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Author Archives: Gina DiMasi

Avatar photo About Gina DiMasi

Gina DiMasi is an organizational finance whiz. Gina is an avid investor, educator and aficionado of bitcoin and other modern investments. In addition to being an all around nice person, Gina has a degree in personal finance studies from Framingham State University. When she's not running numbers or blogging up a storm, Gina actively volunteers with Habitat for Humanity.

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Should Couples Retire at the Same Time?

Posted on December 9, 2023 - 12:00 pm by 1
Should Couples Retire at the Same Time

Retiring at the same time is a dream for many if not most couples. The idea of one day leaving your job and being able to start your retired life together sounds amazing, right? However, most people don’t weigh out the pros and cons of retiring at the same time as your spouse. In this article, we will answer the question “Should Couples Retire at the Same Time?” and hopefully help make your decision a little easier.
Should Couples Retire at the Same Time

Should Couples Retire at the Same Time?

Walkthrough the points below with your partner to figure out your answers and what your final decision should be.

Retirement Goals

The first step is to figure out the lifestyle you and your partner want to maintain during retirement.

  • Would you be traveling frequently together?
  • Will you own your home outright or will you be paying a mortgage/rent?
  • Do you want to help babysit your grandchildren?

In this step, you want to write out what you want life to look like in retirement. This is where you will write out all of the life goals you want to accomplish. This can also include places you want to do and things you want to try.

Are you and your spouse the same age? If you want to retire at the same time, will both of you be 65 or will you be of different ages? You can both have separate retirement goals too. Maybe you want to travel but the spouse doesn’t, if that’s the case then maybe you retire before the spouse and travel while they are still working and contributing to retirement savings.

Leave no stone unturned in this step, you want to make sure you are happy in retirement. After all, you’ve worked your whole life for it, right!?

Career Fulfillment

The next step is to figure out when you want to retire from work. The standard retirement age is 65, however, that doesn’t mean you can’t retire early or later if everything else is in line. But speaking from a more emotional perspective, at what age will you feel fulfilled with the work you have completed?

  • Is there a project you have been working on you want to see through completion?
  • Are you a mentor at your workplace?
  • Do you feel like you’ve achieved every goal you wanted to before retiring?

You don’t want to leave work on a bad foot feeling as if you didn’t accomplish enough or like you left someone else is a pickle. Figure out when a good time would be for you to retire by planning out what you have to do and complete at work. In this step, make sure you are looking at knowledge transfer as well.

However, maybe your spouse hates their job and you love your job and don’t want to leave. Maybe this could be something where you continue at your job and build up a higher nest egg while your spouse retires a bit earlier and gets peace of mind by leaving a job they hate.

You want to make sure someone can take over the position you will be leaving and they won’t be calling you while you’re retired!

Adequate Savings & Insurance

This is the final step. Figure out how much money you already have saved up for retirement and how much more you need to save to have the life in retirement that you described in step 1.

From the first step, you should have an idea of what your monthly expenses will roughly have to be every year. This number should be net of taxes meaning that the final number is what you need so you will have to earn monthly gross that number to factor in taxes.

The main rule of thumb is that an investment portfolio can sustain a withdrawal rate of 4%.  So figure out the total sum you need on an annual basis, and multiply that by 25 to get amount of money you need for retirement.  So, if you need $80,000 to find the lifestyle you want, you’ll need $2,000,000 by retirement to pay for everything.

Figure out what your current expenses are and how they will increase or decrease in retirement. Knowing how much you will need (after taxes) every month in retirement will help you understand how much you need to retire.

Try using this vanguard retirement calculator that will help you calculate how much you need to retire comfortably.

Then also you want to talk to your current employer about your health insurance and what retirement benefits you may be eligible for. Ask your health care provider what you can do to keep your health insurance or increase it if you think you will need it. They will have full information regarding your specific policy and your options going into retirement.

