My brother is a talented carpenter. Before becoming a carpenter, he was an amazing chef. He is also extremely good at repairing and rebuilding cars. In fact, he’s good at anything that requires patience and attention to detail. Except, that is, when it comes to his finances.
He just turned 32, and says he is happy to keep working for the next 30 years or more. But as his sister, I worry because he’s saved only a few hundred dollars for his retirement. So I decided to help him.
Here’s the plan I came up with – and it’s one you might be able to use too.
By taking on some odd jobs on weekends (people are always asking him to build fences or help with kitchen renovations), I think he will be able to save enough money to get into real estate within the year. All he needs is 10 percent to put down on a beat-up house that he can buy for, say, $200,000.
For a couple of years, he can live in that house while fixing it up and continuing to save money. After turning the house into a property he can rent out for about $1,400 a month, he can then buy another beat-up house that he can fix up and live in permanently.
Assuming he adds about $25,000 in value to his investment property and it appreciates by 4 percent each year, in 25 years he will own a place worth $576,743. And his tenants will have paid off the mortgage for him! It’s almost like having someone else put $1,900 a month into his retirement savings account! ($576,000 divided by 25 years divided by 12 months = $1,920)
Even if the property doesn’t appreciate by 4 percent every year (which has historically been the average), his tenants still will have paid off his mortgage in 25 years. Plus, he will be enjoying the rental income he gets each month – and that rental income will keep increasing.
Of course, he also will have paid off his own home by then… giving him more than $1 million worth of property that he can cash in for his retirement.
My brother has already sold one of his cars, pocketing a few thousand dollars from the proceeds, and has begun to save about $500 a month just by having one less vehicle to insure and maintain. He’s also done a few weekend jobs that have added up to about $1,500. At this rate, he will be ready to buy his first property in less than 12 months and start his retirement plan in earnest.
[Ed. Note: For more insider strategies for getting started as a real estate investor, sign up for real estate expert Julie Broad's free monthly newsletter. Get your free report for making money with real estate here.
For a unique way to make money in real estate –-taking advantage of the foreclosure boom - check out the Bandwagon Raiding Machine here.]
Similar Articles:
- How Does Your Present Spending Impact Your Retirement? – If you’d like a quick reminder of the importance of saving, consider how the dollars you spend (or d…
- The Seeds of a Real Estate Harvest – I grew up in a small farming town in Alberta, Canada. For 17 years, I was surrounded by farmers – an…
- Why Current Market Conditions Shouldn’t Stop You From Buying Real Estate – Seven years ago, the real estate market where I live – the west coast of Canada – was in a serious s…
- How to Evaluate a Rental Property in 60 Seconds – When you start looking for a rental property to buy, you might find yourself overwhelmed by all of t…
- Where to Retire If You Can No Longer Afford to Live in the States – “We can’t afford to live in the States anymore.” We’d just finished dinner with a couple who’ve deci…
- Pay Yourself First – Many financial advisers recommend sticking to a budget. By categorizing expenses and limiting spendi…
- The Biggest House-Buying Tip Ever – In Stephen Covey’s best-selling book The 7 Habits of Highly Effective People, he recommends that you…