Make More in Retirement Than You Did on the Job Using Strategy


I know a guy who bought his first property in 1975 for $57,500.

If he’d held onto it all these years, it’d be free ‘n clear — and worth around $400,000, maybe a tad less. ‘Course, if he still owned it by utilizing the buy ‘n hold strategy many worship, he woulda lost well over an additional million bucks.

Why? Cuz the strategy seen by many as pure gold is silly. In almost 40 years, the original nominal FHA down payment he laid out woulda grown to at least a couple million, especially in San Diego, for Heaven’s sake.

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Buy ‘n hold is a great strategy ’til the day it’s not.

At some point, and the exception merely proves the rule, it makes Captain Obvious sense to sell and/or exchange the equity in any given property. Wanna know who buys and holds forever? One of the largest groups doing this are the ones investing in locations akin to capital growth quagmires.

In other words, they never had a chance or a choice from Day One.

Related: How to Avoid the Most Common Reason Retirement Plans Fail

An offshoot of the buy ‘n hold approach is to refi and buy more as the market dictates and/or allows. Sometimes that’s the best thing to do. In fact, there are strategies I employ that allow for refinancing debt-free property for the expressed purpose of acquiring something(s) other than more real estate. However, the refi and buy crowd is virtually always doin’ so due to their almost religious adherence to buy ‘n hold.

How the heck else are they gonna add to their portfolio, right? Right.

See, real estate is pretty much the only thing that works long term. (sarc) Sorry, but that ain’t a strategy, it’s a belief. It’s a belief I’ve proven false for a very long time. In fact, since 1975, when I acquired my first discounted note, that belief disappeared in a puff of smoke. But we’re gettin’ ahead of ourselves here.

The Problems With the “Exchange ‘Til Ya Die” Strategy

Refinance to buy more and more properties to be held forever: another strategy that will succeed in a vacuum, but be destroyed in terms of retirement income results when compared with other, more reasoned methods and techniques.

One of my all-time favs is the offshoot of buy and never sell, which is to exchange ’til ya die. NEVER EVER pay taxes!!! Shall we cut to the chase on this one? Let’s view the “benefits” of invoking the blessed Section 1031 tax deferred exchange into oblivion.

3 Results of Using the Section 1031 Tax Deferred Exchange Repeatedly

1. Upon retirement, the average adjusted cost basis of properties in your portfolio will be roughly $1.98.

2. Due to #1, any outright sale of a property, whether based upon positive or negative reasons, will cost the taxpayer/investor more money in various taxes than they ever dreamed. Imagine having the “baggage” of several exchanges come back to haunt you 30 years later. I’ve seen it a few times, and it’s butt ugly at best.

3. Most investors adhering to this “strategy” end up with a boatload of older properties with ever-increasing operating expenses, while “enjoying” an equally ever-decreasing slice of the tenant pie.

What’s even worse is that they did it to themselves with a plan — and on purpose. The really sad part is that at some point around midway, they realize the straightjacket into which they’ve put themselves. Not a happy day and relatively difficult from which to escape.

The so-called strategy of “Exchange ‘Til Ya Die” is based upon the shortsighted belief that payin’ taxes of any kind is against all that’s holy. Simply not true. It’s always about relative benefit. ALWAYS.

What’s the Biggest Strategic Mistake Real Estate Investors Make?

(You mean besides thinkin’ they can find all the answers online? 🙂 DIY types sabotage more potentially superb retirements than any group of folks I’ve ever observed. It’s almost painful to watch in real time. But that’s another post I’m reticent to publish.)

The answer from where I sit is twofold, and they tend to be connected at the hip.

First off, they think real estate is THE end all, be all. I love, love, love real estate, but seriously, people, it’s not all things to all investors, all the time. There are other investment vehicles that will lead to incredible retirement incomes. Discounted notes and EIULs come to mind, for sure. But there are more than those two. They’re the ones I’ve settled on after 45 years of seeing the results of how Time tests their relative results. I’ve seen those tests and their results in real time — and with my own lyin’ eyes. 🙂

Yet we display as part of our human nature fear of what we don’t know and/or understand.

