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There are many ways to accrue retirement savings, such as opening an IRA, contributing to your company’s 401K plan, investing in gold or silver, funneling money through CDs, buying corporate bonds, etc.  But the one retirement savings strategy that trumps them all is investing in rental properties. 

Investment properties have 2 key advantages over every other type of retirement investing.  One is the fact that you can use other people’s money to accomplish your long term savings goals.  In other words, you only have to put down, say, 10% of the asset’s value to have full control over said asset.  The other 90% is loaned to you.  So if I want to buy a $200,000 income producing property, I only need to use $20,000 out of my own pocket.   Try doing this with stocks, or gold, or silver, or corporate bonds, or any other investment vehicle you can think of.  It simply cannot be done; for any other investment option, you must put 100% of the money down before you have any control over it.

The second key advantage is that the 90% that does not come out of your pocket is paid by your tenants in the form of their monthly rent.  Essentially, your tenants will pay your monthly property mortgage payments, yet you are the one who gets to keep the built-up equity and cash it out when you sell.  I call this “free equity.”

So again, no other investment vehicle allows you to acquire it for only 10% of its total value.  If I want a $200,000 stock portfolio, I must have access to $200,000 in cold hard cash.  But if I want a $200,000 rental property, I only need to have access to $20,000 in cash. 

As an added bonus, real estate will always appreciate in value over the long term.  So not only do I get to purchase a $200,000 property for only $20,000, but I will be able to sell it for more than what I paid, in this example let’s say $250,000.  Thus, in 10 years my $20,000 investment will turn into $230,000 in cash.  Yes there are other variables and this is an overly simplistic example, but even with that said it is still one heck of an ROI!

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