08/09/2021
Why build a house brick by brick just to take it apart brick by brick?
Does that make sense???
Let take a look at the myth - Saving Your Way to Retirement
vs. Building Cash Flow To Retire
First, let me say that I prefer the second title to the first because saving your way to retirement is the concept that I want to attack and hopefully destroy in your mind by the time you finish this article. Second, let me make a few concessions. Does building cash flow require education? Yes. Does this require courage? Yes. Does this require commitment? Yes. Does this require hard work? Yes. But let me ask you this. Are you thinking there is something for nothing out there? Do you think that you are going to get ahead without courage, commitment, and hard work? I don’t think so. I think you know this is true. However, because of a lack of self-education, you just don’t know what to do so you keep doing what you are doing year after year, decade after decade.
“Formal education (high school and college) gets you a job. Self-education gets you rich.” -Jim Rohn
According to Social Security, 90% of Americans are retiring at or below poverty income levels. The main reason for this is that they are saving for retirement instead of building passive streams of income. They retire with only social security income and meager savings. We will call this Business Model No. 1. It’s scrimping and saving your way to retirement. Special Note: Remember that a family is a business. It is a business that is supposed to run at a profit. Most people never learn this simple point. Let’s look at the results of Business Model No. 1 over nine years compared with Business Model No. 2.Business Model No. 2 is building wealth and passive income streams with real estate. We will keep it simple and only look at single-family property for this example.
Beginner facts: Let’s look at the median income in the US. As of 2011, the median income in America for a family is $50,502 according to the Census Bureau. If we take a conservative approach and decide to save 10% of our income for investments that is about $420 a month. I understand that the vast majority of people cannot and don’t do this. They live paycheck to paycheck with no savings at all. That is why the average 65-year-old only has $35,000 to show for 40+ years of working 40, 50 even 60 hours a week. However, for this example, let’s say they do it. What Results will you get in 9 years (and 32 years) with Business Model No. 1 Saving?
According to BankRate.com, the average stock market return since the turn of the last century is 9.4% — 4.8% in price appreciation, plus approx 4.6% in dividends. The average inflation for the same period has been about 3%.
At the end of 7 years, you will have saved up about $45,000. At the end of 9 years, you will have saved up about $70,000. It will take you 32 Years to save up $1,000,000 Because of inflation, your $1,000,000 is now only worth $388,337.03. Now you have to start taking out money from the principal effectively forcing yourself to “pray you to die before you run out of money.”Where are the golden years? Travel, grandkids, cars, houses, charity, and legacy. Just pulling out the equivalent of $40,000 a year in today’s money means you have less than ten years' worth of savings. What if you live longer? Now let’s look at Business Model No. 2: Building Passive Income
Take the average of my last ten deals. $20,000 Equity Capture $400 a month cash flow after principal, interest, taxes, insurance (PITI), and $100 a month maintenance and vacancy reserve. $12,000 down. This is the total down payment including everything out of pocket. Start saving the same $420 a month but this time, educate yourself in real estate investing and start buying income-producing assets instead of speculating in the stock market.
29 months to save up $12,000 Now Saving $820 a month ($420 from earned income, $400 from cash flow)
15 months to save $12,000 Now saving $1,220 a month
10 months to save $12,000 Now saving $1,620 a month
7 months to save $12,000 Now saving $2,020 a month.
6 months to save $12,000 and buy another house. Now saving $2,420 a month.
5 months to save $12,000 and buy another house. Now saving $2,820 a month
4 months to save $12,000 and buy another house. Now saving $3,220 a month4 Months to save $12,000 and buy another house. Now saving $3,620 a month
3 months to save $12,000 and buy another house
Now saving $4,020 a month
3 months to save $12,000 and buy another house.
Now saving $4,420 a month and we are now at the end of year 7.
Let’s see where we are. 10 Houses. Picked up $200,000 in equity $4,000 a month in passive income.
Where are you at with Business Model No. 1 in the stock market? You would have $45,000 and no monthly income. Let’s go just two more years: You will average about one house every two months over this period. Two more years and that is 12 more houses. We are now at the end of Year 9. Let’s see where you are.
22 Houses $440,000 Equity Capture $8,800 a month in positive cash flow Where are you with your savings program in the stock market? You are at $70,000 and have no monthly income. There is no comparison financially. Building wealth with real estate is much more effective. However, now let’s see how your life will be different at the end of those nine years.
It is not the money; it is the Lifestyle.™
How
do your bills come in? Monthly, right?
How does $70,000 in the stock market help you pay your bills? It does not. How about that $8,800 a month passive
income? All your bills are paid aren’t
they? Yes. The average family in the US spends $4,009 a month. Could you quit your job if you had $8,800 a
month in passive income? For most people,
the answer is yes.
Remember: As soon as your passive income meets and exceeds your bills, you are retired.
It has nothing to do with age. We have students in their 20s that have done this. How long will you live in retirement? How well do you want to live in retirement? Can you enjoy your golden years? Travel, grandkids, cars, houses, charity, and legacy. In conclusion, building wealth with real estate is so much more effective than speculating in the stock market it is not even comparable. So get out there, get educated, and start building passive streams of income for you and your family.
Web source:
http://www.lifestylesunlimited.com/how-22-rent-properties-can-retire-you-faster-...
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