Do you want to retire? Sooner rather than later?
When you retire do you want to maintain your lifestyle or improve it, as your cost of living decreases?
I figured out a simple way to live better while doing less! I’ve been doing so for almost 10years now and I decided to share my very simple method with some friends.
8 to 10 years ago, I began looking for a safe place to “park” my money – to let it accumulate relatively safely while I prepared for the future.The choices - <1% money market investments and anything interest rate sensitive with the inevitable spike in rates, not if but when - were (are) not attractive.
Then I realized- OMG – I’m not only sitting in front of it, but I’m sitting in the middle of it – MALIBU REAL ESTATE! The math (and tax consequences) are relatively simple: The median price of a home in Malibu is $4,000,000, which you can buy with $1,000,000 down (conservatively).You can borrow $3,000,000 at 3.375% (as of November 14, 2017) interest for 30 years, with taxes at 1.25% and insurance, the monthly cost is less than $20,000 per month.(If you borrow “interest only, your cost drops to less than $14,000 per month.)
(FYI – Under the House tax bill, real estate investors are exempt from the limits on the deductibility of mortgage interest.Taking advantage of this exemption may impact the ability to claim capital gain treatment upon sale, as noted below.)
You can rent the house for $20,000 (or more) and at least break even.(With an interest only loan, you can put $5,000+ in the bank each month.)
If you assume 5% appreciation on your investment (the average appreciation rate over the last 10 years on real estate in Malibu has been 9.5%),you more than double your equity in 5 years.
Tax free until you sell it and then, if you structure it correctly, capital gains.
Unfortunately for me – but maybe good for you – I see more opportunities than I can pursue.
Call me if you’re interested. Brenda Hayward, my partner, and I can find you a property and set you up with a lender.