I am the big sister to two kid brothers. Like any older sister, I worry about my brothers, even now. Most of all, I worry about their futures. The one closest to my age is the one I worry about the most lately.
My oldest brother is a gifted carpenter. He used to be a chef and he was very good at that too. He is also great at rebuilding and repairing cars. His skills, patience and attention to detail are remarkable. However, this is not true when it comes to how he manages his money.
Since he's still young (in his early 30s), he feels there's lots of time to work and make money to put away for his retirement. I wish he didn't think this way. The government may not take care of us when we're older, so the time to start saving for your retirement is now.
I don't want to see my brother in financial trouble later, so I decided to help him with his finances. There was one part of his lifestyle that was glaringly obvious to me that needed to change- he owns three cars. I explained to him if he sold one and put that money into savings, not only would he have the money from the sale, he would be able to save an additional $500 a month.
Side jobs are great source of extra income and carpenters are always in demand. Building fences and helping with kitchen renovations could also add thousands of dollars into his savings in a short period of time. The savings can then be used as a down payment to buy a fixer-upper which could probably be purchased for around $200,000.
Since he is a carpenter, he can even buy a house that has been listed as a "handyman's special". If he lives there while he's fixing it up, he can save even more money. After a few years he can rent out the house for about $1,400 a month. Then he should buy and move into a different property.
Fast-forward 25 years - let's see what he has to show for his investment.
If his repairs add $25,000 in value and the house appreciates by 4% every year, then in 25 years it'll be worth approximately $576,743. That means that his original investment has almost tripled in 25 years! Imagine- $1,900 a month of someone else's money going toward his retirement ($576,000 divided by 25 years divided by 12 months)!
If you're wondering where the 4% comes from, properties increase in value on the average of 4% every year, even with ups and downs in the real estate market. But even if it doesn't increase quite that much, the tenants have still paid off the mortgage over the 25 year time span. The rent from the property that he continues to collect (which would be up to about $2,350/month if rent and expenses increase at a 4% rate as well) will go directly toward his retirement.
Also- in 25 years he will have the home where he lives paid off as well. The two properties should give him over $1 million in equity. That's a nice number for retirement- especially nice when the majority of the retirement savings was contributed by his tenants over the years!
So are you wondering what happened to my brother? He followed my plan, sold one of his cars, and now he's doing side jobs and saving up for a nice down payment for his first investment property.
My oldest brother is a gifted carpenter. He used to be a chef and he was very good at that too. He is also great at rebuilding and repairing cars. His skills, patience and attention to detail are remarkable. However, this is not true when it comes to how he manages his money.
Since he's still young (in his early 30s), he feels there's lots of time to work and make money to put away for his retirement. I wish he didn't think this way. The government may not take care of us when we're older, so the time to start saving for your retirement is now.
I don't want to see my brother in financial trouble later, so I decided to help him with his finances. There was one part of his lifestyle that was glaringly obvious to me that needed to change- he owns three cars. I explained to him if he sold one and put that money into savings, not only would he have the money from the sale, he would be able to save an additional $500 a month.
Side jobs are great source of extra income and carpenters are always in demand. Building fences and helping with kitchen renovations could also add thousands of dollars into his savings in a short period of time. The savings can then be used as a down payment to buy a fixer-upper which could probably be purchased for around $200,000.
Since he is a carpenter, he can even buy a house that has been listed as a "handyman's special". If he lives there while he's fixing it up, he can save even more money. After a few years he can rent out the house for about $1,400 a month. Then he should buy and move into a different property.
Fast-forward 25 years - let's see what he has to show for his investment.
If his repairs add $25,000 in value and the house appreciates by 4% every year, then in 25 years it'll be worth approximately $576,743. That means that his original investment has almost tripled in 25 years! Imagine- $1,900 a month of someone else's money going toward his retirement ($576,000 divided by 25 years divided by 12 months)!
If you're wondering where the 4% comes from, properties increase in value on the average of 4% every year, even with ups and downs in the real estate market. But even if it doesn't increase quite that much, the tenants have still paid off the mortgage over the 25 year time span. The rent from the property that he continues to collect (which would be up to about $2,350/month if rent and expenses increase at a 4% rate as well) will go directly toward his retirement.
Also- in 25 years he will have the home where he lives paid off as well. The two properties should give him over $1 million in equity. That's a nice number for retirement- especially nice when the majority of the retirement savings was contributed by his tenants over the years!
So are you wondering what happened to my brother? He followed my plan, sold one of his cars, and now he's doing side jobs and saving up for a nice down payment for his first investment property.
About the Author:
Learn How to Retire with Real Estate with Julie's free Real Estate Investing Starter Tips Guide. Learn how to create financial freedom, positive cashflow and massive wealth with tips like: How to find quality real estate, finding and keeping great tenants, and easy ways to make more money with real estate.
