Here’s The Impact Of Rental Income On Your Retirement (Case Study)
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- čas přidán 5. 07. 2024
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In this video, I will discuss how rental income can significantly enhance your retirement plan.
By using the case study as an example you will learn how to leverage rental income to adopt a more aggressive investment strategy, minimize tax burdens, and optimize your portfolio allocation.
Learn from real-life examples and personalized strategies to make the most of your retirement.
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Time Stamp
00:00 Intro
00:48 Importance of Rental Income
01:05 Case Study Introduction
02:40 What Is Return on Hassle
04:50 Intro Early Retirement Academy
07:30 You Have to Understand This if You Own Rental Properties
08:30 Real Estate vs. Stock Market Returns
12:25 Ask Yourself This Question
14:00 Last Example
16:00 Summary/Conclusion
16:52 Work With Us
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Ari Taublieb, CFP®, MBA, is the Vice President of Root Financial Partners (Fiduciary) and host of the Early Retirement Podcast.
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⚠️ "DISCLAIMER:⚠️
All content is not to be received as financial advice, and each individual should consult with their dedicated financial planner, tax preparer, estate attorney, etc., before making any financial decisions.
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Consider this if you're wondering why I would take money out of my retirement to purchase real estate: My 401(k) has produced an average annual return of 4.2% over the last 20 years, while my IRA has created an average return of 3.49%. When everything is taken into account, my possible return on real estate investment is very different from my retirement funds.
The crazy thing is that with all of those savings thanks to my consultant ( *Leah* *Foster* *Alderman* ) I could literally buy a property every year, lower my tax situation even more, and keep earning more money-but it's also possible that it could put me in a position where I can make millions of dollars in the future. I can tell you right now that it works for me. I have 13 houses that are actually making me $65,000 more a year.
You will benefit tax-wise from your investment in the nation's infrastructure because your income is increasing and the majority of people are not in your situation at the moment. I looked into your adviser and found that they have a great deal of experience.
A multimillionaire essentially puts himself in your position through your certified coach, saying, "Hey, if I were you, I wanted to increase my income but I also wanted to lower my taxes."
Yes! Rentals! So powerful!
Thanks Ari for another very informative video!
Start early with diversified investments in stocks, bonds, and real estate. Maximize contributions to tax-advantaged accounts like 401(k)s and IRAs. Regularly review and adjust your strategy to ensure security...
It’s a pretty complex question. If you sell a piece of property you take a huge hit. Subtract some fix up costs, 6% real estate commission, 20% capital gains tax on the gain and any depreciation. Then take off the mortgage payoff if any.
What you have left might be 30-50% less asset value. Then reinvest that in the stock market.
If you have good property that is cash flowing the middle ground might be to hire a manager. They really do almost all the work and you don’t need to be on alert 24/7. They also then to be more aggressive raising rents and keeping up on maintenance.
Real estate is a great diversification tool as well. Rents and property values then to go up over time. This is a big help for people looking at 20-40 years in retirement. The assumption that the stock market will go up 8% per year on average may in fact not happen.
Good video. The reason I don’t use an advisor is they don’t typically understand real estate or the self employed business owner. Much more complicated!
I think if you plan to retire, having a rental income can be an advantage but the headache of dealing with maintenance and securing the longevity of a renter can be a hassle Unless the rental property is new and no maintenance is needed. Ari, how long is the waiting list? .
Do you have an advisor that specializes in people who want to retire early with real estate?
While I don't have a specific advisor to recommend, I can provide you with some general advice and resources that can help you in your goal to retire early with real estate investments.
### Steps to Retire Early with Real Estate
1. **Educate Yourself**: Gain a solid understanding of real estate investment. Books like "Rich Dad Poor Dad" by Robert Kiyosaki and "The Millionaire Real Estate Investor" by Gary Keller are great starting points.
2. **Set Clear Goals**: Define your financial goals and retirement age. Calculate how much passive income you'll need to cover your expenses and live comfortably.
3. **Create a Budget and Save**: Start by saving a significant portion of your income. This will serve as the initial capital for your real estate investments.
4. **Research Markets**: Identify real estate markets with strong growth potential. Look for areas with job growth, population growth, and other economic indicators.
5. **Build a Team**: Surround yourself with professionals, including a real estate agent, mortgage broker, real estate attorney, and property manager.
6. **Start Small**: Begin with single-family homes or small multi-family properties. These are generally easier to manage and finance.
7. **Financing**: Explore different financing options. Consider leveraging your investments by taking out mortgages, but be mindful of the risks involved.
8. **Cash Flow Analysis**: Always perform thorough cash flow analysis before purchasing a property. Ensure that the rental income will cover all expenses and provide a profit.
9. **Diversify**: Don't put all your eggs in one basket. Diversify your real estate investments across different property types and locations.
10. **Scale Up**: As you gain experience and confidence, gradually scale up your investments. Consider larger multi-family properties, commercial real estate, or even real estate development.
### Useful Resources
- **BiggerPockets**: A popular online community and resource hub for real estate investors. They offer forums, podcasts, blogs, and educational materials.
- **Local Real Estate Investment Clubs**: Joining a local club can provide networking opportunities and access to experienced investors.
- **Financial Advisors**: Look for financial advisors who specialize in real estate investments. They can provide personalized advice based on your financial situation and goals.
### Inspirational Story
Consider the story of Chad Carson, a real estate investor who retired in his 30s by building a portfolio of rental properties. He emphasizes the importance of starting small, staying persistent, and continuously educating yourself. His journey is detailed in his book "Retire Early with Real Estate."
If you need more specific guidance or have particular questions, feel free to ask!
this is a good summary of rental income pros & cons, Ari. prefer to invest in selectively chosen REITs in a Roth IRA instead. rentals can be the absolute biggest pain-in-the-a$$ investments. between the expenses, tax complications, and all of the tenant challenges, the stress and risks aren't for me. REIT dividend snowballing and price appreciation into tax-free retirement income with near-zero stress is priceless.