Are you among those who often daydream about an early retirement, counting down the years until you reach your sixties? If so, know that you actually don’t have to tolerate such a long wait because you could easily retire much earlier than that, saying goodbye to the daily grind in your thirties, forties, or fifties.
However, I do understand that retiring can seem like a distant concept for those who are miles away from the official retirement age the government has thrown our way, and that’s why I’d like to show you how to retire early using real estate investing.
This early retirement vehicle is what I used to escape the rat race of getting up at 4 am to commute to my day job, and what I continue to use to have the freedom to spend time with my family, take vacations, pursue my passions, and have the money needed to cover all my expenses, as well as create legacy wealth. It’s truly been a game changer that has allowed me to craft my own path in life because I now have the freedom and the funds to make it happen.
Early Retirement – You Don’t Have to Wait Until You’re a Senior Citizen
People are waking up to the fact that they don’t have to wait until they’re seniors to retire. This has them planning on leaving their traditional employment in the dust so they’re not chained to their work desks for years to come. With that in mind, I’m hoping you’ll see the full potential of investing in real estate and act on it so you don’t have to wait 30-plus years to retire.
Whether you want to say goodbye to your 9-5 job so you can spend your days as you please, or even if you’d like to continue working because you love what you do but want the freedom to step away at any time, the answer is investing in rental real estate.
Real estate investing is the number one way to build wealth. I know this from experience, and it’s a proven fact that millions of financially stable investors can attest to. I recently put together an article that drives home this point, and it’s worth checking out – 9-5 Job vs Rental Real Estate.
Many people have opened their eyes to the truth that the existing retirement system they once believed in is actually a lie and a path they didn’t have to follow. The alternative option is being financially independent and retiring early through real estate instead of leaving the workforce when you’re advanced in years and doing so on limited funds from a 401(k).
You may be at a point where you still believe the 401(k) can sustain you throughout your retirement. If that’s the case, it’s time for a brief, enlightening overview that could help reshape your perspective.
The Illusion of the 401(k) – Why It’s Not a Realistic Way to Save for Retirement
Even though it’s the most popular retirement vehicle in America, giving the appearance of being the superstar of retirement plans, it’s not reliable in any way, shape, or form. This is because its success depends on the volatile stock market, massive account fees dwindle down the balance, and the amount you can contribute each year is capped, which doesn’t allow for an abundance of wealth.
The average 401(k) balance, according to Vanguard, is $100,000. How can anyone possibly live out their retirement years on $100,000? For some, that would last one year; for others, two or three years tops, and this is if they’re really skimping by not going out to eat and relocating to a cheaper place to live. I can’t imagine this is the type of retirement anyone would want to live out.
Rental Real Estate – Why It’s a Great Vehicle for Achieving Early Retirement
Ok, now let’s focus on a more realistic and lucrative way to build retirement wealth, especially if you have your sights set on leaving the workforce early – this approach would be investing in real estate.
It’s a path that not only provides enough funds to retire at, let’s say, age 35 through 50, but also offers other attractive benefits that make it secure and profitable.
- Provides a High ROI: Rental real estate has been proven to generate double-digit returns on your investment.
- Cash Flowing Asset: Enables you to create passive income through steady cash flow – rent checks come in like clockwork, month after month.
- Not Financially Capped: The sky is the limit on how much wealth you can build because you don’t have a yearly contribution cap like the 401(k).
- Money Saving Tax Shelter: Provides exceptional tax benefits that allow you to keep more money in your pocket instead of sending it off to the IRS.
- Appreciation: The rise in the value of real estate will contribute to an increase in your net worth.
- Safeguards Against Inflation: Serves as a hedge against inflation where rental income keeps pace, so you’re not taking a hit.
- Not Subjected to Wall Street: You’re shielded from financial losses during periods of economic downturn that cause stock market volatility, unlike the 401(k), where your funds are directly affected.
- Easy Mortgage Payoff: Your tenant pays the mortgage off for you.
- Lucrative Market Conditions: The current housing shortage is causing a high demand for rentals, pushing up rental rates, which increases profitability.
- The Power of Leverage: Real estate allows for the use of leverage, which can be used as a powerful tool to grow your portfolio and overall wealth.
- No Experience Needed: You can successfully invest in rental properties with zero experience by utilizing a full-service real estate company that takes care of everything for you.
Now that you see the incredible financial benefits of investing in real estate and its potential, retirement may not seem like a distant dream anymore. With that said, it’s time to discuss some strategies that you can apply to retire sooner rather than later.
Strategies to Help You Retire Early Using Real Estate Investing
Whether you’re in your late twenties with a goal of retiring by the age of 35, or in your forties and tired of the office life, or perhaps you have your eyes set on retiring at age 50, you can certainly make it a reality through real estate investing. I retired early this way, and so have many others, which means there’s no reason it can’t happen for you also.
