“… Real Estate or other entrepreneurial investments” might be more accurate. But that makes for a lousy headline. ;-)
Anyway, my answer to that is simple. The old industrial age model no longer works.
That was:
- Go to school* so you can
- Get a good education so you can
- Get a good job
- With a good company
- With good benefits
- And a retirement plan
- And you’ll be set for life
* By school they really mean collage. For most people and most careers these days a high school education simply won’t cut it.
I had friends who retired from Polaroid many years ago. They retired with a full pension and benefits and should have been set for life. Then Polaroid filed Chapter 11. As part of their reorganization they convinced the bankruptcy judge to ‘relieve them of the burden’ of their obligations to their retirees. In an effort to save the corporation the judge threw all of the ‘no longer productive employees’ under the bus, as it were, and cut off all of their pensions and health insurance. That saved the corporation a bundle! And hosed all of the people who made Polaroid what it once was. Not the Board of Directors, mind you. All of the rank and file.
This is but one example of many and it was quite a few years ago now. But it is still going on to this very day. In some cases the corporations skip all the fuss and bother with filing bankruptcy and just cut the bennies themselves. CNN has an article on their Money page on that very subject, as a matter of fact.
You simply cannot rely on the old model of retiring from the company you’ve worked for for thirty years, plus what Mum calls Social Obscurity, to guarantee a secure retirement. And don’t expect your 401(k) to be there for you either. Robert Kiyosaki has a whole book on thesubject.
You need to take responsibility for your own financial future. You personally as an individual.
Don’t expect the government to save you. They can’t even save themselves! Just take a look at the latest budget crisis spawned by our ‘leadership’ in Washington. I don’t even need to post a link here because no matter how many years down the road you may be reading this there will be some financial crisis in the news that has as its origins foolishness emanating from Capital Hill.
Don’t expect some NGO to save your bacon either. I’m not casting aspersions there. It’s just that an NGO’s resources are invariably much more limited than the government with its ability to print currency on a whim.
You may get lucky and get help from somewhere. But you can’t count on it. That is why YOU have to take the initiative and take care of yourself for yourself.
The safety briefing given by the flight crew always states “If the oxygen masks are deployed PUT ON YOUR OWN MASK FIRST!” You cannot help others if you pass out.
Likewise, you have to take care of your own financial well being, especially if you want to help others.
Bringing this back around to the headline: Investing in real estate that produces a solid passive income, such as the 14-unit apartment complex I am working on purchasing, is a time tested and proven method of generating a reliable income without trading time for cash as in an industrial age job. It also has the benefit of providing that income even after you retire from your job in the corporate world.
Some would say that now is a lousy time to get into real estate. “The bubble’s burst and property values are in the tank. Why on Earth would you want to get into that mess?” I would reply that now it the best time to get into real estate that will ever occur in our lifetime! Everything’s on sale! There are bargains everywhere you look!
Buying to “flip” in a rapidly appreciating market is only one way to make money in real estate and IMHO it’s far from the most reliable. Frankly, it’s a form of gambling. You are buying something in the hope that someone else will pay you more than you paid. That model will simply not work in most markets at this point in the cycle.
On the other hand, buying a rental property that will pay you more than the cost of owning it over however many years you choose to own it is a sound investment. That passive income may not be the big flashy bundle of cash the flipper may have made a few years ago, but it will continue to come in. Month after month. Year after year. And if managed property it can continue to do so for your kids and their kids and barring some great calamity for many generations into the future.
Now about that calamity, that’s what insurance is for.
Right now is the very best time we will ever see to get into real estate. That is why I am working so hard, even staying up late to get the paperwork done, to get this first deal under my belt. As I said in my one pager: once I have completed a couple of deals of this type my next destination is “To Infinity and Beyond!” (Thank you Buzz Lightyear for that quote!)
If you’ve read Robert or Dolf or Loral or the other Robert or any of a dozen others this will all sound familiar to you. If you haven’t I’d suggest you get on down to your local library or book seller and get your hands on a few of these books. Reading them will open your eyes to a whole new world of opportunity!
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