Every paycheck most employees sock away a few percentage of their checks into their 401k, IRA, ESPP or all of them. They put their money into the stock market with out a second thought. Anytime your employer is willing to give you a match, I would recommend that you fully take advantage of that. Its an immediate return on your investment. Investing in pre-tax dollars also allows you to lower your tax bill. All good things.
Is it enough though? I don’t think so.
Is it safe to put all your money into the stock market? I don’t think so.
Are there better alternatives? Yes, real estate!
71% of the millionaires in this country have made their fortunes in real estate. Even if you don’t aspire to be a multi millionaire, real estate provides great diversification to your other investments.
Unlike the stock market, real estate is tangible. Its real property that you own, and not a paper asset. A rental property has income that is backed by enforceable lease contracts, whereas very few stocks have any income at all.
You can buy a rental property with a mortgage and leverage your investment. This allows you to amplify the power of your money.
There are numerous tax advantages to owning rental property as well. Depending on how much money you make, it could reduce your overall tax liability.
Once you’ve sold a stock investment, the party is over. You can no longer make money on that investment. Real estate is not that way. You could certainly sell it and realize a gain, however you can also could draw against the value of the real estate by taking another mortgage on it, and the interest would be tax deductible.
You could continue to rent it and live off of the rental income during your retirement years with out ever touching your other investments.
Imagine for now that you were able to pick up 3 rental properties at $150,000 over the next 5 years. If you are 30 years old, these properties would be paid off by 60 or sooner. Based on the average appreciation rate of 3% per year the real estate would be worth over $1 million dollars, and be producing rental income of $10,000 a month.
The best part of it is that you only put the down payment into this investment and your rental income paid for the rest.
Don’t let someone tell you that real estate is too risky, or that you will be getting calls at 3am about toilets. Hire the right professionals like VSM Real Estate and they will take care of all of the dirty work. We can help you to find the properties, rehab them, lease them, manage and maintain, and eventually sell. This is our passion and what we know.
Thank you for reading and let me know if you want to get in the game!
Ryan Schroder
VSM Real Estate