My background in investments in the past has mainly been my 401K and my personal stock portfolio. Thirty-five years of my life was spent in the high-tech industry, so that became the majority of my stock portfolio. I have seen my high-tech stocks double, triple, and then crash! It wasn’t until I sold my home in Sonoma County and moved to Southern Oregon that I realized I accidentally made more off the equity in my home that I have ever made in all my stocks. This became my first investing epiphany.
That epiphany and “accidental” windfall started my obsession for real estate investing. I then invested in some raw rural land that I developed and resold, more than doubling my investment. Life seemed great until 2005 when I went through an unexpected and financially devastating divorce that wiped out a lifetime of earning and savings.
Life goes on, and as the real estate market started to decline in 2007, the worst recession I have experienced, my real estate partner and I began renovating and reselling (flipping) homes. Renovating and flipping homes can be fun and profitable, but it’s a full-time job managing contractors. In 2007, homes were declining in price, so speed was critical to how much profit you would make, and we realized we didn’t have time to manage flips and work full-time.
In 2008, we realized we had little retirement, so we then changed our focus to creating a stream of passive income that would be never ending and that we could retire on. With my incredible partner, we started buying rental homes seven years ago, and we became very disciplined about not spending, but investing, our money. It’s easy to buy that cool BMW X5 or take that Royal Caribbean Cruise, but being in my early 50’s, building a comfortable retirement income was far more important than material gratification.
Now, seven years later we have built a comfortable passive income stream that we can now retire on, which lead to my second investment epiphany. You can create a lifelong income stream that is enough to retire on in seven years! Yes, for all of you over 40 who have lost money in investments, went through a financially devastating divorce, had to start over in your career, had an expensive medical event, or have enjoyed material gratification and not saved your money, it may not be too late to build a great retirement income. Yes, you do have to work hard, you do have to save your earnings, you do have to minimize the gratification that comes from material belongs, but you can create an unending income stream with seven years of investing!
This story could end here, and I’m so glad to tell anyone who will listen that it doesn’t take that long of heavy investing before you have a never ending income stream. If we can do it, any hard working couple can do it! But, this story doesn’t end here; it’s not over yet, as there was my third investment epiphany and it’s called appreciation. While our focus was on the yearly passive income that each of our investment homes would bring us, a funny thing was happening: each of our homes was going up in value and we were building a lot of equity! Every year the value of each home has risen and our equity in each home has grown past the 30% we have invested. The median price of a home in Jackson County has gone up over 58% in the last five years, but our investment properties are in Jacksonville where the median value of a home has gone up almost 70% in the last five years. So now we have so much equity, we can borrow against that equity in the form of a HELOC (home equity line of credit) or a refinance and buy more investment homes. Originally we put down 30% to purchase our rental homes and the banks loaned us 70%. Now we are refinancing and are pulling out more than our original 30% investment, which means we have none of our own money invested, which is an infinite return.
My last investment epiphany is if we keep investing our equity we can have more yearly income in our retirement than we did while we were working! That’s an incredible thought from someone who has always worked a 60+ hour week.
We don’t believe real estate is the only way to make money investing, it’s just the path we chose that worked for us. We have two friends that are vigilant at studying Warren Buffet and invest wisely in stocks, we have no doubt they will do well and have a great retirement. We don’t mean to make this sound easier that it is, we have learned in life “the harder we work, the luckier we get!”
We’ll leave you with the most important investment tip we have learned, and that is that it’s never too late to invest for your retirement, and if you continue to invest you may have a retirement income that exceeds your expectations!
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Jacksonville, OR 97530
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