Save Thousands For Your Retirement With Someone Else's Money
I am the big sister to two kid brothers. Like any older sister, I worry about my brothers, even now. Most of all, I worry about their futures. The one closest to my age is the one I worry about the most lately.
You see, he is a talented carpenter. Before that he worked as a chef " and was amazing. He is also extremely good at rebuilding and repairing cars. Anything that requires patience and attention to detail seems to be something he is exceptionally good at. That is, except when it comes to his finances.
Since he's still young (in his early 30s), he feels there's lots of time to work and make money to put away for his retirement. I wish he didn't think this way. The government may not take care of us when we're older, so the time to start saving for your retirement is now.
As his big sister, I decided to help him out by making a plan. My brother has three cars, and he certainly doesn't need all three. I convinced him that one of the cars should be sold. The money he makes from the sale can be put into a savings account, and he'll also be able to start saving about $500 a month.
He can also take on side jobs. People are always asking for help with building fences or kitchen renovations. He doesn't have to work every weekend, and in a year he could have enough saved to put 10% down on a beat up house could be bought for around $200,000.
For a couple of years, he can live there while fixing it up and continuing to save more money. Then, he will turn that house into a rental property, renting it out for about $1,400/month. He then buys and moves into a new property that he will call home.
Now, keeping this really simple, lets look at what my brother has when he retires in 25 years:
If he added $25,000 value to the house by fixing it up, and the property goes up every year at 4% appreciation, then in 25 years time the property will be worth almost $600,000. And the best part is that the tenants paid the mortgage for him! That's like having someone else contribute around $1,900 a month to his retirement savings ($576,000 divided by 25 years divided by 12 months).
If you're wondering where the 4% comes from, properties increase in value on the average of 4% every year, even with ups and downs in the real estate market. But even if it doesn't increase quite that much, the tenants have still paid off the mortgage over the 25 year time span. The rent from the property that he continues to collect (which would be up to about $2,350/month if rent and expenses increase at a 4% rate as well) will go directly toward his retirement.
Plus, he will also have his main residence paid off by then, giving him over $1 Million in property for his retirement. What an easy way to get someone else to pay for a big part of his retirement!
When I explained this to my brother, he sold one of his cars! And with the money he earned helping us with our property, he's already putting together a nice little down payment for a home. - 23218
You see, he is a talented carpenter. Before that he worked as a chef " and was amazing. He is also extremely good at rebuilding and repairing cars. Anything that requires patience and attention to detail seems to be something he is exceptionally good at. That is, except when it comes to his finances.
Since he's still young (in his early 30s), he feels there's lots of time to work and make money to put away for his retirement. I wish he didn't think this way. The government may not take care of us when we're older, so the time to start saving for your retirement is now.
As his big sister, I decided to help him out by making a plan. My brother has three cars, and he certainly doesn't need all three. I convinced him that one of the cars should be sold. The money he makes from the sale can be put into a savings account, and he'll also be able to start saving about $500 a month.
He can also take on side jobs. People are always asking for help with building fences or kitchen renovations. He doesn't have to work every weekend, and in a year he could have enough saved to put 10% down on a beat up house could be bought for around $200,000.
For a couple of years, he can live there while fixing it up and continuing to save more money. Then, he will turn that house into a rental property, renting it out for about $1,400/month. He then buys and moves into a new property that he will call home.
Now, keeping this really simple, lets look at what my brother has when he retires in 25 years:
If he added $25,000 value to the house by fixing it up, and the property goes up every year at 4% appreciation, then in 25 years time the property will be worth almost $600,000. And the best part is that the tenants paid the mortgage for him! That's like having someone else contribute around $1,900 a month to his retirement savings ($576,000 divided by 25 years divided by 12 months).
If you're wondering where the 4% comes from, properties increase in value on the average of 4% every year, even with ups and downs in the real estate market. But even if it doesn't increase quite that much, the tenants have still paid off the mortgage over the 25 year time span. The rent from the property that he continues to collect (which would be up to about $2,350/month if rent and expenses increase at a 4% rate as well) will go directly toward his retirement.
Plus, he will also have his main residence paid off by then, giving him over $1 Million in property for his retirement. What an easy way to get someone else to pay for a big part of his retirement!
When I explained this to my brother, he sold one of his cars! And with the money he earned helping us with our property, he's already putting together a nice little down payment for a home. - 23218
About the Author:
Learn How to Retire with Real Estate with Julie's free Real Estate Investing Starter Tips Guide. Learn how to create financial freedom, positive cashflow and massive wealth with tips like: How to find quality real estate, finding and keeping great tenants, and easy ways to make more money with real estate.
posted by X - Men @ 5:22 AM
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