I have two younger brothers. And as their older sister, I cannot help but worry about them and their future. It's my job as the older sister. And lately, I have been worrying about my brother that is closest to me in age.
You see, he is a talented carpenter. Before that he worked as a chef " and was amazing. He is also extremely good at rebuilding and repairing cars. Anything that requires patience and attention to detail seems to be something he is exceptionally good at. That is, except when it comes to his finances.
As he is only in his early thirties, he's happy to keep working for the next 30 years, but I do worry about the fact that he's only saved a little bit for his retirement. None of us can rely on pensions or government funding to support our retirement anymore so we all should start thinking about our futures today!
I don't want to see my brother in financial trouble later, so I decided to help him with his finances. There was one part of his lifestyle that was glaringly obvious to me that needed to change- he owns three cars. I explained to him if he sold one and put that money into savings, not only would he have the money from the sale, he would be able to save an additional $500 a month.
He can also make extra money by taking on extra jobs. These don't need to be full time jobs- just little side jobs such as kitchen renovations or building fences. Even if he only works weekends, he can have enough saved to put 10% down on a $200,000 house that he can fix up and rent out.
If he lives in the house while he's fixing it up, he can save even more money. Once it's all fixed, he can rent it out for about $1,400 per month. It's at this point he would buy a primary residence where he will live.
Now, keeping this really simple, lets look at what my brother has when he retires in 25 years:
If he added $25,000 value to the house by fixing it up, and the property goes up every year at 4% appreciation, then in 25 years time the property will be worth almost $600,000. And the best part is that the tenants paid the mortgage for him! That's like having someone else contribute around $1,900 a month to his retirement savings ($576,000 divided by 25 years divided by 12 months).
"But wait", you may be thinking, "property doesn't always increase by 4% per year". While that might be true, historically the average appreciation of property has been 4% per year. Regardless, after 25 years the mortgage will be paid off by his tenants and the rent he continues to collect can go toward his retirement. Rents and expenses normally increase by 4% each year as well, so in 25 years he could see a positive cashflow from the property of around $2,350 each month.
Plus, he will also have his main residence paid off by then, giving him over $1 Million in property for his retirement. What an easy way to get someone else to pay for a big part of his retirement!
When I told my brother my plan, he got excited and sold one of his three cars. With the money he's making by helping us with one of our properties, he's been able to start saving for a down payment for a house. - 23309
You see, he is a talented carpenter. Before that he worked as a chef " and was amazing. He is also extremely good at rebuilding and repairing cars. Anything that requires patience and attention to detail seems to be something he is exceptionally good at. That is, except when it comes to his finances.
As he is only in his early thirties, he's happy to keep working for the next 30 years, but I do worry about the fact that he's only saved a little bit for his retirement. None of us can rely on pensions or government funding to support our retirement anymore so we all should start thinking about our futures today!
I don't want to see my brother in financial trouble later, so I decided to help him with his finances. There was one part of his lifestyle that was glaringly obvious to me that needed to change- he owns three cars. I explained to him if he sold one and put that money into savings, not only would he have the money from the sale, he would be able to save an additional $500 a month.
He can also make extra money by taking on extra jobs. These don't need to be full time jobs- just little side jobs such as kitchen renovations or building fences. Even if he only works weekends, he can have enough saved to put 10% down on a $200,000 house that he can fix up and rent out.
If he lives in the house while he's fixing it up, he can save even more money. Once it's all fixed, he can rent it out for about $1,400 per month. It's at this point he would buy a primary residence where he will live.
Now, keeping this really simple, lets look at what my brother has when he retires in 25 years:
If he added $25,000 value to the house by fixing it up, and the property goes up every year at 4% appreciation, then in 25 years time the property will be worth almost $600,000. And the best part is that the tenants paid the mortgage for him! That's like having someone else contribute around $1,900 a month to his retirement savings ($576,000 divided by 25 years divided by 12 months).
"But wait", you may be thinking, "property doesn't always increase by 4% per year". While that might be true, historically the average appreciation of property has been 4% per year. Regardless, after 25 years the mortgage will be paid off by his tenants and the rent he continues to collect can go toward his retirement. Rents and expenses normally increase by 4% each year as well, so in 25 years he could see a positive cashflow from the property of around $2,350 each month.
Plus, he will also have his main residence paid off by then, giving him over $1 Million in property for his retirement. What an easy way to get someone else to pay for a big part of his retirement!
When I told my brother my plan, he got excited and sold one of his three cars. With the money he's making by helping us with one of our properties, he's been able to start saving for a down payment for a house. - 23309
About the Author:
Learn How to Retire with Real Estate with Julie's free Real Estate Investing Starter Tips Guide. Learn how to create financial freedom, positive cashflow and massive wealth with tips like: How to find quality rental properties, finding and keeping great tenants, and easy ways to make more money with real estate.
