Retire Early with Real Estate (You'll Be Shocked)
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- Опубліковано 7 вер 2024
- Retire Early with Real Estate (You'll Be Shocked)
It can take a long time to become financially independent and retire early if you’re saving a portion of your income and investing into something that provides only average returns. Earning a 10% annual return isn’t going to help you build wealth quickly, especially when factoring in inflation. On the other hand, investing in real estate could provide you the ability to retire at a comparatively younger age. By using some creative strategies that allow you to earn maximum cash flow and build significant equity with your purchase, you could retire in less than ten years as opposed to a more typical 40 year timeline. One of the many benefits of investing in property is that it’s possible to receive healthy cash flow in addition to appreciating property values. Contrary to popular belief, you don’t need millions of dollars in real estate to make a livable income. In fact, it’s entirely possible to retire with just one single unit which we will discuss towards the end.
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Chris,
Can you please do a video on if it is worth it to refinance your house and invest in the market? I have 500k in equity on a 650k house. We have 200k in 401k's, 20k liquid cash and 55k in a index fund. We make 130k and put 25% in our retirement accounts.
We are both 37 and work in very stable government jobs with zero chance of layoff.
Im trying to brainstorm ideas on how to make more money but I dont know if it is wise to pull our equity to invest. We could afford to ride a low market for years if we had to. What do you think?
@@aislcsales dude you need to talk to a local professional advisor. Not a UA-cam guy. No disrespect to him but local people know the local market.
I respectfully disagree on that I think you would need 60 to 100 properties to make real money to retire on.
Hey Chris, I’ve been doing this for a long time and I’ve seen a lot of videos, and this one is absolutely one of the best. Great job! Can’t wait to watch more.
@@aislcsaleswow great question and good job providing the necessary information to answer it! Follow up with me if you’d like specific guidance. 😊
I paid up all my mortgages in 2yrs while working with a Financial Adviser. I’m 50 and my husband 54 we are both retired with over $3 million in net worth and no debts. We got to realize that the secret to financial freedom is making better investments.
That is so amazing, I’m trying to get onto the investing ladder at 40. I wish at 55 I will be testifying to similar success..
@@Oly_laura How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings
@@martingiavarini Catherine Morrison Evans is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
@@Oly_laura She appears to be well-educated and well-read. I just ran a Google search for her name and came across her website; thank you for sharing.
So awesome.
Nobody can become financially successful over night. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking bold steps we need in other to reach our goals./
@rachealhubert74 This is the problem! Most times people with little or no knowledge of the stock market try investing by themselves. It once happened to me, then I learned my lesson and contacted a US-based finance consultant by name Alice Marie Coraggio and everything changed. I started enjoying huge returns from my investment.
@rachealhubert74 Alice Marie Coraggio , lookup with her name online.
@rachealhubert74 Alice Marie Coraggio her trading strategies is working for me for more than a year now and I’m making good profit from the stock market and she's 100% honest, reputable and trustworthy
I'm 48years old living in California, I'm hoping to retire at 50 if things keep going well for me. Bought my third house last month and I can't be more proud that am i now. I'm glad I made great decision about my finances that changed me forever but now I can't seem to make any other smart investment.
I can feel your pains. New guys need to realize the risks that come with all of this. You could lose it all and you could win it all. It goes both ways. Second, what works for A may not necessarily work for B and you should not be a bandwagon investor. A good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in depth market knowledge.
@@loud9090 Factos!! Since the market became extremely volatile and pressure increased (I should be retiring in 17 months), I took the decision to work closely with a financial advisor. It has already been 9 months and counting, and I have made approximately 600K net from all of my holdings.
@@user-3456rtu That's impressive, my portfolio have been tanking all year, tried learning new strategies to gain in the current market but all of that flew right over head, please would you mind recommending the Adviser you're using.
@@322dawgg My advisor is the quite famous NICOLE DESIREE SIMON She has been making a fortune online worth millions of dollars in digital assets for a select few for years. Lately, these types of services have appeared that allow you to copy the results of the experts. She demonstrates how to copy it automatically using that system.
@@user-3456rtu Thanks for the info, i found her website and sent a message hopefully she replies soon.
Sadly the cost of living is becoming very high just so the price of renting has gone up faster than inflation. My heart goes out to anyone like myself retiring this year and as such I need help on how to make a good return off my 400k portfolio . Hope to get the best replies. God bless!
very true Colt, The one effective technique I use is staying in touch with a financial coach for guidance, I was able to outperform the market during this inflation and raise a profit of roughly $400k.
That’s really Impressive! do you mind sharing more info on how you achieved this?
The advisor I use is Diana Claire Lougen, she;s verifiable , so you could just search her.
This recommendation is coming at the right time because i am literally grasping for straws ATM!!! I looked her-up online and scheduled a phone call with her.
Scaaaaam aleeeert🚨🚨🚨🚨🚨🚨
I'm using a similar strategy renting out a single family property. As a vet, I used a VA loan for my first home with zero money down. Ten years later I retired from the service and purchased a second home as my new permanent residence using a VA loan once again. I installed new appliances and HVAC at the old place, so hopefully no major repairs for awhile. I plan to pay the mortgage off on the rental property in the next 10 years then retire early.
Thank you for your service. I wish my parents taught me this when I was a kid. I'd be better off financially today then I am now.
