So this is actually really simple.
- Buy a $200,000 house today.
- Rent it out, making sure you’ve picked a house where the rent covers the expenses with a bit leftover.
- Wait 20-30 years. That’ll make me 50-60.
- You’ll have (at least) a $200,000 asset free and clear that you can sell, remortgage or light on fire.
- Repeat Step 1 as able while you’re young.
Make sense? What do you have that’s better? What’s holding you back?
Photo Credit: stevendepolo
{ 18 comments… read them below or add one }
…..U got it Chris, its that simple!
Buying at the right price and location in the first place and setting realistic rental rates while treating your tenants with respect will make your retirement plan work.
Thanks for reminding everyone that taking action and actually doing something is always better than just thinking about it.
Thanks Gord, you’re right. It’s not rocket science and I’m always reminded of the (now) cliche ‘don’t wait to invest in real estate. Invest in real estate and wait’
Alberta will crash hard:twitter.com squidly77
Whatever floats your boat. It’s easy to say things will explode. How about offering something that people can do to help themselves? How about doing an on-camera interview with me an explaining why you think so?
Nice and simple. An income that will be indexed to inflation something that is easily rented or sold back into the first time home buyers market. I do not see the need to personally go out and buy 50 properties in a year I like the slow and steady approach and who cares if it ever goes up in value just buy enough so that when your renters pay them off it replaces your income.
Mark, I’m totally on board with you. Sure, it’d be great to buy 50, but a lot of the people who did that did it with assumable mortgages, which are long gone. The slow and steady approach.
I worry a little about Alberta myself sometimes. I live and work in Fernie, BC and we have not seen the Albertan buyers for quite some time.
Thanks
Hi Ryan, I’ve heard sales have slowed down for vacation properties from all corners. I know a couple people who have started sniffing around for deals, but we’ll see where 2011 gets us.
This is a perfect example of what I refer to as “get rich slow, and for sure”. Even the realistic worst case scenario leaves you sitting pretty at retirement time with this simple example.
Compare this to the realistic worst case scenario for stock or mutual fund investments and it only makes that much more sense to invest in real estate.
Yeah, the worst case scenario is pretty decent. I’ve seen and heard about the highs and lows of the last 38 years first hand from investors. Keep it simple, keep it long term and you’ll do very well. Sure, there are ways to make some cash quicker, but never forget how good you can do in the long term.
Sounds simple, but there are a lot of expenses and pitfalls that the amateur landlord will not be expecting. Anyone who plans to invest in real estate should really be sure that they have done their research and truly understand their expenses.
“What’s holding you back?”
The thing holding me back: the bubble in real estate prices
Where can I find a house that actually provides positive cash flow? They have been a rare animal for the past 5-6 years. When this strategy actually becomes possible again then I probably will follow it.
If you’re investing with a 20 year horizon, why would a bubble (if one existed) now matter?
And the last year, I’ve been finding better and better deals. One so good I’m actually breaking from my buy-and-hold strategy and doing a flip.
You get the same offer everyone else does. If you’re in Edmonton, I’ll buy you coffee and show you actual places that work, the numbers. We’ll take a picture together, mention your own first name and I’ll write a blog post about our experience. You can draw your own conclusions.
“If you’re investing with a 20 year horizon, why would a bubble (if one existed) now matter?”
?!? Why wouldn’t it matter? By the very nature of a bubble, the price of an asset goes beyond what the fundamentals support.
Why would I increase my leverage and risk for an investment that doesn’t produce income? And even if it does produce some income, is it enough to justify the cost of the house?
I don’t live in Edmonton, but I would love to see some examples of houses where rent will cover expenses and produce a reasonable return on investment.
A real estate bubble occurs, deflates and returns to normal in cycles shorter than 20 years, so it’s not a concern. And there isn’t a bubble.
I’m on vacation for a bit but I’ll put some numbers up when I’m back next week.
Sounds like a great idea if you live in Calgary, unfortunately I live in BC where you can only find one bedroom apartments for 200,000. Rent will never cover the mortgage. Any ideas for someone looking in the BC market other than don’t buy.
Chris, Mark beat me to the punch. I own property in Edmonton and in Kelowna. I’ve helped manage property for a lot of absentee owners who have done very well throughout the last twenty-five years. And I know people who have found cash flow in Port Moody, although it’s not what I’d call an economically stable town. I like a more diverse economy.
Why do you need to invest where you live? For years investors have been investing out of province and out of country. If you have a great team in place to find, finance and manage the properties location is pretty much irrelevant. A plane ticket is very inexpensive considering the size of the investment and it would be a tax write off.
Thanks Mark, you beat me to it and you’re right on target as usual!