Boomers: Exit the rat race

by Contributor on 19 Jan 2018
After years of steady growth in our major centres, never has there been a time where it makes more sense to downsize your primary residence, shrink your footprint, and experience the freedom of exiting the rat race while earning passive income for life and watching your net worth continue to grow into your retirement years.

Assuming 25 years of both runaway and conservative growth expectations, I can confidently assure you that your $500,000 investment will not only split off the income you need to make your ‘elegant exit,’ but will also become a sum of money healthy enough to be representative of multi-generational wealth.

I have had the pleasure of consulting with a fair number of Boomers who are looking to invest their nest egg strategically in order to be able to live off of the return provided by their investment in real estate. Here are two real-world examples of how I was able to help investing individuals and couples do exactly that, using investment strategies that took six months to a year to execute – with no expertise or MBA required on their part.

How to get a 26% ROI
These real-world examples demonstrate what’s possible with a real estate investment strategy. For the sake of argument, let’s assume you can sell your present home at a profit of $500,000. (A higher profit would mean even more leverage.) If $500,000 earns you $50,000, that’s an outstanding 10% ROI, but there’s additional good news.

The mortgage paydown taking place on your loans adds another $24,000 to your net worth each year. Using conservative growth of 3.5%, an investor can see $56,350 in capital gains in the first year alone, meaning your total income for the first year will be more than $130,000 – a total ROI of 26%.

If you’re playing the long game with these properties and intend to own them for 20-plus years, a 55-year-old investor, as he approaches 80 and looks at succession planning, will have a debt-free portfolio worth approximately $4 million, which will generate an income of $250,000 per year.

How’s that for a legacy?

AJ HAZZI is a Kelowna-based investor and founder/associate broker of Vantage West Realty, a boutique agency specializing in serving investors with quality acquisitions and investorfocused property management. Contact him at [email protected] and 778-765-0377, or visit vantagewestrealty.com.
 

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