Some notes to keep in mind:

  • Medicare starts at 65
  • Social security can start to be claimed at 62 with reduced benefits. It can be claimed at 65 with full benefits. Every year after 65 up to 70 have 8% increased benefits
  • COBRA health coverage can last approximately 18 months after losing or leaving a job

With all of this said, you want to make sure you are running multiple scenarios of retirement. Especially if each of you wants to retire at different ages. If you are both the same age, it is a bit easier to calculate what retirement would look like together because of age benefits (social security is an example).

However, if one of you will be 65 first and the other has some time before hitting 62 even, then maybe it is worth it to not retire at the same time so the younger of the two can at least retire with social security benefits.

Regardless, you want to run multiple scenarios to see when exactly you will reach the level of financial independence to withdraw from your retirement accounts comfortably. This will help you decide on whether or not you should retire at the same time.

Final Thoughts

In the end, this decision is very personal and is between you and your partner. Use this article as a point of discussion. Walk through each of the main points and figure out what works best for you and your partner. There is no right or wrong answer, it is all dependent on your own personal situation. Hopefully, after reading this full piece you have your personal answer to “should couple retire at the same time?”

Do you already have your retirement plan? How did you approach your spouse about it?

For more reads, check out these articles! 

This Is Why A Lot Of Rich People Exaggerate Their Net Worth

Posted on November 13, 2023 - 8:03 am by
This Is Why A Lot Of Rich People Exaggerate Their Net Worth

This Is Why A Lot Of Rich People Exaggerate Their Net Worth

I am sure in the past couple weeks you have read some sort of headline revolving around “Kylie Jenner Not Actually Being A Billionaire” or maybe in the past you’ve heard that Donald Trump and Wilbur Ross have inflated their net worth among many others. While some may be upset that these people aren’t being transparent (even though it is unheard of to ask the “normal” person for their net worth), I want to look into this further and understand why a lot of rich people exaggerate their net worth.

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What Building 7 Streams Of Passive Income Really Looks Like

Posted on September 4, 2023 - 6:00 pm by 3
What Building 7 Streams Of Passive Income Really Looks Like

What Building 7 Streams Of Passive Income Really Looks Like

In this post, the goal is to take you on my personal financial journey and what building 7 streams of passive income really looks like.

What Building 7 Streams Of Passive Income Really Looks Like

If you are reading articles from this site, then you have probably heard this phrase countless times but just to make sure it’s drilled in one more, all millionaires have at least 7 streams of income directly affecting their net worth positively. The point of having seven streams of income is that if one fails, you have six more that are bringing you income – A.K.A diversity. Millionaires want to stay millionaires, they are trying to maximize their returns while also realizing an appropriate level of risk.

When I first started my foray into the personal finance world, I was reading Rich Dad, Poor Dad for Teens by Robert Kiyosaki himself. I like a recommend Kiyosaki, but his best book is the classic Rich Dad, Poor Dad (which at five bucks on Amazon is a no brainer), but I digress.

He stated the 7 streams fact multiple times and as I went on to research more, this fact became quite obvious. Set up 7 streams of income and watch them increase your net worth. However, one point I would like to make that my end goal is to have 7 streams of passive income hence I wouldn’t have to be actively working to be making money from each stream.

The passive portion gets tricky. Especially because in the case of investing, whether real assets or in the markets, it takes money to make money. This is why I adjusted my goal to have 7 streams of passive income before I am 30 bringing in more than enough money for me to comfortably live off of.

Below is my list of current streams of income, whether they are actively requiring my time or just passive investments and also future investments I plan on partaking in when time and money permits.

Streams of Income

#1. My W-2 Job: Active  

This one requires the most amount of time. I am a financial analyst for my 9-5 job.

#2. Freelance Writing: Active 

I freelance write for a couple of sites during the week averaging about 4 articles a week. However, I hold DINKs near and dear to my heart as James and his team was the first to give me a shot at freelance writing and made it possible for me to write for other sites.

#3. Personal Blog: Active

My whole life I have been passionate about not only saving money but making money. I commuted to college to save money, majored in personal finance because selfishly I wanted to set myself up for success. Along the way though, I realized how many of even my closest friends were lacking the basic lessons of personal finance to help set their future selves up for success. Hence why I started the blog!

