Build your Real Estate Empire
And live the life you’ve always wanted
Have you ever had dreams of using real estate to create some real wealth? No, I’m not talking about the house flipping shows you see on reality TV, but something truly simple and attainable. You buy a home and rent it out. That’s it, it’s literally that simple. Do this a few times and you will create some serious wealth!
In 2016, My wife Becca and I purchased our first investment property and we purchased our second in 2020. We have seen first hand how this is accelerating our path to financial freedom and helping us build real wealth! Our ultimate goal is to have $20,000 a month in passive income from our rental properties. With this money, we could achieve financial freedom, fund college for our kids, retire early and/or more comfortably, give back to our community, etc. The possibilities are truly endless!
Stock Market vs. Real Estate:
I am a big proponent of the stock market (I Invest in it myself for part of my retirement, just to diversify). But I am much more excited about real estate. The main reason, I believe in the long term, is that real estate will provide me a much larger return on my investment. If you think about it, someone else is basically funding my retirement for me, with their money. I make a small investment, 20% down payment, and then someone else (a renter) pays down my mortgage for me (Principal Reduction), while I get to enjoy a return (Appreciation) on 100% of the asset (not just the 20% of my money I put down) which is a big differentiator to the stock market, where you will only earn a return on the money you invest. Plus, I get to depreciate the home over 27.5 years and pay less taxes on my regular ‘day job’ income (Tax Benefits) and receive extra money to save/invest/spend after the mortgage, property taxes and repairs/vacancy are all accounted for (Cash Flow).
We love real estate because you earn money on your investment 4 different ways!
Principal Reduction: Amount your tenant pays off on your mortgage annually
Appreciation = Average appreciation rate in Denver area is 6% over last 30 years
Tax Benefits, having an invest prop can help offset some of your regular income
Cash Flow: Gross rent less all expenses (woohooo, extra $$$)
On top of all that, looking forward into retirement when we want our investments to fund our lifestyle, If we take money out of our stock market accounts, we are depleting the nest egg over time (unless we take out a smaller amount than we gain in returns each year, but then at best we are staying stagnate). Meanwhile, as we pay off our properties we get a larger cash flow for retirement (as there will not be mortgages on the homes). We get cash each month while the home (asset) still grows in value through appreciation. Also, should we ever need a larger influx of cash, we can always put another loan on one of our properties, or do a cash out refi and get a large sum of cash ‘tax free’. → At the end of the day, my main argument would be, why not do both. Invest in the stock market AND invest in real estate?
Where to get the down payment:
Ok, so you are convinced that rental properties can make you wealthy, but you are stuck on how to come up the downpayment to get started. This, in my experience, has been the most difficult part.
A few ways to get the downpayment:
Good old fashioned savings
A nice option If you have a great income and a high savings rate
Cash-out Refinance on your primary home
Did you purchase your primary Denver area home more than a couple years ago? Chances are you are sitting on a big pile of money (the equity in your home). You can access this with a cash out refinance - a tactic we used in 2020 to both lower our interest rate AND get cash for a couple more rental property down payments.
HELOC (Home Equity Line of Credit) on your primary home
House Hack: Buy a new primary home and put down 3.5% or 5% - live there for 1+ year and then rent it out! You can utilize this strategy as many times as you would like!
Brandon Turner from Bigger Pockets created a fantastic video on how simple it can be to become a millionaire with real estate investing, check it out here:
How to Become a Millionaire Through Rental Properties
My Real Life Examples - Quick Numbers:
Townhouse by DIA (2016)
Purchase Price: $240,000
Initial Investment: $54,600 (Down Payment + Closing Costs + Initial Repair Costs)
Annual Cash Flow $5,484 = 10.04% return on initial investment
Principal Reduction $3,167 = 5.8% return on initial investment
Condo by Buckley Air Force Base: (2020)
Purchase Price: $265,000
Initial Investment: $63,975 (Down Payment + Closing Costs + Initial Repair Costs)
Annual Cash Flow $5,391 = 8.4% return on initial investment
Principal Reduction $3,815 = 6.0% return on initial investment
We are making a return of over 14% on each property...and that is not including appreciation or the tax benefits!! Plus, unlike investing in the stock market, we are earning appreciation on the purchase price of $240,000 (DIA Townhouse) not just our investment of around $55,000. That’s the power of leverage! *The property value has increased to $315,000, so we have earned $75,000 in equity already on our DIA townhouse.
Ready to take the next step?
I would love to discuss how you can use real estate for your goals: financial freedom, college savings, retire early/more comfortably, or enhance your lifestyle. You’re investing in your future, planning, and working hard – how can you put your money to work for you?
Let's meet up and strategize how you can start building your own Real Estate Empire!
Click the link below to set up an Investment Consultation now!