If you want a comfortable retirement, then you have got to figure out a way to earn passive income.
It is a sad fact of life but once you are old, its tough to work at a job (tough to find one) or even your own business (unless you have someone else take care of it).
There are different ways to earn passive income- be a dormant business partner with financial contribution only, own a franchise, invent something or author a bestseller book, for which you get a royalty.
If you are like me, i.
e.
neither an inventor, nor an author, nor have a great idea to start a franchise & sell it, buying investment property is a good way to go.
Even if you want to make more money by adding on more sources of passive income later, real estate is a good way to start.
Its not easy, you need to invest a lot of time, effort and have some money at your disposal for a down payment for say, your first two properties.
And investing in real estate is something you need to start early in life, unless you are planning to flip houses.
So, in short, this is how it works.
Say, you buy one or two investment houses to begin with.
The type of house depends on your financial situation and amount of money at your disposal for down payment.
It also depends on how much loan you can get from the bank.
But the rule of thumb is to buy two inexpensive properties instead of one expensive one.
It is easier to rent out cheaper properties, and the rent will almost always cover your expenses.
Expensive houses are harder to rent out, and the rent would probably be lesser than your mortgage payments, insurance, and other expenses combined.
Also, remember an individual who can afford to pay the rent of a big house, can afford to buy a house, and will not stick around as your tenant for long.
Say your rent is $1500 a month, and after paying mortgage, insurance, other expenses, etc.
you are left with $300 a month net income.
Not a big deal, but remember your payments will be static, and your rent will probably increase every year.
So each year your rent income will increase, and after you pay off the mortgage in 20-30 years, you get to keep 100% of the rent, and pay only minimal insurance.
If you own even 10-15 properties, that is a lot of money to keep you going once you're 60! If you owned properties in the 1980s and 90s in California, and sold it before the real estate bust, you would not even have to wait that long; you could have become a millionaire overnight! So, what is the catch? Remember, nothing is easy and quick.
A lot of what I mention above depends on the economy, the area where your investment property is located, the type of tenants you get, and real estate value in general.
But in the long run, the economy corrects itself, and you should see a stable, substantial passive income to keep you comfortable during your retired life.
It is a sad fact of life but once you are old, its tough to work at a job (tough to find one) or even your own business (unless you have someone else take care of it).
There are different ways to earn passive income- be a dormant business partner with financial contribution only, own a franchise, invent something or author a bestseller book, for which you get a royalty.
If you are like me, i.
e.
neither an inventor, nor an author, nor have a great idea to start a franchise & sell it, buying investment property is a good way to go.
Even if you want to make more money by adding on more sources of passive income later, real estate is a good way to start.
Its not easy, you need to invest a lot of time, effort and have some money at your disposal for a down payment for say, your first two properties.
And investing in real estate is something you need to start early in life, unless you are planning to flip houses.
So, in short, this is how it works.
Say, you buy one or two investment houses to begin with.
The type of house depends on your financial situation and amount of money at your disposal for down payment.
It also depends on how much loan you can get from the bank.
But the rule of thumb is to buy two inexpensive properties instead of one expensive one.
It is easier to rent out cheaper properties, and the rent will almost always cover your expenses.
Expensive houses are harder to rent out, and the rent would probably be lesser than your mortgage payments, insurance, and other expenses combined.
Also, remember an individual who can afford to pay the rent of a big house, can afford to buy a house, and will not stick around as your tenant for long.
Say your rent is $1500 a month, and after paying mortgage, insurance, other expenses, etc.
you are left with $300 a month net income.
Not a big deal, but remember your payments will be static, and your rent will probably increase every year.
So each year your rent income will increase, and after you pay off the mortgage in 20-30 years, you get to keep 100% of the rent, and pay only minimal insurance.
If you own even 10-15 properties, that is a lot of money to keep you going once you're 60! If you owned properties in the 1980s and 90s in California, and sold it before the real estate bust, you would not even have to wait that long; you could have become a millionaire overnight! So, what is the catch? Remember, nothing is easy and quick.
A lot of what I mention above depends on the economy, the area where your investment property is located, the type of tenants you get, and real estate value in general.
But in the long run, the economy corrects itself, and you should see a stable, substantial passive income to keep you comfortable during your retired life.