#4. Random Adhoc Gigs: Active 

This one really can’t be summed up as anything other than rannnddomm. No seriously. From getting paid to model for a local clothing line, to helping photographers shoot weddings to tutoring kids. This one really just depends on what gigs I am seeing on craigslist and other gig sites. These are fun though and always keep me on my toes.

#5. Wholesaling: Active 

Wholesaling is a strategy in real estate where you are actively trying to find deals off the market and bring these deals to buyers. You earn a fee from this depending on the price. This is a really great way to build up capital. I don’t plan on doing this forever (who really knows) but I enjoy it in the short term and it has allowed me to put more money into passive investments.

#6. 401(k): Passive 

Here we go, first passive stream! This is easy. Money gets funneled out of my paychecks from my 9-5 to my 401k. I max out my 401k every year and plan to as long as I am working a 9-5. This is a no brainer especially since this money works for me without me having to physically work.

#7. Four unit multi-family: Basically Passive

About 1.5 years ago, my boyfriend and I purchased our first real estate investment in the form of an FHA loan on a 4-unit multi-family. We live in the smallest, most-dated unit and have been slowly chipping away at any renovations. Living in the smallest unit allows us to capitalize on the rents of the other units and we actually get paid quite a bit of money each month just to live here… pretty sweet deal if you ask me.

You probably remember me talking about house-hacking in my other real estate articles but if you are willing to do this could build massive amounts of wealth quickly. We would like to do this a couple more times and also purchase other real estate deals but more on that later. This one is classified as basically passive because since we live here, we handle the property management but if we didn’t then it would be completely passive. Not to brag, but this doesn’t even factor in the MAJOR appreciation we have seen in just the 1.5 years of owning it (over $180k!).

Incidentally, if you want to get into real estate, but don’t want to spend a ton of money, check out Ark7.  Its an app that lets you buy shares in houses.  This is a nice option if you’re cast constrained but still want to build up passive income. You can get the app here.

#8. Roth IRA: Passive

I opened my Roth IRA when I got my first job as a host at a BBQ restaurant back in 2012. I was making money and eligible to put money away into savings. Sounds pretty crazy that a 16-year-old would do that but trust me, most 16-year-olds aren’t reading Rich Dad, Poor Dad for Teens so hopefully that puts it into perspective. My Roth IRA is another way for me to invest in the stock market however in a tax-advantaged method. I love watching my money grow without my even lifting a finger! :)

What The Future Holds

While the future is uncertain, there are definitely some things I am going to work my hardest to do. The first being of course, is to keep maxing out both my Roth IRA and 401k as they are my first two passive streams of income.

Additionally, I would really like to FHA house-hack a couple more times as well as save up larger sums to buy larger properties. When I say larger properties, I mean more units. The more units, the safer the investment in my opinion since if one tenant leaves you to have plenty of other rents coming in to pay the bills. I would count each of the different properties as different streams of income as well.

Lastly, by 30 I would like to get my own blog to a point where I can monetize it more heavily to hire out the writing and maintenance work so it also becomes much more passive.

I believe that all of this is do able with some good work and I have 5 years to get there and three out of the 7 passive streams of income so only four more to go!! I hope you liked learning more about what building 7 streams of passive income really looks like and if you have any targetted questions please don’t be afraid to reach out in the comments.

What do you think? How many passive streams of income would you like to have?

For more reads, check out these articles!

Here Are Five of The Best Real Estate Strategies

Posted on September 4, 2023 - 3:36 pm by 2
real estate strategies

Ever wonder what the majority of the wealthiest people in the world have in common? They all own real estate.  But how do you successful invest in real estate? And, what are the best best real estate strategies to use?

Real estate can come in all shapes and sizes (no pun intended). The strategies used vary greatly, but all that means is that you can choose one that fits your preferences and skills best.  All of strategies in this article are designed for more sophisticated investors, but what makes them “best” is they’ve all been tried and are profitable.

This article outlines some of the most profitable/best real estate methods out there. Let’s dive in!

