Here’s My #1 Investment

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Our country is facing a retirement crisis. The unfunded liabilities of Social Security and Medicare coupled with the low savings rates and decimated 401(k) large parts of the baby boomer generation not having enough money to retire.

Retirement Funds

Unfortunately, the retirement funds of many boomers are either minimal or nonexistent. The statistics are somewhat grim: 41% of baby boomers between the ages of 55 and 64 have no retirement savings at all, and 25% have saved less than $50,000.

When you consider the possible length of retirement (20 years or longer), a yearly average income based on these figures is nowhere near a livable amount.

I do have one insider who is offering my readers a chance to save their retirement, but only if you click here to watch this video before 2pm today!

I’m starting to see articles here and there on strategies for retirement outside of the standard advice of mutual funds and bonds.

I read an article in The Wall Street Journal called “Want a Job? Become a Landlord.” To summarize, the author writes that for those facing retirement, a valid option is buying a small multi-family building, living in it, and managing it.

He also points out that rents are on the upswing in most states and that the long-term trend in the US looks to be one of renting vs. ownership. All of this bodes well for landlords.

Additionally, he says that having a job as a landlord will “provide something harder to quantify for retirees who have difficulties walking away from a full-time job: a challenge, a purpose and an opportunity for accomplishment.”

I’m happy to see this type of article in the mainstream media because I’ve been preaching for years that cash-flowing real estate is one of the ultimate investments due to the ability to leverage, receive cash in your pocket each month, and the tax benefits.

Perhaps the biggest benefit to owning an investment property is that as long as it is well maintained, it will increase in value over time. Approached carefully, these investments are a good way to prepare for the future and develop generational wealth.

While I agree with the sentiment of the article, one thing I disagreed with was a retiree spending their last years of their life “working” rather than having their money work for them.

Hire A Property Manager

If you’re buying an apartment building, why spend the time and energy renting, managing, and maintaining the building—especially if you don’t know what you’re doing? Who wants to spend their retirement years fixing toilets and changing locks?

To me, it’s short-sighted to find only one building and make managing it your job. Instead, become an investor and find more great deals that you can purchase and have professionally managed. Spend your spare time educating yourself on the market, rounding up investors, finding better deals, and building the value of your portfolio so that you can leverage it into even more deals. That will give you a purpose in retirement and build your wealth.

Property management is probably the most misunderstood simply because you don’t need to be a successful property manager to be a successful real estate investor.

One of the great things about multi-family investing is that you can factor in property management into your calculations when buying an investment property. Find a deal that can provide income while supporting professional property management.

In my experience, a good property manager will know how to improve the value of the property in three general areas: income, expenses, and systems.

1. Income

The number one misconception that can turn a good real estate deal into a bad one is by not understanding that real estate is a business, not just an investment.

As such, the most important aspect of your investment is the bottom line. The success of your deal is the dependent upon how much net operating income it produces. Rent and occupancy are two of the most important factors that determine total income.

2. Expenses

When it comes to property management, expenses are generally the factor you have the least control over. Property taxes, insurance, and utilities will be the biggest expenses a property will face and to a large extent, these are costs you simply can’t control.

There are a few things you can do. A professional management company might have better purchasing power when it comes to insurance premiums and can get a better rate than the average person. A good property manager will utilize a tax consultant to analyze whether he might be able to challenge the property tax for the property.

3. Systems

The easiest way to explain how systems can improve the value of the property is to explain how a lack of systems can devalue a property.

Poor management can lead to things like poor occupancy standards, or deferred maintenance issues. Both of these things can add up to lost income.

Nothing is more important the success of your investment than good, knowledgeable property management. Oftentimes, it is the difference between meeting your investment goals and losing untold amounts of money.

Start Now, No Matter Your Age

Baby Boomers looking for steady income in retirement may want to consider real estate. Historically, it has delivered higher income than traditional fixed-income assets.

Additionally, real estate generally has a low correlation to equities and bonds, helping Boomers diversify their portfolio, and potentially hedge against increased market volatility. Also, in today’s rising rate environment, real estate may provide some downside protection as the fixed-income markets continue to struggle with rising rates.

And even though it’s true that real estate can suffer short-term interest rate shock, what really drives its performance long-term is a healthy, growing economy – similar to the current environment we’re experiencing.

As the old saying goes, “Youth is wasted on the young.” Don’t let your youth be wasted. Rather begin planning for your future by investing in your financial education and building a portfolio of assets that will provide for you and your family when you’re ready to retire.

My wife, Kim, began investing over two decades ago with one two-bedroom house in Portland, OR.

Today, she owns thousands of units in multiple states that bring millions of dollars into her pocket each year. Anyone can do this.

Start small when you’re young and build big for when you’re old.

Regards,

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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