Wow, were you able to use the money left over from the VA loan on your original home or did you refinance it with a different loan and use your VA loan for the new one?
@@forestpark73 two homes under VA. There were limits based on total value, but both my homes were modestly priced.
@@highlyillogical9399 That’s awesome. I’m a veteran and was considering doing the same. I’m facing retirement and looking to grace into it the best way I can.
@@rafaelw8115 oh no, the rental income will just supplement my military pension and VA disability. I'm currently debt free other than my mortgages. Every little bit helps. I'm trying to accumulate assets I can pass on to my kids too.
My early retirement investing in the stocks market has been the best decision I've made in my life and today I'm really enjoying life. I just bought my second home 2 months ago.
Wow that sounds amazing but how where you able to do that ?
@@vincenthart4063 Despite the fact that I take glory for the achievement, I honestly have to tell you, I was guided by PRISCILLA DIANE AIVAZIAN a broker I found through a news blog. She aided me achieve that.
@@rhondaeggers110 How do i reach this broker lady ?
Found her website, Impressive. thanks
PRISCILLA DIANE AIVAZIAN is one of the trader I have ever worked with in the past few years, she knows how best to deal with whatever market situation.
I love getting paid to hold an asset, especially while it grows in value. One of my favorite ways to do that is by holding dividend paying stocks. Nothing like a dividend REITS to give you diversification AND income! Gotta love it. $192,000 of passive income made in 2022.
My "boring" REITs portfolio paid me over $6,000 in dividends last month. This is money that i can choose to spend without having to sell any of my shares. But for now i have it all set to reinvest to buy me even more REITs.
@@kashkat987 Anyone have recommendations for a reliable monthly investment? I hope to ultimately supplement my income from work with a monthly income from investments. I will still make long-term investments, but it would be wonderful to have a little additional money each month.
I came to realize that bear and bull markets provide opportunities for high gains, I used to bluff people who boasted of making a fortune in such bear markets until I do it myself. Well the US stock market has had its longest bull run in history, so the hysteria and mass panic is understandable given that we're not used to such a troubled market. However, there are opportunities everywhere if you know where to look; with the help of an investment advisor who helped me diversify my portfolio, I made over $860,000 in profit the previous year.
Please let me know your invėstment advisėr's name and how i can reach he/she?
I have "JILL MARIE CARROLL" as my investment advisor. She has a solid reputation in her field and is a true genius when it comes to diversified portfolios, which help portfolios be less vulnerable to market downturns. She may be a name you are already familiar with; a Newsweek piece helped me to do so. She's a Google-able person.
House Hacking in a duplex has been a game changer! The tenants rent allows you to eliminate your house payment and additional expenses. This is a strategy I recommend to all first time home buyers!
I bought a duplex but instead of keeping the profits I roll 100% of them back into the mortgage and now it will be paid off in 8 years instead of the 15 year mortgage I took out on it. I can afford to not have the income now and will benefit greatly in 8 years with no mortgage on the property.
Can u explain ? I’m looking forward to do this soon , did you put a big down payment on the property ?
the fun part is, this is not duable without a high paying job. banks wont loan u 80% of the house if u dont earn enough
Some banks will count the rent as income...but it's still the biggest hurdle
So save your money for a couple years , plan it out , be frugal
Here's the best part Nini12. You are in total control on whether or not you can get a high paying job. Get a good education, be really good at something that people will hire you to do... Best of luck to you.
@@mnp8211 thats the biggest bs i ever heard lol. u must live in a bubble or are too young to understand. education is not for everybody, education is very expensive, education depends on brains given at birth cant do a higher ed if u aint got the IQ. be good at something is also useless because they wont hire someone without 15/20 years of good stats, also there is too much competition
If you THINK something isn't doable. It isn't. You also fail at 100% of the things you never start. Your comment is what differentiates many.
FYI - Your income has NOTHING to do with your ability to obtain real estate. It may make conventional loans easier. But after 4 homes you can't do conventional anyways.
Look into DSCR loans. "Debt Service Coverage Ratio". Only looks at the rental income and net operating costs to loan amount. Not the only option. But it's a start to get educated. Good luck 🙏
I had thought of this, I have a large house that’s too big for us really. We thought about Turning it into a duplex but the thought of bad tenants scared me away from it.
Have background checks or people with clean records only allowed.
Not saying this will solve the problem but it sure will help.
sell it buy a smaller house and throw the rest in stocks... if its too big for you you are just wasting money.
Definitely background checks and at least decent credit. I think my problem is I’m super attached to the house and having a hard time letting in strangers.
@@postcutclarity true enough, but it’s a family thing so selling is probably not gonna be an option.
I read some of the comments and I would agree that capex reserves should be included because inevitably you will have significant capex such as a new roof, flooring, and etc. I also believe if you're comparing to investing in stocks, then you should factor in a management fee to be a fair passive investment comparison. You also might have other costs such as listing/ad fees, software for record keeping, LLC registration fees, and umbrella insurance (additional to property insurance to protect you in the event of a lawsuit). Once you factor these in, your returns are not as stellar.
Yes, his numbers are inflated.
I enjoy watching your videos Chris, I aim to invest in both stocks and real estate and I've set aside $450K to put towards stocks and make enough to invest in real estate after a year
That's fantastic! Thank you for watching 😁
@Erickson Milton
can’t disclose too much , but yea I’ve been using a coach since October 2021, growing my portfolio from $175k to $600k approx. It is pretty straightforward, not as complicated as it used to be.