Isn’t that why we go to the dentist? Isn’t that why we don’t rebuild our own transmissions? Why, oh why do so many not treat their retirement, arguably one of the very most important things in their lives, the same way? Why do they fumble around in the dark like the blind? I’ve never understood it. But there it is.

Secondly, it almost never occurs to investors to employ the principle of synergy when designing their plan for retirement income. Combining various strategies is something foreign to most. If there is anything even remotely close to a “magic button” when the goal is to generate a magnificently abundant retirement income, it’s the employment of synergy.

The Importance of Strategic Synergism

Strategic Synergism is what makes the empirically measurable difference between the results of one investor and another. The difference is almost universally laughable. But, you say, isn’t that phrase nothin’ more or less than a marketing device? A great point, and in my experience, almost always true when it comes to actual results. But when it’s actually executed well over time, you’ll know it’s real by these two empirical factors:

1. You’ll end up retiring sooner than you thought possible, sometimes much sooner.

2. You’ll end up with more actual after tax retirement income than you thought possible.

Bonus: Often, you’re able to experience both. 🙂

Let’s boil this down to something with which we all identify, so as to have a universally understood metric.

Related: The IRA Stretch—How Far Will Your Retirement Dollars Go?

The mantra we’ve all heard since becoming working adults has been that we’re gonna retire with a comfortable income if we just work hard, save and invest wisely and keep our heads, right? The next thing they tell us is not to worry about income taxes in retirement cuz we’ll be in a lower tax bracket.

Ever ask yourself why that is?

I’ll tell ya why. It’s a direct result of listening to and acting on that advice most of your life. Allow me to offer you an alternative to that approach.

Given at least 15 years, the vast majority of serious people have the ability to create a retirement income that will be in the range of 80-200% of the best year ever on their job. Many will end up with after tax income greater than the best pre-tax salary they ever earned working.

The best part of that? They’ll do it in ways so boring that a bowl of plain vanilla ice cream will seem exciting.

It’s ALWAYS been about strategy. Combining multiple strategies synergistically becomes the turbo charger. Retiring with more than you ever made on the job should be the freakin’ rule, not the exception.

What’s your retirement strategy? To what extent are you relying on real estate investments?

Let us know your views in the comments section below!

About Author

Jeff Brown

Licensed since 1969, broker/owner since 1977. Extensively trained and experienced in tax deferred exchanges, and long term retirement planning.


  1. tl;dr: there may be a different strategy to buy-and-hold.

    But, the criticism to the article is that it doesn’t have _any_ real description or actionable item about the different strategy.

    Very, very low information content. Sorry.

    This maybe an interesting topic, but make the article information density higher, please.

    • Jeff Brown

      Hey Luis — I feel your pain. Thing is, it’s daunting to write the all-inclusive post you’d like to see. Worse, it’s shortchanging readers here if I just cavalierly say something like, “Buy low, sell high”. This stuff isn’t like assembling a toy you bought for your son or daughter. It’s serious stuff that requires in-depth explanations that frankly can’t be put into a sentence or two. For Heaven’s sake, my nickname is already ‘War ‘n Peace’ Brown. 🙂

      So what I end up doing is to begin by defining the problem, naming the factors involved, and explaining any so-called ‘well known’ truths that are in fact highly inaccurate. That’s what I did here.

      To be brutally honest, the topics about which I write here can’t, at least for the most part, be titled ‘8 things to do with strategy that will guarantee success’. That’s a cookie cutter approach, and in context of the subject matter of this post, would be a disservice to readers. Why? Cuz what might work wonders for Joe would put Luis behind the 8 ball.

      I plan to follow this post with more in-depth explanations about the various strategies laid out in today’s post. All of what I’m sure you woulda liked to see in this one post will no doubt be included in the book I’ll never write. 🙂

      Make sense?

  2. I am at this time of my retirement…comfortable. nice, cash flow. I am a retired RN, since 2001.
    R E cashflow has been good to our family….it kept my mother in a good care facility for 10 yrs, at $10K a month. My sister and I inherited each a house and a bit of cash. So one can have all the strategy, Man plans, God laughs. I have played it as it lays. So far it has worked , being flexible, knowing the local market and being my conservative, 74 y.o. self.

