March 2022 U.S. Housing Market Update

More of the same was delivered in the U.S. housing market last month, with March 2022 being the hottest market on record. That’s according to Seattle-based Redfin Corp. (NASDAQ: RDFN), which found homes sold at their fastest pace, and for more above list price, than any other March on record. Nationally, the median home-sale price […]

Pre Sale Renovations with Curbio

Does your home need some repairs or renovations in order to sell it for top dollar?  I’ve recently partnered with Curbio! Curbio is the pre-sale home renovation company that helps you make significantly more money on the sale of your home, without the hassle or upfront costs of working with a traditional home improvement company. Curbio […]

December 2021 RE Market Report

When evaluating the current real estate market in Sacramento, Placer, and El Dorado counties there are a few highlights to acknowledge.  First of all, inventory for January 2022 is slightly higher than it was last month.  But from there, we’re seeing a decline in the homes listed, sold, and pending.  Average days on market is […]

Where the housing market is going in 2022?

As told by 7 leading forecast models A perfect storm. That’s the best way to describe the red-hot housing market we’ve seen from coast-to-coast during the pandemic. It was spurred by a combination of recession-induced low mortgage rates, remote work allowing buyers to sprawl further away from their workplace, and a demographic wave of first-time millennial homebuyers […]

Is it a good idea to list your home during the holidays?

The holiday season is typically not peak listing time for real estate. But the current situation, namely a super-low supply of homes coupled with great demand, is not typical. Usually, there are fewer buyers than, say, in May or June, meaning that homes tend to take longer to sell during the holidays. So sellers often […]

Buying a home unmarried?

Buying a home unmarried? What to know before signing the deed There’s a growing number of unmarried couples buying homes together, and without proper planning the move may create future problems. Indeed, 9% of home buyers were unmarried in 2020, according to the National Association of Realtors. While younger millennials, ages 22 to 30 years old, […]

Credit Scores for Homebuying

Credit scores are crucial to the homebuying process. Not only does your FICO score determine if you can qualify for a loan in the first place, it will also have an impact on your mortgage terms. Your credit will affect getting the type of loan that will fit your family budget. You should also plan […]

Non-Contingent Offers Quick Guide

In our hot Seller’s Market, we’re seeing a lot of Non-Contingent Offers from Buyers. What does that mean? Well it means that Buyers are at risk for losing their deposits or even paying damages if they decide not to purchase after an offer is accepted. Even Sellers should be cautioned about this strategy which leaves […]

Retire Early With Real Estate

Retire Early with Real Estate in 4 Simple Steps

retire early

  1. Learn how to retire early with real estate

Investing in real estate is one of the best ways to secure your future. It can be a fantastic way to bolster your savings account and ensure you don’t hit financial downturns. Furthermore, with some smart investing decisions, your investment properties can become a source of passive income. Because of these reasons, there’s a growing community of people who are investing in real estate as a means of retiring early. There’s a lot of misperceptions about this process: Some people believe it to be an unfeasible and lofty goal. However, by taking some strategic steps and knowing what your goals are, you can start building wealth with real estate in 2020 for the future.

The first thing you need to figure out when you want to retire early with real estate is how much income you’ll need to generate to maintain your lifestyle. This is a common exercise for individuals who wish to retire early and is referred to as your “Financial Independence Number.”

A lot of variables can influence this number: Do you want to travel often? Do you want to relocate to a more or less expensive city? What about inflation? These questions will determine a rental income for retirement that makes sense for you.

Once you know this number, you will have a clear idea of how much income your investment properties will need to generate to sustain your lifestyle. Whether it’s $20,000 or $200,000, knowing this number is your first step to retire early with real estate.

  1. Develop Your Real Estate Investing Business Plan

For a majority of individuals who retire early with real estate investing, owning rental properties is the way to go. This is because rental properties will generate a consistent stream of income every month for the foreseeable future. If your properties lie within an area that is in high demand or where the housing market is expected to continue growing for decades to come, you’re on the right track. This is the underlying mechanism of retiring early with real estate.