@@amiracentenososa3847
Quite Impressive gains, does this consultant of yours work with just anybody? Mind sharing some Info?
@@jeffreymurphy5302
My coach is 'Lisa Jill Grenell",I watched a news interview on where she featured during an IPO and spoke proficiently, caught only her name and did a search later online.
@@amiracentenososa3847
oh wow😮… This is incredible. I listen to her podcasts sometimes and I have learnt lots of strategies thereso, never knew she offered these services. how does she work?
In this economy you'd be lucky to find a nice duplex period (let alone one for around 400k). Also the feds hiked interest rates up to 6% now from the affordable 3% a couple yrs ago.
I’m under contract on a 4-plex for $486K. Find the right deal is doable if you do your homework everyday and practice patience.
@@LEADEXECUTIVE in what state and how much in repairs does it need?
Very hard to get that sort of rent yield here in Australia. I own two 200K properties and receive a thousand a month rent each. Your example is double the yield. It'd be a no-brainer to snap up properties with those returns. I wish I could.
Same here in Canada, I own a similar property than his example. The costs are almost exactly the same but the revenue is about halved...
Here in the U.K. you can buy a house for around 75k and earn £500 a month from it. (In early 2022). Prices are definitely going up though!
Don’t invest in real estate then you have alternatives in the stock market
@@davidwasilewski That amount of rent for 75k house, is an excellent deal by income standards of Indian IT professionals.
The rental yeild is amazing. Huh, only if more Indians got to know I'm pretty sure me and other's would buy up houses there, as long as capital controls weren't strict in our country.
I bought a place, rented it out, and found myself a cheap rental to live in. I used this strategy to be financially free at 35, but I would never do this into retirement. The stress of having a tenant who can call you at any time if things go wrong, including when you're out of the country, is not something I want to deal with.
So hire a property manager
@@thesnyderteam-lasvegas6614 Cuts down on the profit, and many of them are not actually good.
Another thing is, this strategy only works if the housing price to rent ratio is low. I know in many part of the USA, you can buy a 200k home and rent it out for 1-2k per month. Where I'm at, my 800k condo rents for 2.5k per month and the government puts a cap on rent increase to 1.5% per year. You also cannot kick out a tenant unless you are repossessing the place to live in, so the rental income will eventually be too low.
@@Azel247 of course it cuts down on the profits it also cuts down on your time investment freeing you up to invest time into other ventures that create more income.
@@Azel247 all good points
Or not pay!!!
Real estate is awesome for sure but I'll stick to stocks, 100% passive just sit back and get rich.
what stocks are you invested in???
I firmly believe in passive income and multiple Streams of income
@@jarred333Boss exactly. Nothing preventing both
Most people are unsuccessful with stocks, real estate seems like a safer source of income unless you have a ton of money and are invested in safe, low return stocks
To provide 30k in income per year in retirement you need over a million dollars invested.
I have a double and a single family. About to pay off the first, as I just paid my house off. The second will be paid off in 2 years then monthly cash flow will be $3,500. This is like a snowball. After these 2 are paid off I can save cash quickly, hopefully the housing prices go down by then so I can buy more. I look to get my down payment back in 4-5 years cash on cash return. If I can't get that I move on. Major things to look for, Plumbing, Electrical, Roof, A/C. Use these to reduce the offer price made or cash after sale after the inspection brings them to light. I bought a house with fuses, and bad plumbing. Ouch, I learned... I have very low cost of living now, so life is getting easier, my job that I enjoy becomes less necessary over time. Save for the first one and jump in. Look for people to get advise from, they are always willing to share knowledge.
This is a great example, but you also have to take into account your time and effort as well. I get late night or early morning phone calls quite a bit. I do long term, and short term rentals. I really like short term renting, even though many cities are banning them because most hotel chains are losing a lot of money since competing with them. God forbid the average Joe Schmo gets a little ahead 🙄
1 tenant doesn’t pay, 18 months to evict, mortgage loan called, my credit ruined, 2nd tenant tears up home, costs me $5k and 2 months to repair and another month to rent; real agent charges 2 months rent for new tenant
Sounds like a pretty good deal, overall. Sustainable too.
UK property market is INSANE! Fact is, you had to be lucky enough to be born early enough before everyone started building property "portfolios"
The reality of real estate investment, is first time buyers are hurt by exponential growth, so it only gets worse and worse for new buyers as time goes on.
I personally hope the market crashes and greedy landlords are severely punished for profiting on peoples basic survival need of shelter.
It’s all great till the politicians give your renters moratoriums and you wait a year for your rent
This is a great strategy if you can actually find a property. Inventory is scarce, especially for Duplexes and other small multi families as they became trendy for investors and wannabe investors
Agreed. This video really isn't geared toward today's realities... it's a puff piece that's meant to garner clicks and likes. Probably not what the maker intended though- they really want to help, but are stuck in a time warp that causes them to see yesterday repeatedly (like the movie Groundhog Day).
I just bought my first home and the prices are crazy these days - low supply + high demand. Part of the problem is that so many people are treating property as an investment, greatly diminishing the supply for genuine prospective homeowners. As much as I want to retire early, I wouldn't want to be contributing to this problem, even if it was just one rental property.
