Summary
We are all seeking to fashion a safety net of sorts for ourselves, so that we can enjoy our retirement – or if we reject the notion of conventional retirement, to at least achieve a degree of financial independence in which we are free to only work on the projects we are passionate about.
It’s clear that we cannot rely on a pension or stream of income guaranteed from an employer or the government. Today it is up to us to create our own safety nets. Fortunately, this means more exciting – and lucrative – opportunities for those of us willing to take risks and go beyond what is expected.
Real estate is the real deal when it comes to creating a steady stream of revenue for you that can continue to generate returns in a passive fashion long after you have put your homework and legwork in.
By focusing on acquiring properties that can help you generate the monthly minimum income you seek, you can free up your time and resources to follow your passions and do what you love with the ones you love.
Read more to learn how you can strategically use your leverage to make big gains in real estate and take charge of your own destiny.
Transcript
How much cash flow do you want when you retire?
Retire On Your Own Terms
You often hear about people needing to cut back on lifestyle when they retire. Why is that? Isn’t the entire idea behind the retirement phase of life that you finally get to kick back and do what you want on your own terms? The simple reason for their need to tighten their belts at this stage is bad planning. Too many of us just assume that we will be turning off our income spigot when we are no longer working full-time and we thus need to adjust our expectations to fit a fixed income. This is a failure of mindset.
Too often when we think of weaving a safety net for ourselves in retirement, we end up bemoaning the decline of pensions and guaranteed benefits from employers. For most of us, we are very much on our own when it comes to planning, saving, and creating that safety net that we can rely on in our older years. This can be a stressful thought – or it can be liberating. How many of us today would be content to hang out around one place doing the same thing for years on end just to assure ourselves of a pay-out decades later? For most of us, there are far more exciting opportunities that abound from charting our own course and taking responsibility for where we finish.
A “Real” Safety Net
On that note, there is a virtually sure fire method of retiring in the lifestyle you need. For most people, this is the simplest and easiest method – it involves real estate.
The concept is to quickly, over as short a time period as you can, buy a number of residential rental properties. Your goal should be to amass a collection of properties with a net rent equal to your desired income. Of course these properties will initially have a mortgage on them. But let’s say that your desired monthly income (outside of salary, Social Security, or other revenue sources) is $5,000 per month, for example. You could collect six or seven properties that rent for around $800 monthly. After some initial maintenance and upkeep, you will have created a guaranteed means of ensuring your desired monthly income.
You don’t have to start with all six or seven today – many of us prefer to proceed with some caution when it comes to leveraging ourselves for real estate, especially given the fallout in the real estate market in 2008. Try getting started with one – but start today. The best time for you to strike down this road was most likely yesterday.
Generate Multiple Passive Income Streams
Your goal shouldn’t be to buy expensive properties that in areas that are already so desirable that their market has essentially peaked. You would be well advised to focus on buying near a university in a town of no less than 500,000 or so residents. Places fitting this profile tend to have growing work forces and continually expanding job markets – not to mention a steady stable of college students in need of a place to rent. You don’t necessarily need to buy a property that is geographically near you if you can secure a good property manager that you can trust. That said, an axiom of investing holds that you often do best by investing in markets and products that you have a deep understanding of. By the same token, you may be further ahead of the game by investing in properties in an area that you know completely. You will then be required to put in less time upfront learning more about the area.
The property manager component is a key point. One of the primary virtues of involvement in real estate is that you can benefit from the gains of mostly passive income after you have put in most of the upfront work that is involved in getting your property to be tenant ready and finding reliable renters. Delegating much of the day to day work to a good property manager will allow you to cede much of the responsibility for overseeing daily logistics – in short, the aspects of real estate ownership that are most similar to working a conventional job.
Avoid Money Pitts
Continue to grow your empire – don’t stop. Over time as you accumulate more, you can use the increasing rent and value over to pay off your mortgages and then buy more. You should beware of any properties that have a negative cash flow. You should avoid properties that come with prohibitive refurbishing costs. Doing some fixing up and maintenance can help drive up the value of your home from your buying price, but don’t get bogged down into a money pit that you won’t be able to fill with the revenue coming in from rent and sales.
Play The Long Game
Also, don’t spend too much time worrying about the daily fluctuations in the market – a concept you are wise to follow when it comes to tracking your investments in general. You are buying for the long-term flow and can thus afford to ride out market corrections and downturns as long as you keep your focus on the horizon.
You can start at any age, but the younger the better. Your future self will be grateful that you decided to take the plunge and make such a critical investment in your financial well-being.
Research The Market And Increase Your Skills
You will need to spend some time educating yourself. Not just on the basics of how to be handy in case you do need to roll up your sleeves with some plumbing or electronics, but also in terms of learning about how real estate works as a discipline. Make it a weekend habit of yours to visit the open hours in your area to get a feel for the types of properties that are out there. Instill a sense of appropriate listing and asking prices by checking out the notices in the local paper or online.
You should also head out into the field to do more research on your own. Take drives and walks in the areas you’re interested in learning more about, including taking the time to talk to neighbors about what they like and dislike about living in the area. Keep your antenna out for folks cleaning up their lawns or adding on new coats of paint, as they may be interested in preparing to sell their places in the near future.
Attend some networking and educational events to get a chance to learn more about the business from real estate agents and recent buyers. You can talk with them to get a sense of where they think the strongest growth opportunities are for picking up properties that can assure you the monthly income floor you are seeking for yourself.
What strategies will you use to build up your real estate holdings? Can you identify geographic areas that are ripe for you to take advantage of? What more do you need to know before you begin securing your own financial future and scooping up more properties of your own today.
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