Beth Richardson

Real Estate Made Real Simple

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Are you preparing for retirement?

Are you preparing for retirement?

I grew up in a duplex. It wasn’t the beautiful true duplex of the Arts and Crafts era that we see sprinkled throughout Minneapolis and St. Paul, it was simply a bungalow where someone had created a small one bedroom apartment on the second floor and added an outside stairwell. My parents were able to make their low wages become livable wages because of the apartment upstairs. Most importantly, their retirement was made possible because they had that investment and later another single family dwelling as well.

I frequently say to people after closing that they should make the attempt to make an extra payment on their new home each year thereby reducing their 30 year mortgage to a 21 year mortgage. While I don’t usually say this, I am wishing I had over the years……Assuming you are putting some money into retirement in Wall Street accounts, saving more money for a down payment on an income property is an important thing to do. We have all heard the expression don’t put all your eggs in one basket. Not having real estate as an investment is effectively putting all of your eggs into the basket called Wall Street. The investment vehicle called real estate is dealing with a concrete object, but it has some advantages that should be considered.

1. The stock market goes up and down. Rent almost always goes up.

2. Your mutual fund could be investing in the slave trade in Asia. Your rental property is providing housing at whatever level you have chosen.

3. There is more than one way to make money in real estate. For most people, the easy way is simply to buy a property and wait for it to increase in value just as you wait for your stock portfolio to increase in value. You can also make money by collecting more rent than your costs. Lastly, you can make money by buying, fixing up, and selling. This last option is the stuff of television shows!

How do you get started? There are several ways. If you have savings, you can purchase a single-family dwelling, duplex, condo, apartment building, etc. If you do not have savings to the tune of 25% down, but have significant equity in your current home, then you can begin there. As with anything involving financing, speaking with a lender, like Lisa Wells is the place to begin: 612.202.1731 or Lisa.Wells@myccmortgage.com. If you have neither of those options but are good at working on property then you can begin a process of “trading up”. In other words, you buy house, fix it up while you live in it, then sell it and invest the proceeds in your next home. You are simply doing it at a much faster rate than the normal moving every 5 to 7 years.

If you want to be motivated, hear this story: A friend just told me that he came across someone recently whose brother had died. The brother owned 200 single-family dwellings! He had purchased them over his life time and the collected rent had paid them all off. Their combined value was $50 million!!!

Don’t make it more complicated than it is. Set a goal! Call me. I will help you!

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