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SHOW NOTES FOR EPISODE 308: WHY IT’S BETTER TO INVEST IN REAL ESTATE AFTER 50
Some seniors invest in real estate to simply generate cash flow for retirement? But what most people don’t realize is that people 50 and older are actually better prepared for real estate investing success than younger investors. In today’s podcast, Bill shares 15 compelling reasons why 50 plusers not only have the right stuff to succeed in real estate but they also have a significant advantage over their younger counterparts.
Announcements
- Tip for today: Set Your Rents at the Rate You Want!
- Don’t get hung-up on Rentometer, area comps, or your property manager when setting your rents
- I’ve had property managers look only for the easy way
- Cheap rents attracts more prospects
- So they don’t have to work as hard to find the real good tenants
- Remember, people will pay what they think the property is worth – they are not going to necessarily look at what other rents are in the area
- Make you rental something that can re-set the bar for local rents
- Take time to truly understand who your ideal tenant us and what they want
- Ask yourself, “Would I live here? If not, why not? And what would I need to change?
- Can you provide what they need?
- Is it worth the cost?
- You may find some requirements may not cost anything
- Higher rents suggest higher value
- We have been doing this in Indiana
- That’s why I do Stealth Tenant Marketing
- Create the perfect place (within reason) that your target tenant would want
- It may mean getting cable service, A/C, security, allowing pets
- Remember: It’s your property and you decide what it rents for
Introduction to “Why it’s Better to Invest in Real Estate after 50”
- I know the title may seem to exclude those “young pups” out there who are in their 20s thru 40s, but I think you may also glean something from today’s podcast
- You can draw from the advantages the 50 plusers have and use that info and knowledge to get a jump on others your age
- You’ll get a better idea of what is needed to succeed and adjust your strategy and gird yourself approach
- For you 50 plusers
- Don’t look at real estate investing as a “last ditch effort” or an “act of desperation”
- Look at it like what it really is – the best time to start REI
- Think of all the entrepreneurs in their 20s and 30s trying to retire in the next 5-10 years – they will have a harder time than you!
- One of my recent guests in his 30s said “I’m trying to build a $1 billion real estate portfolio in 5 years. How is that different for you?”
15 Reasons for Investing After 50
1. Financially Experienced
By the age of 50, you will have had much more experience in most financial matters. You would have decades of experience…
- Paying bills
- Paying property taxes and homeowner’s insurance
- Managing household and maybe even business budgets
- Managing health care expenses
- Borrowing money with banks, mortgage companies, etc.
- Managing personal financial assets
2. More “Life Experience”
Just the shear reason that you have lived longer, you have obtained experience and maturity in a number of areas that help you make better decisions.
- More “street smarts”
- Dealing with people
- Dealing with businesses (the phone company, buying and selling, negotiating prices)
- Dealing with government bodies
- Plus, you would have made plenty of poor decisions as well as good decisions and learned from those experiences
3. Previous Real Estate Experience
According to the National Association of Realtors, more than 80% of those over 50 years of age have purchased at least one home. That means that most people have experience shopping for, financing, managing and selling homes.
- Many have purchased a house or two, condo, town home, vacation homes, manufactured homes, etc.
- Real estate is not a new or unusual thing for most 50 plusers
- Most are familiar with applying for mortgage loans and making mortgage payments
- Most know what it’s like to deal with common home issues (plumbing, cutting lawns, electrical, broken water heaters/garbage disposals/heaters/ACs, landscaping, maintenance)
4. Kids are Grown & Gone (well… in a perfect world)
On this one, it varies from family to family but, for most 50 plusers, the kids are grown and out of the house. Of course, we all know that there are exceptions to every rule and for millennials, there are many exceptions. Haha
- No longer primary supporter of children (haha)
- No longer need a big house
- Freedom to do what you want with your house
5. Passed Wage-Earning Years
At 50, many are making the most they have ever made but they are also aware that those days are numbered. As younger and more eager people enter the workforce, the more mature employees are winding down and looking more toward their retirement plans.
- More people are retiring earlier
- Many look forward to getting out of the rat race
- Office politics seem foolish
- Life is winding down
- More focused on the future
6. Accumulated Assets
Statistically, you have more assets if you’re over 50. If you are a saver, planner and or investor, you are more likely to have even higher assets and are at your highest net worth in your 50s.
