city — and it still is, said Nader: "Right now, San Francisco really favors renting. It's really hard from a pure numbers standpoint to make owning make sense."
Courtesy of Mini Anna Photography
There are exceptions, he noted: "Particularly in a place like San Francisco, a lot of the math can change with the appreciation of property values. If housing prices continue to increase, then maybe buying can come out, but if you take conservative approaches to any future increases in housing, renting just ends up making a lot more sense mathematically."
Plus, Nader was never convinced he and his family would stay in San Francisco long enough to make buying worth it.
"The Goldilocks timeline has historically been, five to seven years is when buying starts being more advantageous than renting," he said. "Now when I do the numbers, it's even longer — closer to the 10-year timeframe — and I'd never been confident that I would be in San Francisco that long."
While prudent real estate investing is a viable path to wealth, Nader doesn't believe he needs to own property to hit his financial goals.
His investment strategy revolves around low-cost index funds. He owns various Fidelity and Vanguard index funds, including Vanguard Total Stock Market Index Fund ETF Shares (VTI) and Vanguard Total International Stock Index Fund ETF Shares (VXUS).
Nader describes the strategy as "super boring," but it's effective: It's helped him build a seven-figure net worth, which BI verified by looking at a copy of his investment report.
It's not lost on him that bringing in two tech incomes was a major advantage.
"I won the income game by being in tech, by being a dual-income household. I didn't need to be taking these outsized risks by investing in extremely speculative ways. I could be boring in my portfolio," said Nader, who worked at Meta for nine years before he was affected by the company's 2023 layoffs.
He and his wife had enough between their savings and one tech income that he didn't have to find another job, but he says he'll consider himself "semi-FIRE'd" until his wife also walks away from her job.
Nader, who spends his days writing on Substack and doing one-on-one financial independence coaching, says his investment strategy has remained the same since the layoff. He likes the hands-off approach to index fund investing, especially after experiencing what it's like to own real estate.
When he was managing the Austin rental, "I kind of quickly realized that the promise of real estate being a clearly passive investment, even if you have property managers, wasn't something that, for me, proved to be true, so it further reinforced my view around focusing on super boring, low-fee index funds," he said. "I could have a few hundred thousand dollars in real estate and maybe a million dollars in index funds, but I would be thinking about the real estate three times as much, so it would be a disproportionate amount of mental exercise, at least for me."