1. Short-Term Rental Arbitrage

This is when you rent an apartment and then list it (with the owner’s permission) on a website like Airbnb, VRBO or HomeAway.

Short-term rentals (STRs) in themselves are incredibly profitable with guests generally paying over $100 for a single night stay. Multiply that $100 by 30 days in a month, and you have a nice $3,000, which is far more than what a long-term rental would profit. Of course, that means you would have to be booked every single night; however, it’s pretty easy to see just how lucrative STRs can be. Now take homeownership costs out of the equation; the results are an easier real estate strategy for you.

2. The BRRRR Method

The Buy Rehab Rent Refinance Repeat method is a common one used by multi-millionaire real estate investors.

It works by buying a property that is in subpar conditions but in a good neighborhood with cash or equivalent, and rehabbing it to get it to look great. This includes adding bathrooms or bedrooms where possible, renting it out for an appropriate market rent price, refinancing it to pull your original cash out, and repeating by using that same cash to buy another property, rehab it, rent it, refinance and so on.

This strategy increases the velocity of your money incredibly by using the same cash to buy multiple properties. When you refinance the property, you get a mortgage that is completely covered by rent (you want a surplus of rent money, so you’re profiting). When you refinance, the bank will typically give you about 70-75% of the home market price. This part is very important. It means that you want to make sure you’re buying low enough and doing the right rehab to get the market value of the home to be at least 30% more than what you’re all in the property corn (purchase price Andy rehab costs).

When done correctly, this strategy can build your wealth incredibly fast.

3. Apartment Complex Syndications

This strategy is when one investor pools money from multiple investors to have one big lump sum to be able to buy an apartment complex.

In these deals, you can choose to be an active or passive investor. If you were active, it might mean you are investing your time by scouting deals, finalizing new contracts, or running numbers while also potentially investing your money. If you are passive, it just means you are investing your money into the deal for a return.

These sorts of deals happen between experienced investors who don’t have the capital to invest. That said, if you’re a newbie who 2nts to learn more, try networking with some experienced investors and offerings up your time to help so then, in turn, you get to learn from them.

4. Mobile Home Parks

Buying a mobile home park actually means you are buying the land that the mobile homes sit on, not the actual homes. The beauty of this? You don’t actually have to upkeep the home like you would with a normal multi-family or apartment complex. Instead, you have to upkeep the land plus any common area so there might be.

Mobile home parks are also often to be one of the best recession proof investments because it’s very costly for the tenants to move out (they have to pay to move their home, remove any hookups to water and electric and pay to get into another park). They are also relatively cheap for the tenants to live there.

Finding a loan for a mobile home park may be harder than a multi-family, but it isn’t possible. There are plenty of ways to get creative with funding these deals.

5. Wholesaling

The fifth item on the list of best real estate strategies is wholesaling. This strategy is when you, the wholesaler, find deals and sells them instead of putting them on the market. The wholesaler earns money when’s they get a deal from the seller at a low price and sell it to an investor at a higher price.

Some wholesalers have a huge network of investors who know they are wholesalers so if they want to find a deal or sell a property, they go to them.

Other wholesalers work to find deals by scouring the streets and finding owners who may be interested in selling.

Regardless, this method can snowball profits fast if you are churning deals. It’s a low barrier to entry as well since you really only need to invest your time and energy, no capital. For more information see this post: Wholesale Real Estate: The Ambitious Agent’s Ultimate Guide to Winning Ethically.

6. BONUS IDEA: Own A Ton Of Fractional Real Estate

Finance is constantly evolving, so one part of a toolkit of best investing strategies is to own a ton of shares in different properties.  In the past this was best done through holding Real Estate Investment Trusts (REITS) or by raising the hundreds of thousands of dollars of capital needed to purchase houses in different markets. However, due to regulatory and social change, there are now a number of good businesses that help investors purchase partial ownership of real estate. Here are two legitimate companies that are doing this:

Ark7: This is an interesting little start up.  They basically buy houses and commercial property and issue shares in the properties. The company handles all the administration and rental payments.  You get a portion of the rent based on how much of the property you own.  You can read our review of them here, and sign up here if you like the idea.