👏👏🙌🙌 It's gotten to the point now whereby landlords wanting rental profits have pushed genuine buyers out of the market. One simply cannot fight this heavily unregulated industry which is dominated by those who were lucky to be born early enough to afford multiple properties.
A monopoly on homeownership pushing people into rental poverty needs serious addressing.
I personally agree that profiting off of someone's basic survival need of shelter is disgraceful. Unfortunately, too many government officials are profiting for property, so it'll never be addressed.
@@nah88 Not sure what you mean by 'heavily unregulated'. I can't think of many industries subject to as much regulation as housing is & it's always subject to an increasing amount. Purchase prices are higher than ever but interest rates are also lower than ever in many places. Because of all the options leverage brings to the table, yesterday will always be the best time to start with real estate.
I hope you can also agree that there are distinctions between public and private options. Or do you think that BMW & Mercedes profiting off of people's need for transportation is somehow disgraceful? There's the option of public transportation & public housing, public school and so on. You seem to be confusing them with their private counterparts. There's nothing disgraceful about profiting off of something private individuals or entities have sank private funds into & now seek to recoup and profit from.
So you'd rather invest in the companies that don't pay their employees enough to buy a house. Got it.
If owning investment property were as extortionately profitable as people think it is, Jeff bezos and Bill gates would own every single family home in the country.
The fact is, rental properties are not extortionately profitable. They are a marginally-more (not always) profitable investment than index funds balanced by increased risk. They are an investment for the little guy to escape the rat race, not investment for the ultra rich to enslave the plebs.
Lastly, no, owning investment property is not why home prices are high. Over regulation in areas like California, (probably?) all of Canada, and steep increases in prices of building materials (largely caused by ineffective covid response)... These are the reasons of high home prices.
@@zakuzeon7382 you're confusing desired products with required products.
I often wonder where you guys live where you pay 388k for a duplex AND would get 3.8k in rent per month. I highly doubt these places exist in 2022. Where I live you pay 500k for a 2 room apartment, 800k for 3 rooms. Can anyone show me that unicorn places? ;-)
Easily in midwest US
I think I saw the duplex for 388K, but it is really old and need a lot of repairs. I am also wondering if the rent can be $3,800 too.
My duplex here in Texas was around that, but I'm lucky to get $3K in rent per month and both the property taxes and the insurance are 50% higher than his example.
Yeah he took the average rental payment (which is probably mostly single family homes) and assumed you could just double that for a duplex. But generally renters are willing to pay less for half of a duplex than for a full house, so that's not really an accurate assumption.
@@elmateo77 it's actually the average for an "apartment"
This video has an incredible amount of value. Don't sleep on this stuff. As a 24 year old investor I find this not only is a very safe option but if you do it right you can create generational wealth. I started my own channel discussing my journey investing in real estate and hope to pass on some knowledge I acquire along the way. Hope someday I can help others the way you do! 🙏
It was not mentioned here that the rental income also needs to be taxed or filed as an income tax so that will also be deducted from your rental income together with other expenses.
Yes but between the deductions and depreciation you will be paying little to no tax
A duplex sounds good, or having the front 3bed - 2 bath house rented out while I'm in the converted unit in back
The biggest problem with this is that after all said and done your income is still about 10% a year. You still owe on the house. Me personally, I don't consider any money profit until all debt is paid off. So he owed 300k on the house and profit 33k in one year. That's slightly over 10% of what he owes on the house. It will take 9 -10 years to pay off the home if all that profit goes to savings. It won't be until after the house is paid off until he's truly making profit. So no he can't retire early. Never bank on tenants because things happen. They come and go.
Many people retire on cash flow while still owing money on rental property 🤷♂️
@@ChrisInvests true but still a risk. You have to make sure you have reliable tenants.
So basically what I'm getting from this the only way you can live rent-free is to get a four-unit home, live in one, and rent out the other. Grow your food, and look into taking up a trade like carpentry or HVAC and electrician and you'll be ok. OH, AND DON'T GET MARRIED AND HAVE CHILDREN! LOL, cause I see this as a single-person goal.
Bought 1 house too early then 3-more when the market was down about 11-yrs ago now!
I am not retired but, the Rentals are helping!
That was a great time to buy!
@@ChrisInvests It was!
Can you make it happen again???
Good video Chris! I will say, I had a very similar property to your example one in this video and the profit is always less than you think lol. Due to many surprise repairs and maintenance issues that cannot be avoided. Never the less, I still think real estate is probably the best investment anyone can make if you're willing to put in the work 👌
Thanks Michael! Did you trim your real estate holdings?
@@ChrisInvests Of course ! I enjoy your videos, you always do a great job. Yes, I sold that property for a decent profit and have been on the lookout for the next opportunity, and it seems it may have come
@@MichaelBordenaro Real estate is a pain in the a because you never know what you're renting to. It's like a coin flip. Plus, you could get sued for not renting to someone you get bad vibes from after seeing their gold teeth
@@moseskongi4746 if you want to invest in real estate you have to be willing to screen tenants yourself or hire someone you trust and do it for you. I’ve been in the business a long time and nothing replaces meeting the tenant in person, getting their vibes and going from there. Of course You need to verify income, credit and references. But you can have a property manager you trust do that on your behalf. But there’s no replacement for doing it yourself if so inclined. Also if you deny someone as a tenant you don’t have to give a reason why
@@MichaelBordenaro also, i forgot to add that being a landlord must have been a nightmare for some who couldn't evict people who wouldn't / couldn't pay their rent. is it true that even in pre-virus times, it was a hassle and time- consuming to evict someone?
