Manage episode 200480529 series 2124446
Everyone wants to talk about real estate investment strategies. However, strategies that fit YOUR timeline are the only ones that matter.
Transcript: Today let’s talk about strategies. Not strategy in the sense of, “I’m going to be a buy and hold guy,” or “I’m going to be a fix up guy.” Strategy in terms of the long term, how old you are, how many years total do you have on your timeline before you actually get to retirement. That’s the real timeline that matters. If you’re looking at 65, but you want to retire at 55, lost last 10 years don’t matter. You’re already on the late bus if you wait until 65 wanting to retire early. One of the things you have to look at with strategy is, given the number of years you have left before that fun day happens, and you retire what do you have to have accomplished? One of the things that usually people have to do is retire debt. Now, is it retire debt on your primary residence? Is it on your rentals that you bought? What is it? For most people it’s both, but for now let’s talk about what happens when you want to retire your debt. Debt on rentals at retirement is not a good thing, because I don’t care how many months you how to go, or years, that’s cash flow you’re not getting that the lender is. If you’ve got 10 years to go, or 20 years to go, it doesn’t matter, because the guy with 20 years to go has twice as long, but he may have 3 times to properties. How many can you free and clear of all debt by the day before your retirement party starts? That’s one thing to look at. The other thing is, maybe you’re going to buy notes too, and that’s going to be part of your ultimate strategy. If you’re buying notes too, are you buying them in your own name? Are you buying them in an IRA, or a 401K envelope that you control? Is it traditional, or is it Roth? Why isn’t it one or the other? What are you thinking? All that matters. People tend to want to pull, aim, and shoot, and that’s where people get in trouble, and that’s why we call it “purposeful planning,” not, “I just got up, and this sounds like a good plan planning.” When you look at strategies, the timeline dictates what you can, and can’t do most of the time. When you’re 53 years old, and you owned your primary residence, and you have money in your 401K, and maybe an IRA or 2 between you, and your wife, you can’t willy nilly go out and buy 6 pieces of real estate, and acquire a $1,000,000 plus of debt simply because you can afford it. If you’re going to retire at 65, you’ve only got about 12 years to go. Can you retire 2 commas worth of debt in only a dozen years? I don’t know. Can you? If you had enough capital to buy those 6 small pieces of property, did you have any extra for cash reserves? Did you have any extra to buy notes? What did you do, why did you do it, and what’s the timeline you have to accomplish all the goals? Arriving at retirement just because you can, but with debt still on everything that you own makes no sense. Sure, you might be able to squeak by, but the point is, every time a property free and clears itself, usually the cash flow from that property goes up 3, or 4 times overnight. When you’re doing this, you’re strategies matter, and the timeline almost always dictates which ones you will pick. Latter on we’re going to be talking about exactly which strategies for which people, and what timelines matter the most.
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