How To Create an Income You May Never Outlive
When we invest in stocks, we usually start by looking for equities
with strong growth prospects. Capital gains are the apple of our eye.
As we grow older our focus usually shifts to dividend stocks. Fixed
income securities become more appealing because they throw off a
regular income, which is what we look for in retirement.
Real estate offers the best of both worlds. Investing early in real
estate provides for real capital appreciation, particularly because
the tenant pays off most of the investment, but you own all of it.
And, as you hold your real estate investment over time, its cash flow
potential increases. The reason for this is that the rents usually
increase over time, while the mortgage payments go increasingly toward
paying off the principal. When the mortgage is fully paid off, the
bulk of the rent then goes directly to the owner in the form of income
Usually our clients set up mortgages that range from 15 to 25 years.
If a person is buying properties at age 45, by the time they reach
retirement age the mortgage will be paid off and they will have a
steady income from the property - maybe for as long as they live. If
they have used this proven system for real estate investing, they may
have an income that exceeds the income they had during their working
career. And, they always have the option of selling the property and
realizing the gains available to them.
I believe that real estate is a powerful wealth-building tool
because it offers the best of both worlds - strong capital
appreciation potential and a powerful income stream over time that
lasts as long as the investor wants it to.