Morris Invest frequently helps people just like you retire early using real estate investing. We can put together a custom plan that will set you on a path to owning several rental properties, getting you on track for retiring early. Schedule a free call with our team if you’d like to hear how we can make this happen for you.
In the meantime, let’s dive into the real estate strategies that savvy investors use:
1. Take Action Now – The Sooner You Start the Earlier You Retire
Your worst enemy when it comes to retiring early is not taking action. And when it comes to investing in real estate, I always say it’s not “timing the market” that successfully builds wealth, but instead, “time in the market”. Take both of these thoughts and make it happen; you’ll feel great about accomplishing something that propels you forward, pushing you closer to your dream of retiring early.
Additionally, it’s recommended that investors try to buy before the spring of 2024. Why? Because there has been a pent-up demand in selling and buying real estate due to mortgage rate hikes. However, these rates have recently begun lowering, making it a prime time to buy and sell. So, come spring, a time when people tend to move, the floodgates will open and there will be limited availability and bidding wars. Property prices are projected to skyrocket at this time also.
Buying now will enable you to purchase a property at a lower price, as well as capture some equity when the property appreciates. Here’s an article I put together on what’s going on with the current housing market that you should check out – Reasons Investing in Real Estate Early 2024 Can Provide You With Significant Financial Benefits.
2. Calculate What’s Needed to Cover Your Monthly Expenses – Find Your Freedom Number
Calculating your Freedom Number may be one of the most important steps in the process because it will reveal the number of properties needed to meet your early retirement goal. This is important because your retirement plan will be focused on obtaining a certain number of rental properties to generate enough income to maintain your standard of living. Once you meet that number, you’re financially free and have the ability to leave your job, if that’s what you want. Any additional properties added at that point are just icing on the cake to grow your wealth.
Here’s a great video that discusses finding your Freedom Number:
So, how is your Freedom Number calculated? It’s done through our Freedom Cheat Sheet. It was created at a time when I was unsure of the stability of my job. I came up with a bulletproof formula for determining exactly how many rental properties were needed to cover all my expenses.
Once I had that number, I marched forward to meet that goal, and I was financially free in just three years. I could do a whole article on the ins and outs of this cheat sheet, but I’ll just direct you to where you can download it for free so you can check it out yourself – The Freedom Number Cheat Sheet.
For those of you who are having a hard time visualizing retiring on rental income instead of taking the traditional path to retirement, I have a few helpful comments to share on that below.
Shouldn’t I Just Save a Large Sum of Money to Cover My Expenses When I Retire?
Some of you might be thinking, “What about the fact that we’ve been told to save up a considerable amount of money to retire on, the way a 401(k) builds up a retirement fund?”
Ok, let’s set the record straight on this – only saving up a large lump sum of money isn’t a wise retirement strategy, although most people think it is. You see, if a large pile of cash is what a retiree will use to live their life out on, then it goes without saying that the money will just deplete as it’s used, and could eventually run out. This is especially true if you retire early and your retirement spans 40 or 60 years.
How much would you have to save to live comfortably for 40-plus years? I won’t go into the math, but it’s a ridiculous amount of money and a 401(k) certainly wouldn’t cover it. Additionally, if this pile of money runs out, you’ll have to put your best interview clothes on to get a job that will cover your monthly bills and your retirement will officially be over.
In contrast, retiring early on rental income can definitely cover your expenses. This is the beauty of real estate investing and why I love it so much. It produces streams of income month after month, year after year; it never stops and never runs out – are you starting to see the big picture here? A pile of cash eventually runs out, while rental income will outlive you.
3. Map Out Your Funding Strategy for Property Investment Purchases
Now that you’ve decided to take action on your goal to retire early using real estate investing and have your Freedom Number in hand, the next step is to sort out how you’ll fund your investments. If you feel you don’t have enough money to move forward right now, know that Morris Invest has worked with many clients who were able to make a purchase happen when they had no money to work with.
This was possible because our team puts together a custom funding strategy for each client, and we work with 200 banks, which opens up a lot more possibilities. In addition to this, know that traditional financing is not the only avenue you have available. That said, let’s take a look at more ways you can fund a real estate investment as you work towards your goal of an early retirement:
Non-Recourse Loan: With this type of financing, your personal income and credit score won’t influence the approval decision. So, what do the banks consider then? The loan approval depends on the property, including its condition, location, whether a tenant is in place or not, and the likelihood of stable cash flow, among other related elements.
HELOC: A home equity line of credit is a loan that allows you to borrow against the equity of a property. It works like a credit card, starting with a zero balance and offering a certain credit limit that enables you to draw upon it when needed. The money can be used to fund the down payment on a rental property. Here’s an article I put together on HELOCs to give you a well-rounded view of how it all works.
Self-Directed IRA: Unlike a traditional IRA, an SDIRA is not confined to paper asset investments such as stocks and bonds. In contrast, it allows for alternative investment options such as rental real estate. If you have a 401(k) that’s not restricted by a current employer, we can easily roll that money into a self directed individual retirement account so you can use that money to purchase a rental property. You can find more information on SDIRAs through the following article – Can You Use a Self Directed IRA to Purchase Real Estate?
