Done For You Real Estate

*This post originally appeared on www.michaelmorrow.org.

Investing in real estate is one of the best decisions you can make with your money. However, there are many hurdles that you will need to jump over in order to get started. One of the biggest hurdles that investors face with real estate is securing enough cash to purchase a rental property. Homeowners know how difficult it can be to accumulate a twenty percent down payment for a home. Saving money for a rental down payment is just the same. While real estate has significantly less risk than other forms of investment, there is still the risk that you can’t find someone to rent your property. Then you would be responsible for paying monthly payments on two properties at the same time. Partnering with others to purchase property is one of the best strategies that first-time real estate investors use.

Done For You Real Estate

Done For You Real Estate (DFYRE) is one organization that removes many of the headaches associated with real estate investment. For example, managing the property itself can be one of the most time-consuming aspects of real estate investment. It’s especially a burden if you have multiple properties and work a full-time job at the same time. DFYRE takes care of this issue as well as many other issues related to real estate investment.

The organization finds the best markets and the best houses for you. Then it does the necessary repairs to get them prepared for renters. Once the houses are ready it does all of the legwork associated with finding renters. Finally, it manages the properties so you don’t have to worry about ongoing repairs or any other related issues. All you have to do as an investor is provide the capital, and DFYRE provides all of the services. Since the organization began in 2007, it has helped investors receive a 20+% return year on year. In particularly hot markets you can expect a conservative income of $3900 per house for each year that you invest in the program. The potential equity growth of 3 – 10% is just a bonus.

Learn More

If the DFYRE system sounds attractive to you, then you should watch this video to learn even more. You can also visit the DFYRE website to download a free kit that has even more information. One of the founders of the organization is named Kris Krohn. He began investing in real estate when he was 23 years old. By the time he turned 26 was able to earn a passive income of six figures. He is very knowledgeable about real estate, and his system helps investors get involved in real estate in a turnkey manner.

Learn More About Sequence of Return Risk

*This post originally appeared on Michael Morrow Financial Planner.

One of the biggest concerns that retirees have is whether their nest egg will be large enough to support them during retirement. The worst case scenario that every retiree fears is experiencing a market downturn just as he or she is ready to enter retirement. Since retirees need to draw from their retirement portfolio in order to live, they must be aware of and prepared to deal with sequence-of-returns risk.

In my article Jack Bogle Warns: Prepare for Two Massive Market Declines in The Next Decade, I wrote: “In simple terms, sequence of return risk means that in retirement, it can be more critical when you get returns than what returns you get.” Investopedia defines sequence-of-returns risk as “the risk of receiving lower or negative returns early in a period when withdrawals are made from an individual’s underlying investments. The order or the sequence of investment returns is a primary concern for retirees who are living off the income and capital of their investments” (Investopedia – Source).

While investors don’t have to worry about sequence-of-returns risk before retirement, it becomes a big issue during retirement. If you plan to retire soon and you want to limit sequence-of-returns risk, keep reading for some tips and strategies.

Limit Risk

When you make risky investments there’s always the chance of losing your money. For example, if your portfolio only includes stocks you’re at the mercy of the market. If your stocks take a beating and you continue to withdraw money from your portfolio, you make it difficult for your portfolio to recover. At Aspen Creek Wealth Strategies we recommend a “risk bucket” strategy based on the rule of 100. If you are 65 years old then 65% of your portfolio should go into a safer bucket of assets. You can put the remaining 35% into a riskier bucket. Investors can increase their chances of a successful retirement by making wise investments and avoiding unnecessary risk.

Lower Percentage of Stocks

Another strategy to consider: during the first years of your retirement your portfolio shouldn’t include a high percentage of stocks. Over time, though, you can increase the percentage depending on the risk you feel comfortable taking. The first years of retirement are the most important. If you withdraw too much money or lose too much money as a result of risky investments, you’ll make the rest of your retirement difficult.

Don’t Overspend

One of the easiest ways to protect your retirement funds is to only withdraw the amount that you actually need. Ask yourself before making a big purchase, “Is it really necessary?” Every retiree wants to enjoy their retirement, but you don’t need to carelessly spend your money to enjoy yourself. If you withdraw your money wisely you’ll help ensure it lasts you and you don’t outlast it.

