Friday, June 19, 2009

Can you build wealth in this real estate market?

WOW what a subject, my favorite!

In my earlier years at Judge Fite Company, my wife and I bought a home for $32,000 in the Kessler Square subdivision, invested $40,000 in it and sold it for $155,000.00. We bought the next home for $140,000.00 and sold it for $235,000.00.

That might sound great but NOW FOR THE REST OF THE STORY…the $32,000.00 home is now worth $300,000.00 and the $140,000.00 home is worth $565,000.00!

I mentioned in a previous article that the only regret I have over my lifetime is that I ever sold any of the Real Estate we have owned. We started accumulating rental properties 25 years ago, today we have 27 rentals and our homestead. The difference between what we owe and what they are worth is approx $1.5 Million. Had we NOT sold any of our acquisitions that equity would be approx $2.9 Million.

You have the same opportunity at your finger tips. It is our plan to continue to buy rental properties and let the rent pay them off. We plan to live off 60% of the gross rental income if we ever choose to retire. If all rentals were paid off today, the monthly rent role is $25,000 a month. At a 60% ratio, that would be a monthly income of $15,000.00 while saving the $10,000 a month for taxes, Insurance, upkeep, remodel and vacancy. We can live on $15,000.00 a month easier than we can live on $2,100 a month in social security. Social Security is a bonus to retirement, not the sole basis to retire on.

Instead of buying diamonds and new cars, we buy rental properties and drive nice used cars. Real Estate is our main focus of growing wealth. MILLIONAIRES will be made in the next 18 months by buying investment properties during the low interest price dip that we enjoy today. There is a silver lining in every situation. Selling investment properties will make you a lot of commissions this year!

William Ferguson, President, Judge Fite Management Company

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