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ASS-BACKWARDS! Why 'Conventional Wisdom' About Rental Properties KILLS Your Portfolio | Episode 151
FromSelf Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's
ASS-BACKWARDS! Why 'Conventional Wisdom' About Rental Properties KILLS Your Portfolio | Episode 151
FromSelf Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's
ratings:
Length:
9 minutes
Released:
Oct 21, 2015
Format:
Podcast episode
Description
Today you learn why the “wealth building” model you’ve been taught about rental property investing is – well, it’s totally ASS-BACKWARDS – and I’ll teach you a MUCH SMARTER way that can yield you a portfolio of 15 reliable, high-yielding rental properties for a one-time investment of ONLY $150,000. I’m Bryan Ellis… get ready to have you mind blown right now in Episode 151.----Hello, SDI Nation! Welcome to the podcast of record for savvy self-directed investors like you!I hope you’ll forgive my use of the mildly vulgar word in today’s introduction, but this one is worth shocking you to get your attention.There’s a belief that’s pervasive… and it’s true. The belief is this: Rental property investing can make you wealthy over the long term.That’s very, very true. Folks, the advantages of owning rental real estate are almost too vast to mention… regular income, appreciation, tax benefits… it’s like the ultimate cornucopia of investment benefits.But the way you’re taught to achieve it is, well… it’s totally backwards. Here’s the prevailing ‘wisdom’ – and I use that word very loosely – on the topic:Conventional wisdom tells you to go out and buy a house – ideally at below-market pricing. You leverage your efforts by getting a loan to finance the property. You place a tenant in the property, who pays rent, which you use to pay down your debt and to cover expenses like property taxes and maintenance. And hopefully, you’ll have $200 a month or so left over after all expenses as your reward.Then the hope is that one day into the future – probably 25-30 years into the future – the property will be totally free and clear of all debt, yielding you a substantial bump in income, and you’ll have an asset that you can then sell to finance your retirement.Of course, you’ve got to do this 10-20 times in order to provide the kind of income and financial future you’ll need… and each time, it means shelling out another $100,000 to $150,000 to get a top-quality rental property.Can this approach work? Yes, it can. But I know a whole lot of real estate investors… and not many who have had success with this approach. The problem is that it takes SO LONG to get any benefit from doing this… it’s just terribly demotivating. This is an example of a strategy that is very, very easy to sell rental properties to investors – particularly new ones – but it just doesn’t hold up under the strain of reality. The payoff is too distant and too uncertain.And frankly, it’s REALLY, REALLY dangerous. If you’re clearing $200 or $300 per month… that won’t be enough to make a dent when an air conditioner goes out or a roof must be replaced. You’ll go into the red very, very quickly.The thing about rental property is this: It does not make sense as a one-off investment. The best scenario is to have a portfolio of multiple properties, all generating strong cash flow, so that you’re protected from the ebb and flow of natural variations in expenses like maintenance and vacancies. But you can’t do that with one property only……and you can’t even do that with multiple properties, if they’re all leveraged and you’re only clearing a couple hundred dollars a month on them.What’s the answer?Do exactly the OPPOSITE of conventional wisdom… use the SDI Wealth Snowball strategy.Using the SDI Wealth Snowball Strategy, you make a one-time investment into wise high-yielding properties… pay all cash for those properties… and you let the income generated buy you ever more property to repeat the process over and over… until some point in the future, when you have many, many properties… all free and clear, and all yielding a truly SUBSTANTIAL income… all as a result of a one-time investment.This isn’t some wild, theoretical idea either. Imagine this scenario with me:You call me up and say “Bryan, I’ve got $150,000 available cash, and I’d like to build a large, very profitable cash flow portfolio from that money.” Here’s what I’d do:First, I’d confirm your TIME HORIZON. If y
Released:
Oct 21, 2015
Format:
Podcast episode
Titles in the series (100)
SDI 025: 12-18% Returns Every Year... And It's REALLY SAFE!: If you could earn 12-18% each year - VERY VERY SAFELY - you'd jump right on it! I'll tell you exactly how in Episode #25! by Self Directed Investor Talk: Alternative Asset Investing through Self-Directed IRA's & Solo 401k's