Tom Ashworth

When you are ready for The Life of Riley?

The Life of Riley

A popular television show in the 1950’s was “The Life of Riley” starring William Bendix.  The origin of the title “The Life of Riley” came from an expression that meant you are “Living the Good Life”.  If you are like most people, you think you will be living the “Good Life” when you retire.  Also if you are like most people, you don’t have a plan how to get there.

I personally think the good life is living right here in the Texas Hill Country and using the Highland Lakes as my recreation of choice.  So in the article, I am going to cover the basics of retiring using rentals in simple terms.

The rule of thumb used to decide how much your NET worth would need to be for retirement is to have an target annual income and divide that by the yield (interest received) to determine how much you need to have invested.

Here is an example.  You want $100,000 income from a 5% interest bearing investment means you would needed to invest $2 Million.  That means if you have $5ook now, you need to have $1.5 million more by the time you retire.  If your retirement is 15 years away, heck, that means you would need to save $100,000 a year, every year until you retire.

This example could be depressing if you don’t have a plan.  Sure you could give up and say that “I should have started this sooner.”  That may be true, but there is still hope.

If you gradually over the next several years started to accumulate rental property and allow the tenants to pay your mortgages, the equity from the properties will grow as the loans are paid for by the tenants.   Also it grows due to inflation, so the value is dollar cost averaged.  This means as the dollar becomes worth less, your real property becomes worth more.

Single family residential homes are the best rentals and offer an investor the opportunity to meet retirement goals for the following reasons:

  • Banks will give you access to borrow large loan-to-value mortgages
  • You will get fixed interest rates
  • Long term loans available up to 30 years
  • Banks know your assets will appreciate
  • Running this rental business give you huge tax advantages
  • And you have better control than investing in stocks

If you want to discuss this you can call me at (208)830-7991 and I can help you find a great rental property in the Texas Hill Country.

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