Real estate investing can become a significant income stream for you and your family. Every month, you’ll get a nice stack of cash flow to help with expenses and other luxuries.
However, real estate investing isn’t always passive. Trust me; I own three homes, and they all go through periods where they need some TLC (tender love & care).
Because of this time requirement, you may want to deleverage the majority of your real estate assets during your 50s. I’ll explore that idea today and perhaps discuss the opposite (doubling down) later.
Inflation Ate My Paycheck
Welcome back to the Real Estate Investing at Any Age series (20s, 30s, 40s), where I discuss all things real estate as we advance through life.
What is deleveraging? Leverage is the act of borrowing money to increase gains. We can use bank loans, hard money loans, private money loans, and home equity in real estate.
Leverage is great until it turns against you. Usually, when times are good (i.e., the bull market of 2002-2008), many people use leverage to buy multiple rental properties and condos.
Then, suddenly, we go into a bear market (or recession), and the money dries up. Rents decrease, home prices go down, and we are stuck with multiple empty homes. It is not fun.
As we age, we don’t want to end up on the wrong side of leverage, so we may consider deleveraging—this means selling properties and taking profits.
Income Portfolio vs. USDC
Other ways to deleverage. However, there are more ways to deleverage other than selling properties. You can get the same effect by paying off your properties. The bonus is you get to keep your income streams.
Dave Ramsey (“Baby Step Millionaires”) loves to talk about the debt snowball as a way to pay down debt. The debt snowball also works with paying off homes.
You can pay off the home with the lowest remaining mortgage balance first. Then, using your newfound income, you can keep paying off your homes until you own them all free and clear.
This paydown plan may take 10-15 years to achieve, but you have guaranteed a great future for yourself and your family. It would take an unworldly event to destroy your portfolio at this point.
My real estate plan in my 50s. I am currently 41 years old and own three homes. My first goal is to reach $1 million in my dividend portfolio. Next, I plan to pay off my smallest and least expensive home.
Retire Rich, Retire Comfortable with a Business 3
From there, I may decide to pay off the other homes, but we shall see at that point. I want to pay off my small home before I retire from work entirely.
Here is how it all comes together. Hopefully, around age 50, I will be fully retired from the military. I should have at least $60,000/year coming in from dividends. My book business should be bringing in $3,000-$5,000/month.
Finally, my small home with no mortgage should be bringing in at least $3,000/mo in cash flow. Do you see the magic of passive income all working together? Remember, we are only 50-60 years old. We still have many more years to add to our portfolio.
What do we do after deleveraging? If you decide to sell some of your portfolios and take profits—what’s next? There are many ways to stay involved with real estate without owning properties.
RV Life vs. Homesteading
One of the best ways is to own land on your primary residence. Onwing 5-20 acres of land can give you the space to build income streams where you live.
The article “Self-Storage vs. Mobile Home vs. RV Park 2” talks about the various combinations of structures you can put on a large lot. These income streams can keep the cash flow coming into your pockets without the risk of owning external properties.
You can also buy Real Estate Investment Trusts (REITs) on the stock market. There are ways to invest in REITs outside of the stock market, which make your investments less volatile but more illiquid (can’t quickly get your money out).
How about buying real estate in the metaverse. This can be a great option, but I wouldn’t make it my sole strategy. The metaverse will become very real, very soon, so you should start studying it today.
House Rich, Cash Poor
Family ties. Your 50s is the perfect time to start integrating your children into your plans. You will want to begin winding down your life—transferring some responsibilities to your children.
“Make Your Family Rich” discusses having family meetings to keep everyone up to speed on family operations. If you are in the military or the corporate world, you understand the concept of these meetings.
However, these will actually achieve something productive. Your children need to know things like monthly expenses, annual costs, tenants, maintenance specialists, taxes, etc. Hopefully, we can start turning over some of these properties to our children as well.
The Biggest Book on Passive Income 2
The book “Get Your Ducks in a Row” talks about estate planning early. What better way to plan your estate than to start talking about it with your kids in your 50s?
Taxes will be a massive part of our estate planning conversations. Should we put these properties in irrevocable trusts? How will we divide the properties? These are all great questions.
Our 50s see us being more intentional about everything we do with our real estate. There has to be a purpose and plan for every move we make. We don’t just want to buy a home because it is a great deal. What purpose will it serve?
Conclusion. We should enjoy our 50s. We probably put in 30 years of hard work to get here, and now is the time to lay in the sun. However, we can handle our business early in the morning, before the sun rises.
Rich & Free: Build an Investment Portfolio in 8 Steps
We can double down, deleverage, transfer, or keep the same real estate posture. We need to base these decisions on the entire family and how we will all move forward in the future.
We are walking a tight balance between our financial security and our children’s. We could sell everything and walk away free and clear, but where would that leave our children?
We want to remain invested and prevent hardships towards the end of our lives. That’s why our 50s are vital to bringing our children on board and helping them take ownership and responsibility of our assets.
I know we will have the energy to grow our real estate business throughout our 50s continually, but is that something you want genuinely? Ask yourself those deep questions, and remember to enjoy your 50s; you’ve earned it.
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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
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