Hello fellow real estate investors. I like saying that. Just the fact that you are a real estate investor, puts you in the top 15% of investors that are paying attention and preparing for the future. Well I guess a few people do read these blogs. A couple of people asked me why attitude was so important in investing. I'll tell you. As Zig Zigler said, "It's attitude, not aptitude that determines, altitude."
I had some folks come by an open house I was doing a couple of weeks ago. We made small talk and they said they were looking for a house for her mother. They wanted her closer to where they lived as she was getting older. As we talked a little more they indicated they had been looking for a year. I've got news for "mother". They aren't going to be moving you here. You see, they don't want a realtor. They know they need one because otherwise they can't get in to look at houses. But the truth is they are afraid somebody is going to talk them into buying something they don't want. I've got news for you. Unless you are mentally defective, no one is going to talk you into buying something you don't want.
I'll tell you some more truth. If you want to buy a house you NEED a realtor. That is, unless you have access to the MLS and you can look up several houses at one time, in one area, with everything you want to see that's available. And unless you are prepared to be able to write up a legal Idaho Real Estate Contract, you will need a realtor. If you don't want one that is going to bother you, qualify him. Tell him that. Tell him exactly what you want him to do AND what you don't want him doing. Don't be one of those people I've talked about that is afraid to make a decision.
I'll tell you some more truth. Some of you aren't going to be able to retire unless you get on the stick soon. Unless you fall into the correct age group you probably aren't going to get Social Security. You haven't prepared because you sit back and watch what happens instead of making something happen. Are you ready to retire? Are you getting ready to retire? Are you out of debt? Is your house paid for? You can live cheaper if you are out of debt. BUT, you also need income. You need what is called multiple streams of income to live on. You can't have that unless you plan for it and get with the program. Where is your money going to come from? How long will your 401K last? What kind of shape is your IRA in? Can it provide the kind of money you want and need per month or are you looking at working till you die?
I talked to a fellow this past weekend that retired 14 years ago. He had what he thought was a great pension from a state government. It was great 15 years ago. His wife told him he needed to quit spending money because they didn't have any more. He spent all the money for the month by the middle of the month. He told me he was on a fixed income, but when he started the fixed income gas was $1.25 per gallon and now it's over $3.00 per gallon. Everything has gone up. You see he hadn't planned for multiple streams of income. Which would you prefer?
What happens when it looks like you will get your Social Security then they run out of money. What happens when you work at a job for almost 30 years only to find out the pension you had planned on retiring on is no longer available because they lost the money in the market. It happens. It's time to make a new plan. There are a lot of ways to develop multiple streams of income.
Some use MLM, some are entrepreneurs, some people invest in real estate. Real Estate are what we are going to talk about. Just to be free and loose with some numbers, let's say your social security is $1800 for you and $1500 for your wife. But if you want a real shocker, set up a meeting with Social Security and find out what the real numbers are. You have $3300 a month coming in. Now if you are completely out of debt you only have to pay for utilities, food, and gas, and of course taxes. Sounds like plenty for that. Now there are the things you want to do when you retire, like travel. Problem is you don't really have a lot of money for that. If you aren't out of debt and are still making a house payment, you realize you may already be behind the proverbial gun.
I remember working my original career people talked about retirement with the fear that they could barely make it on what they make now. What happens when they are making half of that or less. Doesn't feel very comfortable does it? Now, let's put in 2 streams of income and see where we are. Let's say you are a planner and not just a person who deals with things as the worlds hits you with them. Let's say you went out and bought two rentals and spend $130,000 for each. You did that knowing you could get $900 a month on each of them, rent them for 12 years have enough to purchase two more houses or even a duplex. For the sake of our analogy let's say that each place brings in $900 a month but now you have four of them.
Now you have your social security and four streams of additional income that more than doubles your social security brings in. When you originally thought you would be able to retire on social security things didn't cost as much as they do now. Now, you know the whole idea of living on social security may be a reach, and you worry about whether you will even have social security.
No one can tell you how many streams of income you need. Several years ago I went to hear a motivational speaker named Bob Proctor. Even then he talked about having 20 or so streams of income. You can't have too many. You can certainly discover too late that you don't have enough.
What I'm saying is YOU have got a lot of work to do. So, I'm going to give you some homework. Go spend some time on Craigslist and get a feel for what rentals are going for. Base that on the area, the number of bedrooms and bathrooms not to mention garages and try to get a feel for what size your optimum investment is going to be, and let's start looking for that first stream of income. There has NEVER been a better time to be an investor. Vacancy rates are at or below 1% in Ada and Canyon counties vs. traditional rates of 7-8%.
If you want some help, contact me.
Marlin Scoby
Atova, Inc
208-546-2727
mscoby@atova.com