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5 Year Retirement Plan

By
Real Estate Agent with Gentry Realty

Retire Early... Invest In Out-Of-State Rental Properties!

5 Year Retirement Plan
Retire in 5 years with an income of $90,000 to $110,000 per year tax free for the rest of your life!


Purchase 10 out-of-state properties valued at $150,000 each, owning $1,500,000 in real estate. Each property would cost you $4,500-$10,000 for a total business investment of $60,000-$85,000. Let the properties incubate for 5 years, then pull out the equity of your two best properties and retire making $95,000-$110,000 a year tax-free forever. This great plan doesn't even include the awesome benefits of cash flow, increase of rental income each year, principle pay down and tax sheltering.

Working The Numbers...

Using 7% appreciation rate (national average) and multiplying by $1,500,000 in property.

Income
First Year = 7% x $1,500,000 = $105,000
Second Year = 7% x $1,605,000 = $112,350
Third Year = 7% x $1,717,350 = $120,214

Fourth Year = 7% x $1,837,564 = $128,630
Fifth Year = 7% x $1,966,194 = $137,634

Return on investment first year is 175%!

In Five Years, You Will Have Made $603,828
In Ten Years, You Will Have Made $1,450,728

Pull Out The Money
Do a cash-out-refi on your two best properties (borrow 90% of the equity).

Years One Property Two Properties

5th Year $45,000 - $55,000 $90,000 - $110,000
6th Year $45,000 - $55,000 $90,000 - $110,000
7th Year $45,000 - $55,000 $90,000 - $110,000
8th Year $45,000 - $55,000 $90,000 - $110,000
9th Year $45,000 - $55,000 $90,000 - $110,000
10th Year $45,000 - $55,000 $90,000 - $110,000

You now have a tax-free income for the rest of your life of $90,000 - $110,000 a year from your initial investment of $60,000 - $85,000.

Note: National appreciation average is 7%; at this rate properties will double every ten years.

New homes starting at $95,000
$4,750 Down payment @ 5% buys you a new house
Builder's will pay 2% of the non-recurring closing costs
Rental Ready Package ... All new homes include front and backyard landscaping, window coverings, refrigerator & stove and garage door opener
Strong appreciating markets where properties are projected to double in value in 5-10 years
Properties are located in great rental markets
Positive cash flow to breakeven properties
Property management will take care of your investment at a discounted rate
Invest out-of-state where the numbers make sense

 

Comments(7)

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Eugene Jones
Weichert Realtors - Somerville, NJ
Sounds like a good plan Elliot. In which states would you recommend implementing this plan?
Feb 25, 2008 02:43 PM
David F. Joslin Jr.
Century 21 Advantage Gold - Newtown Square, PA
15 yrs in Real Estate, FULL TIME
The time is now to begin planning for your future, Elliot you have laid this out so simply, I can't see why anyone would wait to begin their retirement fund. I deal with numerous investors and in this time of the "doom and gloom" real estate market the investors are building wealth and cash flow that will allow for an early retirement, why not get out an enjoy retirement before 50? Wouldn't that be nice, with Real Estate it is possible. Great Info Elliot
Feb 25, 2008 02:43 PM
Tom and Stephanie Hansson
Cortiers Real Estate - College Station, TX
Hansson and Hansson Real Estate Team
This very interesting stuff.   Eugene had a good question, which states are you recommending?
Feb 25, 2008 02:53 PM
Mike Gambino
Prudential Patterson Realtors - Florissant, MO
GRI

Elliot,

So how many do you own and where are the best markets?  How do you qualify for all the mortgages on these properties?  Are you just considering those with the capital to pay cash for the properties?  Most investment loans I have seen range from a minimum of 10% to 20% down.  Just curious, as I do not see the whole outlay in your plan.  Why out-of-state?

Feb 25, 2008 02:53 PM
Elliot Caldwell
Gentry Realty - Mesa, AZ
Broker

I don't recommend a specific state. It doesn't even have to be out of state. I would do a little research. I would suggest a state in which people are moving toJ check the U-Haul Records. Job Growth is also very important. I also would suggest a state with an abnormal foreclosures rate. I currently own 10 in state (All in Phoenix & Tucson Area) 1 out state (Houston Tx).

As Far as loans go... there are so many types and requirements. I myself like to put 10% to 20% down, each investment is different.  I would analyze each investment individually. There are several books out there, and when I say that...I mean there are TEXT books for investment analysis, not that self help with a mix of bull crap real estate book.

 

Thanks

Feb 25, 2008 03:35 PM
Dennis Volz
State Farm Insurance - San Diego, CA
Like a Good Neighbor
I'm in.. When do I start?  Where???
Feb 26, 2008 02:25 PM
Chuck Willman
Chuck Willman - Alpine, UT
NewHouseUtah.com
This is great information... I use something very familiar.
Mar 12, 2008 08:52 AM