When readers see the title of this post, they just might do a double take. How can anyone retire within three years? Is real estate investment really the key? These are the questions that are being asked. The time has come for an in depth look at this popular topic.
In order to get started on this topic, a few assumptions need to be made first. Let’s assume that the real estate investor has a realistic point of view when it comes to the amount of money that they are looking to retire with. This is not a guide for those who are looking to retire to a life spent on yachts, drinking the finest champagne.
This is a guide for those who want to be able to pay their monthly bills with the passive income that they are deriving from their investments. Those who are looking for a bit more can adjust the numbers that are being presented later on, if they so choose. Setting a tangible goal is important. Let’s start by saying the investor is looking for $5,000 each month.
Breaking These Goals Down
Once the larger goal has been defined, it is time to break it down into more digestible chunks. The real estate investor should be breaking down whatever number they decide upon accordingly. If they are looking to generate $5,000 in passive income each month, they must divide that number by the amount of units that it will take to achieve that goal.
Real estate should only be purchased when the cash flow is positive. Once the expenses have been paid and all income has been received, the investor should have positive cash flow to rely upon. As a rule of thumb, each unit should generate at least $100 per month. If the investor is looking to accrue $5,000 per month, that means they will need at least 50 units.
Some investors may be able to increase their profits and accrue the same amount with less units. Once they have done the research and decided how many units are needed, it is time to make a plan for acquiring them.
Acquiring The Necessary Units
In order to retire within three years, the real estate investor needs to shop around. Sure, they may be able to find one apartment building that has all of the necessary units. That type of success story does not come along every day, though. It is time to be a bit more realistic.
Smaller, multifamily properties are the way to go in this instance. If the investor needs 35 units to retire with the proper peace of mind, they should be stretching these purchases out over the course of the next three years. Otherwise, they could end up biting off a bit more than they chew.
Plans are great but action is even better….
How To Reach Retirement
After the investor has established a plan, it is time to take action. How are these units going to be obtained? The top investors will typically meet with a local realtor. This gives them a chance to find out more about the realities of the market. Smaller, multifamily properties are great but that does not mean that they are going to be easy to come by.
In other words, the real estate investor may need to kiss a few frogs before they are able to locate their true prince. The investor that is ready to analyze dozens (if not hundreds) of deals beforehand is the investor that is going to experience a greater level of success.
Last But Not Least….
Some investors may be wondering how they are going to pay for all of this. While this may sound cliche to some, those who truly want it are going to be able to make it happen. There is a bevy of creative strategies. Some may be able to use other people’s money. Others could look into leasing options and seller financing. Partnerships can also help.
Real estate investment does not discriminate. It does not matter if the investor is rich or poor. It has never been simpler to achieve all financial goals but the process is not going to happen overnight. Setting goals is great….as long as the investor is taking the necessary steps to accomplish them!