Thanks to the FIRE movement<\/a> (financial independence retire early), we have a safer definition of retirement in which the income generated from your assets covers your expenses (and then some!).\u00a0<\/span><\/p>\n Thinking of retirement in these new terms means that with the right cash flow from your real estate assets, capital preservation, and great tax benefits, we can create a level of certainty and control for ourselves in our later years (and possibly make work optional right now).\u00a0<\/span><\/p>\n Yet when you Google \u201chow to use real estate to retire,\u201d you\u2019ll <\/span>find results<\/span> like these<\/span>:<\/span><\/p>\n Don\u2019t get me wrong, all of the above are valid ways to enter the real estate game. But there are some flaws if these \u201cassets\u201d are going to support your retirement. Consider these four questions:<\/span><\/p>\n The above are unlikely to be a solid investment tactic for our new definition of retirement. <\/span>Not to mention that you would have to accumulate quite a pile of cash to retire with assets like these in 20+ years (which brings us full circle to our old definition of retirement).<\/span><\/p>\n How do you build a real estate portfolio that you can retire on? Moreover, what if you are starting the real estate game later in life?<\/span><\/p>\n Below are four ways you can leverage rental real estate to fund your retirement, especially if you are just starting out or have limited capital to invest. (Stick with me though, as we will discuss scaling next!)<\/span><\/p>\n When you house hack<\/a>, you outsource your monthly housing expense (in part or all) to roommates living with you or renters (if you buy a duplex). Any extra income you generate could be used to pay down the home or to save to invest in other places. You would purchase in such a way to preserve your capital, capture tax benefits, and position yourself for the appreciation \u201cicing on the cake.\u201d <\/span><\/p>\n Repeat this process every two years for five years, and you could have a nice equity nest egg and multiple cash flow streams to live off of. Check out <\/span>The House<\/span> Hacking<\/span><\/em><\/a> Strategy<\/em><\/a>\u00a0<\/span>by Craig Curelop for more details on this method.<\/span><\/p>\n When you purchase turnkey<\/a> rentals, you continue to convert saved capital or re-positioned equity (think HELOC or home sale) into multiple streams of cash flow. And like house hacking, you would purchase in such a way to preserve your capital, capture tax benefits, and position yourself for the appreciation \u201cicing on the cake.\u201d\u00a0\u00a0<\/span><\/p>\n Related<\/strong>: Turnkey Properties: Should You Invest in a Turnkey Real Estate Investment?<\/a><\/em><\/p>\n When you purchase a BRRRR<\/a> (Buy, Rehab, Rent, Refinance, Repeat) investment, <\/span>you accelerate your wealth and access to capital through forced equity.<\/i> You buy the asset low, rehab the property to minimize your capital expenses for a few years, rent it to create positive cash flow, then refinance out your initial investment and repeat the process.\u00a0 <\/span><\/p>\n It is possible to create infinite cash-on-cash<\/a> returns this way; thus, you are only limited by the number of projects you can do at one time, the upfront capital required, and the amount of time you have to do the projects! And like house hacking and turnkeys, you would purchase in such a way to preserve your equity position, capture tax benefits, and continued appreciation. Check out <\/span>Buy, Rehab, Rent, Refinance, Repeat<\/span><\/a><\/em>\u00a0by David Greene for more details on this strategy.<\/span><\/p>\n A little tip of the hat to <\/span>Ali Boone<\/span><\/a> for coining this phrase (brilliant!). This is my favorite<\/em> way to invest in real estate and has been my go-to strategy more than 20 times! Essentially, a BRRRR-key is leveraging someone else\u2019s time, knowledge, expertise, and networks to get the BRRRR done.\u00a0\u00a0<\/span><\/p>\n Side note:<\/b> All of the above strategies can be done with multifamily buildings, as well. The terminology just changes from \u201crehab\u201d to \u201cvalue-add\u201d or \u201cdevelopment,\u201d depending on the extent of the rehab.\u00a0\u00a0<\/span><\/p>\n Additionally, these types of portfolios take time to scale to the point you can retire off the income\u2014unless you have the capital and network to purchase a portfolio of projects all at once. (Yes, it can be done!)<\/span><\/p>\n Now that we\u2019ve identified four of the core real estate investing strategies you can use to fund retirement, let\u2019s build off these strategies and cover four ways to supercharge our scaling efforts <\/span>and retire much quicker<\/i>!<\/span><\/p>\n This strategy is simple and elegant. Buy one quality property for 30 years leading up to retirement. In 30 years, your tenant has paid off the 30-year mortgage on the first property, and now you sell it. You can live off the proceeds of the sale or reinvest all or part of this money back into future investments. (Ideal, since you are going to live way past 100!) And you still have multiple properties that are cash flowing to fund your living expenses.<\/span><\/p>\n Chad Carson speaks of this strategy often. Each year, you buy three properties. I feel this works best with BRRRR or BRRRR-key-type properties, so you can continue to create velocity with your capital. You complete all three projects, then roll two properties (ideally the two best ones) into your portfolio, and sell the third to live off of. <\/span><\/p>\n In five years, you have 10 cash flowing properties and a sizable pool of capital to continue investing or to fund your lifestyle. Combine this strategy with the above strategy, and now you are cooking with fire!<\/span><\/p>\n\n
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So What Are Other Ways to Retire from Real Estate?<\/span><\/h2>\n
1. House Hacking<\/h3>\n
![\"house-hacking\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/02\/house-hacking-couple.jpg\" "\\"\\"")
<\/p>\n2. Turnkey\u00a0<\/span><\/h3>\n
3. BRRRR\u00a0<\/span><\/h3>\n
4. BRRRR-key<\/h3>\n
Let\u2019s Take This to the Next Level!<\/span><\/h2>\n
5. Buy 1 Property Each Year for 30 Years\u00a0<\/span><\/h3>\n
![\"Small](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/model-house-at-sunset-702x336.jpg\" "\\"\\"")
<\/p>\n6. The Buy-3-Hold-2-Sell-1 Strategy\u00a0<\/span><\/h3>\n
7. The Stack Strategy\u00a0<\/span><\/h3>\n
![\"partners-networking\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/06\/Successful-Real-Estate-Investing.jpg\" "\\"\\"")
<\/p>\n![\"ad-bookstore\"](\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/5.2-702x125.jpg\" "\\"\\"")
<\/p>\n