So I just read Scott Trench's "Set For Life" and started questioning how I should approach real estate. From what I gather, I am coming to the conclusion that I ought to take all of my extra resources and apply it to real estate. In other words, after I have paid for my necessities such as food, housing, transportation, entertainment, etc., I will take all of my savings and put it into real estate instead of into an IRA, 401(k), etc.
Now, I am still in college and have yet to get a decent paying W2 job so I am still searching for the best way to invest my future income. Does the approach of spending all of my extra income on real estate a good idea or should I diversify some income into different retirement strategies?
I know that it will take awhile before I can invest in my first property due to student loans so I feel as though I should start aggressively saving for my first property and perhaps consider another route afterward.
First step is just to create the savings.
Then, I wouldn't put 100% of my cash into real estate. You want to have some cash on the sidelines and you want some to be in other investment vehicles. Of course if you have very little cash then you wont have many options.
Nice thing about real estate is you can easily sell and get your money back out if you're a buy and hold. Of if you do flips/wholesale you're always getting your money back. If you've found a way to consistently make great returns investing in real estate then it makes sense to go for it, and if you want to pull back, you can. I like to invest in things that I can access the money/pull the money back out of it and have that flexibility.
I see a great value in the tax-shelter certain retirement accounts can provide. Did you know you can save money for retirement in a retirement account and still use those funds to invest in real estate? The type of account is called a self-directed IRA or 401(k). These retirement accounts allow you to invest in "alternatives" such as real estate, private lending(notes) and many other things.
As a college student, you may be in a lower tax bracket than you might be in later in life, a Roth IRA could be a very beneficial retirement account to consider.
Thank you! I did not know this and will learn more about it. My initial plan was to wait until I had my own property before I would think about other investment strategies. Your reply has let me know of other options.
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