From watching my dad invest in a place to rent out and have tenants I know that it is a lot of work and headache sometimes.. he sold for a great profit when he got out of it though since he bought like 5-6 years ago and sold the place in 2021. Timing was on point for that 👌🏻
100$ per month is pretty unrealistic for lawn care + snow removal. Snow alone is about 100$ a Week here in the northeast, lawn is +/- 50$ week
Even if you average it out all year?
I love your videos because you break everything down so it's super easy to understand and you also make it seem doable.
I appreciate it! Glad they're helpful.
Hey Chris. Great video! Real estate is definitely my preferred investment strategy for early retirement. It took me just about 10 years. I recommend that everyone who is considering getting into real estate for the first time start with a house hack (like in the duplex you described in the beginning of the video). The down payment can be 3.5% instead of 20% in that scenario and the investor can save on his or her own living expenses while simultaneously growing their wealth. Obviously, house hacking isn’t for everyone, but I think it is probably the easiest way for an average person to get started in real estate.
Love your content man 👍
Love that strategy for beginners! Thanks for watching 😁
Are these numbers somewhat realistic? I just don't get why you would pay 1900$ rent per month to live in (your half of) a house that costs less than 200k. Just buy the thing instead of paying such bonkers rent rates... Where I live, a duplex bringing in 2x 1900$ a month would cost about a million
thanks for the video. Your numbers seem unrealistic to me. Especially, the cost of the duplex and the rental income you mentioned, at least for the area I live in (Portland, Oregon). Also you haven't considered the taxes in rental income. Overall, I do agree investing in real estate gives good returns but the barrier is the initial capital and effort you need to put in real estate. Investing in stocks seems easier and appealing to many.
The numbers are realistic because they're averages for the United States. Investment property comes with many deductions. In fact, people commonly buy it to LOWER their taxable income.
You should've used an actual case study of a property instead of national averages. I analyze real estate deals often and never see rents similar to what your estimates. The property value is always higher than the rents. The property values increase faster than rents.
I'm unsure of what you mean by this: "the property value is always higher than the rents" 🤔
Good analysis, but expenses are a little low you forgot to include cap-ex reserve. A small home like that will be about $200/month. Some say 5% of rent. Also, you should do an underwriting stress test. Assume high vacancy and lowered rents just so you know you'll be able to float the property when times are bad (and they are coming). That's how investors in '08 lost their shirts.
Investors in 08' lost because of unprecedented govt corruption.
Where can I buy a brand new duplex for $400k? Where Im from, a duplex is $500k minimum and that’ll be a real fixer upper - each apartment will rent for $900 a month. I’m from Montreal, Canada. More opportunity in the US I suppose.
I bought my duplex for 120k I live in one side and I rent the other side out for 1k a month I paid it off fairly recently because the cash flow is really good but I'm in a low cost of living town in Iowa. Good luck with your duplex journey in Iowa nobody's built a duplex since 1970s or '80s it's all been condos and single family homes.
Vacation real estate has a higher cash on cash return with the median airbnb making about 35-50% cash on cash. Of course airbnbs also have much higher managment requirements, upfront cost, and risk
Yes, I mentioned that!
I’d like to offer an alternative POV as someone who THOUGHT they wanted to build a rental real estate portfolio. My plan was to build up gradually until the cash flow exceeded my present salary. However, watching the events surrounding the moratorium have had a chilling effect. And it’s not just a matter of people losing their jobs because realistically most of them would qualify for rent relief and you would be able to collect from a government agency. This is specifically able people who might not have had any losses in income but knew the courts were closed & the consequences for non payment would be delayed enough that they’d have time to move out before the delinquency caught up to them. Those people do NOT qualify for rent relief. They also know that applying would be committing perjury so they’re not doing that anyway. There are also the people who were behind on rent since before the pandemic and the timing of their court date worked out in their favor by falling after the lockdowns. All in all, it’s now a huge turn off & I will never consider rentals again. Unless I’m buying a house for personal use, someone would have to be giving away property for free if I’m to ever reconsider this position. Be careful out there.
The Supreme Court did find the federal CDC Moratorium was unconstitutional, so it's not likely another federal moratorium will be happening anytime soon. As for the state level ones, most states would do well to be cautious about imposing moratoriums, as without a federal one in place investors have little reason to not just relocate to a state that doesn't have moratoriums, thus crippling the ones that choose to keep them. Only giant states like California and New York still have watered down moratoriums & they're still subject to lawsuits. I think the question runs deeper, when you can't pick what investment strategies are safe for fear of the government it maybe time to reconsider what government you're subject to than what strategies you want to use. (Nomad capitalist has a UA-cam channel all about moving to more investment friendly locales)
well said
Terrible logic
@@thesnyderteam-lasvegas6614 how?
@@mannyjeanpierre4062 what that person described happened once in your lifetime and now they won’t ever invest in real estate because of it, despite real estate investing being a tried and true method of obtaining financial freedom and significant wealth. It’s like saying we shouldn’t invest in the stock market cuz one time it crashed.