Fund & Grow – Unsecured Business Credit: Fund & Grow provides a unique service to real estate investors, helping them obtain interest-free business credit lines. By utilizing the power of business credit, investors can drum up additional funds for the down payment of a rental property. This is a great option for those who need more money to make a purchase happen, so be sure to head over to our Fund & Grow Review article to see how it all works, as well as our main Fund & Grow page.
Connect Invest: This is a company we partnered with that has opened up a world of opportunity for our clients. Through Connect Invest short notes, an investor can begin creating passive income with as little as $500. This allows you to buy a fraction of real estate loans for residential and commercial rental properties. You earn monthly returns that will eventually add up over time and fuel a down payment on a rental property purchase. Check out Connect Invest’s page which has a short video that explains the process.
If you’re interested in using a self directed account, then see the following video on the Secret to Securing Your Wealth By Purchasing Hard Assets with an SDIRA:
4. Fast-Track the Early Retirement Process by Working with an Experienced Real Estate Investment Company
Many people set out to retire early using real estate investing and end up missing their mark. Why is this the case? Because they just didn’t have the proper investment experience to make it work. There are a lot of moving parts when it comes to making a rental real estate purchase happen – from locating a property in a profitable market to knowing how to get the right tenant in place to avoid vacancies, and everything in between.
Working with an experienced full-service real estate company is essential to streamlining the process and getting set up for success. This is what we do on a daily basis and we’re good at it. So if you truly want to retire early using real estate investing, we suggest getting the advice and help you need to push your real estate purchases through in a timely and effective manner.
If you don’t want to sort this out alone, we can take care of all the details for you. Just reach out to the team at Morris Invest so we can answer all your questions and place you on the path to an early retirement.
When you invest with us, you’ll get new construction properties in the hottest markets that have been proven to be recession-proof, have booming economies, thriving job markets, a high rental demand, just to name a few. Check out the following articles that touch on these topics – you’ll definitely find them interesting:
- New Construction Build-to-Rent Properties Have a Skyrocketing Demand
- Lubbock Recognized as Recession-Proof City
5. Reinvest to Meet Your Freedom Number – Rinse and Repeat
Once you buy a rental property, after some time, maybe a year, with the way the housing prices are skyrocketing, you’ll have enough equity to be able to rinse and repeat. You would do this by putting a down payment towards your next property, and you just keep repeating this process until you reach your Freedom Number.
Take a moment to let this video explain the process of rinse and repeat:
You can fund the next property in various ways depending on your situation – through the cash flow that’s been coming in from your tenants, with a HELOC that captures the equity you’ve built up, or a traditional loan. Our team can answer any questions you may have regarding the rinse and repeat process, as well as give you information on typical funding options to make it happen.
After you buy multiple properties and hit your stride, you’ll be on your way to becoming financially independent and able to retire early.
Power Resources for Those Wishing to Retire in their 30s, 40s, or 50s
Dive into the following financial resources to kickstart your real estate investing journey:
- 90-Day Financial Empowerment Bootcamp
- Financial Freedom Academy
- The Freedom Number Cheat Sheet
- Morris Invest & SDIRA Wealth Real Estate Investing Programs
Real Estate Investing is Your Ticket to an Early Retirement
The bottom line is don’t think about replacing your income to retire; instead, think about how you can cover your monthly expenses with multiple income streams that will last indefinitely. A pile of money from a 401(k), or some other source will eventually run out and won’t be able to support you or your current lifestyle during your retirement years.
Rental real estate, on the other hand, can seal the deal when it comes to retiring early and building great wealth. I believe strongly in this because it’s what I achieved, and it changed my life completely – I’m not bound by the chains of a paycheck anymore, or trading time for dollars, and I don’t have to ask permission to take a one-week vacation and hope it’s approved.
Rental real estate allowed me to retire early so I could spend time with my children during their younger years, travel, and focus on increasing my personal wealth rather than contributing to a company’s bottom line.
If you’re here because you desperately want to escape the commute, the long days at the office and the lack of freedom, you don’t have to wait until you’re a senior citizen. We can help you make this dream a reality in the present day; we do it all the time for our clients.
To give you some inspiration, take a look at these interview write-ups on clients who started investing with us. Most include a video so you can hear their experiences directly from them:
- Zero to 15 Rental Properties in 3 Years – Interview with Don
- Spend Less Time Working and More Time Living – Interview with Michael
- A Successful Real Estate Investment Journey – Interview with Bryan
- Gained Three Rental Properties – Interview with Geiby
Feel free to schedule a complimentary call with one of our professional team members who can give you all the details on how the process of buying a rental property works, and how we can build a custom investing plan based on your goals and unique situation. We look forward to speaking with you and helping you reach early retirement through real estate investing.
Grab a cup of coffee and dive into the video below that details the benefits of working with Morris Invest:
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