Rental properties are also favored because they have the potential to generate passive income. By contracting professional property management, your workload will remain at the bare minimum with your rental properties! Make sure you find a property manager or property management company that is trustworthy, to whom you can delegate the responsibility. Passive real estate investing can guarantee that you receive a salary every month into the foreseeable future.

So how does this all tie into your real estate business plan? You need to outline many different things. Among the most important are the real estate investment strategy (the clear winner being investing in rental properties), the real estate market’s where you want to buy a rental property, and your management plan. Learn more about how to put together a plan by reading “Learn to Create Wealth & Income Through Smart ‘Buy Low Rent High’ Strategy” By: Daniel Diaz”.

  1. Find the Right Rental Properties

There’s a lot of things that can go wrong with this strategy. Foremost, some cities and regions which are currently in demand may or may not be in the years to come. If your rental properties are in a rural area, for example, there’s a chance that your tenants may start leaving as urbanization takes over. These diminishing real estate markets can be risky in the long term since you may be left with an investment property that lacks tenants.

You might even eventually find yourself in a situation where your rental properties aren’t generating enough income or are not keeping up with inflation. So while your expenses increase over time, their rental income won’t.

Thankfully, being wary of these risks can put you on the right track to mitigating them. If you find the right income properties in the right areas, you’re sure to guarantee your income for decades to come.

You want to look for strong housing markets that have performed well historically and rental properties that can guarantee a higher-than-average return on investment. Buying multiple rental properties within this category is a must if you intend to retire early with real estate.

You can locate properties using web sites like Loopnet.com, Realtor.com, Craigslist or Auction.com or, better yet, your real estate agent who can streamline the hunt.

  1. Calculate Your Income and Expenses

The final crucial step you need to take is knowing exactly how much rental income each property will generate and what expenses you need to set aside money for. Using an advanced tool like a real estate investment calculator, (https://www.calculator.net/rental-property-calculator.html),  will go a long way here. It will also provide you with in-depth figures that you need to know if you intend to retire early with real estate investing. You’ll have data like expected rental income, cash on cash return, and cap rate, which can show you the success of your real estate investments at a glance. But you’ll also need valuable data about your real estate comp (comparative properties), which can inform you of how much you can reasonably charge for rent. Again talk with your REALTOR® about comps.   All of these numbers are crucial when developing your real estate investing strategy.

You also need to know your outgoing cash (things like maintenance, property management costs, mortgage interest, and a budget for repairs) versus your rental income. This exercise can show you exactly how much money you’ll be getting from each rental unit on a monthly or annual basis. Doing the math is crucial when you intend to retire early with real estate. You also need to know your mortgage costs to see how they affect your cash flow and return on investment. Ask your real estate agent for a referral to a mortgage lender who can assist with this.

You should also consider setting aside a budget for repairs to be undertaken every several years. To make sure your properties are competitive and appealing for decades to come, maintenance and upgrades should never be disregarded.

Once you know your exact real estate income — with certainty it is sustainable for years to come — you can begin planning for early retirement. Compare this figure to the aforementioned Financial Independence Number (FIN) to see how far off you are. Are you still short on reaching your FIN? Now you’ll know how many rental properties to retire you still need!

Some real estate investors try to buy one rental property per year in order to achieve this goal. But depending on your FIN, you might be able to achieve your goal much more easily.

Bottom Line

The ability to retire early with real estate investing sounds ambitious. But by employing the right strategies, this is a feasible option that many investors can pursue. Use this guide as a starting point, and be sure that you have a clear plan. If you can secure passive retirement income for decades to come, retiring early can be a real option for you. Whether you are just getting started in real estate or are a seasoned investor, there are steps you can start taking today to retire early with real estate.

Build your team with qualified, experienced, professionals in real estate and lending.

 

 

 

 

 

Originally written by Elias Rizek  on mashvisor.com