Preface

“A computer on every desk and in every home.” This was the ambitious dream of Bill Gates and Paul Allen when they co-founded Microsoft more than forty years ago.¹ Now, their dream is a reality: Computers (in the form of desktops, laptops, tablets, and smartphones) are indeed on every desk, in virtually every home. And they are in pockets and purses and backpacks. Computers are even strapped to wrists in the form of smartphone watches. They are literally everywhere!

I have a similar dream, though it’s not about computers and it’s not about smartphones. It’s about real estate. My dream is that every adult will have at least one rental property as a part of his or her long-term retirement plan. And I mean everyone . . . including you! If you worry that you lack the courage, experience, or even a compelling reason, then keep reading. This book is uniquely designed to show you why even just one rental property is a critical component of your long-term financial plan, as well as how you can accomplish this goal, strategically. This is why I believe my dream is attainable for virtually anyone, which you will see as you get into the heart of this book.

There are many reasons for my dream. Mostly, I am terrified for the millions of working adults who are living in this post-pension world and hoping to retire one day with financial security. I fear for all of us the potentially devastating impact of relying solely on the shaky and highly politicized Social Security system and our inherently risk-laden retirement accounts. More so, if you really stop to think about it, the nest egg model of striving your whole life to build up a pool of savings, then retiring, crossing your fingers and hoping and praying that it won’t run out before you die, just doesn’t make sense. On top of that, you’ll be lucky if there is anything left over to pass on to your loved ones after you’re gone.

This is why I’ve started a movement to inspire working adults everywhere to—Think beyond the nest egg and get a chicken! Not a real chicken, but a metaphorical one: a rental property. Because just as chickens lay eggs day after day, rentals provide income month after month . . . forever. This income never runs dry, and, in fact, is likely to increase gradually with time. Plus, if kept in good repair, rental properties typically appreciate in value over the long term, meaning that, instead of passing down the dregs of your 401(k) to your kids when you die, you pass down an often-appreciating, income-producing asset that will be there to help protect their economic security for years to come as well.

Here are some of the ways owning even just one rental property can benefit you, once you pay off the mortgage:

1. It will diversify your plan and serve as a backup in the event of a widespread stock-market crash, computer glitch, identity theft, or cyberterrorist attack.

2. It could pay for your kids’ college tuition or other large expense, either expected or unexpected.

3. It will supplement whatever modest income you might receive from Social Security once you retire.

4. It will add a sustainable asset to your plan that pays you every month, so that you will not be exclusively reliant on your retirement savings—which, by definition, could run out.

5. It could lower the taxes that you pay on your retirement account withdrawals and Social Security income in retirement.

6. It will give you an asset, which you can sell or refinance, if or when you need a large sum of money.

7. It will give you a transferable, willable, income-producing asset that you can pass down to your loved ones (or favorite charitable organization) upon your death for continued prosperity.

In addition to these long-term benefits, there are many benefits to owning a rental property that you can enjoy right away, even before the mortgage is paid off:

1. The property can reduce your annual income taxes (or increase your refund).

2. It can generate extra income for you and your family, month after month.

3. It can provide a way for you to leverage into more investment property and attain greater levels of financial comfort and self-sufficiency, if that is what you desire.

4. It can foster a profound sense of empowerment and confidence regarding your future financial security.

As I explain in chapter 5, the Ultimate Goal is to own at least one income-producing rental property with no mortgage. To achieve this Ultimate Goal, you must first purchase or otherwise acquire rental property, usually with the help of a mortgage. This is where the three Primary Goals come in. The first step is to decide which Primary Goal is best for you. Do you desire just a degree of financial diversification and safety (Level I Goal), greater financial comfort (Level II Goal), or complete financial self-sufficiency (Level III Goal) in retirement?

The Level I Goal of financial diversification in retirement involves buying or otherwise acquiring just one rental property. I liken the Level I Goal to an insurance policy or backup plan to protect yourself against the many unknowns of the future. Between the often-unpredictable stock market, the shaky Social Security system, and the very real threat of simply outliving your savings, the Level I Goal offers a degree of safety provided by adding a layer of authentic diversification to whatever is in your current retirement picture.

The Level II Goal offers an additional level of financial comfort in retirement. It involves acquiring a couple of rental properties, or one multi-family home, to create a cushion beyond what the Level I Goal provides. Those who achieve the Level II Goal will have enough monthly rental income, after the mortgages are paid off, such that, when added to their other expected sources of monthly income (pension, Social Security, retirement distributions, etc.), their monthly income needs are satisfied.

The Level III Goal gets you to complete financial self-sufficiency, but requires more work and greater cash reserves. It involves owning enough rental property such that, once all mortgages are paid off, you can retire on the rental income. Your rental income will fully fund your life, with other sources of income and savings being icing on the cake.

The Level II and III Goals can come later and in accordance with your needs, wants, motivation, and resources. However, I strongly believe that the modest degree of financial safety offered by owning even just one rental property should not be an optional goal. This is why I’ll show you a number of ways to achieve this very attainable Level I Goal. The moves that are best for you will depend on where you are in life in terms of your age and level of resources, among other considerations. I’ve included a special chapter called “Hatching Your Plan” to help you develop the right strategy based on your circumstances. Finally, by taking action on your strategy, and by using the right moves for your situation, you will experience the unparalleled pride of knowing that you have protected your retirement dreams and late-life financial security, as well as the financial security of generations to come, with the powerful and time-tested tool of real estate.