In 2007 I purchased a house in Dallas subject-to the mortgage for $69,000. It was worth $100,000 and rented for $960. The underlying loan payment was $586 PITI. My cash flow was about $300 a month.
By 2012, it was worth $125,000 and rented for $1200 with a loan payment of $620. I used proceeds from wholesaling to pay down the mortgage to $32,000. My cash flow was over $500 a month.
Now, in 2017, the mortgage is paid off and the house rents for $1495. It is worth $175,000. Taxes and insurance eat up about $300 a month but that still leaves a little over $1000 a month in cash flow.
By just holding on to this property and letting the tenants pay off the mortgage, I have gained incredible cash flow and wealth with this one house. There is not a lot of appreciation in Texas yet ten years after purchasing this house it is worth $100,000 more than I paid for it. I also made roughly $45,000 in cash flow over the past ten years. Plus, every year I gained all the tax benefits of owning this property. I did not have to go to work at a job to make any of this money.
Multiple this example by 4, 5, or 10 houses and you can see how you can achieve really great income from rentals plus you are accumulating wealth. You do not need a lot of rental houses to make a lot of difference in your life.
You can do this too! You may want to get on the fast track by accumulating 10 houses in the next couple of years so you can retire early. Or, you may prefer to buy one to two houses per year for the next five to ten years. Either way, the cash flow from rentals will give you financial security.
Rental income from just one house could make the difference between a comfortable retirement and struggling financially. Rental income from 3-4 houses could completely change your lifestyle…for the better.
Start now! Time will pass no matter what you do.
It’s time to get serious about building cash flow and building wealth (excerpt below From Jack Miller’s Buying Houses from A to Z book):
Over and over I’ve heard people in their mid 50s say that they were going to have to start getting serious about saving more. How much money has the average American accumulated by retirement? According to the American Banking Association, not even 1% of people in the United States have made regular deposits into savings for 20 years. 85% of men who reach age 65 don’t have $250 in the bank. As ‘safety-nets’ provided by social security, pensions, and welfare continue to deteriorate, the differences between consumers and investors are going to become much more pronounced. The middle class is fast disappearing.
Think about this for a moment. Take away government retirement checks and you’ll discover that the average 18 year old in the United States earns more than the average 65 year old. Somehow, that 65 year old hasn’t learned to convert the 47 year advantage in experience he possesses into more income. It’s as though he hadn’t improved his marketable skills and knowledge over his entire life.
Probably the fatal error that even knowledgeable people make is in failing to realize that they must continually strive to convert their time, energy and talent into increasing net worth and assets just to keep from falling behind. No one can afford the luxury of not continuing to study and learn ways in which to cope with our brave new world.
So here are your challenges:
(A) Expect to win. Plan to win. Act to win.
(B) Be willing to sacrifice a part of each day in order to have a better tomorrow.
(C) Always be on the lookout for ways to increase your efficiency at increasing your earning power and that of your investments. Recognize that the investment you make in your own knowledge will probably produce the highest return over the years.