A Simple Investment Strategy for a Better Retirement


When you sit down and think about it, as few as three rent houses free and clear can give you enough income to live comfortably on.

Let’s take my brother as an example. He just purchased his first home. He’s a carpenter so he bought a home that needs some love. If all he does is live in that house while fixing it up and adding a second suite he will add a lot of value to the home. Then, if he moves out and rents out both units, moving into a new home to fix up and live in for awhile, he will already have made a gigantic step towards a comfortable retirement. Even if he does NOTHING else to save for his future in the next 25 years he will be sitting more comfortably than many other people who pay into a company pension and hope for the best in the future.

My personal plan for him is to add a new house to his portfolio every 3 – 5 years until he has 5. Once he has 5, as long as he keeps them all and continues to pay down the mortgages on each of them using the rental income he earns he will be able to enjoy a VERY comfortable retirement.

Keeping it simple – let’s look at how he will do if he only does this once (so rents this house out in a few years and moves into a new one and then does nothing else).

Let’s assume the home appreciates by 3 percent each year, in 25 years he will own a place worth approximately $808,000. And his tenants will have paid off the mortgage for him! It’s almost like having someone else put over $2,700 a month into his retirement savings account! ($808,000 divided by 25 years divided by 12 months = $2,693).

Even if the property doesn’t appreciate by 3 percent every year (which is lower than the historical average annual appreciation of homes in most markets in Canada), 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.

Looking at it in today’s dollars – how many people do you know that have $375,000 sitting in the bank for their retirement producing $2,000 a month income for them to live off of? I have met too many people who are looking at very lean retirements because the pension they’d been counting on has been clawed back or the company they worked for has gone bankrupt. Or, worse, their life savings were cut in half by a crash in the markets. There are plenty of people out there that would be very happy to have a source of income on a monthly basis backed by something of value that they can sell when they eventually need a few more dollars to pay for their expenses when they are elderly (or give to their family members to help them live their last few decades more comfortably.)

That is what just one house could do for your retirement. When you have three houses paid off, each producing $2,000 per month in income you will have over $1,000,000 worth of real estate generating a good monthly income to enjoy retirement comfortably.

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