- Generally have built up assets (Savings, IRAs, 401Ks, etc.)
- Equity in homes
- Money to invest
7. Established, Long-Term Relationships
You’ve grown up with people, had lifelong friends, college friends, people you’ve met through work and through your spouse, relatives and other friends. Your friends and family network has grown over your lifetime and, at 50, it’s more extensive than most people realize (and I’m not including fake Facebook friends)
- Over a lifetime you’ve met many people
- Some you’ve lost contact with, others you’ve stayed connected with
- Without really trying, you have informally built up a networks of friends, business associates and relatives that have spanned many years and who may potentially become partners, investors, etc. when you become a real estate investor
8. Broad Investing Experience
Besides buying a home, many investors have multi-faceted experience with other investments.
- Various asset classes (stocks, bonds, annuities, index and money market funds)
- Have managed multiple investments within your portfolio, money market funds, 401Ks, IRAs, etc.
- Can compare (from experience) what was a good investment and what wasn’t and why
- Have seen bad times and good times
- Have made bad investments and good ones
- Knows what works and what doesn’t
9. Shorter Time Left to Invest and or Hold Real Estate
The clock is ticking and you’re more than 50% through your life.
- Some could see this as a negative, but…
- …when your time is more precious, you…
- Don’t want to waste it on foolish things
- Don’t want to get tied up in long-term commitments
- Don’t have time to gain experience (life’s learning curves) – been there-done that
- Are more likely to seek a mentor or seek out assistance than figure it out yourself
- Are more likely to make more sound, conservative decisions
10. Less likely to take risks
Most of us have experienced high risk investments, be it in Las Vegas, with the horses or on Wall Street. But once the thrill is gone, we were not amused that our hard-earned dollars had disappeared. We’ve known the thrill and are over it.
- When you’re young, it’s easier – you usually have less to lose and risks are more likely
- But when you’re older, you’ve worked hard for what you have and you tend to be less hasty on decisions related to your precious assets
- You’re also more likely to take the time required to carefully research a potential investment before taking “the leap”
11. Less Expenses
Generally, more things are paid for, kids have finished or are finishing college and you have more disposable funds
- Student loans long since paid off
- Homes paid off
- Cars paid off
- More money to go into savings
12. Fewer Commitments
You have less commitments and more opportunity to learn and invest.
- Work-related commitments
- Office events
- No kid’s school commitments
- No soccer, sports games
- (Except maybe with grandkids)
13. Easier to Downsize or Minimalize
In your fifties, you’re more likely to become an “empty nester” and that means those big houses no longer make sense.
- Can more likely move out of big houses that eat up time and resources
- You can even “house hack” if you want
- You can move to other states or even other countries
- You don’t need as much “stuff”
14. More Time and Freedom
When you finally do take the retirement plunge, you’ve got more time and freedom than you realized
- Once you retire, you have nothing but time
- Your can continue to work full or part-time
- You can choose to not work at all and just play
- You can work as little or as much as you want
- You can learn something new
- Read
- Learn something new on YouTube
- Attend webinars
- Seminars
- Bootcamps
- Conferences
- Go back to school
- You have more time to research markets and properties
- Manage investments, properties, contractors, property managers
- You can network
- Meet people for coffee, lunch, dinner
- Play golf with friends, partners, and others
- Attend REI meetings, meet-ups
- Meet bankers
- Meet other investors
15. You can Design a Real Estate Business the Way You Want it
And the best part of everything, you can “re-engineer your life” to be whatever you want. No employers calling the shots. You’re the big boss now! You can now design a business that runs itself if you want!
- You set the rules!
- You’re not working for anyone but yourself
- You have the time to set it up right
- You can work as much or as little as you want – You can LIVE the “4-hour Work Week”
- You can spend almost no time making it work
- And what will you do with all the extra time?
- Travel
- Spend time with family
- Play sports
- Enjoy your “golden years”
In Conclusion
What’s the point of all this? If you’re over 50, there’s no better time than right now to start investing in real estate! You have everything you need! It’s just a matter of doing it!
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