The Dangers of Buy and Hold

*This post originally appeared on Michael Morrow Financial Planner.

In general “Buy and Hold” is an investment strategy where stocks are purchased and then held on to regardless of how the market performs. While the Buy and Hold strategy has many supporters who believe it is the best investment strategy, the reality is that the strategy has many drawbacks. The strategy is especially dangerous as a retirement strategy. Some investors who are averse to risk think that Buy and Hold will limit the risk they face. Unfortunately, this isn’t always the case. Keep reading to learn more about the disadvantages of Buy and Hold for retirees.

Market Downturns

The biggest disadvantage of Buy and Hold is dealing with market downturns. If the market crashes or there is a recession, you stand to lose a lot of money. For retirees, this is especially dangerous because they don’t necessarily have the time to “hold” as the downturn corrects itself. Imagine if the market experiences a downturn a year before you plan to retire. If all of your gains are erased, how will you make retirement work? Jack Bogle can preach Buy and Hold because he has enough money to tolerate heavy losses. However, normal investors may not have the safety net that Bogle has, so Buy and Hold isn’t the best strategy for them.

Length of Time

In order for Buy and Hold to work, an investor needs time. Yet if an investor chooses the wrong stocks and holds on to them year after year, he or she may not see any significant gains. Many Buy and Hold supporters recommend investing in index funds to avoid selecting the “wrong” stocks. However, even index funds are susceptible to events like market crashes. Today many Americans aren’t preparing for retirement soon enough. Therefore, they might not have the necessary time to employ a Buy and Hold strategy and see any meaningful returns by the time they’re ready to retire.

Self-Discipline

A large number of investors lose money due to their emotions. They either chase stocks that they believe will make them rich in the short run, or they sell when their stocks underperform. However, the Buy and Hold strategy requires an investor to ignore the urge to sell or buy whenever it strikes. Every investor finds it difficult to ignore these urges at various times. When it comes to savings for retirement, safety is the most important element. Yet if risk is managed correctly, it can be beneficial to a retiree’s investment strategy.

There are many alternative investment strategies to Buy and Hold that offer retirees more security and better returns. To learn more about the disadvantages of Buy and Hold as well as some alternatives read my article Jack Bogle Warns: Prepare for Two Massive Market Declines in The Next Decade (But Heeding His Advice Could Destroy Your Retirement).

Real Estate: Making Money Regardless of the Market’s Direction

*This post originally appeared on www.michaelmorrow.org.

One of the most difficult aspects of investing is dealing with market volatility. However, when it comes to limiting losses there is one asset that stands out above the rest: real estate. The U.S. Census Bureau reports that the price of real estate has increased in a consistent manner since 1940. While the subprime mortgage crisis limited its growth for a couple of years, it recovered relatively quickly and continues to increase in value. Keep reading to learn more about the basics of real estate investing and how you can continue to make money when the market is down.

Why Invest in Real Estate?

The best time to invest in real estate is the present. As stated above, real estate investments have attractive returns over time and some of the lowest volatility compared with other investments. Real estate is a great choice to add diversification to your portfolio. Research shows that during bear markets when stocks are down real estate usually goes up.

Research

One of the most important keys to finding success with real estate is doing your research. Before you purchase any real estate you need to understand which markets will give you the biggest return. If you plan to rent out your property to individual tenants, you should make sure you purchase property in an area that’s attractive to renters. The area around universities is usually the best location to purchase property since student tenants will be available each year.

Decide Your Approach

Do you want to be a landlord, or do you plan to flip properties? There are advantages and disadvantages to each approach, so, again, you will have to do your research. When it comes to flipping properties, you also have some decisions to make. Will you refurbish homes before selling them, or will you search for undervalued homes in growth markets and sell them without making any improvements.

Find a Mentor

If you have never invested in real estate before, you should connect with experienced investors to learn some of the pitfalls to avoid. There is likely a real estate investor club in your area, or you can reach out to individual investors and ask to buy them lunch or dinner. Target investors who are active in the area where you are interested in investing. They’ll be able to provide you with the best insight.

Get Started

The easiest way to get started is to read more about real estate investing. Visit this link to see a list of some of the top real estate books.