I bought my wife a brand new car for only $10,000 !

1 Reply

A little over 4 years ago, I wrote a forum post on BP with the same title as this post.  Click on the link below for the details behind this  unusual title:

https://www.biggerpockets.com/forums/48/topics/165...

Right on time in December 2018, we sent the final payment of the land contract / owner financing loan, and now own the property free and clear.  Here are how the monthly numbers look now:

Rent - $650

HOA - $135

Taxes - $75

Insurance - $15

Maintenance & CapEx- $75

Cash flow - $350

The cash flow is at the high end of the range I had expected to be at when we purchased this unit 4 years ago.  Fortunately car price inflation has been moderate in the intervening years, and there are a wide variety of cars, trucks, and SUVs available to lease for $350 or less.  My wife wanted an SUV, and today we took delivery of a brand-new Ford Edge!

When the lease is up in 2 years, we may have to pay a bit more to lease her next new vehicle.  The nice thing about rental property is that, unless you're in a war zone or economic basket case area (which this condo is not), rents will creep up every year, keeping up with inflation so as to cover rising expenses and provide slowly rising monthly cash flow.

Some of those reading this post, perhaps those in expensive markets, or high earners, may be turning up your nose at the small amounts of money involved in this deal.  The bottom line is though, despite the low cost of entry into the deal, we now have an asset that pays for a new car for my wife, essentially forever.  Since adding the subject property, we've purchased a number of similar units which will be coming online over the next several years as cash flow machines as the short-term financing used to buy them is paid off.  Start stacking up enough inexpensive rentals that reliably throw off $350 per month and financial independence and retiring early become realistic choices.

Although the Rich Dad Poor Dad book wasn't what got us started in real estate (a colleague was), it teaches about the importance of accumulating income producing assets to create financial freedom.  A few years ago I assigned Rich Dad Poor Dad to our daughters as a mandatory summer reading requirement, and both of them read the book and wrote book summaries to demonstrate they understood what they'd just read.  Whether it was due to Kiyosaki's book, or to our example with this condo and others, our younger daughter asked me if she could buy the next unit I found that met our investment criteria, which I agreed to.  She took the money she'd been saving toward her first car and used it as a down payment on a property that needed almost no work, minimizing her capital outlay.  She was chafing at having to wait all the way until the ripe old age of 21 until her property will be paid off and she can lease a new car, but seeing her mom driving a new car today has probably made the whole plan seem a lot more real and worth following.

Ken

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