  3. Jeff,
    Maybe you can run it through an example for a person who has average financial situation (i.e. salary $100K, 2 kids and wife, 50yr old, wants to retire in 15 years, has 401K about $..K etc. etc.) )and how a particular strategy “might” work?

  4. I can see holding property forever being a problem, but if you sell it at the right time and upgrade to a newer/better located/bigger property, I don’t see why using 1031s over and over is a problem.

    • Jeff Brown

      Hey Carole — And there’s the rub, as most folks don’t see the problem. Here are a couple examples. 1) The properties with which they finally retire will have no shelter for the cash flow, or only a very few years. 2) If they should need to sell ’em for any reason, the tax bill would be onerous to be kind, due to the constant tax deferrals finally coming home to roost.

      There are strategies available for some that allow for ‘scheduled’ sales, but with significantly reduced taxes, if not reduced to zero. Tax deferred exchanges should only be used when nothing else will work. Though I’ve done well over 200 of ’em, each one was executed after all other options had been eliminated.

      • Jeff,
        What about folks who make more than 150k per year? They cannot take depreciation unless they are real estate professionals. That deferred depreciation racks up and can be used against the tax burden of a future sale.
        Thank Jeff, I’m looking forward to future articles. Unfortunately, you are one of the few that really looks into long term planning.


        • Jeff Brown

          Thanks Jason — The ability to ‘stockpile’ unused depreciation can, and often does open the door to a whole new page of options for the investor. The key is to ensure the strategies used are subject to the overall plan, seasoned with copious amounts of flexibility.

  5. Jeff, as I read your article I began to feel angry with how you attacked those of us that believe in the buy and hold strategy. 🙂 However, by the end it made real sense and I appreciate what you are saying! I have been applying a healthy amount (12%) to 401k and have maxed out my Roth IRA for several years. I have become much less focused on the stock market as my mind has become consumed with real estate investing, so I can understand the pitfalls. I will look into some of your suggestions, where should I start? Thanks.

      • ok…sorry, but the village idiot is back. So is your point not to just do buy and hold real estate? Just let that be 1 part of your investment strategy? For full time employees like my wife and I that still pay into a 401K (just the min needed to get max company match), max out Roth IRA’s each year, sock away decent amount of cash each month and also buy rentals to hold long term (10+ years)……are we more in line with what you are prescribing?

    • Jeff Brown

      Hey Eric — Those answers will lead to more questions, and I’m a bit pressed today. If you’d like to get into the deep end of the pool with me, go to my site and contact me. I’d be more than happy to get below the surface with ya.

  6. Ben Leybovich

    Hey, Jeff – I understood everything, except for one thing:

    What the hell is this “job” thing you keep talking about…?! I even asked all my friends – Brandon, Serge, Brian, Jason – nobody knows 🙂

    Perhaps you’re talking to a different audience…But, I listen when you talk anyway, even though I’m not sure it’s meant for me. (I also tell lots of folks to talk to you, cause as you’ve pointed out – I may be the exception that proves the rule).

    Then again – so are all of my friends…thoughts?

    • Jeff Brown

      Ben, you’ve picked an MO you like, and are convinced will stand the test of time. Fact is, it has for you. How many would be able to do what you do? Frankly, I think your strategy is good for you, but for now. In the future, when the income becomes paramount, it may or may not remain the way for you to proceed. The proof’s in the pudding, right?

      All of us must constantly reanalyze our status quo for the purpose of producing the best possible results while remaining safe and boring in the process.

    • Jeff Brown

      It’s neither one, Chris. It’s what works for the individually when it comes to gettin’ results in retirement. For you, it will likely be almost the opposite when compared to some of your neighbors. There’s no ‘one size fits all’ that I’ve ever found.

      • Ok….seriously. I have no clue what you are talking about and I really am a pretty bright guy. I just called my mom and asked her. Should I just forget I read this blog or is there a relevant point that can be explained to me. All I am getting so far is that whatever my strategy is, it’s probably wrong for me but might work great for the next guy.

  7. Jeff,
    Great article as usual. I see it less as an article against buy-and-hold investing and more in support of options when making retirement decisions. Retirement is the great financial challenge of everyone’s lifetime, and this article highlights that planning wisely is essential to get there securely. Relying on a single strategy alone – such as ONLY buy-and-hold – would be comparable to ONLY using your 401k to get to retirment. Those strategies will get to retirement alright, but not the retirement you could have created.

