HOPE FOR EARLY RETIREMENT PART 3: A SIMPLER AND BETTER IDEA

By: Mark Frentz
www.akerahomes.com
mfrentz@akerahomes.com

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A Simpler Way

In part one and two of this mini series (this is the third and concluding post) I used numbers and math to show people how they can retire using traditional methods of thinking about saving and investing.Today I would like to present something so much simpler than the above methods. I will still give some numbers, but want to present an option that most people simply don't know. My desire is to educate as many people as possible to make their futures exciting rather than scary.

One More 25 Year Plan

In my former examples I stated you would need to be saving and investing from $15,000-$40,000 each year for 25 years in order to retire well. Here is a way to invest less and yet have more at the end of the 25 years.

In the first year I would recommend using $15,000 to purchase a $300,000 bungalow with a basement suite. This can easily be done in Calgary (although you won't be living in the wealthiest of neighborhoods). You could live in this house for 4 years and rent out the other suite (which would make it much easier to save up money for the next 4 years). In this scenario, you would simply have to save another $4,000 each year and at the end of 4 years you could purchase another property with 5% down and move in. I'm skipping a step here to make things simple... but for those who understand newer CMHC rules this can still be done quite easily, trust me.

Now, if you repeated the process and did this a total of 4 times you would own 4 suited properties and be living in one of them. You would now be 12 years in the future and each property would have some debt in the form of mortgages. At this point you would stop saving up $4,000 each year and simply use the extra money from the rent of the other 7 suites to pay off the mortgages quicker for the next 13 years.

What Would You Have at The End of 25 Years?

-You have own 4 properties with no debt!
-These properties would be worth (in normal markets) around $2.5 million! Which is way more than you had saved in either previous scenario
-These properties would be bringing in the equivalent of around $7,000 each month in rent after all of your expenses are paid! This means you could work your job for one more year, purchase another house for yourself with no suite, and then make $8,000/month for the rest of your life which totals almost $100,000 each year. This is a much higher number than either scenario as well.
-This is not the last point. But it is the last I will make today. You will also not have to pay full taxes on the $100,000 you make each year which means you would be able to keep much more of it and continue to invest or simply enjoy the money for the rest of your life!

Summary

If you want the same retirement as those around you, do the same things they are doing. That means that if you want to work at Walmart as a greeter, don't think about your retirement at all. If you want to scrape by and make ends meet with the help of family members, invest in RRSPs and hope in CPP, OAS, and your company's pension plan. If, however, you want to retire well and enjoy the rest of your life... start doing things that others don't. Know that the above scenario would take discipline and sacrifice! So did the other scenarios! Do something to take action and take charge of your future today!



Here's to your future of risk-averse investing!

If you would like to learn more about investing in real estate please contact me at the email address listed at the beginning of this article or go to my website at: www.akerahomes.com/investing-in-real-estate.html