With a large percentage of the population approaching the age of retirement, there’s been a great deal of focus in the media about making sure you have a retirement plan in place. Fortunately, I’ve been working on mine since I was 24, and I think I’ve developed a rather unusual and yet highly successful method of retirement planning that can work for nearly any middle class individual in their 50s or younger.
Now this strategy won’t be surprising to the many people who have known and
worked with me during my decades as a real estate professional. But what may come as a shock is that my husband and I, in fact, own 11 homes.
That’s right – 11!
They aren’t palatial estates and they aren’t in exotic locals like Vail or Paris. In fact, they’re all right here in Austin. But they are the solid foundation of a sophisticated but easy-to-execute strategy I developed over the years to ensure my husband and I have a comfortable retirement.
When I talk to friends and associates about my real estate portfolio and how it’s going to help me live very comfortably when I retire, they’re flabbergasted. They want to know more – mainly how they can do it too. That’s what inspired me to write this book:
“Rich Slow Is My Homeboy: Real Estate Investing Redefined” is a 50-page book that succinctly explains in playful but easy-to-understand language how I’ve parlayed a single starter home purchased at age 24 into 10 rental properties that pay for themselves not only in the short term, but will also finance many years of well-lived retirement for my husband and me when the time is right.
The Rich Slow Method
In a nutshell, here’s how it works: let’s say you bought a starter home for $100,000 a few years ago which with appreciation is now worth $200,000. Lenders will allow you to do a cash-out refinance to borrow from that equity to the tune of 75%-to-80% of the current value. So in our example, that means you can cash-out refinance your home, and take out at least $75,000 in equity without selling the property.
What will you do with that equity? Using my Rich Slow methodology, you’ll use it as a down payment on another house. You’ll rent out your newly purchased house, and that rental income will take care of the mortgage, taxes, interest and insurance, so that’s a wash. But that house begins earning its own equity, which is where the power lies in building wealth over the long-term. In four-to-seven years, when this “new” house has gained a good amount of equity, you can do a cash-out refinance on this home as well as your original home, and use that cash to double your portfolio and purchase a third and fourth home, which you’ll also rent out.
If you keep going with this strategy, at some point you could end up with a dozen or so properties (I refer to this process as the homes having babies) with each building incredible equity while paying for themselves via rental income. Over the years you can cycle back through your homes and do more cash-out refinances on them, to either purchase more homes or to finance, for example, your kids’ college educations. Your mortgage payments will go up after each cash-out refinance, but you if you time things right, you will still be cash flow positive or neutral on rent after the cash-out refinances.
When it’s time to step back from your career, you’ll cash-out refinance one of your houses, and live off the proceeds for a year or more. You can repeat this process with a different house every year or however often you need to access the equity to fund your retirement. The beauty of it is that the funds you receive from a cash-out refinance are tax free!
Best of all, this increases the chances that you can leave your 401k or IRA untouched to continue to grow until the time is right to access it.
Patience is Key
But the title of my book should make it clear that this is not a get-rich-quick scheme. This is a method that enables middle-class people like you and me to slowly and steadily build a solid foundation for a comfortable retirement.
Keep in mind that the Rich Slow method should be just one component of your overall retirement planning strategy. Financial advisors will tell you it’s never smart to put all your eggs in one basket, and you’ll want to continue contributing to your other long-term savings accounts. This just gives you one more option and one more way to ensure a joyful and comfortable retirement.
I’ve just given you a brief taste of how to implement my method. The book has all the details — for example, what type of home is best to invest in? — and lots of bonus tips and strategies I’ve learned over the years.
“Rich Slow is my Homeboy” is available on Amazon as an e-book ($8.99) or as a soft-cover hold-in-your-hands book ($12). It would make an ideal gift for post-college grads just starting their careers to help them plan their financial future. But, really, the book and the method it describes are valuable for people of any age.
There’s a wise old proverb that goes: “The best time to have planted a tree was 20 years ago; the second-best time is now.” It’s never too late to start shaping your financial destiny. Follow my advice and start planning today.
“Rich Slow Is My Homeboy: Real Estate Investing Redefined” is available now, order today!