The stock market has been on an 8+ year surge in value, the longest run in history with no major corrections. For those that invested in their retirement programs, mutual funds or bought/traded stocks over this time have done well, especially in 2017! Savings accounts have only earned .01-1.2% over the last few years with inflation averaging 2.9% annually, putting you further behind. If you average the returns on the Dow Jones market over the last 11 years the return has been only 2% annually, not the 7% that many investment counselors have maintained you would get. Many market analysts feel a correction is in order over the next year of as much as 40% of the market’s value. Large corrections historically (see Oct 2008) have taken 12 years to get back to the levels before the downturn. I believe this is an important time to explore other options for funding your retirement and building another stream of income.
A person could not do much better than investing in rental homes on a long term basis, especially in the Phoenix area which is poised for long term growth over the next 10-15 years at least. My reasons for this are: first, real estate is a tax favored asset at the current time through sheltering current income by depreciation and 1031 tax exchange laws. Real estate can be leveraged by a standard 30 year fixed rate mortgage, with someone else paying the mortgage. It also creates a cash flow if done properly. If you save your money with discipline and by cutting current costs and purchase 10 residential properties over the next 10-15 years, you will have assets that are growing in value, have tax benefits and have someone else paying the mortgage down. Eventually these assets will be free and clear and will always generate a cash flow in good or bad markets.
Contact me and I can elaborate on a plan of how best to acquire, finance and manage the rental properties in the Valley of the Sun.
I would like to acknowledge Michael Douville, a friend and fellow Realtor, for his book, “How To Create A Real Estate Money Machine And Retire With Income”, which can be purchased through Amazon, from which the basis for this strategy came.
Larry Derksen; Realty One Group; Dir: 602-376-5098; email: larry@derksenaz.com
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