The stock market is very unstable. At this time it is going up and down while interest rates are so low that you want to be a borrower and not a lender. Would you like some suggestions on how can you get the most out of low interest rates while being assured your principal will not disappear while you are trying to make some money? Of course, there is always the danger of borrowing the money and then spending it just because it is there.
Buy Real Estate
So, would you also like to know what the best way is to borrow money at today’s low rates without spending it? Buy real estate. Not any real estate, but real estate that will hold its value, even if single family houses go down. It is apartment buildings. Because apartment rents are still going up, the value of apartment buildings have the best chance of appreciating while everything else goes down.
Low interest rates mean that you can have a positive cash flow at real estate purchase prices you would have lost your shirt on, even two years ago. Rates are currently 4.5% to 6.5% interest rates when we used to pay 9% for apartment loans just a few years ago. Apartments have become a better investment for two main reasons. First, carrying costs (interest costs) have been going down. Second, income has been going up, substantially. Can things be better than this? Yes it can!
Two Methods
One of the methods is to take people with a small net worth and build an estate or self directed IRA (tax free retirement plan) that is worth up to $800,000 in 15 years and that generates an income of $60,000 per year with both still going up after that.
For those that can put together $100,000 to start, there is a second method where the numbers come in at $1,300,000 net worth, with a $100,000 annual net profit in only 10 years.
Unbelievable? Yes, and with low risk as well! This comes out to be a 25% annual return with no roller coaster stock market ride. It really works, its been done before. Many now retired senior citizens have done it in the past.
No 30-Year Head Start?
The problem today with most 50+-year-old baby boomers is that they never got started on building a retirement fund. So now, instead of having the normal 30 years to build a retirement fund, they need to be there in 10-15 years. It might take one year of financial hell to come up with some cash. (That means no money for anything except accumulating cash.) But after that, it can be a sweet painless ride to wealth. The best part is the possibility of failure is less than 10%, if my steps are followed.
First Step:
The money is not touched for 10 years. That is why a trust fund, IRA or a self-directed retirement plan is a great place to put this.
Second Step:
Develop exactly which properties will give the biggest appreciation and cash flow and also be the best risks. Interestingly, almost everyone picks the wrong locations to buy until they hear the whole list of criteria.
The Downside
Now that I have told you the lazy man’s way to riches, let me tell you the downside. You have to have the correct timing on your purchase. In Dec 2001, everything was in place to do these two programs, in Los Angeles County. Unfortunately, by July 2002, the numbers didn’t work any more. They did still work in Florida, for example, but not in Los Angeles. What happens is that prices go up after the rates go down. The seller sees how good a deal the buyer can get and raises the asking prices. So! Your timing to start these programs is very important. Do not be discouraged, though. If the numbers do not work today, it will work sometime tomorrow. The system is sound, and since we are talking long-term wealth accumulation, a little patience can go a long way.
Willard Michlin is an Investor, California Real Estate Broker, Accountant, Financial Distress Consultant, well known Public Speaker and Administrative/Business Consultant.
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