Real Estate Investors – Create Synergy Between Short and Long Term Investing – A Projected Case Study

Recently a post spoke of how those who buy, fix, and sell properties — flippers — can use that skill as a natural turbo charger for their long term investing Plan. You can read it here, it’s not too long.

A couple weeks ago I met a potential client, in San Diego for a work related conference. He’s a 30-something professional, married to the same. They have their first child, not even two months old yet. (Remember those days?) They’re both smart as whips, hard workers, way above average wage earners, and already building an incredible future. Also, just nice folk, both of ‘em.

‘Edmond’ is already doin’ the buy and fix-up thing. He’s now the proud owner of a few such properties. They’re old. They don’t have much of a future. But they will all show a profit, short term. He’s done well, and not only has he gone on a nearly vertical learning curve, he’s been able to apply lessons on the run, in real life/real time.

What I told Edmond and ‘Randi’ to consider as a Plan

First — Sell the current properties NOT used as security for local line of credit. Move the equities into brand new Texas income property.

Second — Keep doing rehab projects. Take the after tax profits and apply them to the loans on properties in the ‘long term’ portfolio. Use the BawldGuy Domino Strategy.

Third Acquire more property as possible. With this couple, the ability to make six figures at work, plus rehab profits, allow for the option of paying down current debt or diverting the capital to further property acquisition. These decisions usually make themselves when push comes to shove.

Fourth Stop contributing to job related retirement plans. Establish EIULs for the new baby for their college education. Concurrently begin EIUL(s) for one or both of them, using the after tax money now available from the discontinued payments to work related retirement plans.

Fifth Encase all of this with a solid plan for ongoing asset protection. Leaving this as an afterthought is why so many find themselves dealing with unnecessary problems. Leaving asset protection out of any Plan is playing retirement roulette in my opinion.

There will be more to their Purposeful Plan of course. What I’ve laid out above is the crux of what will be the vehicle taking them to retirement. I’m confident that given a 15-20 year period Edmond and Randi will be easily able to retire on a combination of tax sheltered and tax free income. Conservatively it should be in six figures annually — even assuming no appreciation in either property values or rents for the entire 15-20 years.

In fact, I suspect they’ll create retirement income of six figures both in real estate and via their EIUL(s). Given the time allotted, the only thing required is prudent, diligent application of OldSchool principles.

The results will take care of themselves.

Speaking of results, how’ve yours been the last few years? Ready to try something that, you know, works? Gimme a call and kill two birds with one stone — find solutions for your retirement goals, and supply me with a daily fix. You’ll reach me at 619 889-7100. Have a good one.

This entry was posted in 1031 Exchanges, 401(k)'s & IRA's, EIUL on by .

About BawldGuy

I'm second generation real estate, first licensed in fall of 1969. Having been mentored by several iconic brokers, I'm also CCIM trained, having completed all 200 hours back in 1980. Have successfully executed well over 200 tax deferred exchanges, many of which have been multi-state in nature. Strong points are analysis and the creation and real world application of Purposeful Plans employing several strategies synergistically. The idea is to arrive at retirement with the most after tax income possible, backed by the largest net worth.

Contact BawldGuy | BawldGuy's Google Profile

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>