Many Investors Have Told Me "I Should Have Bought More Homes" – Here's Why
Over the years, one real estate success story after another, many of our investors have expressed their gratitude for being able to change their lives by making the right financial decisions at the right time. Some have become personal friends as well. So what is a typical story of an investor? How do these people invest and how long does it take for them to break even? And very importantly, how soon can they hope to become debt free? We take a look at a real estate case study; a typical real estate success story of one of our investors.
Buying 17 homes is not unusual.
So let me tell you the story of this Silicon Valley tech professional who started with one home when was in his 40s. To begin with, he was a bit hesitant and he wasn’t sure that real estate investing was the right way for him to go. However, once he bought one home, he bought another, and then another when he saw how streamlined the process was and how it all made sense for him in the long run. He ended up buying 17 homes.
While it is true that some buy far fewer homes, others buy even more. So this guy buys 17 homes, paying only the lowest possible down payment – at the time this was 10% – plus the PMI. He has made smart decisions about the location and price of the homes he has bought. These are quality, affordable homes in upcoming metropolitan areas where young families are looking to rent. Now he does the smart thing and does nothing for over ten years.
The 30-year loan makes all the difference.
The smartest thing this guy has done is to use the 30-year fixed-rate loan to buy as many homes as possible. About 13 years into his real estate success story, he finds that his loan balances have shrunk to just about 26% of the value of the homes. So at this point, he finds that he has a lot of options. He does the smart thing, and he sells off four of the homes he owns. With the money he receives, he clears what he owes in terms of capital gains taxes and then he pays off his loans. So now, he has his remaining homes clear and free – still earning him rent!
It is easy to see how the decisions that this guy took in his 40s are serving him well now in his 50s, and will still ensure he is very well off for the rest of his life. This is not a guy who has to worry about income after he retires. If he wants to send his kid to a good college, he can afford it. He can travel to exotic locations if he so wishes. And you know what? He wishes he had bought more homes – this is something they all tell me – “I should have bought more!”
This is the power of real estate investing done right. This real estate success story is not uncommon. I have more such stories to share. If you would like to hear some more, you can sign up for our quarterly expo. Drop us a line at icgre.com if you have a question, or sign up for free on our Events Page.