401k VS Real Estate Retirement plan

 401k VS Real Estate Retirement plan

401k VS Real Estate Retirement plan

Don’t Save for Retirement !!!

The current retirement system doesn’t make sense in today’s world. The current model assumes that you’re saving money throughout your working life and at retirement these savings will be converted to an annuity. You pass all that money that you save to a financial institution, like an insurance company or a bank. They’ll convert that into a series of payments, called an annuity, until you pass away, and after that, some of the money would go to your spouse. These payments should provide you with sufficient income to live comfortably but there is no guarantee.

The other problem with this model is that it assumes that you save a lot of money for a long period of time at a low interest rate. So in effect you’re not maximizing what you’re going to have at retirement.

The other part of it is that you’re not leaving anything for your kids. Once you give your money to the insurance company to give you that annuity, and if you and you spouse pass away, then the payments stop and the left over funds will NOT be passed onto your children.

Imagine that you saved a million dollars, give it to the insurance company, and in the worst case scenario a month later the father and the mother die, then that’s it. The couple received one annuity payment and the insurance company gets to keep the rest of the money. If you’re going to live long, then that’s great, because you could actually get more money than you put in. In either case, you’re not leaving anything to your children.

Live Less Now or Later

When I considered what I would be making at retirement, I looked at the different calculators that were online. The funny thing is that when you go to the AARP site to see how much money you can make at retirement, you get to play with some of variables that make up your retirement outcome.

Retirement websites give you only two options: save more money now to increase your retirement benefit or have less money at retirement. In the end, you either live less now or you live less later, but you decide when you want to live less. Personally, I was not ready to live less, so I thought there had to be something else. In addition, this was only focused on me, this tool was not leaving anything for my kids and that’s important to me. So I didn’t like the answers.

Different Options

Today I feel that all my money is tied to my work. I’m a contractor, so if I stopped working for one hour, I don’t get paid that hour. I go on vacation, I don’t get paid. My goal has always been to move away from hourly work and build something that provides passive income.

For many years I have tried to create this passive income through certain business ventures. I created a food company for 10 years, it took so much time and money and in the end it didn’t create the passive I had hoped for. I looked at writing a book, licensing music, creating online stores, creating other products. After years of testing, none of these things worked for me. In the end, I chose real estate.

Real Estate

Real estate is something very tangible where we have control. Compared to the stock market where we don’t have control of the company or the organization or how they spend money and how they generate profits. In real estate, we decide what deals we get into, we make sure that we are making money upfront, and we buy at the right price. We then rent those properties to tenants for passive income. If you find the right market, you can really get something that’s cash flow positive today with minimum amount of money that you put down.

TurnKey Rental Properties for Passive Income

One way to create this passive income is to talk to turnkey rental companies. What turnkey rental companies do is sell you a house they renovated, they have a tenant in it, and they manage the property for you. The property management company is going to collect the checks, they’re going to get the phone calls in the middle of the night when the toilet is broken, and they will handle these issues for you and put the right contractor in place to get the home repaired. The property management companies also have portals online where you can check the profits and expenses of each property that you own.

$15,000 for $200/mo at Retirement

The other great thing about buying turn key out of state is that the do not require much money down. With just $15,000 or so you can get a rental property that creates over $200 in monthly cash flow straight to your bank account. A property for $60,000 in a market like Memphis or Cleveland will rent for over $750/mo. From this you will have expenses each month for the property management company, property taxes, insurance, etc. You will also get a mortgage on this property and you can get an 80% loan on this property. This allows you to only put down around $15,000. In the end, after all expenses and mortgage payments, you will have net cash flow over $200/mo today. It doesn’t sound like much, but if you were to put $15,000 in a savings account right now, will the bank give you $200 a month in interest? At retirement, once the mortgage is paid off, that same rental property will provide $500 or more in monthly cashflow.

The great thing is that once you die, your rental properties can be passed down to your children. These properties are still part of your family trust or your corporation or your LLC that you created, and then your kids are part of that. They can benefit from the properties, from the cash flow. You’re passing the cash flow and assets to your children. You don’t have that with the annuity, you don’t have that with any other vehicle. Real estate is the way to go.

It’s easy and we can help

Passive income is what we all strive for. There are many ways to generate passive income. You can write and sell your book, your music, etc. You can sell or resell products for a profit. Create your own you tube channel. All of them require time, effort, and skills. Investing in turn key rental properties doesn’t require any of that.