Investing The Nest Egg

two cents

Right around the time the kids venture out on their own, we get weird new thoughts about the future, don’t we? We wonder how long it will be before grandkids bless our home with their sticky little hands. We wonder if we will need a nursing home one day, and if anyone would come visit if we did. And we may even wonder how we can leave an inheritance for our kids, especially when the nest-egg and the interest rates on savings are both a whole lot smaller than we thought they’d be.

I have a suggestion. It’s not for everyone, but for those who dare, I highly recommend buying a second property.
Wait – hear me out.

A second property can, in a single swoop, accomplish… 

  • Providing you with a monthly income as a rental
    Rent will cover all expenses – mortgage, insurance, taxes, maintenance. What’s left over is money in your pocket. Every month.
  • Being the awesomest savings account ever
    Property values generally climb. In this area, I have seen values go up, often by $100,000 in the last ten years. That’s a return you won’t find from a bank account.
  • Giving you a free house
    Tenants buy your house for you. After they live in it, providing you with that extra monthly income, you still have the house. Sell it, refinance it, rent it, or pass it on to the kiddos – so many options.

Also, you can include the second property in your life insurance coverage. With the right policy insurance would, upon your death, pay out the mortgage. This property could then be given, debt-free, to your children as their inheritance. (All on the tenant’s dime by the way!) Your children could choose to sell, live in it, or continue renting it out – they would have options and means.

 But What If….?

I know, this can seem scary and there are lots of things to consider. But we can troubleshoot a bit with those…

Don’t want to deal with tenants?

Though you can, you don’t have to manage your property. Property managers can be hired for 5% of the rental income. You need never personally deal with a client ever.

What if there’s an emergency 5 years down the road?

If, for whatever reason, it doesn’t work out, you are not stuck. The mortgage may be for 25 years, but you can sell your property anytime you want or need to. (you will still be financially ahead with all the monthly income you’ve gained, and the property value increase by the way.)
When Investing Is A Bad Idea

Like I said, this isn’t for everyone. If you have great anxiety about it, and this kind of thing would cause you great stress, it would not be wise to inflict that on yourself. If this is going to rob you of sleep and make you unable to eat, this is not for you.

If this does sound like something you’d like to explore, I’d love to help with that! Call me, and we’ll discuss if over coffee.

Do you already have a rental as part of your nest egg plan?

 

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