516: The Senior Real Estate Investor Advantage

SHOW NOTES FOR EPISODE 516: THE SENIOR REAL ESTATE INVESTOR ADVANTAGE

Although some real estate investors are hesitant to start investing later in life, there are some very good reasons why they SHOULD invest now! In this episode, Bill shares first hand experience and 8 key reasons why investing later in life is better. 

Tip of the Week: Know How to Leverage

Leverage uses borrowed capital or debt to increase the potential return of an investment. In real estate, the most common way to leverage your investment is with your own money or through a mortgage. Leverage works to your advantage when real estate values rise, but it can also lead to losses if values decline.

Knowing how to use leverage in real estate investments, and knowing how it can work for you or against you, is necessary when determining how to get the highest rate of return from the money you’re investing.

Leverage allows a real estate investor to either purchase a property that costs more than the amount of money they have available or to spread out their cash across multiple properties.

Example:

• You own a house worth $500,000
• You borrow against or LEVERAGE the equity in your personal home to pull out $100,000
• You take the $100,000 and, instead of buying one home for cash for $100,000 to get $1,000 a month in gross rental income, you buy 5 – $100,000 homes by putting 10% down, at $10,000 per home, to generate $5,000 a month in gross rental income from 5 houses at $1,000 each. That’s leverage!

Personally, the older I get, the less likely I am to use leverage but it can be a good way to accelerate early on, just so long as you switch gears eventually, to start to pay off your properties.

The Senior Real Estate Investor Advantage

I talk to a lot of people

Talented, intelligent, successful, beginners and established pros

Well-known, unknown

All ethnicities, beliefs, nationalities, etc.

Some of the most successful real estate investors in the country that I have interviewed almost unanimously agree that older persons (50 years and older) have a true advantage in starting their real estate investing career later in life.

For Those 50 Plusers Out There…

Now, I’m specifically talking to you out there (who I endearingly call) Old Dawgs – those who are 50 years of age and older, who are approaching retirement or already there – and I’m in that group as well.

We’re sometimes called Seniors, 50 plusers, Baby Boomers (only if you were born 1946-1964), part of the Silver Tsunami, the aged, older persons, gray-hairs, blue-hairs, Senior Citizens, the elderly, old people, pre-retirees, retirees, retired people… and the list goes on and on

We come from a generation who also doesn’t like being labeled – thrown into categories. To be classified, pigeon-holed!

We’re individuals with different histories, characteristics, traits, abilities, talents, giftings.  Were a broad, diverse group that includes persons who fought in World Wars and Viet Nam, who’ve sat in “Malt Shops” and ordered  a Banana Split for 40 cents, grew-up watching I Love Lucy, Bonanza, Get Smart on black & white TV, or Saturday Morning Cartoons.  We went to Woodstook, listened to the Beatles, Beach Boys and Motown.  I saw the Doors, Jefferson Airplane and Nitty Gritty Dirt Band at my future High School football stadium at 13 years of age.  We grew-up in a society where it was OK for kids to just get-up Saturday morning, get on your bike or skateboard and come back just in time for dinner.

That’s where I just came up with my own classification, instead of the Boomer REI Network or Older Folks REI Network.  I chose the Old Dawg’s REI Network, with the apostrophe in such a way where I’m the Old Dawg and all you listening can be whatever you want!  Haha   It was a name that I said, “OK, if I’m going to be classified or labeled, I want to be put as an old, tough, stubborn, persistent creature that is, at the same time, well-loved and endeared – like man’s best friend!  I know, that, at first, the “label” can be taken pejoratively.  But, knowing that you don’t like being pigeon-holed or labeled in any way.

We’re and eclectic, diverse and very different generation!

We’re husbands and wives, parents, grandparents, great grandparents, doctors, lawyers, plumbers, accountants, salespersons, engineers, and more

We grew up on a farm, in the city, got a high school education, attended universities, learned a skill

We’re from many different countries, some have even lived under oppressive regimes at one time, some came from poverty, others were better off

We worked most of our lives.  Saved money.  Lost money. Made good decisions.  Made some bad ones, too.

One thing, however, that we have in common is – We’ve all lived a life and we’ve lived it a longer period than others.  We have lots of experiences in life, with people, with family, with jobs and work, finances and the BIG BEAUTIFUL WORLD out there!

But does that necessarily give us an advantage over Gen Xers, millennials (AKA Gen Yers), and Gen Zers?  Maybe.  Decide for yourself.

Advantages Over Younger Investors

I’m not saying that age, alone, dictates whether you will be a good or less-good as a real estate investor.  But there are definitely factors, that come with , that can prove advantageous!

• Maturity

  • There’s something to be said for having a more mature outlook – “Been there, Done That”, especially when it comes to investments
  • You’re less likely to make rash decisions, especially when it comes to your hard-earned money

• Capital Wealth Accumulation

  • Statistics show that older people have had the time to build and grow their investment holdings, savings and assets
  • Whether your wealth is in stocks & bonds, mutual funds or retirement accounts, older persons are already more likely to have accumulated significant cash to invest
  • Many older people have homes they have been paying off or already have paid-off, which have become an asset that can be tapped into (whether by selling, HELOCS or equity loans) and converted into cash that can be invested
  • Younger people haven’t had the time to build up assets like older people can

• Graduates from the School of Hard Knocks

  • A lifetime of “learning from your mistakes” can bring about a certain type of sound wisdom that is key to making wise real estate investment decisions
  • Over time, you are less likely to repeat the same mistakes
  • Whereas, younger investors are more likely to take bigger risks

• Lots of “Life and People Experience”

  • Life experiences with families, at school/university, at the work place, dealing with government entities and the like are the type of experiences that will help you in everyday dealings with people, whether they be sellers or county regulators
  • The more you work with people, the more you understand the dynamics of “playing well with others”
  • Helps especially in your negotiating abilities

• Job Experience

  • My first job was as at age 12. I was a paperboy, flinging papers while driving my Stingray bicycle and chasing after my customers saying “I want by $2 dollars!”  I can’t count the number of jobs I’ve had since then!  But there were many!
  • Having held a job or jobs for a considerable amount of time, helps also in dealing with people. You worked for supervisors, managers, VPs and others who were focused on the bottomline!
  • Understanding the bottomline is key for successful profit generation
  • Also, having a job teaches about working as a team – also a critical skill for real estate investors – Teams are critical to your ongoing success to build and grow a portfolio

• Financial Experience

  • Older people have worked with money more than younger people (Do any of you remember getting those empty coin rolls and rolling up pennies from your penny jar?) – Do they even make pennies anymore?
  • You’ve learned both the benefits and curses of debt
  • You know the value of a dollar and how to stretch it for maximum benefit
  • You’ve learned the value of saving and building-up reserves

• Investing Experience

  • Whether it’s from your first compounded savings account up through stocks, bonds, annuities, index funds or growing a retirement account, many older persons have seen what works and what doesn’t, what’s a high risk and what are more secure

• We know a fair amount about success and failure

  • As investors and in life, we’ve “been there and done that!”
  • You can develop pretty thick skin after enough bad decisions and thick skin makes for considerably less mistakes

In Conclusion

As you can see, there are definite advantages to becoming a real estate investor  later in life.  And, yes, maybe there are some disadvantages as well:

• Being too cautious to the point of never starting
• Being so risk-aversive that you might miss some great returns and opportunities.

But that “rather safe than sorry” stance, can also help make you a good, prudent investor at the same time

But, overall, just in case you were wondering, you’ve definitely got ALL THE RIGHT STUFF to get started — and to succeed in real estate investing beyond what you might imagine! What are you waiting for??

Well that’s it for today!

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