We are doing it currently, have enough income from one rental to live, and are soon renting a second one. Although I do still work selling real estate, I don't have to. We also live in Baja Mexico where the cost of living is so low.
That's great! What type of rental is it?
@@ChrisInvests both are single family homes. No loan straight cash flow. Here in Mexico there are no advantages of interest deductions and interest rates are 10%.
I’m doing real estate investing all wrong and I’m still beat the stock index by leaps and bounds.
We’ll see if I can survive a downturn though.
Interest rate is higher than 3 percent now and that 300k house is now worth 500k including the cost of everything else
Affording the taxes on a house after 30 years can become a problem because taxes are based off of home value. Buy a house at $250,000 and in 30 years that house might be worth $2,000,000. So I have decided to invest some of my equity so I can use that investment to pay the taxes.
Putting that money into another rental house isn’t a bad idea. But I’m doing it with the stock market. Here is my plan.
Wait until I have 50% equity in my house
Then increase the loan to 70% and take that 20% as cash.
That 20% cash invested into the stock market over 30 years will average a 7% annual return.
After 30 years you should own the house. The growth on that investment will be enough to pay your property taxes forever.
Thank you for this educational video. Can you please explain and show the math behind how the mortgage pay down $6,463 & average appreciation of $11,640 is calculated?
I’m just now able to rent my home, since my parent FINALLY moved out. I’m getting about 2g a month on rent. So after taxes I’ll just say 1500. I thought this was ok,, and was planning on living off the rent. HOWEVER, I just started investing in EFT. I have about 40g in one, and this month I got paid 1,000. I’m still new to this, but I’m starting to think it’s better for me to sell my house, and just invest all in my ETF. If I would invest all from my house, I could easily make triple what I am now, and not have to pay insurance, and property tax. But I do like owning a home. Something about just having a place to go if I needed. I know it’s old school mentality.. but I think I might need to get rid of it. I’m throwing away a lot of money.
You just had a really good month, 2.5% return per month (which would be 30% per year) is nowhere near normal for any type of reasonably diversified investment. In the long run the rental property will provide higher average returns as long as you're willing to do the work of running it yourself.
@@elmateo77 Yeah, I usually get around 400 a month. I just added about 10k more.. so it was really big jump.. but I was thinking the same thing. The rental is guaranteed.. so I shouldn’t really mess with it. Thanks for the input.. I think I will keep the home.. if everything goes belly up.. at least I’ll have a roof over my head LOL
The problem with securities is the fluctuation can be severe. If you look at real estate over a long period of time, it's more stable.
@@Food4thought1234 Real estate is the best and safest investment..THINK Home appreciation
I think the biggest plus of your current situation is the cashflow you’re getting from it. That also means that if the stock market is down, you have the 2 grand (or whatever you can spare from it) a month to buy stocks when they’re cheap. If you’re fully invested in an ETF you won’t have that same cashflow (maybe some small dividends, but not comparable levels to rent), which means that you won’t be able to benefit from a market crash/decline. Having consistent and reliable cashflows really shouldn’t be underestimated, you’ll also find that when times are tough and you are most likely to need cash, is often the time when you are faced with selling an ETF at a suboptimal level (say during a market decline).
The consistent cashflows of rent could prevent you from having to sell off assets for a loss and may give you the opportunity to invest more when assets are cheap, which might make you overall better off long-term.
I own Three buildings from the 1800's that have all been refurbished and am making Huge Profits-:)
Glad it's working out for you 👍
This is great content. But let's face it , average Americans don't have the 20% down payment.
I'm not trying to be negative just being realistic. So I guess the key is how long will it take you to come up with that 20% down payment for the duplex + factor in the inflation rate and appreciation value of the duplex your going to buy. Good luck yall 😂👍!
That can be a hurdle but many beginner investors utilize a first time home buyer program and only need to put about 3% down
@@ChrisInvests are you referring to FHA loan?
@@marklabitad yes
I'm assuming the down payment includes closing costs and any one time repairs? Cleaning, etc. Otherwise the initial down payment is higher than $77K.
Investing in real estate can be a good option. However, before you do, understand the risks and make sure this type of investment aligns with your life goals.
Commenting at 3:50 and already want to squash your calculations based on your assumptions. Where I live a 2 bedroom duplex per side in a decent neighborhood where I live would be minimum $650k, if you could find one and then rents would be $1800 a side.
It doesn't matter where you live, it's an average
can you do an example of this but buying in all cash instead? I want to see if its worth doing real restate investing in cash over dividend investing. Thanks great video.
Not sure which place in the US is selling a duplex for $388,000 while simultaneously having an average rent for a 2 bedroom for $1900. That ratio is way out of wack.
They are (were) averages
Can’t finance 3 homes because underwriting will look at your w2 only for income, no rental income allowed
Some banks do Bank Statement Mortgages.
@@ToddTinley urban legend, provide bank contact info for make believe
In my area, property rented for 3800 dollars is priced above a million ....
sounds easy and lucrative on paper. but in reality it's not that simple. my friend owned a rental home in CA, and the tenant declared bankruptcy. and with CA laws, if the tenant declares bankruptcy, landlord cannot evict them. what a massive headache that caused for the landlord.
