Real estate fluctuates just like stocks, however people need a place to live much more than they need Google stock. Real estate can create a nest egg for you that many other investments cannot because it's tangible and it's something that people will always need. It can be easier to think about real estate as a retirement plan because the thought of growing your savings account to $500,000 or $1,000,000 sounds insane. We all know that you'll spend the money on something before it reaches a million dollars.
Only spend money on appreciating assets.
It doesn't count as "spending money" when you buy something that can appreciate in worth. For instance, Google stock and real estate are different than buying a car or a toy. Google has plans in place to increase in value over the next 10 years and you can simply hop in the car and ride with them. There's no financial plan for real estate, but everyone that sells a home must turn around and buy another home.
What if you gave me $30,000 and I told you I'd give you back $100,000 in 30 years?
Instead of thinking about a giant nest egg for retirement, first think about growing a savings account to $30,000. Mortgage rates are still low. Refinance & Lower Your Payment! Depending on who you are that could still sound like years of saving, but we all must save or else we'll end up on the streets when we retire. $30,000 is enough for a down payment and for repairs and updates.
In 5 simple steps you turned $30,000 into $100,000 without including appreciation!As you can see above, I didn't say that your investment will gain at a rate of 5%, or 10%. I said that your rental income will cover the mortgage payment for 30 years and you'll own a home that's worth $100,000 free and clear. After your mortgage payment is gone your rental profits will sky rocket!
In 30 years you'll have no mortgage and a stream of rental income for retirement!
Of course the process sounds easier than it will be in real life, you'll have numerous headaches and annoying tenants that want everything from you, but if you stick with it you'll make $70,000. Better yet, if you keep the home, you'll be making about $1000 extra cash while you're retired.
Once you bought a home, repaired it, and rented it to a tenant for a couple of years, you'll start to see that being a landlord flows into your regular work life. It's never simple, but it becomes standard and familiar to you. As you start to save you can repeat the process with another $30,000. Don't pay down your current mortgage, save money in an account, so that you can buy a second property. Soon enough you'll be a real estate investor on the side, while you still work 40 hours at your day job.
|Tip: People like to live in nice homes. Be sure to keep it updated with your rental income so that you keep your current "customer" happy, and so that you can rent it for more money to the next tenant.Answer your customer promptly, give your customer a reason to stay for another year, and don't ever fight with them unless you want to lose them!|