Boomer’s-Bank Part 3 of the Boomer’s-Bank eBook
Financial Intelligence for Real Estate Investing This is the last part of Chapter 1 of the book where we begin to explore the options available to Boomer or anyone looking to create enough positive passive cash flow to cope with what the experts expect over the next few years. next 20 to 30 years.
Please understand that I expect everything on the negative side of this book to be just BS, however if I am correct in my report then something someone needs to take action on, and no one is coming to save the day outside of you.
So here is the balance of the chapter PS: there are 21 chapters—and it gets better and better
What this means in practice is that you need to start figuring out how to consolidate the value of your assets. You have to invest in your future to make sure you don’t get caught in the ever-tightening financial noose. So why real estate investing is your answer? Let’s consider for a minute the power of real estate. As we mentioned earlier, for centuries real estate investing has been considered one of the most effective methods to build wealth. However, it is not just great wealth that real estate can help establish, as it is a very realistic investment approach. In Marin County, California, a sixty-year-old married couple was able to buy homes for their two children in the 1990s because of their earlier decision to invest in a favorable housing market some thirty years earlier. If you’re not familiar with Marin County, all you need to know is that it’s one of the most expensive neighborhoods around San Francisco. It’s a decidedly affluent area where real estate values are basically skyrocketing, along with just about everything else. So how did a retired teacher and his wife, a landscape gardener, manage to buy two family homes in one of California’s most expensive neighborhoods?
Mr. and Mrs. Peterman bought a house in Marin in the late 1960s before property values began to rise. The house they bought was relatively dilapidated, but it was a sizeable piece of land. After moving into their home, the couple broke ground on their dream home located at the back of their property, in what was effectively their backyard. They built, from scratch, a three-bedroom house suitable for their family. When that house was built, they tore down the original house and raised enough money to build a second house on the front of their property.
By the time the Peterman children were thinking about college, Mr. and Mrs. Peterman was able to sell the second home along with about half of the land they had originally purchased. Their profit was considerable since they made the purchase when the values of the properties were low and the sale when the values of the area rose. The money they earned not only allowed them to put their two children through college, but also allowed them to make down payments on their children’s houses when it was time to settle down.
The Petermans enjoyed their considerable success not only because they had ventured into real estate investing. Nor were they able to get out of any debt and help their children avoid the financial quagmire that people who live and work in a decidedly expensive neighborhood are no doubt prone to because they were in the right place at the right time. The real ‘X’ factor in Peterman’s investment story is the fact that they used
your IRA and 401k packages to buy your real estate in the first place. Among other things, this wise investment decision meant they didn’t pay capital gains on the money they made from the sale of their second property. Mr. and Mrs. Peterman is also doing well in terms of preparing for retirement. All of the money they have used to invest in their real estate has come through their retirement plan (so no capital gains on sales).
With this history in mind, you may be getting an idea of what really constitutes smart investment decisions. Unless you have a lot of money to play with, you need to get into real estate for a very specific reason. It is always better to identify your goals early on. Do you dream of becoming the next real estate mogul in your community, a successful counterpart to Donald Trump? Do you have considerable debt that you want to get rid of? Do you dream of having several hundred thousand dollars safely stored in your bank account? Maybe even a few million dollars if you’re prepared to stay that way for a while.
Establish what you are dreaming of, what you would really like to have in your life. You need a plan to turn your dream into reality. Whether real estate is part of the destination you have in mind or just a springboard to get where you want to go, this book should help you build a workable plan to achieve your goals in a way that makes a lot of financial sense. ; not just for your immediate future, but, perhaps most importantly, for your long-term financial well-being.
Think about it for a moment. Real estate is a very diverse asset. You have numerous options, from buying a single-family property that you intend to live in to perhaps taking advantage of a multi-family apartment building. You can also buy a parking lot or an office building complex. Why not buy a piece of land and use it to build several condominiums or, if the land is large enough, build a planned residential community? Investing in real estate today is one of the smartest things you can do, period!
Unfortunately, most people don’t have the first idea of how to understand this type of arrangement. The idea of owning real estate that isn’t just for their primary use or the idea of using their retirement plan to leverage and invest in the first place is somewhat baffling to them. Most people are terrified of the work involved. At least, they think there’s a lot of work involved. How do you get your money back? What if you have to find tenants for an investment property? How do you do that? How do you go about selling a
property whenever you want? Who are you calling? A lawyer? A real estate agent? A financial planner or a broker? What if you can’t sell it for the price you paid? What if you just want to sell properties like those foreclosure deals you always hear about on TV? Can you still use your retirement plan, and if so, how do you set it up?
All of these questions posed by an inquiring mind deserve a complete, fair and complete answer. The truth is that when it comes to real estate, there is no one answer that always fits the bill. Creativity is important.
The good news about this industry, as we will emphasize at various points throughout this book, is that the primary commodity, real estate, and commercial real estate in particular, is universally valuable. Its value is considerable and it is unlikely that it will fall far below the mark. People are always going to need buildings for commercial use. They won’t necessarily always need an office building in precisely that location, but they will need something or the other. Places change, and therefore commercial real estate is the best type of real estate to invest in if you want to be able to ride the waves of change that will undoubtedly affect your community over time.
But wait a second. The best news is yet to come. You don’t have to be a Donald Trump to do well in this field, either. Real estate investing is actually quite simple once you have the mechanisms in place and the important numbers on speed dial. You invest some of your own money to buy a property through your IRA or 401k; you borrow some money against the value of the property. Either keep the investment property as your primary residence or turn the property into a source of income, the choice is yours. You can do some repairs, some renovations and developments on the property to increase its value. If you don’t use the property as a residence for yourself, you get your money back in the long run by renting out units or trading the thing in and reselling it for more than you originally paid for, avoiding problems like capital gain because the money you make goes into your plan. retirement. The precise details of each agreement will vary depending on the type of property in question and your particular interest. If you want to make quick money, you’re probably in the business of investing; buy and then quickly resell your properties for a quick profit that you can safely store away to keep your future bright and cheery.
What this book should do for you, above all, is provide you with a definitive overview of the principles of real estate negotiation. The overall purpose is to chart the entire process of buying and eventually selling property, leaving plenty of room to maneuver within the overall framework. Furthermore, it is also intended to provide a definitive explanation of why precisely this type of investment strategy is not only advantageous but, in many cases, decidedly necessary to ensure a viable retirement plan.
End of Chapter 1
