Nice Fat Pension Starting With a Loan

by : Amanda Hash

You already have a pension coming, although it is not time yet. Would not it be nice to enlarge it with a bit of imagination? Our plan is ideal for middle-aged homeowners who feel they have the energy and patience to play around with real estate, while earning a juicy income at the same time.

The Starting Point

The very beginning is your own home and a secure income. No way around that. Now, you look around and with all the time in the world in your hands and you find a nice-looking house. Take a 30-year mortgage, buy it and immediately rent it. The rent will approximately cover the cost of the mortgage. The whole thing about this is the longest term mortgage you can get, to keep the monthly payments low.

The Variations

There will be variations to this plan, since you have time to look around and shop for a good opportunity. Nobody is hurrying you. In this case, you can get a good price and take it while it is hot. You will need to have your mortgage pre-approved, so as to gain time, as usual. A better price, will even tip the scales in your favor, leaving some cash in your hand.

Variation 2

Variation two is to buy a piece of land and build a duplex or maybe even buy a duplex. There you will have two rents instead of one, with which to pay for the mortgage. Make sure insurance and taxes are considered as well within the mortgage, so you will have less worry and running around paying bills.

Get Accustomed To The Feeling

Now, hold on for a few months, until you feel comfortable with the new feeling and start getting ready for a second purchase. Remember you used the property you bought as collateral for the mortgage, but you have your own home free to use it as a security for the next mortgage, supposing you wanted to buy land and build. In a few months you would build equity enough to have one property free for the next mortgage.

The Whole Secret

The secret here is to get the rent to pay for the mortgage; that is why I am suggesting the long term 30-year mortgage loan. I have done the numbers and it works. So, if you do this say, twice a year, or three times, in ten years you could have a minimum of twenty properties working for you. After ten years, you will have between two and four properties at least, with one third paid for and you will still have your first property free of security.

Feel Like Selling?

All right, sell one of the older properties. Pay off its mortgage, and keep one third if the value of the home, to enjoy as you wish, maybe early retirement, super vacation, whatever. One third of a property worth $200,000 is approximately $65,000, which means just over $5,000 a month. Like it? Next year, sell another and enjoy your retirement from it.

Selling one property a year, you will have twenty years of bonanza, apart from your regular pension. At this rate, your remaining properties will be gaining equity faster than you are selling. (You bought two a year and you sell one a year) So, by the time you get to the tenth property, it will have paid for its mortgage for twenty years, meaning two thirds equity. That means $130,000 for you, at today's values, of course.

The Point Is

Nothing physical obtained in this world will be taken to the next. Enjoy it while you can, in this life and give your kids an example and even a home each, for that matter. It is all in a good imagination and, of course, putting it into practice.