How to Retire from Real Estate
The Rewards
If the one lump is all you have, then you have a finite amount of return. If that lump can replenish itself as it pays interest, then you have the perfect system. It also means the lump can be smaller…much smaller, to get the same or better returns. I like to describe the perfect system as when,
If you can find a source, like your insurance policy or Self Directed IRA, then you have the ability to reuse that source over and over again simply by repaying the
loan. How do you do this you ask? First, understand that in the case of using your insurance policy, in most cases you don’t need to define what you are using the
money for. This means there is no direct link to the real estate. In other words, you are buying this for CASH as far as the purchase is concerned. This means right from the start you will have 100% equity in the house. You will have “associated debt” from the I.P., but no lien on the property. This should make refinancing easier after the house is seasoned enough to use the appraised value instead of the purchase price when calculating the LTV.
This is where the next step comes in. Don’t buy houses you have to manage. Let me repeat this,
This makes it much easier to own 50 houses, but you really wouldn’t need to own that many. This is where the next part of the system steps in. Paying off your mortgage in a fraction of the time. I have mine being paid off in around 10 years, using only the income from these properties. This is a special program that I use for my own house as well as all of my real estate investments. It is a great program that I would recommend for everyone to use as I do…on my own house and other real estate.
Once this program pays off the loan, 10 years later in my case, then you can refinance to take cash out (remember, at this point you have 100% equity since you paid off the loan) tax free. This is in the form of a loan that your tenant is paying off, using guaranteed income.
If you have 20 houses, pair them up in groups of 2 per set, refinance one set per year for 10 years (remember, your fast mortgage payoff program is paying them
off in 10 years) and refinance $50k from each one (that’s $100k per set), and repeat the process every 10 years, you have just set up your retirement program.
The way it ens up is around $100k tax free income every year for as long as you stay with the program…and why would you change if you have no management
duties…just check cashing duties (actually, direct deposit)? All of this, from just your starting point of principle, used over and over again.
I’m writing a book on this system applied to residential investing. I’m almost finished. I have posted part of one of the chapters as well as the Table of Contents.
For more information on the NNN house program you can contact me at joe@thepowerofrealestatenow.com and I will set you up with the source.
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