Have you ever used one of those online retirement calculators? I’m talking about the online calculators or planners where you enter all your assets and your current and expected expenses at retirement, it’s adjusts for inflation and it spits out how much you need to save every month for retirement?
These calculators typically result in the user throwing their hands up in the air and thinking Impossible!
I entered all my numbers without my rentals into the Fidelity Retirement Calculator and it spit out that I needed to save an additional $2,000/mo!
Then I added my rental properties into the same calculator. With appreciation and rents going up and equity being paid down over the years, I didn’t have to put away another dime in order to meet my retirement goals.
How would that feel to see that result? How would it feel to know you and your spouse would be ok financially in retirement? How would it feel to know that you wouldn’t be a financial burden on your family as you get older?
I want to clarify that I do contribute to my 401k every paycheck. My company used to have a match of 25% before The Great Recession. Then it dropped to zero match. Now they automatically contribute 3% for everyone no matter if you want them to or not.
There were a number of years during The Great Recession when I did not contribute, but for the most part I have been fairly consistent with my contributions and it's still not enough.
Everyone I talk to can’t believe how expensive homes are or how high rent is. Have you ever heard anyone say…My retirement account is kicking butt right now!!
The reason why real estate investing is so powerful is because you are building wealth in 5 different ways with one investment. I explain these 5 separate wealth building opportunities that rental properties offer in my post The I.D.E.A.L. Investment.
Also, with real estate, it is very difficult and takes a while to access your wealth. You are really forced to analyze the transaction over a significant period of time. The typical process for a cash-out refinance would look like this…crunch some numbers, talk to your mortgage broker, analyze where interest rates are at, crunch numbers together, apply for the refinance loan and wait 20-30 days for the loan to fund. If you want to sell a property in order to access all the wealth held in the property, it's even more cumbersome and takes a lot longer.
The flip side of having your savings invested in rental properties, is to have a brokerage or savings account. Again, I am speaking about savings above and beyond your retirement accounts. The typical process to access funds in a savings or brokerage account looks like this…log on, click a button. Most people are not disciplined enough to never touch those funds.
Do you know in your gut that real estate investing is what you should be doing, but think it is out of your reach? Well, it's not.
I've spoken to so many people who think that there's just no way that they can get into real estate. They're wrong. I live in Southern California. The median home price of the area where I live is over $600,000.
The approach I took with real estate investing is to buy one small investment property at a time a few hours away from where I live currently. I just had to come up with that very first down payment and that's it. If you need tips on getting your financial house in order so you can start saving or want some alternative approaches to saving in order to come up with your first down payment, read my post titled Get in the Game for ideas.