Another interesting company in the fractional ownership space is Fintor.  It works on a similar model to Ark7.  You buy fractional ownership in a single family home, and the app issues you monthly dividends.  The company is a bit less established than ARK7, but both are good possibilities if small investors are interested in geographically targeted real estate.  You can sign up for Fintor here.

There are a number of other fractional ownership such as Landa and Fundrise, but Ark7 and Fintor are good for starters.

Final Thoughts

Real estate has been proven to be one of the strongest income-producing investments by the millionaires who partake. If you are looking to get started in real estate,  be sure to do your research and choose your investment strategy wisely. The strategies listed above are great options for those looking to get the most out of their time and money.

Should You Invest In Real Estate?

Posted on September 4, 2023 - 8:34 am by
Should You Invest In Real Estate

Should You Invest In Real Estate

Deciding whether or not investing in real estate is a good decision for you is more than just watching HGTV and thinking “Hey I could totally do that!”. Having an interest is a great place to start but delving into the different types of investing and what suits your personal situation best is even better. In this article, we will discuss the many different types of real estate investing and see which may be best for you.

Time and Money

The first question you need to ask yourself is what kind of time are you actually able to put into this investment? For example, if you only have a couple spare hours a week then buying a fixer upper that you intend to do all yourself probably isn’t the most financially wise decision since it’ll take some serious hours to get the place into renting or reselling shape.

Next question you should ask yourself is what kind of monetary investment you would like to start out with. Do you have $10k to invest or $100k you would like to invest? Each of the different strategies requires varying amounts of capital so really consider the amount you can afford before pursuing.

Macro View

Then you need to look at real estate investing at the macro level. What kind of real estate do you want to invest in?

  • Commercial (renters are businesses needing office space)
  • Residential (renters are individuals)
  • Retail (renters are retail stores, you might invest in a mall/shopping center)
  • Industrial (renters are businesses needing warehouses, distribution centers or manufacturing plants)
  • Mixed use (a combination of two or more of these types)
  • Land (soil – literally the land that someone might want to rent or purchase in the future)
  • REITs (Real Estate Investment Trusts – an asset class to be bought within your investment portfolio
  • Fractional ownership options

This matters because each one comes with different rules, regulations and tenants. Out of that list, which interests you the most? Which do you think you want to pursue? Do your own due diligence within your top couple to come to an answer. Then, dive into the next step.

Micro View

Once you have taken a peak at the macro view, you need narrow in on your top couple real estate investment strategies that seem to draw you in the most and think about the following questions.

Do you want to be investing in long-term or short-term property?

Long Term: Long-term for residential real estate is commonly referred to as “buy and hold” and means buying homes (multi-family or single family) and renting them out to tenants. Long-term means you want your tenants to sign a lease for an extended period of time (usually a year). Your monthly cash flow is the life and blood of the business so it is vital to make sure you are investing in something that is green consistently.

Short Term: On the other hand, short-term for residential real estate could also be referred to as vacation rentals. This means your tenants are going to be staying for far less amounts of time, maybe weeks or a few months. This comes with a completely different business model and different costs. Cash is always king so you want to be cash flowing but where the above business model has a steady month-to-month cash flow, short-term vacation rentals don’t have any cash flow locked in stone since there are no leases to be signed. One month you may be completely rented out and the next you might have no renters, so this is something to consider prior to entering the business.

Do you want to completely remodel a property or buy it ready to rent? 

With all the aforementioned types of real estate, you can buy a property that is in shambles or you can buy something that could be rented the next day. It just depends on you.

Buying something that needs renovations usually means the price tag will be much lower. However, you will have to invest in a contractor, plumber, electrition, etc. to get the place in renting shape. The plus of doing it this way is that sometimes you can save some money and also you get to renovate it to make it the exact design you want. Also, keep in mind that you are not able to rent/resell this place until the renovations are done so you are losing monthly cash flow.

