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Save Thousands For Your Retirement With Someone Else's Money
I'm an older sister with two little brothers. Like any big sister, I worried about them when they were little and I worry about them now. Lately I've been worried most about my oldest brother and his future.
My oldest brother is a gifted carpenter. He used to be a chef and he was very good at that too. He is also great at rebuilding and repairing cars. His skills, patience and attention to detail are remarkable. However, this is not true when it comes to how he manages his money.
He's only in his 30s, so he foresees that there's lots of time left for him to continue working and saving for retirement. He makes up for the fact that he practically has nothing saved by using his age as an excuse. That's why I worry- the government isn't going to take care of us in our old age and pensions are mostly a thing of the past. If he doesn't save something for his retirement, he won't ever have enough to retire.
So, I decided to make a plan for him. There are probably a lot of ways he could save money, but the big thing I focused in on was the fact that he owns three cars! One of the cars has to go, and with it gone, he will be able to save about $500/month, plus he can add the proceeds of the sale to his savings.
He can also make extra money by taking on extra jobs. These don't need to be full time jobs- just little side jobs such as kitchen renovations or building fences. Even if he only works weekends, he can have enough saved to put 10% down on a $200,000 house that he can fix up and rent out.
Since he is a carpenter, he can even buy a house that has been listed as a "handyman's special". If he lives there while he's fixing it up, he can save even more money. After a few years he can rent out the house for about $1,400 a month. Then he should buy and move into a different property.
So what happens in 25 years? Let's find out.
If he added $25,000 value to the house by fixing it up, and the property goes up every year at 4% appreciation, then in 25 years time the property will be worth almost $600,000. And the best part is that the tenants paid the mortgage for him! That's like having someone else contribute around $1,900 a month to his retirement savings ($576,000 divided by 25 years divided by 12 months).
Even if the property doesn't appreciate by 4% each year (which has historically been the average), his tenants will have paid off his mortgage in 25 years. And, he will still be able to enjoy profits from the rental income each month (his positive cashflow from this one property could increase to as much as $2,350 each month if rent and expenses increase 4% each year for the next 25 years as well).
In 25 years, he will have his own primary residence paid off as well. If he owned nothing else but these two pieces of property, then he will have about $1 million worth of property for his retirement. Doesn't that seem like a simple way to have other people help you save for your retirement?
So are you wondering what happened to my brother? He followed my plan, sold one of his cars, and now he's doing side jobs and saving up for a nice down payment for his first investment property.
About the Author Learn How to Retire with Real Estate with Julie's free Real Estate Investing Starter Tips Guide. Learn how to create financial freedom, positive cashflow and massive wealth with tips like: How to find quality rental properties, finding and keeping great tenants, and easy ways to make more money with real estate.
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