I was in somewhat similar situation a while ago – I had a house, appreciated a lot in value, but to me it was useless because I couldn’t do anything with that equity unless I sold or refi’d it out.
After a lot of research I decided to put it into real estate, where the expected rate of return on your investment was a great deal higher than the interest rate to borrow was (cash on cash). Also, I made sure that the properties cash flowed and that it was a high enough cash flow so that it would eventually replace my salary.
Now, yes, I acknowledge this was risky. But it was a way of spreading my investments beyond the stock market, of which I was already maximizing. I’ve done my research and made some informed decisions. I’ve certainly tried to minimize risk several ways, such as not buying SFRs/condos, not buying in California, and by setting out a 15 year time frame for these investments.
So why am I working like a dog, “slave” to my mortgages, property taxes, and all that? Because my ultimate goal is to retire early and have financial security. The best analogy I can come up with is driving towards my retirement. The safe way is to drive 45 mph. It will take longer to get there, but it is safe. By making all my assets work for me (real estate, investments, my salary, taxes) in an efficient manner, I can push my speed up to 65 mph and get there faster.
Did I mention this is risky? Sure!
Do I recommend this for everybody? No! I thought it would be less work than it has proved to be.
Am I going to get slammed on by Powayseller and all the other real estate bears here? Sure!
(haha)
Still, America rewards hard work and sacrifice. America also rewards laziness but not as much. 🙂
