Question: When can I retire?
Answer: When you have enough cash flow from investments and retirement benefits to cover your living expenses without running out of principal before you die.
The key is CASH FLOW, not cash in the bank. Your ability to retire, and do so comfortably depends on how much cash flow you can rely on each month to maintain your lifestyle.
HOW ARE YOU GOING TO GET THERE?
Gold & Silver? You have to pay storage charges and it does not pay you a dime - you have negative cash flow. The value fluctuates with currency markets gold has been volatile and has also had long periods of time without significant movement.
Stocks? What will the value be tomorrow? Will stocks be up down or off the cliff? What is going to happen with the European debt crises?
Treasuries? The yield on most is lower than inflation. If your yield is lower than inflation you are losing purchasing power every day that you hold these securities. Worse still, to beat inflation today, you must buy very long dated bonds. A thirty year bond yields just over 3%. Do you think inflation will stay below 3% over the next 30 years?
Can you name any other investment that you can touch, insure, and generate cash flow from? How about an investment that someone else buys for you? How about one where you don’t pay taxes on when you sell it, at a gain, or that you can pull funds out, tax free? Of course the answer we would suggest is obvious. After all, you are on a real estate site.
Are we at the bottom? I don’t know, and if I did I’d be a trillionaire psychic. I do know that we are not at the top, and that financing for qualified investors may never been cheaper.
Where are values going in the future? I would suggest that they are likely to be higher in the medium to long run than they are today.
Why? The simple answer is inflation as prices rise, so do the cost to build a house. Carpet uses petroleum, as do shingles and house wrap. You also need 2x4s, labor, transportation, steel, and concrete to build a house. It is likely to cost more to build a house in 10 years from today than it does today. Also, If you can buy a foreclosure and rehab a foreclosure today for less than it would cost to build that house today, then you have bought it for less than its replacement value. I would suggest there are many homes that you can buy today for less than the replacement value, and I would argue that before we see significant new home construction, existing home values must rise to a point where they are close to the square footage cost of comparable new construction.
Demographics are a real estate investors best friends. Texas is growing, in both in population and economic output. Eventually, this growth leads to more demand for housing, which will likely cause prices to rise to the point that new construction is required.
Why TexasRenters.com? If you are buying investment property, the key is knowing what the rents are likely to be. We are in the Texas rental market every day. We know what the market is doing, what areas are hot, and what renters are looking for. We are THE rental property specialist. If you are going to invest in rental property….see THE specialist.
Real estate investing is my passion, give me a call and I am happy to share my thoughts with you.