Did you think your life would be easy? Did you think you would attend college or join the military and buy a house before age 30?
Well, those days are over, maybe even forever. Homeownership is no longer a right but a privilege—only the privileged need apply.
How did we reach the point where only the rich can afford housing? An even better question is how can the middle class afford to enter the housing market.
Read These 10 Books Before Starting a Business
From multi-family to single-family. The first step along our journey was when investors moved from large commercial multi-family investments (apartments) to single-family residences.
Investors never considered single-family homes a great way to grow their income portfolios. Single-family homes belonged to builders and lenders.
However, once Airbnb became popular, investors saw an additional income stream from owning single-family homes.
An investor could switch from a family landlord to an Airbnb host at any given moment. Investors love flexibility; scaling an Airbnb business isn’t too complicated with the right management.
Can You Achieve Work-Life Balance 2?
At the same time, capitalization rates for apartments were decreasing. This means that the return on investment for apartments was dropping because of costs of materials, property management, tenant turnover, and zoning issues.
Remote work for everyone. In 2020, the dream of working remotely became a reality. With a high-speed internet connection, people could work from anywhere in the world.
Now, investors could build a suburb in the middle of nowhere and have instant bidding wars over the future homes.
Remote work gave investors a license to print money; they only needed to keep building suburbs and neighbors further from the city center.
Everyone wants a home. During the early 1990s, President Bill Clinton pushed for homeownership for everyone.
Retirement Planning at Any Age
Owning a home became a standard part of the American Dream. Investors used this dream to keep fresh demand for their new properties.
They aren’t selling you a home; they are selling a dream. Housing prices keep increasing as people put their emotions first and wallets second. Investors continue to build bigger houses with more amenities to increase the price tag.
The idea of the starter home is dead. Why start with a 1,100-square-foot home when you can have a 3,000-square-foot one?
Can You Achieve Work-Life Balance?
The price of housing has increased while wages have not kept pace. New homeowners are sacrificing their future to get into homes today.
The housing wars began. So here we are today—in the middle of the larger silent war in history—the investors versus Main Street citizens.
The average American has no way to beat investors at their own game. Investors have deep pockets, access to cheap funding, and can offer cash settlements.
How can the average person get ahead in this cutthroat housing environment? The answer is to think like an investor.
Three Things I Love About Being a Writer
Living ten years ahead. I love investing because you must see things through the lens of the future. Everything you do must have a positive future return on investment (ROI).
The average American must incorporate this same future-based mentality into their thought process. This means processing their emotions and logic together.
Let’s take an example of a lawyer who makes $360,000/year working in Los Angeles, California. He has a wife and two kids.
Thinking like an investor. Conventional American thinking would have the lawyer purchase a $2 million home in LA.
Retirement Planning in Your 70s
The lawyer makes $30,000/month and would pay $12,000/month for their home. These numbers are in line with what high-net-worth individuals pay in California.
However, investors understand that life isn’t about earned income but passive income. Passive income means how much money you generate when you don’t have a job.
The lawyer’s number one goal should be to start generating passive income, growing his base of assets, reducing debt, and purchasing a house.
Moving somewhere small. The key to thinking like an investor is assuming risk. The average American is scared to death of taking any risk—we call this risk averse.
Diversify Your Passive Income
What if the lawyer moved his wife and kids to the Alabama Coast (Orange Beach is lovely) while he remained to work in LA?
The lawyer could pay off a great home in Alabama within three years. Additionally, he can buy a few acres of land for future development.
The lawyer could then remote work and relocate with his family in Alabama or establish himself as a consultant in the Alabama community.
Once you have a paid-off home, the world is your oyster. The family would focus on passive income like rental properties or Airbnb.
How Much Do You Need for Retirement?
An investor wants to avoid purchasing a high-priced single-family home in LA because his ROI would be low.
However, that same investor would purchase 20 acres of land in Mississippi if the “path of development” was moving toward that patch of land.
If the lawyer purchases a home in LA, he is committing his resources to this property for 30 years. Since the house is so expensive, he can’t leverage his high income to make other investments.
Five Takeaways from “The Book on Managing Rental Properties”
Conclusion. The housing wars are coming for everyone. Investors know how to make sacrifices and accept risk; the average person does not.
To win the housing war, Americans must understand that they are the underdog. They must be willing to sacrifice in the short term for their long-term benefit.
I am writing from my nice house in Florida. The monthly payments exceeded our price range when we bought this house in 2020.
How to Prepare for Inflation
My wife and I decided to rent out the two master suites to pay for the house; we did that for three years.
In the meantime, we refinanced the house to 2% and enacted the Florida Homestead exemption. Now, we have no roommates because I learned how to trade options on the stock market.
We sacrificed upfront for our long-term benefit. Now, we are reaping the rewards of having roommates, living below our means, and educating ourselves in finance. Good Luck!
- PDF of the Month: Don’t Gamble with Retirement 11 (Free 410-Page PDF)
- Free PDF Downloads: Download FREE PDF LIST here
- Financial Mindset: Become CEO of Yourself 2 (Free 196-Page PDF)
- Retirement Planning: Your Retirement Planning Guide 2 (Free 255-Page PDF)
- Investing: How We Plan to Retire on Dividends 4 (Free 139-Page PDF)
- Cryptocurrencies: Counting on Crypto 2 (Free 159-Page PDF)
- Real Estate: Financial Independence through Real Estate 4 (Free 112-Page PDF)
- Business: Retire Rich, Retire Comfortable with a Business 4 (Free 149-Page PDF)
- Latest DGWR: Don’t Gamble with Retirement 11 (Free 410-Page PDF)
- Everything!: The Biggest Book on Passive Income Ever 3! (book)(Web Edition)(Art Edition)
- Writer’s Comparison: M1 Macbook Air vs. GalaxyBook3 Pro 360
- Read My Books for Free: Free Kindle Books Schedule
- Book Design: Design Tips on YouTube
- Kindle Unlimited: Why I Finally Subscribed Kindle Unlimited (learn more)
- Book Reviews: 505 Takeaways from 101 Books (pdf)
- Writing: The Publishing Chronicles (Part 1, Part 2, Part 3, Part 4, Part 5)
- Best REIT- Fundrise: Fundrise vs. US Treasuries (Join Fundrise)
- Follow us: On our Facebook Page and Join our Facebook Group
- Support the Channel on Cash App: $Kingmarine1981
- For more detailed analysis, join my Youtube: MFI YouTube Channel
PDF of the Month: Don’t Gamble with Retirement 11 (Free 410-Page PDF)
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
Leave a Reply