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Here is the Fastlane strategy as I understand it:
1) Get rich making & selling a business
2) Invest those proceeds in "safe" government bonds
3) Collect a monthly pain free cashflow for eternity
My main problems with this strategy are thus:
1) Getting millions of dollars isn't exactly a breeze
2) As we're seeing in Greece and much of the Euro zone, government bonds are not necessarily safe. For those that think that could never happen in the US, take a look at this chart of US debt http://www.futuretimeline.net/subject/images/us-debt-graph-2020.jpg
3) Inflation figures are extremely manipulated by the government to make the economic picture seem rosier (as well as screw over social security and other entitlement recipients whose benefits are tied to the CPI), the real inflation rate is around double what's reported. Therefore, your measly 3% return treasury bonds will not keep up with inflation and you will lose purchasing power over time.
4) The logical outcome of the massive debt the US has is money printing which leads to even more inflation. Owning cash and bonds does not hedge against inflation, but real estate does.
The main argument against real estate is that no one wants to deal with tenants, or have to pay the mortgage if the tenant doesn't pay. I would advocate buying lower end property for cash, the kind of property that only rents for a few hundred dollars. Mobile home parks would be a good example of these. I know you might think "ew" at the prospect but you can buy land in some areas for just a few thousand dollars per acre and rent out the land to someone with their own mobile home for $100-$300 per month. Since you don't own the home you don't have to deal with the maintenance. And if the tenant doesn't pay you, you're not stuck with thousands of dollars in mortgage payments while you're evicting. Also with long term economic stagnation at hand, more people will be downsizing to low end real estate or retiring to these types of properties as their retirement accounts decline.
Here are some numbers:
At a 3% return on government bonds, you would make $250 per month for every $100,000 you have invested.
Compare that to a piece of real estate that you make $250 in rent and paid only $10,000 for, or less.
You could potentially earn 10x more cash flow with real estate. Yes it's more work each month handling checks, tenants, etc, but it's a lot more work to create a multi-million dollar business and even if you do, the returns using goverment bonds are not that great. The Fed has expressed its intention to keep interest rates this low for at least the next two years.
I suppose you could combine these strategies, selling a business and then putting the majority of the proceeds into low end real estate. I say, why wait. Start educating yourself on the subject and buy as you can.
1) Get rich making & selling a business
2) Invest those proceeds in "safe" government bonds
3) Collect a monthly pain free cashflow for eternity
My main problems with this strategy are thus:
1) Getting millions of dollars isn't exactly a breeze
2) As we're seeing in Greece and much of the Euro zone, government bonds are not necessarily safe. For those that think that could never happen in the US, take a look at this chart of US debt http://www.futuretimeline.net/subject/images/us-debt-graph-2020.jpg
3) Inflation figures are extremely manipulated by the government to make the economic picture seem rosier (as well as screw over social security and other entitlement recipients whose benefits are tied to the CPI), the real inflation rate is around double what's reported. Therefore, your measly 3% return treasury bonds will not keep up with inflation and you will lose purchasing power over time.
4) The logical outcome of the massive debt the US has is money printing which leads to even more inflation. Owning cash and bonds does not hedge against inflation, but real estate does.
The main argument against real estate is that no one wants to deal with tenants, or have to pay the mortgage if the tenant doesn't pay. I would advocate buying lower end property for cash, the kind of property that only rents for a few hundred dollars. Mobile home parks would be a good example of these. I know you might think "ew" at the prospect but you can buy land in some areas for just a few thousand dollars per acre and rent out the land to someone with their own mobile home for $100-$300 per month. Since you don't own the home you don't have to deal with the maintenance. And if the tenant doesn't pay you, you're not stuck with thousands of dollars in mortgage payments while you're evicting. Also with long term economic stagnation at hand, more people will be downsizing to low end real estate or retiring to these types of properties as their retirement accounts decline.
Here are some numbers:
At a 3% return on government bonds, you would make $250 per month for every $100,000 you have invested.
Compare that to a piece of real estate that you make $250 in rent and paid only $10,000 for, or less.
You could potentially earn 10x more cash flow with real estate. Yes it's more work each month handling checks, tenants, etc, but it's a lot more work to create a multi-million dollar business and even if you do, the returns using goverment bonds are not that great. The Fed has expressed its intention to keep interest rates this low for at least the next two years.
I suppose you could combine these strategies, selling a business and then putting the majority of the proceeds into low end real estate. I say, why wait. Start educating yourself on the subject and buy as you can.
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