There sure is a chance of disaster like with anything
In which country can you buy a duplex for 8.5 Times annual rent? Its more like 20-30 Times here
Yeah, those housing prices/rental prices in this video is not anywhere close to the "real world". Popular places in Norway you get 1000-1500 dollars a month rent on a 200-350k dollar home.
You should compare this to establishing a UA-cam channel! You can make $1500 in a day sitting on your butt with a UA-cam channel. Real estate work like this is so much work.
It’s all work man, ain’t nothing easy
It ends up being less profitable than you calculate some times. I've seen a friend that almost filed bankruptcy due to failure to be a landlord.
Dear Lord Man!!! 😯 WOW! That's a lot to charge in rent just to cover experience. The economy isn't as good as the current administration wants us to believe. Thank goodness I purchased my house 20 years ago.
Thank you Chris for this great educational video. You made investing so easy to understand and apply. Thank you.
Thanks for watching!
I'm 13 and watching this lol
Yeah but your gonna work for that 19%. And the leverage risk of a mortgage. Those numbers are assumed costlier repairs and longer vacancies can skin you alive. What a headache.
So what do you reccomend for a young first time home owner that’s looking to rent out properties ?
@@yunga83051. Pay cash or be comfortable with the risks. 2. Have a approach, residential vs commercial low end vs mid tier vs high end vs commercial. 3. Have patience.
In many real estate markets, you'll find that the annual rent/price < 5.5%. In this environment, one is gambling that appreciation will make the investment pay off. Compared to the stock market, this seems risky, especially in today's markets.
Is the stock market not risky?
you forgot to add in manamgent fees and closing costs which both lower your return on investment ROI by alot. but still real estate is one of the best wealth creation methods.
Sorry I was fooled by the thumbnail ... buying a single family home (we never rented it out) when both prices and interest rates were low enabled us to retire when our company sold out. The other resident managers were forced to either except positions with the new less desirable owners or scramble to find new jobs. We are living a life of leisure and doing well. Real Estate investing is not without risk, we got clobbered in 2005, 2006 when easy mortgages wiped out the pool of good renters, leaving us with choice between empty houses and no income to taking chance on shaky tenants ... that turned into a nightmare
This is only possible where property is cheap. Try to do this in New York, LA, Vancouver, Sydney, Auckland NZ.
That's not true. Rents are also much higher in expensive areas.
@@ChrisInvests There is only a limit to which rents can rise. The type of duplex mentioned in the video will cost about 1.5 million dollars in outer suburbs of Sydney(Australia) or Auckland(New Zealand). I am sure the same is true for cities like Vancouver in Canada or San Francisco in US.
@@universallife681 I'm not saying all of these options will work in every area but those cities seem to be on the extreme end.
Thanks again, from one Chris to another-- appreciate ya 👍
I’m new to investing but find your videos very informative. I’m just struggling to decide what platform to use. Any suggestions for a beginner?
M1 is very easy for beginners. And we both get $50 when you use my link in the pinned comment.
Please address the hazards of being a landlord. Tell us about the 'investors' that did well during the moratorium. Sure looks good on paper. Reality not so much.
Appreciation is cool but it doesn’t pay the bills. If you are planing to live off of passive income.
Refinancing.
THIS. This is top quality content. Thank you Crhis!
Thanks for watching 😁
Hugely eye opening. Thanks!
Thanks for watching!
Great video! Watched it all and just subbed. Powerful concepts in this video. Although the math is entirely different here in California
Nice video! What if you had to use a HELOC loan against your primary residence to come up with the large down payment then it would probably take a few years to pay that back with the cash flow from the property so you really wouldn't make any money for the first few years!! Every time I run numbers on a property this is where I get stuck deciding if this is smart or not?? I would love to know other thoughts on this.
I personally would use cash in this situation
This video is awesome
I plan on owning many rentals someday. Getting closer and closer. Only have 1 rental right now
Great! Is your rental a single family home?
When it comes to the world of investing,most people don't know where to start. Fortunately, great investors of the past and present can provide us with guidance
10% of the property price per month... is this real in America ? That’s a crazily high figure! I live in uk and my property is not even 0.5% a month.
What do you mean?
retiring with 3 houses lol ;)
Can we get an update on the average duplex price in the US
This concept works. Great stuff!
Thanks for good idea on paper dangerous in practicality
Great video, I’ve got 5 rentals and these assumptions seem fairly accurate, mortgage rates would probably be higher for an investment opposed to your primary residence. There are other ways of getting financing that can be advantageous. I’m pushing for an early retirement and have created several income streams. Real estate has by far been my most reliable and hassle free source of income I’ve come across. When the market is more favorable I plan on buying more.
That's great! What type of financing do you use?
I'm on it closing on my triplex February 10th going to house hack it.
now imagine this with realistic rentals of 1000-1100 a month. now imagine having to have a handyman help with repairs and also save for new roof, water heater etc. now imagine this unrealistic scenario actually yeilds 20-50% of his numbers and i think you are closer. also imagine the stock market has almost doubled in the last 3-4 years and your property will not double. so its a bit of a different scenario
Real estate prices have also gone crazy.
Even tho it's good idea but the numbers are so unrealistic
Here we have the home price over 1M & the rent is 2,000 So the tenants can only cover the monthly payment... that's only if you're lucky
It doesn't matter where you are. The numbers are averages.
