From our friends over at CNNMoney is this link to a retirement calculator.
Real estate investing can help you to achieve your Retirement Worth Having. But how much money is that going to take to mix in with your personal plans?
Monthly Archives: June 2007
How Much Money Will I Need To Reitre? Retirement Calculator
Filed under Calculators
Real Estate Investing Equals A Retirement Worth Having
Are you one of the millions of Americans trying to figure out how you are going to have a Retirement Worth Having? Why not think about small time real estate investing?
I’m not talking about committing hundreds of thousands of dollar and every weekend of your time. I’m talking about owning one, two, five or maybe as many as ten homes for investment purposes. Too hard? Well, start with one. If that does it for you move on to another. When you reach your limit, you’ll know.
But here is what owning just one income property can do for you over the next fifteen years of your life. And if you think that is too long, how old are you and what is your life expectancy?
This example will not be all inclusive and I simply don’t want to write 10,000 words showing how I arrived at all of this. You are welcome to call or email for details.
Buy $175,000 duplex with 25% down at 7.12% interest. Monthly rents at $1,475. Now, I’m going to take into account 5% vacancies and other expenses like insurance, taxes and general maintenance. Also, there will be 5% risers on the income and property value figured in. Here we go;
Year 1 – Income of $17,700 minus expenses of $6,800 minus debt service of $10,608 equals $292 yearly income. House value still $175,000. (To account for slow growth this year and as a cushion. – Hey, I’m being ultra conservative here to make a point.)
Year 5 – Income of $22,500 minus expenses of $8,315 minus debt service of $10,608 equals $3,577 yearly income. House value is now $210,000.
Year 15 – Income off $34,500 minus expenses of $13,750 minus debt service of $10,608 equals $10,142 yearly income. House value is now $319,500.
Note: There were a couple years in there I did not count or did not count in full 5% risers. Again, just being conservative.
So let’s look carefully at this. And we are not going to discuss all the 4 Benefits that we know we have when investing in real estate. We are only going to consider the net equity of the house after 8% sales costs. (You know, the real estate agent, title company and the like.) We’re not even considering the cash flow you had and can see for yourself. Because you probably spent that on your kids’ education or a BMW or another rental property.
House value is now $319,500 minus the $25,560 in sales fees minus the remaining loan balance of $97,600 equals $196,340.
Chris, what about capital gains taxes? What about state capital gains taxes? What about, what about, what about?
To be fair, cap gains taxes are 15% for the feds and vary state to state. But you want to count those? Okay. But to get the details you also need to go back and adjust your yearly income by adding in depreciation. Ah, oh. Now we have depreciation recapture to worry about.
Listen, there are a lot of things going on here. This is an overly simplistic way to get you to stop and think about your Retirement Worth Having and how real estate investing can be a valuable tool in the box. Obviously, you are going to need to work with a professional to counsel you through the landmines and pitfalls to maximize your benefits.Just stop though, for a minute, and think about the retirement you want to have. How will it look? Where will it be? What amount of money do you need to make that happen? Would another $196,000 help?
Filed under Real Estate Investing, Retirement Worth Having
Congratulations Julian Wright Out of Kansas
Congratulations go out to Julian Wright out of Kansas University. The two-year Jayhawk out of Chicago becomes another Kansas millionaire.
Of course, the NCAA in it’s infinite wisdom will count Julian against Kansas’ graduation rates. After all, in their eyes it would be better for him to get his diploma so that he can earn $43,000/yr rather than the guaranteed $1,449,300 he’ll make this year, the guaranteed $1,558,000 he’ll make the next season and the contracted additional $3M plus he’ll be eligible for in years three and four.
Yes, I know this has nothing to do with Kansas City real estate or real estate investing and there is the possibility Missouri fans will hate me…but I do love my Kansas Jayhawks.
Filed under Kansas City Sports
Two New Real Estate Links Additions
I’ve been reading these two blogs for a while. And I’d like to make sure that you are aware of them. Add them to your RSS like hopefully you’ve added mine.
Realtor Wives
A great read from a non-real estate agent. Though she does have an interest.
Lenderama
I’ve been invited to contribute to this blog concerning the interests of the mortgage professionals out there.
I would also like to take a minute and copy Realtor Wives’ sentiment and welcome fellow Kansas City real estate blogger Rebekah Herzog to cyberspace. There are so few of us here in KC, compared to the rest of the world… Now, she works for the competition so don’t like her too much! 🙂 But I think it will be great to have another voice out there.
Filed under Cool Sites, Misc. Real Estate
A-Team Construction: Thank You
In Wednesday’s post I wrote about how inspections and repairs can lead you down roads you didn’t know you were going to go down. The same can be true when the repairs aren’t done to the workman like quality that they should be.
I just want to give a special shout out to A-Team Construction and specifically Stan Withers who bailed me out on such short notice.
On the re-inspect some of the repair items were not done or not done in a quality fashion. And this with less than 48 hours to go. Without the help of Stan we would not be closing on the home an hour and eleven minutes from now.
You can reach A-Team Construction at 816.835.2248. They do basement and kitchen remodels, design and build, and commercial tenant finishes.
How is that for a free ad in return for great, last minute service?
Filed under Misc. Real Estate, Preferred Vendors
Pandora’s Box: Real Estate Inspection Negotiations and Repairs
I am fully aware that there are readers of this blog that believe selling real estate is no big deal. And in the hotter market earlier this decade and on the right transaction, you were right.
But I’ve always said this: “I don’t get paid for selling a place so much as I get paid for getting it closed.”
Right now I’m in the middle of a transaction that has been one thing after the other on the repairs. What started out as a simple repair has uncovered safety issues, code violations and antiquated equipment for which the parts could only be found in one place.
Of course, locating the parts was no easy task and the shipping of them to make the closing deadline is as expensive as the parts themselves. In the grand scheme of your life, the few extra hundred dollars the repairs are costing are small in comparison. But when you first learn you are going to have to spend those dollars emotions can boil to the top.
Real estate agents can bring experience and trained negotiating skills. They can know when to negotiate and when not to. (Yes, there is a time not to.) Real estate agents bring knowledge of markets and market trends.
And one of the most important things and agent can do is bring his experience as a filter. A liaison if you will. Turning a “$%^& NO” into a “here’s what I think we can do about this.” An agent can be the calm in the storm. The clear thinker.
Think about that.
Filed under Misc. Real Estate
Kansas City Star Report On Housing Condition
From today’s Kansas City Star: KC faces housing surplus
It’s worth your time to make the jump to see a market report based on numbers. The most interesting paragraph in the article is this;
Overall, the Realtors reported that it was still a buyer’s market for new homes in greater Kansas City, with a 8.8-month supply available at the current sales pace. The market for existing homes was more balanced with 5.8-month supply at the current sales pace. The inventory-to-monthly sales ratios for new and existing homes were at their lowest levels since August.
Folks, we’ve been spoiled. A 5.8 month supply of homes has always been considered balanced. We are back to the future. Price your home realistically and let your real estate agent do his or her job…assuming you picked the right one.
Filed under Kansas City Real Estate
BBQ Capital | Kansas City Real Estate Investing 