Buying something that is ready to rent usually costs a bit more but where you are saving money is being able to rent it our right away. This means that you will be able to start accruing cash right away. If you are not interested in hiring out a team and managing multiple renovation projects then this strategy is probably better for you.

Do you want to be a passive investor and not really be involved in the day-to-day decision making? Or do you want to be heavily involved?

If you want to be heavily involved in the decision making and managing projects, almost all of the above real estate strategies would be a good fit for you except for REITs.

If you already have a lot going on in your life and you’re not looking for another project, AKA you want to be a passive investor in real estate then REITs or syndications would probably be the best way for you to go. Both of these strategies allow you to decide whether or not the expected returns are good for you and your portfolio but then let you be as heavily or lightly involved as you would like.

For example, say you own your own business already and are crazy busy but you don’t want to miss out on the opportunity of investing in real estate. Well, buying a REIT or finding a syndication to invest in would literally allow you to evaluate it as an investment and then not have to think about it at all. You could get returns on a monthly, quarterly or annual basis (your preference) and take a look at the investment when you want to.

Side Note: Another great passive way to invest is to partner up with someone who is in the weeds of the real estate business. Say a friend of yours owns a couple mult-family homes and does really great with them. Tell that friend that you have some capital you would like to invest for X return and that you want to be hands-off. Sometimes, people even split the profits of the business 50/50 or 40/60. Of course, getting some sort of legal document (partnership agreement, llc, etc.) would be very important for this type of strategy.

Final Thoughts

Regardless of the type of real estate you invest in, it has been proven time and again to be an incredibly profitable investment when bought smartly. Just be careful not to enter into real estate because “Chip and Joanna make it look easy”. Do it for the right reasons of earning capital and diversifying your portfolio and you will likely succeed.

Do you invest in real estate? If so, let us know what type of real estate you are invested in!!

For more reads, check out the following articles: 

A Comparison of Investments: Traditional Stock Market vs. Real Estate Crowd Funding

Posted on September 1, 2023 - 3:48 am by 2
Real estate vs. stocks

Investments

If you listen to any real estate or even personal finance podcast, I am sure you have heard about real estate crowd funding, as a means of investment. A lot of people despise this and would not even consider it an investment while others are very open to it and state that they have had quite nice returns from this type of investment. Your personal preference is the ultimate decider when it comes to your portfolio, however the goal of this article is to compare real estate crowd funding to more traditional forms of investment to help you make an informed decision.

Comparing The Basics

Traditional investments, like stocks and bonds, are bought through your brokerage account or can be purchased through your retirement accounts (IRA, 401(k), etc.). These assets are bought through one of the many stock exchanges and once you buy them you have part ownership in the underlying asset. You can sell them or hold them for as long as you’d like.

Similarly, when you invest in real estate through crowd funding, you take part ownership in a property. You can sell that ownership or hold it for as long as you’d like. Both investing in real estate through crowd funding and investing in the stock market are regulated by the SEC (Securities and Exchange Commission) as well.

Comparing Returns

For comparison purposes, we are picking only two specific investments to make it more of an apples to apples style of comparison. We are looking specifically at the S&P 500 for traditional investments and Fundrise for the real estate crowd funding investment (Fundrise is one of the few online websites that allows non accredited investors to join in on the fun).

Int his case I’m only going to look at couple of years of recent history: 2017 and 2018 to illustrate the broader point.

In 2017, the S&P 500 returns were 19.4%. To compare, in 2017 Fundrise had total returns of 11.44%. These both are incredibly high returns when you look at the average of the S&P 500 since 1926 (creation of S&P 500 index) is only 7% but I would take 19.4% over 11.44% any day, right?

However, if we keep our assumption going and look at 2018, the S&P returns were at -6.2% when Fundrise’s returns were at 9.11%. Another pretty shocking difference.

I think this more speaks to the volatility of investing in any sort of asset. The natural one that most people would assume is safer would be the S&P 500 due to the fact that we have more historical data on it since Fundrise only has historical data back to 2014.

Again, the volatility factor is what is key here. You, as a smart investor, should know that any investment will face major swings but you’re sticking it out for the long haul so when you zoom out, these swings don’t look nearly as bad.