I used to think rental property was an excellent investment. I still do but I am more aware of potential downside. I know 3 people very well and they have individually have invested in rental properties for 20 - 35 years. It's great until you get that bad tenant. It's a nightmare evicting them, can take months, and the tenant can do a lot of damage. What about the past few years with the pandemic? Renters even if still employed could stop paying rent in the area where I live, but my 3 aforementioned friends still had to pay the mortgages.
I get what you're saying but there's no reward without risk, right?
@@ChrisInvests Yes. Interesting video. My point is simply that there may be more risk than one thinks. These small real estate investors know far more about real estate investing than I do. The one person has been investing in residential real estate for 35 years and his parents invested in real estate. He said that he has lost a substantial amount of one property's gains in a single family property because of the actions of one tenant, and similar things happened with the other 2 people. For example, I would never think that a disgruntled renter would pour concrete mix down the toilet or break mercury filled thermometers in rooms. These are very expensive problems to fix. And I certainly never envisioned that a renter could stop paying their rent because the Government said it was ok to do so even though the renter remains employed.
@@John-qn5tz absolutely. Those reasons make alternative real estate investment approaches more desirable. In my opinion, you can limit risk by becoming educated just like with stocks but at the end of they day, there are things that are beyond your control--especially when you're thrown a curveball like in your last point.
@@ChrisInvests Thanks, Chris. I really enjoy your VLOGs and have learned a lot. Again, thanks.
@@John-qn5tz thank you for watching 🙏
Love how you say keep maintenance cost aside. Here is Australian landlords are horrible which make agents horrible. They never upkeep the house and try get you to pay for things that you didn’t damage.
My last rental they gave me a disk with 1300 photos of imperfections with the house. We were supposed to go through them all and make sure everything was on there. The big things were not like chips in tiles for example. At the end of the lease it was a dog fight to get our bond back.
Unfortunately there are a lot of irresponsible landlords
@@ChrisInvests yup. I bought a caravan and lived in it for years. Was awesome but then I got a GF that didn’t want to do that 😂
@@ryanmorgan9589 😂 at least you saved some money!
I personally think real estate is one of the best investments you can make, but accounting for appreciation and loan repayment on a long term investment like a rental property as anything other than change in net worth has always seemed somewhat misleading to me.
It's no different than accounting for the rising share price of a stock
That's like saying you should only count dividends 😂
@@jasonsanders8623 That's pretty much what I am saying for use in this situation. I do think asset appreciation and loan repayment should be accounted for toward wealth development, just not in the same context as a regular income source like rental income.
& what happens when tenants do not pay & LL legally required to provide $$$ heat or go to jail in ex: NYC?
I owned duplex paid $500k rent for $3700 a month .
Hey i have a question/ need advice.. im 18 and just graduated a couple months ago and have a career at the post office making 4k+ a month working 60-65 hour weeks. Im frugal and stay with my parents paying a little rent. Im not moving out for another 4-5 years so i want to invest but trying to decide if i should save only for real estate or diversify nd put half into stocks(slowing down the real estate process). This is the perfect setup for the future due to low cost but in need of guidance and ideas . Any replies will be appreciated 💜
Most investments are over priced. Houses and even the market in 2022. Wait for a market correction. As a postal employee you also can get a pension. Read read read, learn about finance. Honestly trusting people on the internet without doing your own research is a recipe for disaster. But look as redit fir the FIRE group. Financial independence retire early.
What many beginner real estate investors do is by a duplex and live in one part because they only need to put 3% down.
@@travisbrueckner4457 ur right about the looking for info from people on the internet so i look into everything. If i wait for a market correction what if it never happens? I see people say dont try to time the market. Also i checked out the reddit group and its amazing thanks🔥
@@vjlive2604 markets always correct. 2000, 2008 expect another correction. Also international investing as well as commodities are where you should look for value right now. Inflation periods are good for commodity prices and bad for businesses and profit margins.
@@vjlive2604 A market correction will happen. However, you don't know when, so cost average into the market but keep reserves of cash ready to buy more when the market does eventually take a down turn.
Can’t do that in New York City
This assumes good tenants in a landlord friendly area. Bad tenants in a landlord unfriendly area can easily cause you to miss out on many month worth of rental income, and have far greater repair bills. This makes having only two properties very risky, like only investing in a couple stocks. You'll likely want to have a number of rentals in order to be able to absorb the blow of a nightmare tenant.
Fair point
As a realestate investor that actually owns a few properties there are more costs and your nummers for maintenance and repairs/renovations are too conservative. Yout yields are also unrealistic if your example was the realworld everyone would invest in realestate.
The numbers are average
Great advice. I only need to save 80K for my down payment and I can start 🙂 also you will need to report your rental income to the IRS when doing taxes so you will be paying a little more in your taxes. Also, you should have extra money in case your tenants move out so you can cover the mortgage for those months. Overall, it’s a good investment but also it could have some variants/expenses/downsides.
Depreciation and writing off mortgage interest, insurance, (state) taxes, and associated expenses turns many cash-flowing rentals into paper losses for tax purposes.
You’re spot on with the other points; extended vacancies or major unexpected expenses can really hurt a new investor. A reserve fund is imperative, and access to quick money through lines of credit can often soften a cash shock.
Yes, definitely save money for vacancies
Unfortunately without a good credit score and 20 percent down this will never happen.
Many beginner investors buy a property with about 3% down