Podcast Summary
Late start investing: It's never too late to start investing, even with a late start, the 10-year time horizon can lead to substantial progress, increased income and stability can make acquiring loans easier, and having already saved somewhere else is an advantage.
It's never too late to start investing and growing your wealth, even if you're getting started later in life. As Kyle Mast, CPA and guest co-host of the BiggerPockets Money podcast, explained, the 10-year time horizon is a good framework for making substantial progress. While there is a loss of potential compounding time, there are advantages to starting later, such as increased income and stability, which can make acquiring loans easier. Additionally, having already saved somewhere else is another advantage. It's essential to have good money habits regardless of age, and if you're struggling with debt, it's important to focus on getting your finances in order before starting your investment journey.
Real Estate Investment vs Retirement Funds: Middle-aged individuals should keep retirement funds for reserves or lending purposes instead of using them for real estate investment to maintain asset diversification, prepare for unexpected expenses, and make better investment decisions in the future.
As people reach middle age, they may have some savings in retirement accounts like a Roth IRA or a 401k. Instead of using these funds for real estate investment as a down payment, it's recommended to keep them as reserves or for lending purposes due to asset diversification and potential financial emergencies. The preference is to focus on current income and expenses, save aggressively, and build upon the existing financial foundation rather than depleting it. This approach not only keeps assets diversified but also leaves room for unexpected expenses and potential future financial needs. The benefits of waiting to invest in real estate, despite the potential financial gains, include maturity, discipline, and the ability to make better decisions. Additionally, saving more, even a small increase in savings rate, can significantly impact retirement goals.
Financial Independence: Living below your means and saving are crucial, but enjoying a desired lifestyle and starting late with a long-term perspective can lead to financial independence
Saving more and living below your means, while enjoying a lifestyle you love, are both crucial elements to achieving financial independence and retiring early. Kyle shared his experience from the personal finance movement started by Mr. Money Mustache, emphasizing the importance of having both sides of the equation working in your favor. He also emphasized the power of a 10-year time horizon and the benefits of starting later in life, as education and experience can compound towards your goals. Jill's story of starting to invest in real estate in her mid-50s highlights the fact that it's never too late to begin your journey towards financial freedom. The key is to stay focused, educate yourself, and take advantage of opportunities that come your way.
Retirement plans unexpected changes: Retirement plans can change due to unforeseen circumstances, requiring individuals to adapt and consider new opportunities, even if they involve risks.
Retirement plans can change unexpectedly due to unforeseen circumstances like health issues, which can lead individuals to reconsider their financial strategies. In this case, a retired couple had to re-enter the workforce due to medical expenses, but instead of getting jobs, they decided to start a business. They considered various options, including real estate, and eventually settled on buying rental properties as a means to support their retirement. However, their decision to focus on cash-flowing properties at a low price point turned out to be risky, as the properties they purchased were located in an older neighborhood with potential maintenance issues. Despite the risks, they were fortunate enough to make it work. This story serves as a reminder that retirement plans can be unpredictable, and it's essential to be adaptable and open to new opportunities.
Real estate starting late in life: Real estate can provide a supplemental income stream even for those starting late in life, but comes with unique challenges and requires constant adaptation
Starting in real estate later in life, even without significant savings, is possible. However, it comes with its challenges. The speaker started with a small investment in multiple units, which was a big chunk of their savings. Managing these properties in lower-income neighborhoods required solving unique problems that weren't typical for landlords. Despite the hardships, they continued due to the belief that things would get easier as they improved their properties and built a team. However, they found that teams and circumstances change constantly. The speaker's experience demonstrates that real estate can provide a supplemental income stream, even for those starting later in life, as long as they are willing to put in the work and adapt to the challenges.
Real Estate Investing Late in Life: It's never too late to start investing in real estate, even on Social Security, with one deal potentially making a significant impact. Tools like RentReady, Deal Machine, and Host Financial can help streamline the process and increase profits through property improvement and competitive rents.
It's never too late to start investing in real estate, even if you're currently relying on Social Security. Jill's story of starting small and gradually increasing income through real estate is inspiring. Even one deal can make a significant impact. RentReady's services can help streamline the process of tenant screening and income verification, making it easier to expand your portfolio. Additionally, platforms like Deal Machine and Host Financial offer tools to help investors find off-market deals and secure financing, respectively. Joe's success story demonstrates the potential for growth in the real estate market, even in areas where prices have risen significantly. By focusing on improving properties and offering competitive rents, investors can still turn a profit.
Unconventional real estate investments: Thoughtful communication and gradual rent increases can lead to positive cash flow in unconventional real estate investments. Transparency and providing alternative housing options are essential during transitions.
...unconventional real estate investments can yield positive cash flow with thoughtful communication and gradual rent increases. Jill shared her experience of purchasing under-market rental properties in Barberton, where she had to raise rents and evict tenants to reach cash flow positivity. She emphasized the importance of transparency and providing alternative housing options for tenants during the transition. Despite the challenges, Jill found joy in property management and plans to continue investing, with future goals of selling units for substantial gains and purchasing larger, less labor-intensive properties. Her advice to late-starting investors is to define clear goals and assess the condition of potential investments before committing.
Real estate investing approach: Customize your real estate investing approach based on personal goals and financial situation, consider outsourcing property management and maintenance, find the right lender, and consult with advisors before investing.
Real estate investing is not one-size-fits-all, and it's important to make decisions based on personal goals and financial situation. Jill, a successful real estate investor, shared her experience of starting later in investing and customizing her approach to her lifestyle. She emphasized that managing properties and maintenance are not necessary for everyone, and outsourcing these tasks is an option. Additionally, finding the right lender is crucial for a successful investment. Low-rate lenders may seem appealing, but they could cost more in the long run. Using BiggerPockets Lender Finder, investors can connect with investor-friendly lenders based on their investing criteria and read reviews from other investors. Remember, every investment comes with risks, so it's essential to consult with qualified advisors and only risk capital you can afford to lose.