I can make you a millionaire. Guaranteed.
I realize that’s a bold statement. And, in all likelihood, it sounds like something that I’ll ask you to sign up for a coaching program weekend seminar for some astronomical price in order to learn how.
Really, it’s a simple formula that shouldn’t require an MBA or extensive training to master. In fact, I can make you a millionaire if you simply follow these 10 simple steps:
- Save $11,700.
- If you qualify, buy your first home using a first-time home buyer loan that requires as little as a 3 percent down payment. The $11,700 equals the required down payment on a duplex in the Twin Cities with a 2022 median sales price of $390,000. (If you buy a house the current median price is $370,000.) It is crucial to use this form of financing for your first property, as it is not available to current homeowners. If you buy a house, we will use the Twin Cities median duplex price of $390,000 for this exercise. While your first home does not necessarily have to be a duplex, it may help you get a better financial start and buffer if it is. Make sure you have an experienced investment property Realtor help so you can determine the cash flow in advance if you were to move out. Live there for one year as required by the lender. Property value: $390,000. Out of pocket: $11,700.
- Save $12,950.
- Buy your next property using an FHA loan with as little as 3.5 percent down. ($13,650 is 3.5 percent of the $390,000 duplex median sales price.) Rent out your first home. Again, while not necessary, you can purchase a duplex, triplex or fourplex using this kind of financing. It will help your cash flow in both the short and long term, as well as help you save money for your next move. Make sure you have the help of an experienced investment property Realtor. Property value: $390,000, Out of pocket: $13,650.
- Save $18,500.
- Use the $18,500 to buy a single-family home using a 5 to 10 percent down loan program at a median sales price of $370,000. Move in. Rent out your previous property. Property value: $370,000. Out of Pocket: $18,500.
- Save $55,000.
- Buy a second home. Think lake cabin, house in Arizona, Florida or the Great Smoky Mountains. You can do this with as little as 10 percent down the loan. When you’re not there, rent it out as a short-term rental (Airbnb, VRBO). The median sales price of a home in Gatlinburg, Tenn. is $550,000. Property value: $550,000. Out of Pocket $55,000.
- Pay off all the mortgages either early or over the course of 30 years. $390,000 first duplex + $390,000 second duplex + $370,000 single family home + $550,000 second home = $1,700,000. Your costs: $11,700 +$12,950 + $18,500 + $55,000 = $104,950.
- Of course, this value of $1.7 million assumes your properties never went up in value. However, over the last 70 years, the median price of a U.S. home has increased an average of 4.7 percent annually. That means after thirty years, the duplexes purchased above would be worth $1,546,910 each, the house worth $1,467,581, and the vacation property $2,181,539 for a total real estate value of $6,742,940. Not a bad rate of return for a total initial investment of $98,150!
If you’d like to start taking steps to secure your financial future, give me a call. I would love to help make you a millionaire!