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Save, Invest, Repeat

Save, Invest, Repeat

One Million Dollars! With the size of lottery prizes in today`s world, jackpots in the $50 million range, one million doesn`t sound like much anymore. But, do you think you could live the life of your dreams with One Million Dollars? Most people could or at the very least it would be a great start to bigger things.

Did you know that about half the population`s plan for retirement or living their dreams is to win the lottery? So with 14 million to 1 odds of winning, and 20 million people thinking they’re going to win, I do not like those numbers very much. So what’s your plan? Do you have one?

Two things. Pretty much all wealthy people will tell you to pay yourself first. This simply means when you get that paycheck, put some money in savings first. The second thing that pretty much all wealthy people do is to buy real estate which primarily secures their wealth with a tangible, appreciating asset. We’re not talking about a home to live in; we’re talking about a rental property that your tenant will pay off for the owner over time. And, somewhere in time, during this ownership of rental property the ability to borrow money from the equity built up provides the opportunity to purchase more real estate.

Here’s some basic arithmetic.

Buy a condominium for $200,000.00. Make a $50,000.00 down payment. The bank will finance the rest with a mortgage for $150,000.00. Let’s give that mortgage a 3 year term with 25 years amortization and a rate of 3%, resulting in a payment of about $708.00 per month.

Rent the condo out for $1400.00 per month and after expenses (Condo fees, Property taxes, Repairs and Maintenance, Mortgage payment, etc) you should net about $160.00 per month.

At the same time, get the savings plan in gear and stash 20% of your income in an interest bearing account. Depending
on your level of income this could be anywhere from $500 to $1000 or more per month.

Let’s see where we are, when it’s time to renew that mortgage at the end of the 3 year term:

  • We received $160 per month for 36 Months = $5,760.00
  • We reduced the mortgage owing by = $12,680.00
  • Our property appreciated in value by 2% per year = $12,240 more equity
  • We saved $500 per month for 36 Months = $ 18,000.00

That’s a total of $48,680.00! We are only $1,320.00 away from having the next down payment for the next property.  Chances are pretty good that we could raise that $1320 pretty quickly and we haven’t accounted for any interest on the savings we stashed.

That took three years and we have control of one property that is appreciating in value and being paid off by a tenant, and we’re ready to buy our second property and do the same thing again in another three years. Using simplified arithmetic, in 15 years or less, we’ll have appreciating assets valued at over One Million Dollars, 5 properties generating a monthly cash flow of at least $750 per month, and equity in excess of half a million dollars.

It’s an old formula and if you seek out the answers you’ll find that the wealthy have been doing this for years. People today are doing this all the time, wealthy people. And we at Legacy Wealth can show you how to get on board with numbers just like the ones above. This is real, and this is not a lottery, just SAVE, (pay yourself first), INVEST, (Real Estate secures your money), REPEAT.

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