Also, this is a case to prove the power of diversification. If you were only invested in the S&P 500 in 2017 and 2018, you would have faced major gains but also major losses! On the other hand, if you were diversified into the S&P 500 AND Fundrise, then you would have seen still pretty nice peaks but not as deep of pits.

Final Thoughts

I think we can all agree that whether you chose real estate crowd funding or the more traditional investments in the stock market, it is vital to your financial success to invest. This data basically proves that you should be diversifying your portfolio and that real estate crowd funding may not be a bad strategy for it. Especially if you do not want to deal with the real assets that revolve around real estate.

For more on the Fundrise vs. Stock market, consider reading Financial Samurai’s article on the topic.

For more recent Dink’s articles, check out these reads:

Image source: Unsplash.com.

Do you invest in real estate crowd funding? If so, let us know in the comments!

13 Reasons Why I Invest In Real Estate

Posted on August 31, 2023 - 1:12 am by 2
Why I Invest In Real Estate

Why I Invest In Real Estate

Why I Invest In Real Estate

Real estate is an asset class that you have without a doubt heard of. You have probably even heard of the phrase that 90% of the world’s millionaires became that way through real estate. Well, if that sentence isn’t motivation enough for you then I don’t know what will be. The point of this article is to take a high-level look at why I invest in real estate.

Before getting too far, I think it is important to look at some of the different types of real estate investments.

Types of Real Estate Investments

There are many types of real estate investments, here are just a few:

• Fractional Ownership

• Single Family Homes

• Multi-Family Homes (2-4 units)

• House Hacking

• Mobile Home Parks

• Apartment Complexes (5 units or more)

• Vacation Rental Investing (Airbnb Arbitrage, VRBO, HomeAway)

• Commercial Investing (shopping malls, office spaces, storage units, etc.)

• Real Estate Crowdfunding

• Real Estate Investment Trusts (REITs)

• Real Estate Syndications

As you can see, real estate comes in many different flavors. By doing your research, you can see which type

of investment may suit you and your portfolio the best. Maybe you’re investing for cash flow or maybe you

are looking to earn a lump sum in a short period of time, regardless, it is important for you to do your

research prior to jumping in.

13 Reasons Why I Invest In Real Estate

The list of reasons why I invest in real estate grows longer each day. Quite frankly it is the ultimate

investment in my eyes for several reasons.

#1. You have far more control over your return in comparison to investing in the stock market. If you want

more of a return on investment, then you can raise rents or remodel the property to make it higher and so it

sells for more money.

#2. It can be as passive or active of an investment as you’d like. For example, if you don’t want to manage

tenants (which you shouldn’t) then you can hire a management company to do that work for you.

#3. The monthly cash-flow is incomparable. Right now, I am house-hacking a four-family home. I am living

in the smallest unit and renting out the other three. While living here, I am making over $600 a month. That’s

right. I am getting paid $600 just to live in my apartment. Then when I purchase my next property and move

out I will make an even greater monthly cash-flow because I will be able to rent out the unit I am living in.

#4. Appreciation. It is said that on average, the real estate market appreciates (or increases in value) by 6%

on an annual basis. Of course, there are off years and nothing is guaranteed however appreciate definitely is

the icing on the cake when you are investing in real estate already making a nice return and get to enjoy the

benefits of appreciation as well.

#5. Leverage is real. This means borrowing money to make more money. To do this in the stock market you

need to have an incredibly high net worth but not with real estate. Lenders let you put down as little as 3.5%

or even 0%. That means you can start making monthly cash flow to cover your expenses and literally use

little to none of your own money!

#6. Equity increases the longer you own. As you pay down your loan on the property, your equity (or the

amount of loan you’ve paid off) increases. This equity can be used to buy more properties or even as a loan

for other investments. Think about it almost as another bank. You are depositing money every month (sure

for your monthly payment) and any money going towards the principal (the lender keeps the interest) is

your bank account. So you are, theoretically, paying yourself.

