Why You Should Save To Invest … And Not To Retire

A wise real estate investor once told me the best way to be successful in real estate is to start as young as you can. There’s countless reasons why anyone should start in their twenties, and that’s exactly what I did.

I’m into doing deals of many different types including fix and flips, rehabs, buy and holds, wholesaling, and just plain rentals … And that’s what I want to focus in on here today: rentals, and why that should be the goal of your real estate investing business.

First off, the most important thing is to educate yourself on the benefits of rentals, how to create a portfolio, and how you can earn residual income for the rest of your life off your properties, essentially obtaining financial freedom.

The Best Investment Isn’t In The Stock Market

Contrary to popular and/or mainstream belief, the stock market by far is the riskiest investment out there today. Here’s why: It’s extremely volatile and too heavily influenced by current events and can go up or down at any moment. On the other side of that coin, if you’re a “9-5er” and only receiving income from your job, then you’re only able to invest what you set aside, and you’re trusting the market to be at a peak when you retire and begin to use what you’ve saved.

Many agree that’s the safe route, but I argue that’s the most dangerous road out there.

Take a moment and think about it. Imagine all the stock market crashes throughout history … How entire life’s savings can be significantly altered or even destroyed in one day. Every dollar that you work so hard for — you leave to a game that’s harder to win than gambling in my opinion.

Why Real Estate Is The Better Investment

While stock marketing investing is determined largely by your retirement calculator, which makes you guess when you will die in order for you to figure out how much money you need, real estate provides you with cash flow. The idea of cash flow is a consistent supply of money coming to you month after month whether you are working or not. Specifically, rental property investingĀ is the way to achieve this. Cash flow is great because it increases over time and doesn’t tear into the principle investment.

Imagine a stock with a dividend so high there’s no need to worry about it increasing in value to make awesome returns.

Due to inflation, cash flow will increase over time because rents go up. Eventually, your loans will be paid off and your cash flow will significantly increase. It’s positive to see a 20 percent cash on cash return for your rentals.

Buying Is Easier When You Are Younger

It should go without saying, but when you are younger you have a greater opportunity to be highly risk-oriented. The wisest thing for young people hungry for success is to take massive action and risk at this stage of life.

In order to build a rental portfolio, you’re typically required to live in a property for one year before you can rent it out. It may be challenging to convince your spouse and kids to make annual moves, even sometimes into less-than-ideal living situations. It takes time to generate the returns you desire. Yes, it does take time, and patience is the name of the game … That and finding great deals! šŸ˜‰

The older you get, the “more responsible” life kicks in. You have commitments and priorities. Essentially, it’s not all about you anymore, unless you’re retired. Then spend as much time on real estate investing as much as your heart desires.

There Are Some Risks

You heard correct. Just like with anything worthwhile in life, there is risk involved … And the higher that risk, the greater the reward.

Suppose you’re an investor building you’re rental portfolio. Many mistakes people make is buying for appreciation with negative cash flow. It’s awesome when your property appreciates, but a negative cash flow only loses you money.

The problem, despite the fact it’s a negative cash flow, is many investors underestimate the money they will have to spend on their rental properties. It’s super important to run your numbers because, even though with enough time your properties will appreciate, they can also go down in value before that occurs.

Another issue is maintenance. Assume that 10 to 20 percent of your monthly rents will go toward maintenance. If you don’t account for this, it’s possible you will not make any money investing in rental properties.

It’s also time consuming to manage. You need to have tenants, a lease, and a system in place to account for income properly that ensures everyone pays on time. Hiring a property manager can simplify this process for you, but assume they’ll receive 8 to 10 percent of the monthly rent proceeds.

Tips For Your Financial Future

Being a licensed real estate agent while actively investing helps you exponentially in finding awesome deals and allows you to act very quickly. If you’re not an agent, find a great one to add to your power team who’s willing to act fast for you.

Spend time researching prices and trends in your market. Do not depend solely on an agent to find you good deals.

You should become a marketing giant. 80% of your business should be marketing. Remember, you are a marketing company that just so happens to be in the field of real estate. This is only the vehicle.

Join a Real Estate Investment ClubĀ in your local area and find out what other investors are doing and learn from them … And also add valuable players to your power team.

Real estate investing and buying rental properties is fun, exciting, and a world of unexpected surprises. It’s well worthwhile because of the lifestyle you can create for yourself. This is not a “get rich quick” scheme, but over time you can build wealth beyond anything you’ve ever dreamed of if you’re willing to stick with it and not give up. You must have ambition, focus, and a goal in mind if you truly intend to make it work.

The sooner, and younger you get started, the better off you will be.

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