Let’s Talk Real Estate – March 2018
My background in investments had been my 401K and my personal stock portfolio. Thirty five years of my life was spent in the High Tech industry so that became the majority of my stock portfolio. I have seen my high tech stocks double, triple and then crash! It wasn’t until I sold my home in Sonoma County and moved to Southern Oregon that I realized I accidentally made more off the equity in my home than I have ever made in all my stocks. This became my first investing epiphany.
That epiphany and “accidental” windfall started my obsession for real estate investing. I then invested in some raw rural land that I developed and resold, more than doubling my investment. Life seemed great until 2005 when I went through an unexpected and financially devastating divorce that wiped out a lifetime of earnings and savings.
Life goes on, and as the real estate market started to decline in 2007, the worst recession I have experienced, my real estate partner and I began renovating and reselling (Flipping) homes. Renovating and flipping homes can be fun and profitable, but it’s a full time job managing contractors; and, in 2007, homes were declining in price, so speed was critical to how much profit you would make and we realized we didn’t have time to manage flips and work full time.
In 2008, we realized we had little retirement, so we then changed our focus to creating a stream of passive income that would be never-ending and that we could retire on. Seven years ago, my incredible partner and I started buying rental homes and became very disciplined about not spending, but investing, our money. It’s easy to buy that cool new BMW or take a Caribbean Cruise, but being in my early 50’s, building a comfortable retirement income was far more important than material gratification.
Now, seven years later we have built a comfortable passive income stream that we can retire on which leads to my second investment epiphany. You can create a lifelong income stream that is enough to retire on in seven years! Yes, you do have to work hard, you do have to save your earnings, you do have to minimize the gratification that comes from material belongings; but, you can create an unending income stream with seven years of investing!
This story could end here, and I’m so glad to tell anyone who will listen, that it doesn’t take that long with heavy investing before you have a never-ending income stream. If we can do it, any hard-working couple can do it! But, this story doesn’t end here; it’s not over yet as there was a third investment epiphany and it’s called appreciation. While our focus was on the yearly passive income that each of our investment homes would bring us, a funny thing was happening, each of our homes was going up in value and we were building a lot of equity! Every year the value of each home has risen and our equity in each home has grown past the 25% we have invested. The median price of a home in Jackson County has gone up over 60% in the last five years. So now we have so much equity, we can borrow against that equity in the form of a HELOC (home equity line of credit) or refinance and buy more investment homes.
My last investment epiphany is, if we keep reinvesting our equity, we can have more yearly income in our retirement than we did while we were working! That’s an incredible thought from someone who has always worked a 60+ hour week to make a living.
We don’t believe real estate is the only way to make money investing; it’s just the path we chose that worked for us. We have two friends that are vigilant at studying Warren Buffet and invest wisely in stocks; we have no doubt they will do well and have a great retirement. We don’t mean to make this sound easier than it is. We have learned in life “the harder and smarter we work, the easier life is!”
We’ll leave you with the most important investment tip we have learned and that is that it’s never too early or too late to invest for your retirement, and if you continue to invest you may have a retirement income that exceeds your expectations!