#7. Fool-proof retirement plan. Most mortgages last for 30 years however they can be for 15, 18, or 20

years too (really the length of time depends on your lender). So say you buy a property today with a

mortgage amortization of 30 years. This means in 30 years your property will be completely paid off and

you will earn all of the cash flow from the property and will no longer have a monthly mortgage payment.

You can literally set up your retirement to earn however much monthly cash flow you need by investing in

real estate.

#8. It is incredibly tax-advantageous. There are some serious deductions allowed for real estate

businesses. The interest paid on your mortgage, maintenance and improvements, home offices, phone

lines, etc. If you run your business smartly, you can have almost all of your expenses deducted when it’s tax

season. For a comprehensive overview of the deductions available, check out this landlord tax deduction checklist. It is important though to make sure you are working with a CPA who is knowledgeable in real

estate. REITs offer dividends.

#9. Depreciation. The IRS lets you depreciate your property for 27.5 years. What does this mean? Well think

of depreciation as an expense, the IRS is saying that as you own your house for longer and it becomes older

it becomes less valuable however as we learned from #4 in most cases your house is actually appreciating.

Therefore with the IRS allowing the depreciation deduction you get bigger cash flow and report a lower

income to your taxes. Think of it as getting an enhanced return.

#10. Taxes are less on real estate than the stock market. If you are flipping houses, as in buying and

reselling in the span of less than a year then your taxes will still be high however if you are in it for the long

haul then your taxes will actually be much lower than gains on other investments. Plus real estate has great

hacks like 1031 exchanges that allow you to sell your property and reinvest the money into a like-kind

property (including any gains) without paying taxes on that money. Pretty sweet deal if you ask me.

#11. Real estate can act as diversification and a hedge against inflation. Investing in real estate can help

you guarantee passive income that your other investments may not be generating. Also, investing in real

estate a completely separate asset class will help diversify your money so that if something happens in one

market, all of your investments won’t be toast.

Additionally, it hedges against inflation because of the demand for a place to live. As long as populations

continue to grow, the demand for a place to live will increase therefore resulting in an increase in rents and

lower vacancy rates. We increase our rents with inflation every year. If our market we’re invested in

experiences higher than average population growth we also make sure to increase rent in-line with that.

#12. Generational Wealth. Have you thought about your legacy at all? I haven’t much either but real estate

allows you to really put that though in place. You can buy properties for your family to hold for multiple

generations to come. You could be helping people that you have never even (or may never even) met yet! By

investing in real estate, maintaining ownership and keeping up with any required maintenance then you

could be ensuring that your family will stay well-off for ages.

#13. Become your own boss. This is a major point for me. I want my primary job to be working for myself. I

want to own enough real estate and have management companies in place so that my only job is making

sure everything is running smoothly and maybe buying some more deals here and there. Real estate

seriously allows this. Whether you want to be your own boss of your real estate company OR you are using

the monthly cash flow to live off of while you start your dream company, real estate can propel you into

financial freedom.

Don’t Fall Into The Typical Trap

Personally, I don’t consider owning your home as a real investment in real estate. Unless you are house

hacking or doing a live-in flip, you really just bought a home for a sense of security (which isn’t a bad thing!).

However, most American’s consider themselves real estate investors once they purchase their home. This is

due to lack of knowledge. Sure, maybe they make some money once they sell their home down the line but

they usually think they made this great return without factoring in all of the expenses they had to pay over

the years like taxes, repairs, utilities, etc. Once you take expenses into consideration, most people barely

breakeven on their investment.

Wrap Up

Whether you decide to start investing in real estate today or you begin to educate yourself on which method

is the best for you, I definitely recommend that you begin looking into real estate sooner rather than later. It

is the perfect way to diversify your portfolio, earn consistent monthly cash flow, and also set up

generational wealth.

If you have any questions for me or if you yourself have invested in real estate, then let us know in the

comments!

For more recent articles, check out: 

P.s. if you’re interested in some highly niched specifics topics – such as FSBO sites, you might consider checking out the Real Estate Witch blog.  They have some good stuff on FSBO companies, as well as some decent breakdowns of fees paid to realtors.

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