    Utilize many streams of income and use them in support of each other. Then, you can create a greater retirement than you could have working with only one “golden” rule.

    Also, if you’re looking for the “steps” for what’s possible. I’d recommend checking out Jeff’s previous articles:
    This one’s my favorite:

    • Jeff Brown

      Much appreciated, Collin. Buy ‘n hold is much like water. Superior daily hydration is one the keys to physical health, but too much water can literally kill us. What most investors don’t understand about the B&H approach is that it’s no buy now, hold ’til ya die. Long term is a relative phrase. Unflinching adherence to that approach when the opportunities to leverage solid future opportunities has cost too many investors far to much retirement income and net worth.

  8. Jeff,
    Can you please elaborate a little more on “There are strategies available for some that allow for ‘scheduled’ sales, but with significantly reduced taxes, if not reduced to zero.”? Thanks in advance.

  9. Thanks for keeping us thinking Jeff! I think the key is to continually analyze and adjust fire as necessary. What worked in the last decade may not prove to be as advantageous in this one and what works in this decade may not work as well in the next. I appreciate your article!

  10. Well interesting post to say the least. You keep thinking as the title suggest somewhere in there was the big magic but it never comes. A whole lot of “thats a bad idea” but never the nirvana. I saw a few things to comment on. First lets talk buy and hold. The buy and hold crowd who had properties they owned outright were one of the few who survived the downturn. The flippers were crushed as were the ones who kept buying from refi prop after prop. The 401k crowd as well as the stock market crowd all wiped out. Only the ones with old school pensions and soc security came thru unharmed…..those and the buy and holds whose props were paid off. I agree there is more than one way to skin a cat but risk plays a huge role in this equation and I dont see that mentioned. Myself I do buy and hold. I spin my stock market proceeds and pay cash for rentals. I am building a personal reit with them and they spin off a dividend called rent. In the downturn I cleaned up on the backs of these flippers and buy more crowd.

    Well thats enuff about my self. I ask if you are talking retirment you cannot leave out risk. It goes hand in hand.

    • Jeff Brown

      A-Freakin’-Men! CJ.

      I assume the readers here at BP know there’s risk in real estate or any other investment vehicle. But you said it perfectly, risk plays a huge roll, and knowing how to effectively ameliorate risk to the extent possible is what separates the experts from the theoreticians.

  11. Looking forward to your next article. I’ve been learning about buy-and-hold real estate lately, but more for how it fits into an overall retirement strategy. Notes are intriguing me. My goal is to “retire” in about 10 years. I’m 31. 🙂 Gotta lot to learn, even with a background in finance.

  12. Okay… That was definitely interesting to read, even if I only understood parts of it. Based on CJ’s comments, I think I’m getting a better understanding. So risk tolerance differs depending on your own situation.

    I see how flippers got slammed during the crash, but I’m wondering how the “refi after refi” crowd CJ mentions got hurt. Weren’t they refi-ing in order to buy more long term rentals? As the market crashed, people lost their homes, prices fell, but number of renters went up. So as long as you were thinking term buy and hold, weren’t you relatively unscathed, even if you were financing your purchases?

    • Mr. Rhu…….My neighbors, refi and refied, and bought Escalades, boats, cars and c.phones for all the family., all the fancy dancies….when they foreclosed, and took all that stuff with them. how may times have I heard when screening tenants,” well my credit score isn’t good, I lost my house.” All the time.
      I roughed it thru, still driving my 15 y.o. Taurus. Refi was not just about obtaining another property….there was alot of greed involved.

  13. Frankie Woods

    Jeff, I’m really starting to buy into your philosphy. I agree hands-down with the fact that we as investors need to have multiple strategies for retirement, and I’m starting to realize that the belief that we will all be in a lower tax bracket in retirement is just plain wrong (at least for those of us who have been smart…a relatively small % IMHO). I am anxiously waiting for your follow-on articles! I really appreciate your time and effort in explaining these concepts to us because I don’t think enough of us have been exposed to it!

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